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THE  LIBRARY 

OF 

THE  UNIVERSITY 

OF  CALIFORNIA 

LOS  ANGELES 

SCHOOL  OF  LAW 


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A  TREATISE 

ON   THE 

MODERN  LAW  OF  CORPORATIONS 

WITH    KEFEIIENCE   TO 

FORMATION   AND   OPERATION 
UNDER   GENERAL   LAWS 

BY 

ARTHUR  W.  MACHEN,  Jr. 

OF    THE    BALTIMORE    BAR 


IN    TWO    VOLUMES 

Volume  I. 


BOSTON 
LITTLE,  BROWN,  AND    COMPANY 

1908 


Copyright,  1908, 
By  Arthur  W.  Machen,  Jb. 


All  rights  reserved 


Printcta 
8.  J.  Pabkhill  &  Co.,  Boston,  U.  S.  A. 


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Onus  si  tantum  opinione  prima  concipere  potuissem  quanta  me  premi 
fereus  senlio,  inaturins  consuluissem  rires  ineas.  Sed  initio,  pudvr  omit- 
tendi  quae  promiseraiii.  tenuit :  mox,  quamquam  per  singulas  prope  jiartes 
labor  cresceret,  ne  perdtrem  quae  jam  cjfecla  erant,  per  omnes  dij/icultates 
animo  me  snstentavi.  Quare  nunc  quoque,  licet  viajor  quam  umquavi  moles 
premat,  tamen  prospicienti  Jinem  mihi  constitutum  est  vel  dejicere  potius 
quam  desperare.  —  Quintil.,  De  Inst.  Oral.,  Lib.  XII,  prooem. 


(>6V474 


PREFACE 


In  these  volumes  I  have  aimed  to  approach  the  law  of  our 
ordinary  business  corporations  from  a  point  of  view  more  pecu- 
liarly appropriate  to  companies  incorporated  under  general 
laws  than  has  heretofore  been  customary.  It  seemed  to  me 
desirable  to  reject  as  obsolete  much  of  the  old  law  of  corpora- 
tions formed  under  royal  charters  in  England,  together  with 
its  terminology,  and  to  treat  the  modem  law  upon  a  plan 
which  should  recognize  incorporation  under  general  laws, 
rather  than  incorporation  under  royal  charters  or  under 
special  acts  of  the  legislature,  as  the  normal  method  of  incor- 
poration. In  the  second  place,  I  have  aimed  to  treat  fully  and, 
so  far  as  possible,  exhaustively,  those  topics  which  the  rapid 
development  of  the  law  of  incorporated  companies  both  in 
Great  Britain  and  in  the  United  States  has  but  recently  brought 
into  practical  importance,  and  also  any  other  topics  which  for 
any  other  reason  seemed  to  me  to  need  fuller  or  further  treat- 
ment than  is  accorded  in  the  serviceable  text-books  with  which 
American  lawyers  are  familiar. 

Among  the  topics  which  an  attempt  has  been  made  to  analyze 
with  especial  thoroughness  may  be  mentioned  the  law  of  the 
preparation,  construction,  and  filing  of  incorporation  papers, 
the  law  of  promoters,  of  underwTiting  agreements,  the  law  of 
preferred  shares,  of  increase*  and  reduction  of  capital,  of  trans- 
fers of  shares,  of  directors'  and  shareholders'  meetings,  of  by- 
laws, and  of  dividends,  and  many  subdivisions  of  the  law  of 
bonds  and  mortgages. 

I  have  regarded  the  corporation  as  a  living  organism,  and 
have  not  attempted  to  treat,  except  incidentally,  those  parts 
of  the  law  which  relate  to  its  death,  or  winding-up  and  disso- 
lution, or  those  parts  of  the  law  which  existing  American 
text-books  have  treated  so  fully  and  satisfactorily  as  to  render 
any  other  treatment  both  presumptuous  and  unnecessary. 


PREFACE 

The  branches  or  sub-divisions  of  corporation  law  which  have 
been  altogether  excluded  embrace  (1)  the  entire  topic  of  the 
relation  of  corporations  to  the  state  or  to  the  public,  including 
all  questions  as  to  the  constitutional  powers  of  the  legislature 
under  our  American  state  and  federal  constitutions  in  dealing 
with  corporations  and  their  affairs,  and  also  including  the  right 
of  the  state,  or  of  the  attorney-general  as  its  representative,  to 
interfere  in  corporate  management  by  quo  warranto,  scire  facias, 
injunction  or  otherwise,  and  also  the  criminal  liabilities  of  cor- 
porations and  their  officers,  and  also  the  topic  of  taxation  of 
corporations  and  corporate  securities,  (2)  the  topic  of  foreign 
corporations,  which  may  fairly  be  considered  a  branch  of  the 
subject  of  conflict  of  laws,  and  (3)  the  topic  of  winding-up  and 
dissolution  and  the  related  topics,  including  especially  the 
various  statutory  liabilities  of  shareholders  and  directors  to 
creditors,  which  remain  dormant  so  long  as  the  company  is 
prosperous  and  awake  into  practical  importance  only  when 
winding-up  or  liquidation  is  imminent,  and  also  including  con- 
solidation and  reorganization,  both  of  which  involve,  at  least 
in  a  qualified  sense,  a  dissolution  of  the  old  corporation. 

The  only  important  exceptions  to  these  rules  of  exclusion 
will  be  found  in  the  chapters  on  bonds  and  mortgages,  in  con- 
nection with  which  it  became  necessary  to  deal  with  certain 
branches  of  the  law  of  winding-up  and  of  reorganization. 

In  dealing  with  topics  which,  although  within  the  general 
scope  of  the  work  as  outlined  above,  have  yet  for  many  years 
attracted  attention  from  American  courts,  lawyers,  and  text- 
writers,  I  have  tried  to  avoid  useless  threshing  over  of  old  straw, 
and  therefore  have  not  descended  into  detail  except  where  I 
hoped  to  present  some  new  or  different  aspect  of  the  subject  or 
some  particular  novel  points.  Tq  take  a  concrete  instance,  a 
very  large  proportion  of  all  the  corporation  cases  which  have 
been  decided  in  this  country  have  related  to  liability  upon  un- 
paid subscriptions  to  capital.  These  numerous  cases  have  been 
carefully  digested  and  explained  in  text-books  with  which 
every  lawyer  is  acquainted.  Consequently,  I  have  tried  to 
avoid  mere  repetition  of  matter  which  is  already  easily  accessi- 
ble to  every  reader;  and  instead,  I  have  summarized  the  general 
currents  of  authority,  pointing  out  or  emphasizing  certain  new 
ways  of  looking  at  the  subject,  and  elaborating  fully  some  par- 


PREFACE 


ticular  points  which  have  been  heretofore  overlooked  or  sUghted 
—  such,  for  example,  as  the  peculiarities  of  subscriptions  to 
shares  entered  into  by  signing  the  incorporation  paper  or  cer- 
tificate, or  articles,  of  incorporation. 

After  the  citation  of  a  case,  the  words  "headnote  inadequate" 
will  not  infrequently  be  found  in  parenthesis.  These  words 
do  not  indicate  an  opinion  that  the  case  is  badly  reported.  On 
the  contrary,  no  headnote  can,  consistently  with  that  brevity 
which  is  indispensable,  call  attention  to  all  the  points  or  fea- 
tures of  a  case;  and  by  using  the  words  "headnote  inade- 
quate," I  design  simply  to  guard  the  reader  against  rejecting 
a  case  as  not  in  point  merely  because  the  headnote  does  not  in- 
dicate that  the  decision  involves  the  particular  proposition 
for  which  the  case  is  cited. 

References  are  given  to  the  National  Reporter  System,  the 
Lawyers'  Reports  Annotated,  the  American  Reports,  American 
State  Reports  and  American  Decisions,  as  well  as  to  the  official 
state  reports.  Wherever  references  are  given  to  two  or  more 
reports  of  the  same  case,  the  report  which  follows  immediately 
after  the  name  of  the  case  —  usually,  with  the  exception  of 
very  recent  cases,  the  official  report  —  is  that  which  I  have 
examined  and  used  in  the  preparation  of  this  book  and  to 
which  alone,  therefore,  comments  with  respect  to  the  head- 
note  are  applied. 

A.  W.  M.,  Jr. 

Baltimore,  June  17th,  1908. 


TABLE  OF  CONTENTS 

VOL.   I 

Page 

Table  of  Cases xiii 

Addenda ccxxv 

CHAPTER   I 

Sections 
1-30.     Historical  and  Introductory 1 

CHAPTER   ir 
31-162.     The  Incorporation  Paper 2.7 

CHAPTER  III 
163-260.     Organization  and  Issue  of  Shares      ....     144 

CHAPTER  IV 

261-294.     Irregular    Incorporation  —  Proof    of   Incor- 


poration 


217 


CHAPTER   V 
295-306.     Incorporation  for  Illegal  Purposes      .     .     .     256 

CHAPTER  \  I 
307-415.     Promoters 268 

CHAPTER   VII 
416-446.     Underwriting 344 

CHAPTER  VIII 

447-468.     Corporate  Names 367 

ix 


TABLE    OF    CONTENTS 

CHAPTER    IX 

Sections  Page 

469-492.     Corporate  Seals 389 

CHAPTER  X 

493-573.     Capital  and  Shares  —  Classes  of  Shares     .     410 

CHAPTER   XI 

574-677.     Increase,   Reduction,   and   Other   Modifica- 
tions OF  Capital 476 

CHAPTER   XII 
678-738.     By-laws  and  Internal  Regulations.     .     .     .     550 

CHAPTER  XIII 

739-807.     Payment  for  Shares 597 

CHAPTER   XIV 

808-831.     Forfeiture  of  Shares 656 

CHAPTER   XV 

832-1011.     Transfer  and  Transmission  of  Shares.     .    .     671 


VOL.  II 

CHAPTER  XVI 

1012-1072.     Ultra  Vires  Contracts  and  Torts  ....     817 

CHAPTER  XVII 
1073-1089.     One-Man  Companies 871 

CHAPTER  XVIII 

1090-1117.     Publicity  in  Corporate  Affairs — Inspection 

OF  Books  and  Records 888 

X 


TABLE    OF    CONTENTS 

CHAFrER   XIX 

Sections  Pack 

1118-1133.     Proof  of  Cokpokate   Matters  —  Books   and 

Records  as  Evidence 911 

CHAPTER  XX 

1134-1189.     Judicial    Intervention   in    Management    of 

Corporations  —  Siiarkholders'  Bills  .     .     926 

CHAPTER   XXI 
1190-1295.     Shareholders'  Meetings 988 

CHAPTER  XXII 

1296-1315^.  Powers  of  Majority  —  Relation  of  Share- 
holders to  the  Company 1075 

CHAPTER  XXIII 
1313-1398.     Dividends 1087 

CHAPTER  XXIV 

1399-1488.  Directors  —  Their  Appointment,  Qualifica- 
tions, Resignation  and  Removal,  their 
Powers  and  the  Manner  of  Exercise 
thereof 1158 

CHAPTER  XXV 

1489-1509.     Rights  and  Emoluments  of  Directors      .     .  1236 

CHAPTER  XXVI 

1510-1651.     Liabilities  and  Disabilities  of  Directors    .  1253 

CHAPTER   XXVII 
1652-1673.     Officers  and  Agents 1361 

CHAPTER   XXVIII 

1674-1825.     Bonds  and  Mortgages  —  In  General       .     .  1384 

xi 


TABLE    OF    CONTENTS 


CHAPTER  XXIX 

„  Page 

Sections 

1826-1958.     Bonds     akd     Mortgages    (continued)  —  Tue 

Security 14/8 


CHAPTER  XXX 

1959-2069.     Bonds  and  Mortgages  (continued) — Enforce- 
ment OF  THE  Security 1576 


CHAPTER   XXXI 

2070-2110.  Bonds  and  Mortgages  (continued)  —  Reor- 
ganization—  Powers  of  Majority  —  In- 
come Bonds 165/ 


Index 1685 


Xll 


TAJULK  OF  CASES 

[The  references  are  to  pages] 


A  1  Biscuit  Co.,  W.  N.  (1899) 

115  1241 

Aaron's  Reefs  v.  Twiss  (1896), 

A.  C.  273     -  179,  184 

Aaronson    v.    David    Meyer 

Brewing    Co.,    26    N.     Y. 

Misc.  655;  56  N.  Y.  Supp. 

387  85,  1373, 1375 

Abbot    V.    Jewett,    25    Hun 

(N.  Y.)  603  1634 

Abbott    V.    American    Hard 

Rubber     Co.,     33     Barb. 

(N.  Y.)  578  1188,1306 
V.   Hapgood,   150   Mass. 

248;     22    N.    E.    907;     15 

Am.   St.   Rep.    193;    5   L. 

R.  A.  586  311,  311,  311 
V.  Omaha  Smelting  Co., 

4  Nebr.  416  123,  238,  246,  251 
Abby  V.  Billups,  35  Miss.  618; 

72  Am.  Dec.  143  68 

Abeles  v.  Cochran,  22  Kans. 

405;  31  Am.  Rep.  194  517,  1354 
Abercrombie  v.  Riddle,  3  Md. 

Ch.  320  1115,  1156 

Aberdeen  Ry.  Co.  v.  Blaikie,  1 

Macq.  H.  L.  461  1179,  1296, 
1296,  1297,  1.300,  1.304,  1314 
Abernethy  v.   Churcli   of  the 

Puritans,  3  Daly  (X.  Y.)  1  914 
Aberthaw  Const.  Co.  i\  Ran- 

some,    192  Mass.   434;    78 

N.  E.  485  879 

Abraiiam    v.     New     Orleans 

Brewing    Ass'n,     110     La. 

1012;  35  So.  268  1460,  1460 

Abraham,  S.,  &  Sons  (1902),  1 

Ch.  695  1498 

Abstainers,  etc.  Insurance  Co. 

/?f'(1891),2Ch.  124  536 

Acadia  Loan  Corp.  v.  Went- 

worth,  40  Nova  Scotia  525  156,  170 
Accidental,  etc.  Ins.  Corp.  v. 

Davis,  15  L.  T.  182  215 

Accles,  Re,  51  W.  R.  57  1491 


Accountant's    Ass'n,    5    Pa. 

Dist.  Rep.  699  116 

Acker,  Merrall  &  Condit  Co. 

V.  McGaw  (Md.),68  Atl.  17 

1272,   1341 
Ackerman  v.  Halsey,  37  N.  J. 

Eq.  356  960,  1285 

Adamant    Plaster    Co.,     137 

Fed.  251  1505,  1520 

Adamantine     Brick     Co.     v. 

Woodruff,  MacA.  &  Mack. 

(D.  C.)318  1183 

Adams  v.  Adams,  139  Mass. 

449:    1  N.  E.  746  1443 
V.  Boston,  etc.  R.  R.  Co., 

1  Fed.  Cas.  90  23 
V.  Burke,  201  111.  395;  66 

N.  E.  235  982,  1321 
V.  Clark  (Colo.),  85  Pac. 

642  623 
V.  Cross   Wood   Printing 

Co.,  27  111.  App.  313  1371 
V.  Empire  Laundry  Ma- 
chinery Co.,  4  N.  Y.  Supp.738    280 
Adams,  etc.  Co.  v.  Deyette,  5 

S.  Dak.  418;  59N.  W.  214; 

49  Am.  St.  Rep.  887  518 

Adams'  Case,  13  Eq.  474       159,  196, 
417,  525 
Adams  Express  Co.  v.  Harris, 

120  Ind.  73;   21  N.  E.  340; 

10   Am.   St.   Rep.   315;     7 

L.  R.  A.  214  383 

Adamson's  Case,  18  Eq.  670       642, 
1300,  1325 
Addams  v.  Ferick,  26  Beav. 

384  789 

Addinell's  Case,    1   Eq.   225       165, 

509,  510 

Addison  v.  Lewis,  75  Va.  701       1559, 

1.561,  1562,  1566,  1566,  1568,  1571 
Addison  v.  Pacific  Coast  Mill- 
ing Co.,  79  Fed.  459  612 
Addison's   Case,    5   Ch.    294       191, 
191,  523 
Addlestone  Linoleum  Co.,  37 

Ch.  D.  191  178,  632 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Adlets    V.    Progressive    Shoe 

Co.,  84  Mo.  App.  288  1237,  1247 
Adley  v.  Reeves,  2  M.  &  S. 

53  582 

Adriance  v.  Roome,  52  Barb. 

(N.  Y.)  399  592,  1369 

Aerators,     Ltd.      v.      ToUitt 

(1902),  2  Ch.  319  369,  371, 

375,  376 
Aetna    Ins.    Co.    (1871),    Ir. 

Rep.  6  Eq.  298  215 
V.  Albany,  etc.  R.  Co., 

156  Fed.  132  979 
Aetna  Nat.  Bank  v.  Charter 

Oak  Life  Ins.  Co.,  50  Conn. 

167  863 

Africa  v.  Duluth  News-Tri- 
bune Co.,  82  Minn.  283;  84 
N.  W.  1019;  83  Am.  St. 
Rep.  424  1328,  1381,  1382 

African  M.  E.  Church,  28  Pa. 

Super.  Ct.  193  1068 

V.  Conover,  27  N.  J.  Eq. 

157  302,303,304 
Agar  V.  Atheneum  Life  Soc, 

3  C.  B.  N.  s.  725  1220 

Agency  Land  &  Finance  Co., 

20  Times  L.  R.  41  658,  1545 

Agnew  V.  Bank  of  Gettysburg, 

2  H.  &  G.  (Md.)  478  228 

Agricultural  Bank  v.  Burr,  24 

Me.  256  154 

V.  WUson,  24  Me.  273  701 

Agricultural  Branch  R.  R.  Co. 

V.     Winchester,     13    Allen 

(Mass.)  29  529 

Agricultural  Cattle  Ins.  Co.  v. 

Fitzgerald,  16  Q.  B.  432  229 

Agudath  Hakehiloth,  18  N.  Y. 

Misc.  717;    42  N.  Y.  Supp. 

985  113,  1010 

Ainsworth  v.   Evans   (Ariz.), 

80  Pac.  344  936,  985,  985 

A.    J.    Cranor   Co.    v.    Miller 

(Ala.),  41  So.  678  339 

Alabama    v.    Montague,    117 

U.  S.  602;  6  Sup.  Ct.  911       1512, 

1512 
Alabama    Coal,    etc.    Co.    v. 

Shackelford,  137  Ala.  224; 

34  So.  833;  97  Am.  St.  Rep. 

23  957 

Alabama  Foundry,  etc.  Works, 

V.  Dallas,  127  Ala.  513;  29 

So.  459  181,  185 

Alabama  Marble,  etc.  Co.  v. 

Chattanooga     Marble     Co. 

(Tenn.),  37  S.  W.  1004  1118, 

1122, 1413 


Alabama  Nat.  Bank  v.  Mary 

Lee,  etc.  Co.,  108  Ala.  288; 

19  So.  404  1515 

Alabama,    etc.    Imp.    Co.    v. 

Hall  (Ala.),  44  So.  592  518 

Alabama,    etc.    Mfg.    Co.    v. 

Robinson,  56   Fed.  690;  6 

C.  C.  A.  79  1462,  1469 
V.  Robinson,  72  Fed.  708 ; 

19  C.  C.  A.  152  1625 

Alabama,  etc.   R.   R.   Co.  v. 

Rowley,  9  Fla.  508  603,  604, 
893,  895 
Alabama,  etc.  Ry.  Co.  v.  Annis- 

ton,  etc.  Trust  Co.,  57  Fed. 

25;   6C.  C.  A.  242  1648,  1651 

Albany      Fertilizer     Co.     v. 

Arnold,    103   Ga.    145;    29 

S.  E.  695  1121,  1121 

Albers  v.  Merchants'  Ex- 
change, 39  Mo.  App.  583  558, 
560,  560,  582 
Albert  v.  Savings  Bank,  2  Md. 

159  792,  798,  799,  850,  1329 

Albes  V.    Keith,  Simmons  & 

Co.  (Ala.),  44  So.  693  1553 

Albion  Steel  Co.  v.  Martin,  1 

Ch.  D.  580  326 

Albright    v.    Lafayette,    etc. 

Ass'n,  102  Pa.  St.  411  112 

Albro,  etc.  Co.  v.  Chinn(Colo.) 

77  Pac.  1097  880 

Alden   Speare's   Sons   Co.    v. 

Casein  Co.,  106  N.  Y.  Supp. 

980  778 

Aldham  v.  Brown,  7  E.  &.  B. 

164;   2  E.  &.  E.  398  343 

Aldine   Mfg.   Co.   v.    Phillips, 

118  Mich.   162;    76  N.  W. 

371;    74  Am.  St.  Rep.  380; 

42  L.  R.  A.  531  776 

Aldrich  v.  Bingham,  131  Fed. 

363  708 
V.  Chemical  Nat.  Bank, 

176  U.  S.  618;   20  Sup.  Ct. 

498  841 

Aldridge  v.  Pardee,  24  Tex. 

Civ.  App.   254;   60   S.   W. 

789  1510 

Alexander    v.    Atlanta,    etc. 

R.  R.  Co.,  113  Ga.  193;  38 

S.  E.  772 ;  54  L.  R.  A.  305  983 
V.  Atlantic,   etc.    R.    R. 

Co.,  67  N.  Car.  198  1472 
V.  Automatic  Telephone 

Co.  (1899),  2  Ch.  302  205 
V.  Automatic  Telephone 

Co.  (1900),  2  Ch.  56  599,  625, 
935,  939 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Alexander  v.     Cauldwell,   83 

N.  Y.  480  822 
V.  Central  R.   R.  Co.,  3 

Dill.  487  1584,  1586 

V.  Relfe,  74  Mo.  495       529,  534 

870 
V.  Searcy,  81  Ga.  536;  8 

S.  E.  630;   12  Am.  St.  Rep. 

337  960,  971 
V.  Simpson,    43    Ch.    D. 

139  1001,  1001,  1002,  1002 
V.  Tolleston    Club,     1 10 

111.  65  303,  848 
V.  Williams,  14  Mo.  App. 

13  1306 
V.  Winters,    23    Nevada 

475;   49  Pac.  116  283 

Alexander's  Timber  Co.,    70 

L.  J.  Ch.  767       1309,  1321,  1369, 

1370 
Alexandra  Palace  Co.,  Re,  21 

Ch.  D.  149;  46  L.  T.  730  462, 
1091,  1108,  1125,  1289 
Alexandria,  etc.  R.  R.  Co.  v. 

Burke,  22  Gratt.  (Va.)  254       809, 

1439 
Alexandria,    etc.    Ry.    Co.'s 

Trustee  r.  Graham,  3  IGratt. 

(Va.)  769  1509 

Alfred  Shaw  &  Co.,  21  Vict. 

L.  R.  599  765,  765 

Alianza   Co.    v.    Bell    (1906), 

A.  C.  18  1099 

Allan  r.  Manitoba, etc.  Ry. Co., 

10  Manitoba  106  1584,  1598, 
1603,  1606 
Allemong    v.    Simmons,    124 

Ind.   199;    23  N.  E.  768       1708, 

1196 
Allen  V.  Alston  (Ala.),  41  So. 

159  1374 

V.   Am.   Bldg.   &   Loan 

N.'Ass'n,  49  Minn.   544;  52 

W.  144;  32  Am.  St.  Rep.  574  666 
V.  Brown,  6  Kans.  App. 

704 ;  50  Pac.  505  394,  408 
V.  Central  R.  R.  Co.,  42 

Iowa  683  1610,  1616 

V.  Curtis,  26  Conn.  456       928, 

1350 
V.  Dallas,  etc.  R.  R.  Co., 

3  Woods  316  1603,  1604 

V.  Dillingham,  60  Fed. 

176;    8  C.  C.  A.  544  1619 

V.Dubois,  117  Mich.  115; 

75  N.  W.  443;    72  Am.  St. 

Rep.  557  418 

V.    Freedman's  Sav.  & 

Trust  Co.,  14  Fla.  418  855 


Allen  V.  Gold  Reefs  of  West 

Africa  (1900),  1  Ch.  656  568, 

578,  579,  584,  586,  586,  605,  999, 

999 

V.Hill,  16  Cal.  113       1017,1024 

V.  Jackson,  122  111.  567; 

13  N.  E.  840  1358 

V.  Londonderry,  etc.  Ry. 

Co.,  25  W.  R.  524  462 

V.    Luke,  141  Fed.   694 

1285,  1287 
V.  Montgomery  R.  R.  Co., 

11  Ala.  437  65,  667,  1406,  1497 
V.  New  Jersey  Southern 

R.    R.    Co.,    49    Plow.    Pr. 

(N.  Y.)  14  975 

V.    North    Des    Moines 

M.  E.  Church,  127  Iowa  96; 
102N.  W.  808;  109  Am.  St. 
Rep.  366;   69  L.  R.  A.  255 

141,  386 

V.  South  Boston  R.  R. 

Co.,  150  Mass.  200;  22 
N.  E.  917;   15Am.  St.  Rep. 

185;    5  L.  R.  A.  716       730,  731, 
734,  735 

V.  Stewart,  7  Del.  Ch. 

287;    44  Atl.  786  693,  715 

V.  Windham,  etc.  Mfg. 

Co.,  87  Fed.  786  1503 

V.  Woonsocket  Co.,   11 

R.  I.  288  80 

Alliance     Marine     Ass.     Co. 

(1892),  1  Ch.  300  136 

AUibone  v.  Hager,  46  Pa.  St. 

48  176 

Ailing  V.  Wenzel,  133  III.  264; 

24  N.  E.  551  521,  524 

Allison  V.  Coal  Co.,  87  Tenn. 

60;   9  S.  W.  226  •  1359 

Allman  v.  Havana,  etc.  R.  R. 

Co.,  88  111.  521  152.553,607 

Allnutt    V.    Subsidiary    High 

Court,    62    Mich.    110;     28 

N.  W.  802 
Allsop  &  Sons,  51  W.  R.  644 


657 
537, 
544 


Almada  and  Tirito  Co.,  38  Ch. 

D.  415  628 

Almy  V.  Orne,  165  Mass.  126; 

42  N.  E.  561  1347,   1348 

Alpha  Co.  (1903),  1  Ch.  203       1587, 

1590 
Alston's  Case,  22  Vict.  L.  R. 

243  n  616 

Alta  Silver  Mining  Co.  v.  Alta 

Placer  Mining  Co.,  78  Cal. 

629;    21   Pac.  373       1371,   1376, 

1377 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Altenberg  v.  Grant,  85  Fed. 

345:   29  C.  C.  A.  185      339,  355, 

645 
Alters    1'.    Journeymen,    etc. 

Ass'n,  19  Pa.  Super.  Ct.  272  585 
Althause  v.  Girou.x,  107  N.  Y. 

Supp.  191;    56  N.  Y.  Misc. 

508  899,  904 

V.   Girou.\-,    107   N.    Y. 

Supp.  193;    56  N.  Y.  Misc. 

511  901 

Alton  V.  Curtis,  26  Conn.  456  972 
Altschul  V.   Casey,   45  Oreg. 

182 ;    76  Pac.  1083  397 

Amalgamated      Syndicate 

(1897),  2  Ch.  600  99 

Ambergate  Ry.   Co.  v.   Nor- 

cliffe,  20  L.  J.  Ex.  234  602 

Ambergate,   etc.    Ry.   Co.   v. 

Mitchell,  4  Exch.  540  547,  611, 
1187,  1189 

V.  Mitchell,  6  Eng.  Ry. 

Cas.  235  611 

Ambrose  Lake  Tin  Co.,  14  Ch. 

D.  390  330,  1290 

American  Alkali  Co.  v.  Kurtz, 

134  Fed.  663  621 

• V.  Salom,  131  Fed.  46; 

65  C.  C.  A.  284  177,  182,  182, 

419 
American  Alkili  Co.  v.  Camp- 
bell, 113  Fed.  398  601 
American  Bldg.,  etc.  Ass'n  v. 

Merrick,  39  Nebr.  413;    58 

N.  W.  107  918 

American  Bridge  Co.  v.  Hei- 

delbach,  94  U.  S. 798  1515,  1516 
American  Car  &  Foundry  Co. 

V.    Alexandria    Water    Co. 

(Pa.),  67  Atl.  -861  1370 

American  Central  Ry.  Co.  v. 

Miles,  52  111.  174  1237 

American  Circular  Loom  Co. 

V.  Wilson  (Mass.),  84  N.  E. 

133  1341,  1341 

American   Clay   Mfg.    Co.    v. 

American    Clay    Mfg.    Co., 

198  Pa.  St.  189;  47  Atl.  936 

373,  378,  379 
American  Exchange  Bank  v. 

First  Nat.   Bank,  82  Fed. 

961;    27  C.  C.  A.  274  1198, 

1210 
American  Exch.   Nat.    Bank 

V.  Oregon  Pottery  Co.,  55 

Fed.  265  1370, 1373, 1378 

American   Exch.   Nat.    Bank 
Woodlawn     Cemetery, 


105  N.  Y.  Supp.  305 


731 


American  File  Co.  v.  Garrett, 
110  U.  S.  288;  4  S.  Ct.  90 


624, 
1438 


American  Fruit  Co.  v.  Ward, 

99  N.  Y.   Supp.   717;    113 

N.  Y.  App.  Div.  319  1072 

American  Ins.  Co.  v.  Oakley, 

9  Paige   (N.   Y.)   496;    38 

Am.  Dec.  561  1373 

American   Loan,   etc.   Co.   v. 

Central  Vt.  R.  R.  Co.,  84 

Fed.  917  1617 
V.  Minnesota,  etc.  R.  R. 

Co.,  157  111.  641;    42  N.  E. 

153  243 
V.  St.  Louis,  etc.  Ry.  Co., 

42  Fed.  819  1436 
V.  Union  Depot  Co.,  80 

Fed.  36  1466,  1623 

American    Matinee    Ass'n    v. 

Secretary    of     State,     104 

N.  W.  141;   140  Mich.  579  23 

American    Mortgage    Co.    v. 

Tennille,  87  Ga.  28;    13  S. 

E.  158;  12  L.  R.  A.  529  847 
American  Nat.  Bank  v.  Amer- 
ican Wood  Paper  Co.,   19 

R.  L  149;   32  Atl.  305;   61 

Am.  St.  Rep.  746;    29  L. 

R.  A.  103  1420,  1423,  1466 
V.  Nashville  Warehouse, 

etc.  Co.  (Tenn.),  36  S.  W. 

960  1124,  1124 
V.  Oriental  Mills,  17  R. 

I.  551;  23  Atl.  795  689,  693, 

698,  777,  999,  1006,  1021 
American  Novelty  &  Mfg.  Co. 

V.  Manufacturing  Electrical 

Novelty  Co.,  36  N.  Y.  Misc. 

450;  73  N.  Y.  Supp.  755  373 
American      Order      Scottish 

Clans  V.  Merrill,  151  Mass. 

558;  24N.  E.  918;  8  L.  R. 

A.  320  225,  374 

American  Paper  Bag  Co.  v. 

Van  Nortwick,  52  Fed.  752 ; 

3  C.  C.  A.  274  309 

American     Pastoral     Co.     v. 

Gurney,  61  Fed.  41  603,  613 

American     Press     Ass'n     v. 

Brantingham,     75    N.    Y. 

App.  Div.  435;    78  N.  Y. 

Supp.  305  684 

American  Refrigerating,  etc. 

Co.  V.  Linn,  93  Ala.  610; 

7  So.  191  1026,  1026 

American   Ry.    Frog.    Co.   v. 

Haven,  101  Mass.  398  1027, 

1249 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Axnerican  Salt  Co.  v.  Heiden- 
heimer,  80  Tex.  344;  15 
S.  W.  1038;  26  Am.  St.  Rep. 
743  120,  125,  125,  222,  240 

American  Silk  Works  v.  Salo- 
mon, 4  Hun  135  302 

V.  Salomon,  6  T.  &  C. 

(N.  Y.)  352  254,304 

American  Soda  Fountain  Co. 
V.  Stolzenbash  (N.  J.),  08 
Atl.  1078  1366 

American  Spirits  Mfg.  Co.  v. 

Easton,  120  Fed.  440  1259, 

1304 

American  Steel,   etc.   Co.    v. 

Bearse(Mass.),80N.  E.  623     1359 

V.  Eddy,  130  Mich.  266; 

89  N.  W.  952  449,  514,  529 

V.  Eddy,  138  Mich.  403; 

101  N.  W.  578  1094,  1127, 

1129 

V.  Wire    Drawers',    etc. 

Unions,  90  Fed.  608  262 

American     Tube     Works     v. 
Boston   Machine   Co.,    139 
Mass.  5;  29  N.  E.  63    •    438,  444, 
493,  1003,  1032 

American  Waterworks  Co.  v. 
Farmers'  L.  &  T.  Co.,  73 
Fed.  956;  20  C.  C.  A.  133       1628, 

1628 

American  Wire  Nail  Co.  v. 
Gedge,  96  Ky.  513;  29  S. 
W.  353  1134 

American,  etc.  Trust  Co.  v. 
East  &  West  R.  Co.,  46 
Fed.  101  1566 

V.  Toledo,  etc.  Ry.  Co., 

29  Fed.  416  1603,  1604 

Ames  V.   Birkenhead   Docks, 

20  Beav.  332         1515,  1605,  1677 

V.  New  Orleans,  etc.  R. 

R.  Co.,  2  Woods  206     1669,  1669, 

1670 

V.  Union  Pac.  R.  Co.,  4 


Interst.  Comm.  Rep.  625 
V.  Union  Pac.  Ry.  Co., 

60  Fed.  674 
V.  Union  Pac 

60  Fed.  966 
V.  Union  Pac.  Ry 

62  Fed.  7 
V.  Union  Pac 

73  Fed.  49 
V.  Union  Pac 

74  Fed.  335 


1620 

1620 
Ry.  Co., 

1612,  1612 
Co., 


Ry.  Co., 


1620 
1642 


Ames's   Case,  W 
79 
b 


Ry.  Co., 
1570,  1641,  1642, 
1642 

N.   (1896) 

639,  641 


Amesbury  v.  Bowditch  Mut. 

Fire  Ins.  Co.,  6  Gray  (Mass.) 

596  '  561,  577,  577,  594 

A.   Mitchell's  Case,   4   A.   C. 

548  746,  800,  800 

Anacosta  Tribe  v.   Murbach, 

13  Md.  91;  71  Am.  Dec.  625       577 
Ancient      City     Sportsman's 

Club     V.     Miller,    7     Lans. 

(N.  Y.)  412  45 

Ancient  Order  v.  Brown,  112 

Ga.  545 ;  37  S.  E.  890  590 

Anderson  v.   Butler's  Wharf 

Co.,  48  L.  J.  Cli.  824  1504 
V.  Condict,  93  Fed.  349; 

35  C.  C.  A.  335;    94  Fed. 

716;  36  C.  C.  A.  437     1633,  1633, 
1643,  1656 
V.  First    Nat.    Bank,    5 

N.  Dak.  451;    67  N.W.821         53 
V.  Midland    Ry.    Co., 

(1902),  1  Ch.  369  928,  951 
V.  Nicholas,    28    N.    Y. 

6Q0  720,  726,  757 
V.  Railroad,     91     Tenn. 

44;  17  S.  W.  803       127,  138,  608, 

609 
V.  Shawnee       Compress 

Co.   (Okl.),  87  Pac.  315  71 
V.  South  Chicago  Brew- 
ery Co.,    173   III.  213;    50 

N.  E.  655  1373 
V.  Waco  State  Bank,  92 

Tex.  506;    49  S.  W.  1030; 

71  Am.  St.  Rep.  867  711 
V.  War  Eagle,  etc.  Co., 

8  Idaho  759;   72  Pac.  671  876 
V.  W.  J.  Dyer  &  Bro.,  94 

Minn.  30;    101  N.W.  1061 
Anderson's  Case,  7  Ch.  D.  75 


1112 
639, 
639 
184 
763 


,  17  Ch.  D.  373 

,  8  Eq.  509 

Andes  v.  Ely,  158  U.  S.  312; 

15  Sup.  Ct.  954 
Andres  v.   Fry,  113  Cal.  124; 

45  Pac.  534 
V.  Morgan,  62  Oh.  St. 

236;  56N.  E.  875;  78  Am. 

St.  Rep.  712 
Andress's  Case,  8  Ch.  D.  126 
Andrews    v.    Gas    Meter   Co. 

(1897),  1  Ch.  361       431,  440,  441, 

584 
V.   Nat.    Foundry,    etc. 

Works,  76  Fed.  16G;    22  C. 

C.  A.  110;  .-56  L.  R.  A.  139; 

77    Fed.   774  ;    23   C.  C.  A. 

454        620,  645,  1402,  1520,  1521 


248 
1213 


297 
643 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Andrews  v.  Ohio,  etc.  R.  R. 

Co.,  U  Ind.  169  603 

V.  Smith,  5  Fed.  833  1619 

V.  Union     Mutual     Fire 

Ins.  Co.,  37  Me.  256  563,  565 
V.  Worcester,  etc.  R.  R. 

Co.,  159  Mass.  64;  33  N.  E. 

1109 
Andrews  Co.  v.  Nat.  Bank  of 

Columbus  (Ga.),  58  S.   E. 

633 
Angelo,  Re,  5  De  G.  &  Sm. 

278 
Anglesea  Colliery  Co.,  1  Ch. 

555 
Anglo-American    Land,    etc. 

Co.  V.  Dyer,  181  Mass.  593; 

64  N.  E.  416;    92  Am.  St. 

Rep.  437 
Land,  etc.  Co.  v.  Lom- 
bard, 132  Fed.  721  58,  619, 
832,  834 
Anglo-.\merican       Leather 

Cloth  Co.,  43  L.  T.  43 
Anglo-.-Vmerican        Provision 

Co.  V.  Davis  Provision  Co., 

112  Fed.  574 
Anglo-American   Tel.    Co.    v. 

Spurling,  5  Q.  B.  D.  188 
Anglo- Austrian        Printing 

Union  (1895),  2  Ch.  891 

1514,  1599 
Anglo-Californian     Bank     v. 

Field,  146  Cal.  644;  80  Pac. 

1080  233,  384 
V.   Grangers'   Bank,    63 

Cal.  359  572 

Anglo-Colonial  Syndicate,  65 

L.  T.  847  641,  641 

Anglo-Continental     Corpora- 
tion (1898),  1  Ch.  327        435,  437 
Anglo-Danubian,  etc.  Co.,  20 

Eq.  339  1400 

Anglo-French  Exploration  Co. 

(1902),  2  Ch.  845  533,  539 

Anglo-Greek    Steam    Co.,    2 

Eq.  1 
Anglo-Oriental    Carpet    Mfg. 

Co.  (1903),  1  Ch.  914 
Anglo-Universal  Bank  v.  Bar- 

agnon,  45  L.  T.  362  932,  996, 

1195 
Anonymous,  1  Ventr.  257 
Anonymous,  12  Mod.  423 
Ansley  Land  Co.  v.  H.  Wes- 
ton Lumber  Co.,  152  Fed. 

841 
Anthony  V.  Campbell,  112  Fed. 

212 ;  50  C.  C.  A.  195        1636,  1669 


716 


963 


414 


434 


607 


1511 


1315 

758 


1514, 


295 
1396 


401 
401 


1372 


Anthony  v.  Household  Sew- 
ing Machine  Co.,  16  R.  L 
571;  18  Atl.  176;  5  L.  R. 
A.  575  444,  483,  484,  494 

Antietam  Paper  Co.  v.  Chron- 
icle Pub.  Co.,  115  N.  Car. 
143  1542 

Apperly  v.  Page,  1  Phill.  Ch. 

779  342 

Appleton  V.  American  Malt- 
ing Co.,  65  N.  J.  Eq.  375; 
54  Atl.  454  944,  945,  946, 

966,  1127,  1128,  1185,  1359 

Appleton  V.  Citizens'  Central 
Nat.  Bank,  116  N.  Y.  App. 
Div.  404;  101  N.  Y.  Supp. 
1027  84 

Appleton  V.  Citizens'  Nat. 
Bank,  190  N.  Y.  418;  83 
N.  E.  470  841,856 

Application  for  Charter,  Re, 
27  Wkly.  Notes  Cas.  (Pa.) 
399  120 

Apthorpe  v.  Peter  Schoen- 
hofen  Brewing  Co.,  80  L.  T. 
395  878,  879 

Aransas  Pass.,  etc.  Co.  v. 
Manning,  94  Tex.  558;  63 
S.  W.  627  992,  1069 

Arapahoe  Investment  Co.  v. 
Piatt,  5  Colo.  App.  515;  39 
Pac.  584  288 

Arapahoe,  etc.  Co.  v.  Stevens, 

13  Colo.  534;  22  Pac.  823         591, 

635 

Arauco  Co.,  79  L.  T.  336  1548 

Arbuckle    v.    Woolson    Spice 

Co.,  21  Oh.  Circ.  Ct.  347  890 

V.   Woolson   Spice  Co., 

21  Oh.  Circ.  Ct.  356  890 

Archer  v.  American  Water 
WorksCo.,50N.  J.  Eq.  33; 
24  Atl.  508  751,  958,  1062 

Archer's  Case  (1892),  1  Ch.  322 

328,  1263,  1337,  1338 

Archibald  D.  Dawney,  Ltd., 

Re,  83  L.  T.  47  205,  642 

Ardesco  Co.  v.  North  Am.,  etc. 

Co.,  66  Pa.  St.  375  1188 

Arents  v.  Commonwealth,  18 

Gratt.  (Va.)  750  1437,  1461 

Argus  Co.,  Re,  138  N.  Y.  557; 

34  N.  E.  388        922,  1020, 
1023,  1065,  1200,  1201 

Argus  Printing  Co.,  Re,   1  N. 
Dak.  4.34;  48  N.  W.  347; 
26  Am.  St.  Rep.  639   998,  1017, 
1017,  1021,  1021,  1022, 1056, 
1060,  1176,  1176,  1117 


TABLE    OF    CASES 
[The  references  are  to  pages] 


853 


Arkadelphia   Lumber  Co.    v. 

Posey  (Ark.),  85  S.W.  1127 
Arkansas  Stables  v.  Sarnstag 

(Ark.),  94  S.  W.  099       1167,  1359 
Arkansas  Valley,  etc.  Co.  v. 

Lincoln,  56  Ivans.  145;    42 

Pac.  706  853 

Arkansas,     etc.     Society     v. 

Eichholtz,    45    I'Lans.    104; 

25  Pac.  613  1209,  1318 

Armant  v.  New  Orleans,  etc. 

R.  R.  Co.,  41  La.  Ann.  1020; 

7  So.  35  1122 

Armington  v.  Palmer,  21  R.  L 

109;    42  Atl.  308;    79  Am. 

St.  Rep.  786;  43  L.  R.  A.  95 

373,  387 
Armitage  v.  Garnett  (1893), 

3Ch.  337  1154 

Arms  V.  Conant,  36  Vt.  744       1208 
Armstrong     v.     Burnet,     20 

Beav.  424  789,  789 
V.  Karshner,  47  Oh.  St. 

276;  24  N.  E.  897  609,  609 
V.  Merchants'  Mantle  Co. , 

32  Ont.  R.  387  659,  660 

Arnold  v.   Ruggles,    1    R.    L 

105  420,  422,  678 

V.  Searing  (N.  J.  Ch.), 

67  Atl.  831        331,339,027,961, 
964,  972 

V.    Suffolk    Bank,    27 

Barb.  (N.  Y.)  424  197,  197, 

769,  769,  771,  776 
Arnot  V.  Erie  Ry.  Co.,  67  N. 

Y.  315 
V.  Union  Salt  Co.,  186  N. 

Y.  501;    79  N.  E.  719 
V.  United  African  Lands 

(1901),  1  Ch.  518 
Arnot's  Case,  36  Ch.  D.  702 

155,  171,  199,  632,  639 
Arthur  v.  Griswold,  55  N.  Y. 

400 

V.  Oakes,  03  Fed.  310; 

25  L.  R.  A.  414;    11  C.  C. 
A.  209 

V.  Weston,  22  Mo.  379 

Artisans'    Land   &   Mortgage 

Co.  (1904),  1  Ch.  790       541,  1123 
Ashbury  v.  Watson,  30  Ch.  D. 

370  111,441,445,445 

Ashbury  Rv.  Carriage  Co.  v. 

Riche,  L.'  R.  7  H.  L.  053  10, 

11,  12,  32,  41,  94,  97,  505,  824, 
829,  830,  830 
Ashby  V.  Blackwell,  2  Eden 

299;    Ambler  503  743.  754. 

755,  758,  759 


1437 
1468 


1058 


1356 


1621 
254 


Asher  v.  Sutton,  31  Kans.  286; 

1  Pac.  535  1372 

Ashley  V.    Kinnan,   2  N.   Y. 

Supp.  574  1299 

Ashley    Wire   Co.    v.    Illinois 

Steel  Co.,   104  111.   149;    45 

N.  E.  410;  50  Am.  St.  Rep. 

187  1200, 1200, 1207, 1218,  1222 
Ashley's  Case,  9  E(\.  203  177 

Ashpitel  V.  Sercombe,  19  L.  J. 

Ex.  82  341,  342 

Ashtabula,  etc.  R.  R.  Co.  v. 

Smith,  15  Oh.  St.  328         147,  175, 

188 
Ashton  V.   Atlantic   Bank,  3 

Allen  (Mass.)  217  799 

V.    Burbank,    2    Dillon 

435  610,  667 

V.    Heggerty,    130   Cal. 

516;  62  Pac.  934  754,  755,  791 
V.  Heydenfeldt,  124  Cal. 

14;  56  Pac.  624  424 
V.  Zeila  Mining  Co.,  134 

Cal.  408;  00  Pac.  494  791,  1130 
Ashuelot  Mfg.  Co.  v.  Marsh, 

1  Cush.  (Mass.)  507  1371 

Ashuelot  R.  R.  Co.  v.  Elliot, 

57  N.  H.  397  1582,  1582 

Ashurst   V.    Field,    20   N.    J. 

Eq.  1  1149 

V.   Mason,  20  Eq.  225   1279, 

1280,  1349 

Ashurst's  Appeal,  00  Pa.  St. 

290  1309,  1311, 1312 

Aspen  Water,  etc.  Co.  v.  As- 
pen, 5  Colo.  App.  12;  37 
Pac.  728  148,  149,  278,  302 

Aspinwall  v.  Butler,  133  U.  S. 

595;    10  Sup.  Ct.  417  490 

V.  Ohio,  etc.  R.  R.  Co., 

20  Ind.  492;    83  Am.  Dec. 

329  1008,  1009 

V.  Sacchi,  57  N.  Y.  331  250 

Assignment  Mut.,  etc.  Ins. 
Co.,  107  Iowa  143:  77  N. 
W.  808;  70  Am.  St.  Rep. 
149  851,  865 

Associate  Presbyterian  Con- 
gregation V.  Hanna,  113  N. 
Y.  App.  Div.  12;  98  N.  Y. 
Supp.  1082  381 

Astley  I'.  New  Tivoli  (1899), 

1  Ch.  151  1108,  1179,  1305 

Aston.  Re,  27  Beav.  474; 
affirmed  in  4  De  G.  tt  J. 
320  7 

Atchison,  etc.  R.  R.  Co.  r. 
Fletcher,  35  Kans.  236;  10 
Pac.  596  1433, 1437 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Atchison,    etc.     Ry.    Co.     v. 

Cunningham,  59  Kans.  722; 

54  Pac.  1055  1635 
I'.  Osborn,  148  Fed.  606; 

78  G.  C.  A.  378  1561,  1568, 

1633 
V.  Young,  3  Ind.  Ty.  60; 

53  S.  W.  481;  1634 

Atheneum    Life    Ass.    Co.    v. 

Pooley,  3  De  G.  «fc  J.  294  1421 
Atheneum  Society,  Re,  4  K.  & 

J.  558  1073 

Atherton  v.  Sugar  Creek,  etc. 

Co.,  67  Ind.  334  147,  147 

Athol     Music     Hall     Co.     v. 

Carey,  116  Mass.  471  209 

Athol,  etc.  R.  R.  Co.  i;.  Pres- 

cott,  110  Mass.  213  661 

Atkin   &  Co.  v.    Wardle,  61 

L.  T.  23  369 

Atkins   V.    Albree,    12    Allen 

(Mass.)  359  502 

V.  Gamble,  42  Cal.  86; 

10  Am.  Rep.  282  418,  419 
V.  Wabash,  etc.  Ry.  Co., 

29  Fed.  161  1602 

Atkins,  etc.  Co.  v.  Petersburg 

R.  R.   Co.,   3   Hughes  307 

1561,  1570 
Atkinson  v.  Atkinson,  8  Allen 

(Mass.)  15  686 

V.  Foster,  134  III.  472; 

25  N.  E.  528  718,  804 

V.  Foster,  27  111.  App. 

63  1065 

V.  St.  Croix  Mfg.  Co.,  24 

Me.  171  1379 

Atlantic  &  Pac.  Tel.  Co.  v. 
Union  Pac.  Ry.  Co.,  1  Fed. 
745  833,  837 

Atlantic  Coast  Line  Dividend 
Cases,  102  Md.  73;  61  Atl. 
295  1151 

Atlantic  Cotton  Mills  v. 
Abbott,  9  Cush.  (Mass.) 
423  600 

Atlantic      DeLaine     Co.      v. 

Mason,  5  R.  I.  463  652,  1003 

Atlantic  Fire  Ins.  Co.  v.  San- 
ders, 36  N.  H.  252  1198 

Atlantic  Mut.  Life  Ins.  Co.,  2 

Fed.  Cas.  168  416 

Atlantic  Nat.  Bank  v.  Harris, 

118  Mass.  147  1346 

Atlantic  Trust  Co.  v.  Chap- 
man, 208  U.  S.  360  1640 

V.  Crystal  Water  Co.,  72 

N.  Y.  App.  Div.  539;    76 

N.  Y.  Supp.  647  1468 


Atlantic  Trust  Co.  v.  Dana,  128 
Fed.  209;  62  C.  C.  A.  657 

1516,   1517,   1568,  1641 

V.  New  York   City,    75 

N.  Y.  App.   Div.  354;    78 

N.  Y.  Supp.  120  1637 

V.    Woodbridge    Canal, 

etc.  Co.,  79  Fed.  842  1402 

V.    Woodbridge    Canal, 

etc.  Co.,  86  Fed.  975  1565, 

1571 

Atlantic,  etc.  R.  R.  Case,  4 

Hughes  125  1623,  1624 

Atlas  Assurance  Co.  v.  Atlas 
Insurance  Co.  (Iowa),  112 
N.  W.  232  376,  379 

Atlas  Loan  Co.,  9  Ont.  L.  R. 

468  651 

Atlas  Nat.  Bank  v.  Gardner 

Co.,  8  Biss.  537  1176,  1225, 

1227 

Attalla  Iron  Ore  Co.  v.  Vir- 
ginia Coal,  etc.  Co.,  Ill 
Tenn.  (3  Gates)  527;  77  S. 
W.  774  1296 

Attaway  v.  Third  Nat.  Bank, 
93  Mo.  485;  5  S.  W. 
16  1347 

Attorney-General,  Opinion  of, 

18  Pa.  Go.  Ct.  492  120 

Attorney-General  v.  Albion 
Academy,  52  Wise.  469;  9 
N.  W.  391  1063,  1249 

V.    American    Tobacco 

Co.,  55  N.  J.  Eq.  352;    36 
Atl.  971 ;  affirmed  in  56  N. 

J.  Eq.  847;  42  Atl.  1117  261, 
262,  264 
V.  Appleton  (1907),  1  Ir. 

252  263,  267,  370 
V.  Boston  &  Maine  R.  R. 

109  Mass.  99  500 
V.  Chicago,  etc.  Ry.  Co., 

35  Wise.  425  232,  380 
V.  Jameson  (1904),  2  Ir. 

644  575,  575,  677 
V.  Looker,  111  Mich.  498; 

69  N.  W.  929;   56  L.  R.  A. 

947  1249 

V.  Manchester  Corpora- 
tion (1906),  1  Ch.  643  41 

V.  Mayor  of  Brecon,  10 

Ch.  D.  204  88 
V.  Mayor,  etc,  of  Liver- 
pool (1902),  1  K.  B.  411          1416 

V.  Mersey  Ry.  Co.  (1907), 

1  Ch.  81  35,  37,  91 

V.  Mersey  Ry.  Go.  (1907), 

A.  C.  415,  417  4,  62 


TABLE    OF    CASES 
[The  references  are  to  pages] 


588 
423 


16G8 

245 

54 


1016 


39,  43 


263 
1439 


Attorney-General  v.    MidcUe- 

ton,  2  Ves.  Sr.  327 
V.  Montcfiore,  21  Q.  H.  D. 

461 
V.    Myddletons   (1907), 

1  Ir.  471  263,  267 

V.    Regent's    Canal    & 

Dock  Co.  (1904),    1   K.   B. 
263 

V.    Stevens,    Saxt.    Ch. 

(1  N.  J.  Eq.)  369 

V.  Whorwood,  1  Ves.  Sr. 

534 
Attorney-General       ex       rel. 

Hurley   v.    Bridfnnan,    134 

Mich.  379;    96  N.  \y.  438 
Attorney-General     Miner     v. 

Lornian,  59  Mich.  157;    26 

N.  W.  311;    60  Am.  Rep. 

287 
Attorney-General  ex  rel.  Wol 

verine  Fish  Co.  v.  A.  Booth 

&  Co.,  143  Mich.  89;    106 

N.  W.  868 
Attree  v.  Hawe,  9  Ch.  D.  337 
Atwater    v.     American     Ex- 
change Bank,  152  111.  605; 

38  N.  E.  1017         1079,  1082,1382 
Atwood  V.  Shenandoah  Val- 
ley R.  R.  Co.,  85  Va.  966; 

9  S.  E.  748  1411,1414,1416 

Atwool    V.    Merryweather,    5 

Eq.  464  n  935,  935,  1312 

Auburn  Bolt  Works  v.  Shultz, 

143  Pa.   St.  256;    22  Atl. 

904  202 

Audain,  Ex  parte,  42  Ch.  D.  1 

346,  347,  353,  362 
Audenried     v.     East      Coast 

Milling  Co.,  59  Atl.  (N.  J.), 

577  115,  189,  511.  1211,  1218 

Auerbach  v.  Le  Sueur  Mill  Co.. 

28  Minn.  291;  41  Am.  Rep. 

285;  9N.  W.  799  110,  862, 

1409 
Augir  V.  Ryan,  63  Minn.  373; 

65  N.  W.  640  261 

Augusta  Bank  v.  Augusta,  49 

Me.  507  1425,  1451 

Augusta  Trust  Co.  v.  Federal 

Trust  Co.,    140   Fed.   930; 

153  Fed.  157  1416 

Aultman's  Appeal,  98  Pa.  St. 

505  617,  618 

Aurora  City  v.  West,  7  Wall. 

82  1449,  1460 

Aurora,  etc.  R.  R.  Co.  v.  City 

of  Lawrenceburgh,  56  Ind. 

80,  87  245 


Aurora,  etc.  Society  v.  Pad- 
dock, 80  111.  263  1074 

Austin  V.  M.  Fe^^t's  Sons  & 

Co.  (Ga.),  58  S.  E.  318  384 

Au-stin  V.  Murdock.  127  N.  Car. 

454;  37  S.  E.  478  183 

V.  Tecumseh  Bank,  49 

Nebr.  412;  68  N.  W.  628; 
59  Am.  St.  Rep.  543;  35 
L.  R.  A.  444  297 

Austin  Mining  Co.  v.  Gemmel, 

10  Ont.  Rep.  696  1004,  1011, 

1251 

Austin's  Case,  24  L.  T.  932       658, 

1218 

Australian  Producers  &  Trad- 
ers, 31  Vict.  L.  R.  511       191,  193 

Australian  Widows'  Fund  Life 
Ass.  Soc,  24  Vict.  L.  R. 
613  135 

Automatic  Self-Cleansing  Fil- 
ter Syndicate  Co.    v.    Cun- 
ninghame  (1906),  2  Ch.  34       992, 
993,  1161,  1193,  1194 

Avegno  v.  Citizens'  Bank,  40 

La.  Ann.  799;    5  So.  537         490 

Averill   V.    Barber,   6   N.    Y. 

Supp.  255  1340 

Avery  v.  Ryan,  74  Wise.  591 ; 

43  N.  \Y.  317  786 

Avon  Springs  Sanitarium  Co. 

V.  Weed,  104  N.  Y.  Supp.  58      209, 
212,  215 

A.  W.  HaU  &  Co.,  37  Ch.  D. 

712  647,648 

Ayer  v.  Seymour,  15  Daly 
(N.  Y.)249;  5  N.  Y.  Supp. 
650  1064 

Ayers  v.  South  Australian 
Banking  Co.,  L.  R.  3  P.  C. 
548  830 

Ayre  v.  Skelsey's  Adamant 
Cement  Co.,  20  Times  L.  R. 
587;  affirmed  in  s.  c.  21 
Times  L.  R.  404  495,  1318 


B 


Babcock    v.    Schuvlkill,    etc. 

R.  R.  Co.,  133  N.  Y.  420; 

31  N.  E.  30  428 

Bachman,  Re,  2  Fed.  Cas.  310      571, 

701,  767,  771 

,  2  Cent.  L.  J.  119  571 

Backer  v.  United  States  Gas 

Fixture  Co.,  84  N.  Y.  Supp. 

149  408 

Bacon  r.  Mi-ssissippi  Ins.  Co. 

(1850),  31  Miss.  116  63,1371 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Badesch      v.      Congregation 

Bros.,  23  N.  Y.  Misc.  160; 

50  N.  Y.  Supp.  958  591 

Badger  Paper  Co.  v.  Rose,  95 

Wis.  145:  70N.W.  302;  37 

L.  R.  A. 162  147,  169, 209, 278 

Bagaley  r.  Pittsburgh,  etc.  Co., 

146  Pa.  St.  478 ;  23  Atl.  837  1320 
Bagbv  &  Rivers  Co.  v.  Rivers, 

87 'Md.  400;    40  Atl.   171; 

67  Am.  St.  Rep.  357;    40 

L.  R.  A.  632  ^     296,  377 

Baggot  V.  Turner,  21  Wash. 

339;    58  Pac.  212  1226 

Baglan   Hall  Colliery  Co.,   5 

Ch.  346  97,  205,  634,  634 

Bagley  v.  Carthage,  etc.  R.  R. 

Co.,    165   N.    Y.    179;     58 

N.  E.  895  1246 
V.  Reno  Oil  Co.,  201  Pa. 

78;    50  Atl.  760;    56  L.  R. 

A.  184  583,  1003 

Bagnall  v.  Carlton.  6  Ch.  D. 

371  272,  293,  320,  320,  320,  321 
Bagnalstown  &  Wexford  Ry. 

Co.,  Ir.  Rep.  4  Eq.  505  63,  831, 
1400,  1409 
Bagot  Pneumatic  Tyre  Co.  v. 

Clipper     Pneumatic     Tyre 

Co.  (1902),  1  Ch.  146        289,  465, 

1099 
Bagshaw    v.    Eastern    Union 

Ry.  Co.,  7  Hare  114  963 

V.   Eastern   Union  Ry. 

Co.,  2  Mac.  &  G.  389  73,  963 

Bagshaw,    Ex  parte,    4    Eq. 

341  59,  59 

Bahamas,  etc.   Plantation  v. 

Griffin,  14  Times  L.  R.  139  1415 
Bahia  &  San  Francisco  Ry. 

Co.,  L.  R.  3  Q.  B.  584       728,  730, 

731 
Baile  v.  Calvert  College,  etc. 

Soc,  47  Md.  117  95,  603,  606, 

646,  1204 
Bailey  v.  Birkenhead,  etc.  Ry. 

Co.,  12  Beav.  433  607,  931, 

977,  977 

V.  Champlain,  etc.  Co., 

77  Wise.   453;    46  N.   W. 

539  487, 492 

V.  P'armers'  Nat.  Bank, 

97  111.  App.  66  84 

V.  Macaulay,   13  Q.  B. 

815  306,  .308,  309 

V.     Railroad    Co.,     17 

Wall.  96  457,  457,  458,  460 

V.  Railroad  Co.,  22  Wall. 

004  496,  496,  1114 


Bailcv  V.  Tillinghast,  99  Fed. 

801;    40  C.  C.  A.  93       165,  489, 
489,  490 
Bailey    &    Co.,    Joel    T.,    v. 

Snyder  Bros.,  61  111.  App. 

472  407,  1371,  1376,  1377 

Baillie  v.  Edinburgh  Oil  Gas 

Light  Co.,  3  CI.  &  Fin.  639      611, 

611 
Baillie's  Case   (1898),    1   Ch 

110 
Baily  v.  British  Equitable  As- 
surance Co.  (1904),  1   Ch 

374 
V.  Burgess,  48  N.  J.  Eq 

411;  22  Atl.  73 
Baily's  Case,  3  Ch.  592 
Bain  v.  Wliitehaven,  etc.  Ry. 

Co.,  3  H.  L.  Cas.  1  922,  925 

Bainbridge  v.  City  of  Louis- 
ville, 83   Ky.  285;    4  Am. 

St.  Rep.  153  1461,  1463,  1472 

V.  Smith,  41  Ch.  D.  462       1 177, 

1177,  1251 
Baines    v.    Coos    Bay    Nav. 

Co.,  41  Oreg.  135;  68  Pac. 

397 
V.  Coos  Bay,  etc.  Co.,  45 

Oreg.  307;  77  Pac.  400 


187 


587 

309 
213 


1248 


Baird  v.  Bank  of  Washington, 

11  S.  &R.  (Pa.)  411 
V.  Ross,  2  Macq.  H.  L.  61 


880, 
1276 


1224 
341, 
342 

Baird's  Case,  5  Ch.  725         622,  789 
Baker    v.    Administrator    of 
Backus,  32  111.  79 

V.  Beach,  85  Fed.  836 

V.  Consolidated  Gas,  etc. 

Co.,  42  N.  Y.  Misc.  95;   85 

N.  Y.  Supp.  1030  1467,  1468 

V.  Drake,  66  N.  Y.  518; 

23  Am.  Rep.  80 

V.  Guarantee  Trust,  etc. 

Co.,     31     Atl.     Rep.     174 
(N.J.) 

V.   Marshall,    15   Minn. 

177 

V.  Meloy,  95  Md.  1;  51 

Atl.  893        1455,  1455,  1461 

V.  Neff,  73  Ind.  68        248 

V.  Reeves,  85  Fed.  837  619 

Baker  Furniture  Co.  v.  Hall 
(Nebr.),  107  N.  W._117,  re- 
versed on  rehearing.  111 
N.  W.  129  298,  298 

Baker's  Appeal,  108  Pa.  St. 
510;  1  Atl.  78;  56  Am. 
Rep.  231  745 


219 
791 


809 


1408 
429 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Baker's  Case,  1  Dr.  &  Sm.  5.5 

124->,  i:ilU,  VMH,  13 IH 
Balaghat    Gold    Mining    Co. 

(1901),  2  K.  B.  mr>  <J04 

Balch    V.    Hallet,     10    Gray 

(Mass.)  402  1110,1155 

Baldwin  v.  Canfield,  26  Minn. 

43;   1  N.  W.  201       875,  9G3,  974, 
10G9,  1071,  1071,  1072,  1211 

V.  Miller  &  Lux  (Cal.), 

92  Pac.  1030  513,  1091 

Bale  V.  Michigan  Tontine  In- 
vestment   Co.,     132    Mich. 

479;  93  N.  W.  1071  850 

Balfour  v.  Baker,  etc.  Co.,  27 

Greg.  300;  41  Pac.  164  212 

Balfour-Guthrie  Co.  v.  Wooil- 

worth,    124    Cal.    169;     56 

Pac.  891  1201,  1224 

Balkis    Consolidated    Co.    v. 

Tomkinson    (1893),    A.    C. 

396  730,  736,  738,  738 

Ball  V.  Rutland  R.  R.  Co.,  93 

Fed.  513  955,  969 

Balliet  v.  Brown,  103  Pa.  St. 

546  1188 

Ballou   V.    Farnum,    9    Allen 

(Mass.)  47  1582 

Baltimore  Bldg.,  etc.  Ass'n  v. 

Alderson,  90  Fed.  142;    32 

C.  C.  A.  542  1650 

Baltimore  City  Pass.  Ry.  Co. 

V.  Hambleton,  77  Md.  341; 

26  Atl.  279  157,  502,  506 

V.  Sewell,  35  Md.  239; 

6  Am.  Rep.  402  430,  753,  753 

Baltimore  Humane  Impartial 

Soc.  V.  Pierce,  100  Md.  520; 

60  Atl.  277:    lOS  Am.  St. 

Rep.  450;  70  L.  R.  A.  485  1504 
Baltimore  Marine  Ins.  Co.  v. 

Dalrymple,  25  Md.  269  808 

Baltimore  Retort,  etc.  Co.  v. 

MaU,  65Md.  93;  3  Atl.  286; 

57  Am.  St.  Rep.  304         694,  713, 

751 
Baltimore  Trust,   etc.   Co.   v. 

Atlanta    Traction    Co.,    69 

Fed.  358  ^  1619 

V.    Hofstetter,   85   Fed. 

75;  29  C.  C.  A.  35  1543,  1633 
Baltimore,  etc.  R.  \{.  Co.  v. 

Baltimore,  etc.  llelief  .\ss'n, 

77  Md.  566;  26  Atl.  1045  585 
V.  Burris,  HI  Fed.  882; 

50  C.  C.  A.  48  1610 
I'.  Fifth  Baptist  Church, 

137  U.  S.  568;    11  Sup.  Ct. 

185  241,  381 


Baltimore, etc.  R.  R.  Co.  v.  Pum- 

phrey,74  Md.86;  21  Atl.  559       188 

V.  State,  36  Md.  519  463 

Baltimore,    etc.    Tel.    Co.    v. 

Morgan's,  etc.  Co.,  37  La. 

Ann.  883  lOl 

Baltimore,  etc.  Turnpike  Co.  v. 

Barnes,6  H.&J.  (Md.)  57       614 
Baltzen  v.  Xicolay,  53  N.  Y. 

467  422 

Bancroft  &  Sons  Co.,  Joseph, 

V.  Bloede,  106  Fed.  396;  52 

L.  R.  A.  754;    45  C.  C.  A. 

354  76 

Banet  v.  Alton,  etc.  R.  R.  Co., 

13  111.  504  603,  1214,  1215 

Bange    v.    Supreme    Council 

(Mo.),  105  S.  W.  1092  604 

Bangor  El.  Light,  etc.  Co.  v. 

Robinson,  52  Fed.  520       726,  727 
Bangor  Slate  Co.,  20  Eq.  59         442, 

469 
Bangs  V.  Nat.  Macaroni  Co., 

15N.  Y.  App.  Div.  522;  44 

N.  Y.  Supp.  546  67,  1377 

Banigan  v.  Bard,   134  V.  S. 

291;    lOSup.  Ct.  565  444 

Bank  v.  Bellington  Coal,  etc. 

Co.,  51  W.  Va.  60;  41  S.  E. 

390  635 
V.  Flour  Co.,  41  Oh.  St. 

552  1210 
V.  Hollingsworth,  135  N. 

Car.  556 ;  47  S.  E.  618        298,  298 

V.  Lanier,  1 1  Wall.  369        526, 

572,  732 
V.  Lumber  Co.,  32  W.  Va. 

357;    9  S.  E.  243;   3  L.  R. 

A.  583  302 
V.  Railroad  Co.,  5  S.  Car. 

156;  22  Am.  Rep.  12  403 

Bank  of  America  v.  McNeil, 

10  Bush.  (Ky.)  54  774,  775 

Bank  of  Ashland  v.  Jones,  16 

Oh.  St.  145  1400,  1437 

Bank  of  Atchison  Co.  v.  Dur- 

fee,  US  Mo.  431;   24  S.  W. 

133;   40  Am.  St.  Rep.  396       57_I, 

573 
Bank  of  Attica  v.  Manufactur- 
ers, etc.  Bank,  20  N.  Y.  501      110, 
575,  755 
Bank   of    Barnwell   v.    Sixth 

Nat.  Bank,  28  Pa.  Super.  Ct. 

413  84 

Bank  of  China  v.  Morse,  168 

N.  Y.  4.58;  85  Am.  St.  Rep. 

676;     61    N.    E,    774;     56 

L.  R.  A.  139  607 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Bank  of  Columbia  v.  Patter- 
son, 7  Cranch  299  HOS 
Bank  of  Commerce  v.  Bank  of 
Newport,  63  Fed.  898;    11 
C.  C.  A.  484       694,  699,  732,  733, 
773,  773 

V.  Central  Coal,  etc.  Co., 

115  Fed.  878;    53  C.  C.  A. 

334  1656 

V.  Hart,  37  Nebr.   197; 

55  N.  W.  631;    40  Am.  St. 
Rep.  479;    20  L.  R.  A.  780        75, 

424 
Bank  of  Commerce's  Appeal, 

73  Pa.  St.  59  694,  1130 

Bank  of  Culloden  v.  Bank  of 
Forsyth,  120  Ga.  575;  48 
S.  E.  226;  102  Am.  St. 
Rep.   115  572,  574 

Bank   of    England   v.   Cutler 

(1907),  1  K.  B.  889      743,  758,  759 
Bank    of    Forrest    v.    Orgill 
Bros.,  etc.  Co.,  82  Miss.  81; 
34  So.  325  280 

Bank  of  Fort  Madison  v. 
Alden,  129  U.  S.  372;  9 
Sup.  Ct.  332  634,  634 

Bank  of  Hindustan  v.  Alison, 

L.  R.  6  C.  P.  222  193,  493 

Bank  of  Holly  Springs  v.  Pin- 
son,  58  Miss.  421;  38  Am. 
Rep.  330  571,  574,  588,  588, 

589,  593,  773 
Bank  of  Ireland  v.  Trustees  of 
Evans'  Charities,  5  H.  L. 
Cas.  389  407,  728,  729 

Bank  of  Kentucky  v.  Bonnie 
Bros.,  102  Ky.  343;  43 
S.  W.  407  775 

V.    Schuylkill    Bank,    1 

Pars.  Eq.  Cas.  (Pa.)  180  702, 

730,  730,  731,  760,  760,  760, 
700,  761,  911,  912,  914,  924 

V.  Winn,  110   Ky.  140; 

61  S.  W.  32  797 

Bank  of  LeRoy  v.  Purdy,  100 
N.  Y.  App.  Div.  64;  91 
N.  Y.  Supp.  310  1295 

Bank  of  Little  Rock  v.  Mc- 
Carthy,  55  Ark.   473;     18 
S.    W.    759;    29    Am.    St,  ' 
Rep.  60  1199,  1200 

Bank  of  Louisville  v.  Gray 
84  Ky.  565;  2  S.  W.  168 


392 


862 


1373 

142 


Bank  of  Manchester  v.  Allen, 

11  Vt.  302 
Bank  of  Md.  v.  Ruff,  7  G.  &  J. 

(Md.)  448 


1122, 
1122 

230 


1204 


Bank    of    the    Metropolis    v. 

Guttschlick,  14  Pet.  19 
Bank  of  Michigan  v.  Niles,  1 

Doug.  (Mich.)  401;   41  Am. 

Dec.  575 
Bank  of  Middlebury  v.  Rut- 
land, etc.  R.  R.  Co.,  30  Vt. 

159  397,  1210 

Bank  of  Minneapolis  v.  Grif- 
fin, 168  111.  314;    48  N.  E. 

154 
Bank  of  Monroe  v.  Gifford,  72 

Iowa  750 ;  32  N.  W.  669 
Bank  of  Montreal  v.  Chicago, 

etc.  R.  R.  Co.,  48  Iowa  518 

1651,  1652,  1653 
V.      Maritime      Sulphite 

Fibre  Co.,  2  New  Brunsw. 

Eq.  328  1598,  1608 

V.  Sweeny,  12  A.  C.  617       798 

V.  Thayer,  7  Fed.  622         1616, 

1652,  1652 
Bank  of  Mutual  Redemption 

V.  Hill,  56  Me.  385;  96  Am. 

Dec.  470 
Bank    of    National    City    v. 

Johnston,     133     Cal.     185; 

65  Pac.  383 
Bank  of  New  South  Wales  v. 

Goulburn  Valley  Butter  Co. 

(1902),  A.  C.  543 
Bank  of  San  Luis  Obispo  v. 

Wickersham,  99  Cal.   655; 

34  Pac.  444  516,  520,523 

Bank  of  South  Australia  v. 

Abrahams,  L.  R.  6  P.  C. 

265  65,  1513 

Bank  of  Turkey  v.  Ottoman 

Co.,  2  Eq.  366 
Bank  of  U.  S.  v.  Dandridge, 

12  Wheat.  64 

V.  Dunn,  6  Pet.  51 

Bank  of  Utica  v.  Smalley,  2 

Cow.  (N.  Y.)  770;    14  Am. 

Dec.  526  381,  767 

Bank  of  Washington  v.  Bar- 

rington,  2  Pen.  &  W.  (Pa.) 

27 
Bank  of  Wilmington  v.  Wol- 

laston,  3  Harr.  (Del.)  90 
Bank  Commissioners  v.  Bank 

of  Brest,  Harr.  Ch.  (Mich.) 

106 
Bankers'  Mut.  Casualty  Co.  v. 

First    Nat.    Bank    (Iowa), 

108  N.  W.  1046 
Banks  v.   Poitiaux,  3  Rand. 

(Va.)  130;  15  Am.  Dec. 

706  392,  847 


1165 


1198 


1328 


294 

392 
1372 


1368 
594 


1188 


47 


XXIV 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1108 
1223 


580 


Bannatyne  v.  Direct  Spanish 

Telegraph    Co.,   31  Ch.  D. 

287  o32,  r)37,  545,  545 

Banciue    Franco  -  Egyptienne 

V.  Brown,  34  Fed.  162  1419,  155G 
Buriwen  Iron  Co.,  8  C.  B.  406  221 
Barber,  lie,  15  Jur.  51  158,  164 

Barber's  Case,  5  Ch.  D.  963        1171 
Barclay    v.    Wainwright,    14 

Ve.s.  66  1141 

Barcus  v.  Gates,  89  Fed.  783 ; 

32  C.  C.  A.  337  182,  182,  970 

Bardstown,  etc.  R.  R.  Co.  v. 

Metcalfe,    4    Mete.     (Ky.) 

199;  81  Am.  Dec.  541  1521, 

1521,  1584,  1623,  1635 
Bardwell  v.  Sheffield  Water- 
works Co.,  14  Eq.  517 
Bargate  v.  Shortridge,  5  H.  L. 

Cas.  297 
Barker  v.  Great  Hive,  etc.  of 

Maccabees,  135  Mich.  499; 

98  N.  W.  24 
V.    Montana    Gold,    etc. 

Co.  (Mont.),  89  Pac.  66     752,  801 

V.  Stead,  3  C.  B.  946      308,  308 

,  Re,   6   Wend.    (N.    Y.) 

509  1020.  1022,  1046 

Barna  v.  Kirczow  (N.  J.),  63 

Atl.  611  1249,  1250 

Barnard     v.     Fitzgerald,     23 

N.  Y.  Misc.  181;   50  N. 

Supp.  309 
V.  Norwich,  etc.  R. 

Co.,  4  CUff.  351 
V.  Vermont,  etc.  R. 

Co.,  7  Allen  (Mass.)  512 

464,  464,  465,  1114 

,  Re,  61  Fed.  531         1617,  1618 

Barned's  Banking  Co.,  3  Ch. 

105  56,  57,  400,  400,  407,  709 

Barnes  v.  Brown,  80  N.   Y. 

527  632,  1183,  1343 
V.  Chicago,  etc.  Ry.  Co., 

122   U.  S.    1;     7  Sup.   Ct. 

1043 
V.  Mobile,  etc.  R.  R.  Co., 

l'>  Hvm  (N.  Y.)  126 
V.  Ontario  Bank,   19  N. 

Y.  152  66,  394 
V.  Suddard,  117  111.  237; 

7  N.  E.  477 
Barnes  Bros.  v.  Coal  Co..  101 

Tenn.  354;  47  S.  W.  498 
Barnett  v.  Lambert,  15  M.  & 

W.  489 
Barnett's  Case,  18  Eq.  507 
Baron    de    Beville's   Case, 

Eq.  11 


R. 
R. 


1661 

1503 

457 


1637 
1413 


848 

591 

308 
196 

7 

207,  207 


Barr  v.  New  York,  etc.  R.  R. 

Co.,  125  N.  Y.  263;    26  N. 

E.  145  1310,  1316 
V.  Pittsburgh  Plate  Glass 

Co.,  57  Fed.  86;   6  C.  C.  A. 

260  1312,  1340 

Barrell   v.    Lake   View   Land 

Co.,  122  Cal.  129;    54  Pac. 

594  917,  918,  1201,  1222, 

1224 
Barrett   v.    King,    181    Mass. 

476;  63  N.  E.  934  571,  777 
V.  Twin  City  Power  Co., 

118  Fed.  861  1486 

Barrie    v.    United    Rys.    Co. 

(Mo.),  102  S.  W.  1078  1306 

Barron  v.  Burrill,  86  Me.  66; 

29  Atl.  939   ^  154 

Barrow     v.     Nashville,     etc. 

Turnpike    Co.,    9    Humph. 

(Tenn.)  304  843,  848 

Barrow's  Case,  14  Ch.  D.  432       643, 

647,  648,  648 

,  3  Ch.  784  614 

Barrow  Haematite  Steel  Co., 

Re,  39  Ch.  D.  582  537,  545, 

545,  545,  545 
Barrow  Haematite  Steel  Co.. 

(1900),  2  Ch.  846;  af- 
firmed (1901),  2  Ch.  746  536, 
537,  539 
Barrow-in-Furness  Land  Co., 

14  Ch.  D.  400  642,  642 

Barrows  v.  Natchang  Silk  Co., 

72  Conn.  658;  45  Atl.  951  492 
V.  Nat.  Rubber  Co.,  12 

R.  I.  173  777 

Barry  v.  Coffeen,  etc.  Co.,  52 

111.  App.  183  1237 
V.  Merchants'  Exchange 

Co.,  1  Sandf.  Ch.  280  482,  496, 
1113,  1432.  1447,1452 
V.  Missouri,  etc.  Ry.  Co., 

22  Fed.  631  1683 
V.  Missouri,  etc.  Ry.  Co., 

27  Fed.  1  1676,  1678,  1679, 

1681 
V.  Missouri,  etc.  Ry.  Co.. 

34  Fed.  829  1669,  1679 
V.  Missouri,  etc.  Ry.  Co., 

36  Fed.  228  1679 
V.  Moeller,  59  Atl.  (N.  J.) 

97  960.  974,  978,  982,  1285 

Barse  Live  Stock  Co.  v.  Range 

Valley  Cattle  Co.,  16  Utah 

59:  .')b  Pac.  6.30  715,  803 

Barstow  r.   Pine  Bluffs,  etc. 

Ry.  Co..  57  Ark.  334;    21 

S.  W.  652  1440,  1566 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Barstow  ?>.  Savage  Min.  Co.,  64 

Cal.  3SS;    1  Pac.  349;    49 

.\m.  Rep.  705  682,  726 

Barter  v.  Wheeler,  49  N.  H. 

9:  6  Am.  Rep.  434  1582 

Bartholomay  Brewing  Co.  v. 

Wyatt  (1893),  2  Q.  B.  499       424, 
^  878,883 

Bartholomew    v.    Bentley,    1 

Oh.  St.  37  1176,  1177,  1180, 

1182 
V.  Derby  Rubber  Co.,  69 

Comi.  521;   38  Atl.  45;    61 

Am.  St.  Rep.  57  71 
V.  Meuzies  (1902),  1  Ch. 

680  713 

Bartlett  v.  Fourton,  115  La. 

Ann.  26;  38  So.  882  1014 

V.  Gates,  118  Fed.  66  995, 

1063,  1194 
V.  Hipkins,  76  Md.  5;  23 

Atl.  1089;   24  Atl.  532  15 
V.  Keim,  50  N.  J.  Law 

260;  13  Atl.  7  1615,  1618 
V.   Mystic   River  Corp., 

151  Mass.  433;    24  N.  E. 

780  1246 
V.  Northumberland  Ave. 

Co.,  53  L.  T.  611  1598 

V.Wilbur,  53  Md.  485       126,221 

Bartling  v.   Edwards,  84  111. 

App.  471  662 

Barto  V.  Nix,  15  Wash.  563; 

46  Pac.  1033  517,  526 

Barton  v.  Barbour,  104  U.  S. 

123  1617 
V.  International  Frater- 
nal Alliance,  85  Md.  14;  36 

Atl.  0.58  1260 
V.  London  &  N.  W.  Ry. 

Co.,  38  Ch.  D.  144  755 
V.  London,  etc.  Ry.  Co., 

24  Q.  B.  D.  77  679,  727,  728, 
747,  789,  790,  791,  796,  813 
V.    North    Staffordshire 

Ry.  Co.,  38  Ch.  D.  458        727,  755 
V.    Port    Jackson,    etc. 

Plank  Road  Co.,  17  Barb. 

(N.  Y.)  397  517 

Barton's  Case,  4  De  G.  &  J.  46      200, 
200,  657 
Barton's  Trust,  Re,  5  Eq.  238 

496,  1139 
Barwick     v.     English     Joint 

Stock  Bank,  L.  R.  2  Ex. 

259  1362 

Bash  V.  Culver  Gold  Mining 

Co.,  7  Wash.  122;   34  Pac. 

462  280 


Bason    v.    King's    Mountain 

Mining  Co.,  90  N.  Car.  417      400, 
401,  408 
Bassett  v.  Atwater,  65  Conn. 

355;      32     Atl.     937;      32 

L.  R.  A.  575  996 
V.   Fairchild,    132    Cal. 

637;    64  Pac.  1082;   52  L. 

R.A.  611       1203,1246,1247,1248 
Basshor  v.    Dressel,    34    Md. 

503  -  232 

Basshor  Co.  v.  Carrington,  104 

Md.  606  1556 

Bastian  v.  Modern  Woodmen, 

166  111.  595 ;  46  N.  E.  1090      1008, 

1009 
Batard  v.  Hawes,  2  E.  &  B. 

287  274,  337,  337 

Batchelder  v.  Council  Grove 

Co.,  131N.  Y.  42;  29  N.  E. 

801  1467,  1467 

Bateman  v.  Straus,  86  N.  Y. 

App.  Div.  540;    83  N.  Y. 

Supp.  785  _  786 

Bates   V.    Androscoggin,    etc. 

R.  R.  Co.,  49  Me.  491       155,  457, 
458,463,  463,  466,  1114,  1131, 
1132,  1136 
V.  Coronada  Beach  Co., 

109  Cal.  160;  41  Pac.  8.55       80,  80 
V.    Great    Western    Tel. 

Co.,  134  111.  536;   25  N.  E. 

521  163 
V.    Keith    Iron    Co.,    7 

Mete.  (Mass.)  224  1381,  1382 
V.  Mackinley,  31  Beav. 

280  1137 
V.  N.  Y.  Ins.  Co.,  3  Johns 

Cas.  (N.  Y.)  238  773,  1124 
V.  Wilson,  14  Colo.  140; 

24  Pac.  99  105,  122 

Bath's  Case,  8  Ch.  D  334         92,  525, 

525 
Bath  Gas  Light  Co.  v.  Claffy, 

151N.  Y.  24;  45N.  E.  390; 

36  L.  R.  A.  664  852,  855,  863 

Bath   Savings    Institution   v. 

Sagadahoc   Nat.   Bank,   89 

Me.  500;  36  Atl.  996  692 

Bathe  v.  Decatur  County  Agri- 
cultural Soc,  73  Iowa  ll; 

5  Am.   St.   Rep.   651;    34 

N.  W.  484  870 

Battelle  v.  Northwestern  Ce- 
ment, etc.  Co.,  37  Minn.  89; 

33  N.  W.  327  280,  280,  284, 

287,  1.309,  1310 
Batten   v.   Wedgewood   Coal 

Co..  28  Ch.  D.  317  1655 


TAIJLK    OF    CASES 
[The  references  are  to  pages] 


Battle's  Case,  39  L.  J.   Ch. 

391  7G4,  76f) 

Baty  V.   Keswick,   8.5    L.   T. 

N.  s.   18  3G0 

Bauer  v.  Samson  Lodf^e,  102 

Ind.  262;  1  N.  E.  571  576, 

593,  948 
Bauernschmidt     v.     Bauem- 

sclunidt,  101  Md.  14S;    60 

Atl.  437  884 
V.  Md.  Trust  Co.,  89  Md. 

507;  43  Atl.  790^  1412 

Bauernschmidt's  Ustate,   Re, 

97  Md.  35;  54  Atl.  637  873,  884 
Bauersmith  v.  Extreme  Gold, 

etc.  Co.,  146  Fed.  95  354 

Ba  uglier    v.    Merry  man,    32 

Md.   185  812 

Baumhoff  v.  St.  Louis,  etc.  R. 

II.    Co.   (Mo.),    104   S.  W. 

5  ^    199, 786 

Bausman  v.  Kinnear,  79  Fed. 

172;  24  C.  C.  A.  473  612 

Bauter     v.     Superior     Court 

(Cal.),  91  Pac.  749  906,  1367 

Bay  City  Bridge  Co.  v.  Van 

Etten,  36  Mich.  210      1259,  1285, 

1285 
Bay  City  Irrigation  Co.,  135 

Fed.  850  44 

Bayard     v.     Farmers',     etc. 

Bank,  52  Pa.  St.  232  748,  792, 
797,  799 
Bayles  v.    Kansas   Pac.    Ry. 

Co.,  13  Colo.  181;   22  Pac. 

341;  5  L.  R.  A.  480  1610,  1643 
V.  Vanderveer,  1 1  N.  Y. 

Misc.  207;  32  N.  Y.  Supp. 

1117  1270 

Bavless  v.   Bybee,   1   Freem. 

Ch.  (Miss.)  161  928,1183,1184 
Bavliss  V.  Lafayette,  etc.  Ry. 

Co.,  9  Biss.  90  1567 

Bavou     Cook,     etc.     Co.     v. 

Doullut,   111  La.  517;    35 

So.  729  46,  113 

Beach    v.    Fulton    Bank,    3 

Wend.  (N.  Y.)  573  86 
V.  McKinnon,    148   Fed. 

734  1296, 1327 
V.   Miller,    130   111.    162; 

22  N.  E.  464;    17  Am.  St. 

Rep.  291  1315 

V.  Smith,  30  N.  Y.  116         645 

V.  Stouffer,  84  ]\Io.  .\pp. 

395  912,  917,  1238, 1322 
V.  Wakefield,   107  Iowa 

567;     76   N.   W.   688;     78 

N.  W.  19-^         109,  852,  867,  1503 


1493 

66 
309 


1485 
1485 


854 


833 
511 

787, 


Beacon  Trust  Co.  v.  Souther, 

183   Mass.   413;    67  x\.   E. 

345  86 

Beaconsfield    Heigiits    Estate 

Co.,  22  Vict.  L.  R.  97       524,  524, 

1074,  1190 

Beadleson  v.  Knapp,  13  Abb 

Pr.  N.  8.  .335 
Beal  V.  Dillon,  5  Kans.  App 

27;   47  Pac.  317 
Beale  v.  Mouls,  10  Q.  B.  976 
Beals  V.   Illinois,  etc.  R.   R 

Co.,  133U.  S.  290;   10  Sup 

Ct.  314 
V.  Illinois,  etc.  R.  R.  Co. 

27  Fed.  721 
Bean  v.  Am.    L.  &  T.    Co., 

122  N.  Y.  622;   26  N.  E. 

11  733,802 

Bear  River,  etc.  Co.  v.  Han- 
ley,  15  Utah  506;   50  Pac. 

611 
Bear  Valley  Land,  etc.  Co.  v. 

Savings  &  Trust  Co.,   117 

Fed.  941 
Beardslee  v.  Shickler  (Pa.),  68 

Atl.  44 
Beardsley  v.   Beardsley,    138 

U.  S.  262;    11  Sup.  Ct.  318 

1081,  1084 

V.  Johnson,   121  N.  Y. 

224 ;   24  N.  E.  380  998,  1035, 

1167 
Beasleyv.  Aberdeen,    etc.  R. 

R.    Co.  (N.  Car.),    59  S.  E. 

60  822 

Beaver    Knitting    Mills,    154 

Fed.  320  86,  1187 

Becher     v.     Wells     Flouring 

Mill  Co.,  1  Fed.  276 
Bechuanaland       Exploration 

Co.     V.     London     Trading 

Bank  (1898),  2  Q.  B.  658       1423, 
1424,  1425,  1429 
Beck's  Case,  9  Ch.  392  171 

Becker  r.  Berlin,  etc.  Soc,  144 

Pa.  St.  232:    22  Atl.  699; 

27  Am.  St.  Rep.  624  584 

V.    Farmers'    Mut.    Ins. 

Co.,  48  Mich.  610;  12  X.  W. 

874  584 

Becket  v.   Uniontown   Bldg. 

Ass'n,  88  Pa.  St.  211  112 

Beckett  v.  Houston,  32  Ind. 

393  1014,  1017 

Beckhanson  &  Gibbs  v.  Ham- 

blet  (1901).2  K.  B.73  779 

Beckwith  r.  Galice  Mines  Co. 

(Greg.),  93  Pac.  453  723 


1062 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Beckwith  v.  Trustees  of  Hart- 
ford, etc.  R.  R.,  29  Conn. 
268;  76  Am.  Dec.  599  1441 

V.  Windsor  Mfg.  Co.,  14 

Conn.  594  399 

,  Ex  parte  (1S98),  1  Ch, 

324  1241 

Bedford  v.  American  Alumi- 
num Co.,  51  N.  Y.  App.  Div. 
537 ;  64  N.  Y.  Supp.  856       429, 430 
Bedford  R.  R.  Co.  v.  Bowser, 

48    Pa.    St.    29  189, 

191,  516,  524 
Bedford  Springs  Co.   v.   Mc- 
Meen,  161  Pa.  St.  639;   29 
Atl.  99  1250 

Bedford,  etc.  Ry.  Co.  v.  Stan- 
ley, 2  Johns.  &  H.  746  281 
Beebe  v.  George  H.  Beebe  & 
Co.,  64  N.  J.  Law,  497;   46 
Atl.  168                  1370,  1373,  1382 

V.  Richmond  Power  Co., 

13N.Y.Misc.737;35N.Y. 
Supp.  1  1503,  1586 

Beecher  v.  Marquette,  etc.  Co. 

45  Mich.  103;  7  N.  W.  695      1007, 

1073 
Beekman   v.    Hudson   River, 

etc.  Ry.  Co.,  35  Fed.  3         1587, 
1588,  1593 
Beers  v.  Bridgeport  Spring  Co. 

42  Conn.  17  1112,1116,1120, 

1121 

V.  New  York  Life  Ins. 

Co.,  66  Hun  75;    20  N.  Y. 
Supp.  788  593,  1189,  1238, 

1299,  1299 

V.  Phoenix  Glass  Co.,  14 

Barb.  (N.  Y.)  358  1377 

V.  Wabash,  etc.  Ry.  Co., 

34  Fed.  244  1621 

Behlow  V.   Fischer,   102  Cal. 

208;    36  Pac.  509  777 

Belch  V.  Big  Store  Co. (Wash.), 

89  Pac.  174  80 

Belden  v.  Burke,   147  N.  Y. 

542;    42  N.  E.  261  1556 

Belfast,  etc.  Plank  Road  Co. 
V.  Chamberlain,  32  N.  Y. 
651  101,  148 

Belfast,  etc.  R.  R.  Co.  v.  Bel- 
fast, 77  Me.  445 ;   1  Atl.  362      453, 
453, 457, 459, 466, 1104, 1110 
Belknap   v.    Adams,    49    La. 

Ann.  1350;    22  So.  382  521 

Belknap  Sa\nngs  Bank  v. 
Lamar  Land,  etc.  Co.,  28 
Colo.  326;   64  Pac.  212  1646, 

1650 


Bell  V.  Chicago,  etc.  R.  R.  Co., 

34  La.  Ann.  785  1503 
V.    City    of    Louisville 

(Ky.),  106  S.  W.  862  877 
V.  Standard  Quicksilver 

Co.,  146  Cal.  699;    81  Pac. 

17  1197,  1200 

Bell  &  Coggeshall  Co.  v.  Ky. 

Glass-Works   Co.,    20    Ky. 

Law  Rep.  1684 ;  50  S.  W.  2        65, 

109,  110,  115,142,859,1408, 

1409 

Bell  Bros.,  65  L.  T.  245        764,  765, 

765,  765,  765,  795 

Bell's  Appeal,  115  Pa.  St.  88; 

8  Atl.  177;  2  Am.  St.  Rep. 

532  617 

Bell's  Case,  4  A.  C.  547  800 

Bell's  Gap  R.  R.  Co.  v.  Christy, 

79Pa.  St.  54;    21  Am.  Rep. 

39  293,  294 

Bellerby  v.  Rowland,  etc.  S.  S. 

Co.  (1902),  2  Ch.  14  521,524, 

524,  524 
Bellina,    etc.    Tramway    Co. 

(1888),  21  L.  R.  Ir.  497  1171 

Bellona   Company's   Case,   3 

Bland  (Md.)  442 
Bellows  V.  Todd,  39  Iowa  209 


873 
1008, 
1208 


Belmont  v.  Erie  Ry.  Co.,  52 

Barb.  (N.  Y.)  637      485,  485,  485, 
957,  965,  974 
Benbow  v.  Cook,  115  N.  Car. 

324;   20  S.  E.  453;   44  Am. 

St.  Rep.  454  147,  406,  911, 

1005,  1005,  1006,  1006 
Bend  v.  Susquehanna  Bridge 

Co.,6H.  &J.  (Md.)128;  14 

Am.  Dec.  261  617,  622,  812 

Benedict  v.   Denton,  Walker 

Ch.  (Mich.)  336  408 
V.  St.  Joseph,  etc.  R.  R. 

Co.,  19  Fed.  173  1496,  1604 

Benevolent  Society,  10  Phila. 

(Pa.)  19  113,  267 

Benjamin  v.  Elmira,  etc.  R.  R. 
Co.,  49Barb.  (N.Y.)  441 
Bennett  v.  Milville  Imp.  Co., 

67  N.  J.  Law  320;   51  Atl. 

706 
Bennett's  Case,  5  De  G.  M.  & 

G.  284  766,  1327 

Bensiek  v.   Thomas,  66  Fed. 

104;  13  C.  C.  A.  457       1317 
Benson  v.   Heathorn,  1  Y.  & 

C.  Ch.  326  1331,  1332 
V.   San  Diego,  100  Fed. 

158  1554,  1587 


1420 


1113 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Bent  V.  Priest,  86  Mo.  475         1333, 

134G 
V.  Underdown,  15G  Ind. 

516:  60N.  E.307       111,115,142, 

628 
Bentlmm  Mills  Co.,  11  Ch.  D. 

900  679, 793 

Bcntinck  v.    Fenn,  12  App. 

C:is.  652  315,323,323,327, 
328,  1263,  1345 

,  Ex  parte,  1  Mepone  23  764 

,  Ex  parte,  1  Megone  12         642, 

642,  1230 
Bentley,  Ex  parte,  12  Ch.  D. 

850  642,  1325 

Benzinger    v.    Ivantzler,    112 

111.  App.  293  1163 

Bercich  v.  Marye,  9  Nevada 

312  683,  694 

Berg  V.   San  Antonio  Street 

Ry.  Co.,  17  Tex.  Civ.  App. 

291;42S.  W.  647;  43  S.  W. 

929  486 

BergdoU  v.  Bergdoll  Brewing 

Co.,  10  Pa.  Dist.  Rep.  173 


Bergen  v.  Porpoise  Fishing 
Co.,  41  N.  J.  Eq.  238;  3 
Atl.  404 

V.  Porpoise  Fishing  Co., 

42N.  J.  Eq.  397;  8  Atl.  523 


1321, 
1322 


279 
1406 


V.  Valentine,  63  How.  Pr. 

(N.  Y.)  221  1446 

Berger  v.  U.  S.  Steel  Corp.,  63 

N.  J.  Eq.  809;  53  Atl.  68  519, 
534,  534,  542,  542 
Bergeron  v.  Hobhs,  96  Wise. 

641;    71  N.  W.   1056;    65 

Am.  St.  Rep.  85        123,  124,  246, 

251 
Bergman    v.    St.    Paul,    etc. 

Bldg.  Ass'n.  29  Minn.  275; 

13  N.  W.  120  562,  565 

Berkhout  v.  Royal  Arcanum, 

62  N.  J.  Law  103 ;  43  Atl.  1  580 
Berks   &   Dauphin   Turnpike 

Road  V.  Myers,  6  S.  &  R. 

(Pa.)  12;  9  Am.  Dec.  402  380, 
407,  525 
Berkson,    Hughes    &    Co.    v. 

Anderson,    115    Iowa   674; 

87  N. W. 402  128 

Berlin  v.  New  Britain,  9  Conn. 

175  (1832)  827 

Bernard  v.  Union  Trust  Co., 

159  Fed.  620  1641,  1646,  1651 

Bernheimer  v.   Converse,   27 

Super.  Ct.  755  43 

xxix 


Bernstein  v.  Kaplan  (Ala.),  43 

So.  581  103,  134,  139 

Berry  v.  Rood,  168  Mo.  316; 

67  N.  W.  644  628,  629,  635, 
647,  649 
V.  Yates,  24  Barb.(X.  Y.) 

199  76 

Berry ville  Land,  etc.   Co.  v. 

Lewis,   19  S.  E.  Rep.  781 

(Va.)  183 

Berwind    v.    Canadian     Pac. 

Ry.  Co.,  98  Fed.  158  941 
V.  Van  Home,  104  Fed. 

581  1354 

Besch    V.    Western    Carriage 

Mfg.  Co.,  36  Mo.  App.  333     1211 
Besley,  Ex  parte,  3  Mac.  &  G. 

287  309 

Best  V.  British  &  Am.  Mort- 
gage Co.,  131  N.  Car.  70; 

42  S.  E.  456  1365 

Best  Brewing  Co.  v.  Klassen, 

185  111.  37;    57  N.  E.  20; 

76  Am.St.  Rep.  26 ;  50  L.  R. 

A.  765  42,  84,  851 

Bestor  v.  Wathen,  60  111.  138     1348 
Bethune  v.  Wells,  94  Ga.  486; 

21  S.  E.  230  972 

Bevan  v.  Waterhouse,  3  Ch. 

D.  752  815 

Beveridge     v.      New      York 

Elevated   R.    R.   Co.,    112 

N.  Y.  1;    19  N.  E.  489;    2 

L.  R.  A.  648         1107,  1110,  1187 
Be\'ier,  etc.  Coal  Co.  v.  Wat- 
son, 107  Mo.  App.  451;   80 

S.  W.  287  _  1321 

Bianki    v.    Greater-American 

Exhibition    Co.,    3     Nebr. 

(Unof.)    656;     92    N.    W. 

615  1355 

Bibb  v.  Hall,  101  Ala.  79;    14 

So.  98  1234 
V.     Montgomerv     Iron 

Works,    101   Ala.   301;     13 

So.  224  1401,  1527 

Bihhor-White    Co.    i'.    White 

River,  etc.  R.  Co.,  110  Fed. 

473  1607,  1623 
V.  White  River,  etc.  Co., 

115  Fed.  786;    53  C.  C.  A. 

282  1646,  1651 

Bickford  v.   Grand  Junction 

Ry.  Co.,   1   Can.   Sup.  Ct. 

Rep.  696  65 

Biddle  V.  Bayard,  13  Pa.  St. 

150  726 

Biddle's  Appeal,  99  Pa.   St. 

278  502 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Bidwell  V.  Pittsburgh,  etc. 
Rv.  Co..  114  Pa.  St.  535;  6 
Atl.  729  651 

Bidwell   Bros.,  Re   (1893),   1 

Ch.  603  1036,  1044 

Bigbee.  etc.  Packet  Co.  v. 
Moore,  121  Ala.  379;  25  So. 
602  846,  1133 

Big  Creek,  etc.  Iron  Co.  v. 
•American  L.  &  T.  Co.,  127 
Fed.  625;    62  C.  C.  A.  351      986, 

1399 
Bigelow  V.  Calumet,  etc.  Min- 
ing Co.,  155  Fed.  869         57,  78, 
947,  949,  1026,  1063 

V.  Gregory,  73  111.  197  123, 

128,  251 
Bigg's  Case,  1  Eq.  309  660 

Biggerstaff  v.  Rowatt's 
Wharf    (1896),    2    Ch.    93 

1370,  1545 
Biglin    V.    Friendship    Ass'n, 

46  Hun  (N.  Y.)  223  430 

Bignold,  Ex  parte,  22  Beav. 

143  1291 

Bill  V.  Darenth  Valley  Ry.  Co., 

1  H.  &  N. 305  1223,  1228 

V.  Western  Union  Tel. 

Co.,  16  Fed.  14        931,  943,  1080, 
1306,  1313 
Billingham   v.    Gleason   Mfg. 
C0..43N.Y.  Misc.  681;  88 
N.  Y.  Supp.  398  908,  908 

V.  Gleason  Mfg.  Co.,  101 

N.  Y.  App.  Div.  476;    91 
N.  Y.  Supp.  1046  1114,1116 

Bills   V.    Silver   King   Mining 

Co.,  106  Cal.  9;   39  Pac.  43     1122 
Bimber  v.  Calivada  Coloniza- 
tion Co.,  110  Fed.  58  969 
Binnev's  Case,  2  Bland  Ch. 

(Md.)  99  70,  382 

Birch  V.  Cropper,  14  A.  C.  525      433, 

436,  471 

Bird  V.  Dagett,  97  Mass.  494         95, 

862 

V.  People's,  etc.  Co.,  158 

Fed.  963  1587 

Bird  Coal  &  Iron  Co.  v. 
Humes,  157  Pa.  St.  278;  27 
Atl.  750;  37  Am.  St.  Rep. 
727  972,  1079,  1.335 

Bird's  Case,  iSim.N.s.  47       221,223 
Birdsall  v.  Russell,  29  N.  Y. 

220  1435,  1530 

Birkenhead,  etc.  Ry.  Co.  v. 

Brownrigg,  4  Ex.  426    ^  922 

Birmingham      }5anking     Co., 

36  L.  J.  Ch.  150  897 


Birmingham  Drug  Co.  v.  Free- 
man, 15  Tex.  Civ.  App.  451 ; 
39  S.  W.  626  1188 

Birmingham  Fire  Ins.  Co.  v. 

Comm.,  92  Pa.  St.  72  751 

Birmingham  Nat.  Bank  v. 
Roden,  97  Ala.  404;  11  So. 
883  195 

Birmingham  Ry.,  etc.  Co. 
V.  Birmingham  Traction 
Co.,  128  Ala.  110;  29  So. 
187  912 

Birmingham  Trust,  etc.  Co.  r. 
East  Lake  Land  Co.,  101 
Ala.  304 ;    13  So.  72  776 

V.  Louisiana  Nat.  Bank, 

99  Ala.  379;  13  So.  112;  20 

L.  R.  A.  600  769,  774,  775 

Birmingham,  etc.  Ry.  Co.  v. 

Locke,  1  Q.  B.  256  925 

V.  White,  1  Q.  B.  282  895 

Birney  v.  Toronto  Milk  Co., 

5  Ont.  L.  Rep.  1  391 

Biron's  Case,  26  W.  R.  606  1171 

Bisgood   V.    Nile    Valley   Co. 

(1906),  1  Ch.  747  72,  78,  654 

Bishop  V.  American  Preser- 
vers Co.,  157  111.  284;  41 
N.  E.  765;  48  Am.  St.  Rep. 
317  79 

V.  Globe  Co.,  135  Mass. 

132  761,  771,  772 

V.  Kent  &  Stanley  Co.,  20 

R.  I.  680:  41  Atl.  255  1221 

V.  McKiUican,   124  Cal. 

321;    57  Pac.  76;    71  Am. 

St.  Rep.  68  1495 

V.    Smyrna,    etc.    Ry. 

(1895),  2  Ch.  265  471,  1101 

V.    Smyrna,    etc.    Ry. 

Co.,   No.   2   (1895),   2   Ch. 

596  472,  472 

Bissell  V.  Bradford  Tramway 

Co.,  W.  N.  (1891)  51  1603 

V.    Michigan    Southern 

R.  R.  Co.,  22  N.  Y.  258  869 

Biorgaard  v.  Goodhue  County 

Bank,   49    Minn.   483;    52 

N.  W.  48  1080 

Black  V.  First  Nat.  Bank,  96 

Md.  399;  54  Atl.  88  844,  853 
V.  Hobart  Trust  Co.,  64 

N.J.  Eq.  415;  53  Atl.  826; 

affirmed   in   65   N.    J.    Kq. 

769;  56  Atl.  1131  451,  452 
V.  Homersham,  4  Ex.  D. 

24  1134 
V.  Wiedersheim,  143  Fed. 

359  1489 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Black  V.  Zacharie,  3  How.  483 


C97, 
716 


Black  &  Co.'s  Case,  8  Ch.  254      191, 
612,  634 

Black  &  White  Sniitlis'  Soc.  v. 
Vandyke,  2  Wliart.  (Pa.) 
309;    30  Am.  Dec.  203  577 

Black  River,  etc.  II.  R.  Co.  v. 

Clarke,  25  N.  Y.  208        237,  238 

Blackburn  Bldg.  Soc.  v.  Cun- 
liffe,  Brooks  &  Co.,  22 
Ch.  D.  61  831 

V.    Cunliffe,    Brooks    & 

Co.,  29  Ch.  D.  902  831 

Blackwell   v    State,   36  Ark. 

178  1164 

Blackwell's  Durham  Tobacco 

Co.  V.  Am.  Tobacco  Co.  (N. 

Car.),   59    S.    E.    123      371,  372, 

379 
Blair  v.  City  of  Chicago,  201 

U.  S.  400;  26  Sup.  Ct.  427  107, 
836,  837 
V.  Metropolitan  Savings 

Bank,  27  Wash.    192;    67 

Pac.  609  70,  588 

• V.  St.  Louis,  etc.  Ry.  Co., 

20  Fed.  348  1603,  1621 
V.  St.  Louis,  etc.  Ry.  Co., 

20  Fed.  351  1567,  1621 
V.  St.  Louis,  etc.  R.  Co., 

22  Fed.  471     1559,  1561,  1564, 

1572 
V.  St.  Louis,  etc.  Ry.  Co., 

23  Fed.  521  1567,  1572 
V.  St.  Louis,  etc.  Ry.  Co., 

23  Fed.  524         1416, 1670 

V.   St.  Louis  R.  Co.,  25 

Fed.  232  1564,  1629 
V.  St.  Louis,  etc.  R.  R. 

Co.,  25  Fed.  684  910 
t«.  Telegram  Newspaper 

Co.,    172    Mass.    201;     51 

N.  E.  1080  955,  979 

Blair  Town   Lot,  etc.   Co.  v. 

Walker,  50  Iowa  376  1348 

Blaisdell  v.  Bohr,  68  Ga.  56  754, 
755,  757 
Blake    v.    Bayley,    16    Gray 

(Mass.)  531  918,  1166 

V.  Buffalo  Creek  R.  R. 

Co.,  56  N.  Y.  485  1340 

V.    Domestic   Mfg.    Co. 

(N.  J.),  38  Atl.  241        1379,  1380 

V.  Ray  (Ky.),  62  S.  W. 

531  1318 
V.  Supervisors  of  Living- 
ston Co.,  61  Barb.   149           1424 
Blake's  Case,  34  Bear.  039  176 


Blakely  Ordnance  Co.,  3  Ch. 

154  1420, 1421 

Blaker  v.  Herts,  etc.  Water- 
works Co.,  41  Ch.  D.  399       1605, 

1606 

Blalock  V.  Kemsville  Mfg.  Co., 
110  N.  Car.  99;  14  S.  E. 
501  ■  517,  519 

Blanchard  v.  Cooke,  144  Mass. 

207;    11  N.  E.  83  1504 

V.  Kaull,  44  Cal.  440  252 

Bland's  Case    (1893),    2    Ch. 

612  319,  320,  329 

Blanks  v.  Farmers'  L.  &  T. 
Co.,  122  Fed.  849;  59  C.  C. 
A.  59  1636,  1637 

Blanton  v.  Kentucky  Distil- 
leries, etc.  Co.,  120  Fed.  318       917 

Blatchford  v.  Ross,  54  Barb. 

(N.  Y.)  42  1189 

V.    Ross,   37    How.    Pr. 

(N.  Y.)110  976 

Blen  V.   Bear  River,  etc.  Co., 

20  Cal.  602;  81  Am.  Dec. 

132  1374 

Bligh  V.  Brent,  2  Y.  «fe  C.  Ex. 

268  420 

Blinn  v.  Gillett,  208  111.  473; 

70  N.  E.  704;    100  Am.  St. 

Rep.  234  1144,  1154,  1150 

V.  Riggs,  1 10  111.  App.  37     1080, 

1250 
Bliss  V.  Harris  (Colo.),  87  Pac. 

1076  407,  408,  408,  1376 

V.  Kaweah,  etc.  Co.,  65 

Cal.  502 ;  4  Pac.  507         407,  408. 

1372 
Bloede    Co.,    Victor    G.,    v. 
Joseph  Bancroft  &  Sons  Co., 

98  Fed.  175  890 
V.  Bloede.  84  Md.  129 ;  34 

Atl.  1127;  .57  Am.  St.  Rep. 

373;  33  L.  R.  A.  107  571,679 

Blood  V.  La  Serena,  etc.  Co., 

113  Cal.  221;  41  Pac.  1017; 

45  Pac.  252  299,  408, 

408 
V.  Marcause,  38  Cal.  590; 

99  Am.  Dec.  435  1377 
Bloom  V.  Nat.  Saving,  etc.  Co. 

152N.  Y.  114;  46N.E.  166  1278, 
1350,  1351 
Bloomenthal  v.  Ford  (1897), 

A.  C.   156  649 

Bloomer   v.  Union  Coal,  etc. 

Co.,  16  Eq.  383  1504 

Blooming-Grove    Cotton    Oil 

Co.  V.  First  Nat.  Bank,  56 

S.  W.  552  (Tex.)  695,  1130 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Blount  V.  Hipkins,  7  Sim.  51  789 

Bloxam  v.  Metropolitan  Ry. 

Co..  L.  R.  3  Ch.  337  968,  1104 
Bloxam 's  Case.  33  Beav.  529  166 
Bluck  r.  Mallalue,  27  Beav. 

39S  199 

Blueliill  Academy  v.  Witham, 

13  Maine  403  280 

Blue    Mt.    Forrest    Ass'n    v. 

Borrowe,  71  N.  H.  69;    51 

Atl.  670  562,  571,  573,  575,  576 
Blum  I'.  Whitney,  185  N.  Y. 

232  330 

Blumenfeldt  v.  Korschuck,  43 

111.  App.  434  948 

Blumenthal   v.    Brainerd,   38 

Vt.  402;  91  Am.  Dec.  349  1616 
Blumer  v.  Ulmer  (Miss.),  44 

So.  161  949,  1355 

Blundell  v.  Winsor,  8  Sim.  601  7 

Blyth's  Case,  4  Ch.  D.  140  154, 

640,  640 

Board  of  Comm'rs  v.  Shields, 

62  Mo.  247  244 

Board  of  Comm'rs  of  Hamil- 
ton   Co.    V.    State    ex    rel. 

Cottingham,  115  Ind.  64;  4 

N.  E.  589;  17  N.  E.  855  1514 
Board  of  Comm'rs  of  Ouray 

County  V.   Geer,   108  Fed. 

478;   47  C.  C.  A.  450  1449 

Board  of  Supervisors  v.  Min- 
eral  Point   R.   R.   Co.,   24 

Wise.  93  1421,  1485,  1533 

Board  of  Trustees  v.  Piedmont 

Realtv  Co.,  134  N.  Car.  41; 

46  S."E.  723  853 

Board  of  Trustees  of  Seventh 

St.,  etc.  Church  v.  Campbell, 

48  La.  Ann.  1543;    21  So. 

184  117 

Boardman  v.    Boardman,   78 

Conn.  451;    62  Atl.  339  1144 

V.  Cutter,  128  Mass.  388         422 

V.  Lake  Shore,  etc.  Ry. 

Co.,  84  N.  Y.  157  447,  457,  458, 
459,  459,  460,  465,  466,  467, 
467,  1131,  1132,  1136 
Boatmen's  Bank  v.  Gillespie 

(Mo.),  108  S.  W.  74  1208 

Boatmen's  Ins.  &  Trust  Co.  v. 

Able,  48  Mo.  136  702,  781 

Boca,  etc.  R.  R.  Co.  v.  Sierra 

Valley  Ry.  Co.,  84  Pac.  298 

(Cal.)  138,  141,  250 

Bodega  Co.  (1904),  1  Ch.  276       1 168, 

1179,  1179,  1240,  1240,  1319 

Bodman,  Re  (1891),  3  Ch.  135      414. 

454,  1397 


Bodwic  V.  Fennell,  1  Wils.  233 
Bogardus  v.  Trinity  Church,  4 

Paige  (N.  Y.)  178 
Bogart  V.  New  York,  etc.  R. 

Co.,  102  N.  Y.  Supp.  1093 


595 

849 

1246, 
1373 
Boggs  V.  Boggs  &  Buhl  (Pa.), 

66  Atl.   105  573,  786 
V.  Lakeport,  etc.  Ass'n, 

111  Cal.  354;   43  Pac.  1106       917 
Bohm  V.  Loewer's,  etc.  Brew- 

erj'Co.,  9N.  Y.  Supp.  514; 

16  Daly's  Rep.  (N.  Y.)  80       592 
Bohmer  v.  City  Bank,  77  Va. 

445  770,  773,  773 

Bohn  V.  Boone  Bldg.  &  Loan 

Ass'n(Io\va),  112N.  W.  199         63 
Bohrer  v.  Adair,  61  Nebr.  824 ; 

86  N.  W.  495  625 

Boice  V.  Jones,  106  N.  Y.  App. 

Div.  547;    94  N.  Y.  Supp. 

896  336,  336 

Bolckow  V.   Heme  Bay  Pier 

Co.,  1  E.  &  B.  74  1528,  1528 

Boldenwick  v.  Bullis  (Colo.), 

90  Pac.  634  967,  971 

Boley  V.  Sonora  Development 

Co.  (Mo.),  103  S.  W.  975 
Bolt  &  Iron  Co.,  14  Ont.  211 


Boltoa  V.  Natal  Land  Co. 
(1892),  2  Ch.  124        1092, 

V.  Nebraska  Chicory  Co., 

69  Nebr.  681 ;  96  N.  W.  148 

V.  Prather,  35  Tex.  Civ. 

App.  295;    80  S.  W.  666 

Bolton  &  Co.,  R.  (1894),  3  Ch. 
356  1172, 

Bombay  Burmah  Trading 
Corp.  V.  Dorabji  Cursetji 
Shroff  (1905),  A.  C.  213 


192 
1238, 
1247 


1096, 
1098 

43 

143 

1173 


1041, 
1043 
Bomer  v.  .\m.  Spiral,  etc.  Co., 

81  N.  Y.  468  286,  288 

Bon  Aqua  Imp.  Co.  v.  Stand- 
ard Fire  Ins.  Co.,  34  W.  Va. 

764;    12  S.  E.  771  233 

Bond   V.    Barrow    Haematite 

Steel  Co.  (1902),  1  Ch.  3.53  464, 
465,  1091, 1099, 1102,  1102 

V.  Boan,  57  N.  H.  340  712 

V.  Gray  Imp.  Co.,   102 

Md.  426;  62  Atl.  827  938,  984 
V.  Mount  Hope  Iron  Co., 

99  Mass.  505;  97  Am.  Dec. 

49  748 
^,.    Pike    (Minn.),    Ill 


N.  Vv'.  910 


287,  287,  294 


TABLE    OF    CASES 
[The  refereneos  are  to  pages] 


Bond  r.  Terrell,  etc.  Mfg.  Co., 
82  Tex.  309;  18  S.  W.  G91 


852, 
867 


847 


452 


1433 


1206 

904 
1621 

157 


914 


Bondholders  of  York  &  Cum- 

borhuid  R.  R.  Co.,  Re,  50 

Me.  552  1493,  1495 

Bone  V.  Delaware,  etc.  Canal 

Co.  (Pa.),  5  Atl.  751 
Boney  v.  William.s,  55  N.  J. 

E(i.  691:    3S  Atl.  189 
Bonner  v.  City  of  New  Orleans, 

2  Wootls  135 
Bonnet  v.  First  Nat.  Bank,  24 

Tex.     Civ.    App.    613;    60 

S.  W.  325  501,  507 

Bonsall  v.  Piatt,  153  Fed.  126       309 
Bonta  V.   GritUey,   77  N.   Y. 

App.    Div.   33;     78  N.   Y. 

Supp.  961  1030 

Booker  v.  Crocker,  132  Fed.  7; 

65  C.  C.  A.  627  1524,  1529 
V.  Young,  12  Gratt.  (Va.) 

303 
Boord  V.  African  Consolidated, 

etc.  Co.  (1898),  1  Ch.  596 
Booth  V.  Brown,  62  Fed.  794 

V.    Campbell,    37    Md. 

522 

V.    Dexter   Steam    Fire 

Engine  Co.,  118  Ala.  369; 
24  So.  405 

V.  Land  Filling,  etc.  Co., 

59  Atl.  (N.  J.)  767  966,  1083, 

1312 

V.  New  Afrikander  Gold 

Mining  Co.    (1903),    l.Ch. 

295  352,  354,  355 

I'.  Robinson.  55  Md.  419        63, 

65,  75,  76.  974,  976.  1161, 
1271,  1274.  1274,  1306 

V.   Wonderly,   36  N.   J. 

Law  250  245,  246,  252 

Booth  Bros.  v.  Baird.  83  \.  Y. 

App.   Div.  495;    82  N.   Y. 

Supp.  432 
Booz's   Appeal,    109    Pa.    St. 

592;    1  Atl.  36 
Borax  Co.  (1901),  1  Ch.  326 
Borden  v.  Crook.  131  111.  68; 

22  N.  E.  793;    19  Am.  St. 

Rep.  23 
Borland's    Trustee     v.    Steel 

Bros.  &  Co.  (1901),  1  Ch.  279 

421.  564.  575,  575,  576, 
677.  994,  1010 
Bornstein   v.    District   Grand 

Lodge  (Cal.),    84  Pac.  271 

586,  5S7 
Borougli  of  Portsmouth,  etc. 


853 

565 
1548 


1502 
54, 


Tramways    Co.    (1892),    2 

Ch.  362  1.529 

Bosanquet  v.   St.   John    D'cl 

Rey  Mining  Co.,  77  L.  T. 

206  1104,  1.545 

Boschoek  Proprietary  Co.  v. 

Fuke  (1906),  1  Ch.  148  588, 

996,  1004,  1177,  1320 
Bosher  v.   Land  Co.,  89  Va. 

455;    16  S.  E.  360;   37  Am. 

St.  Rep.  879  182,  342 

Bostock  V.  Blakeney,  2  Bro. 

Ch.  653  1156 
V.  Edgar,  24  Vict.  L.  R. 

677  662,  961,  962 

Boston  V.  Simmons.  150  Mass. 

461;  23  N.  E.  210;    15  Am. 

St.  Rep.  230;  6L.  R.  A.629     1270 
Boston  Acid  Mfg.  Co.  v.  Mor- 

ing,  15  Gray  (Ma.ss.)  211  558 

Boston  Deep  Sea,  etc.  Co.  v. 

Ansell,  39  Ch.  D.  339  1183, 

1241,  1305, 1333 
Boston  Music   Hall  v.   Cory, 

129  Mass.  435  715 

Boston   Rubber  Shoe  Co.  v. 

Boston    Rubber    Co.,     149 

Mass.  436;  21N.  E.  875 

372,  373 
Boston    Tailoring    House    v. 

Fisher,  59  111.  App.  400 

1373, 1382 
Boston,    etc.    R.    R.    Co.    v. 

Coffin.  50  Conn.  150  1511 

V.  Graves,  80  Fed.  588         1285 

V.  Richardson,  135  Mass. 

473  738,  758,  759 
V.  Wellington,  113  Mass. 

79  608 

Boston,  etc.   R.   R.  Corp.  v. 

Haven,  8  Allen  (Mass.)  359      1490, 
1490,  1491 
Boston,    etc.    Trust    Co.     v. 

Chamberlain.  66  Fed.  847; 

14  C.  C.  A.  363  1621, 1621 

Boswcll  V.  Buhl.  213  Pa.  450; 

63  Atl.  56  573 

Bosworth  V.  Allen.  168  N.  Y. 

157:  61  N    E.  163:  85  Am. 

St.  Rep.  667:    oo  L.  R.  A. 

751  1161,  1161,  1181,  1259, 

1262,  1337 
Botsford  V.  New  Haven,  etc. 

R.  R.  Co..  41  Conn.  454  1539 

Bottomlev's  Case,  16  Ch.  D. 

681       '  1205 

Bouch  V.  Sproule.  12  A.  C.  385 

498,  498,  1139,  1139.  1139.  1139. 
1140.  1141.  1142 


TABLE    OF    CASES 

[The  references  are  to  pages] 


629 
337 


1560 
1560 


907 
260 
528 
230 
618 


1329 
1527 


Bouchard    r.    Prince's    Hall 

Restaurant,  20  Times  L.  R. 

574 
Boulter  v.  Peplow,  9  C.  B.  493 
Boulton  Carbon  Co.  v.  Mills, 

78  Iowa  460 :  43  N.  W.  290 ; 

5  L.  R.  A.  649  612,  635 

Bound  V.  South  Carolina  Ry. 

Co.,  47  Fed.  30 

V.  South   Carolina   Ry. 

Co.  50  Fed.  312 

V.   South  Carolina  Ry. 

Co.,  58  Fed.  473;  7  C.  C.  A. 

322  1563,  1624,  1625,  1631 

Bourdette  v.  Sieward,  107  La. 

258:    31  So.  630 
Bousfield  V.  Wilson,  16  M.  & 

W.  185 
Bouton   V.    Dement,  123    111. 

142;    14  N.  E.  62 
Bow  V.  Allenstovvn,  34  N.  H. 

351;   69  Am.  Dec.  489 
Bowden  v.  Johnson,  107  U.  S. 

251;   2  Sup.  Ct.  246 
Bowditch  V.  New  England  Life 

Ins.  Co.,  14lMass.  292;4N. 

E.  798;  55  Am.  Rep.  474 
Bo  wen  v.  Brecon  Ry.  Co.,  3 

Eq.  541 
V.  Kuehn,  79  Wise.  53 ; 

47  N.  W.  374  433,  602 
V.  Needles  Nat.  Bank,  94 

Fed.  925;    36  C.  C.  A.  553       84, 

838 
Bowers     v.     Hechtman,     45 

Minn. 238 ; 47  N. W. 792     405,  409 

V.  Male,  186  N.  Y.  28  1266 

Bowlby  V.  Bell,  3  C.  B.  284  422 

Bowler     v.     American     Box 

Strap  Co.,  22  N.  Y.  Misc. 

335 ;   49  N.  Y.  Supp.  153         1238 
Bowling  Green  Trust  Co.  v. 

Virginia  Pass.  etc.  Co.,  132 

Fed.  921  1585,    1587 
V.  Virginia  Pass.  etc.  Co., 

133  Fed.  186 
Bowman  v.  Foster,  etc.  Hard- 
ware Co.,  94  Fed.  592       834,  835 
Bowman  Dairy  Co.  v.  Mooney, 

41  Mo.  App.  665  95,  854,  854 

Bowne   v.    Smith,   44   N.    Y. 

Misc.  575 ;    90  N.  Y.  Supp. 

204 
Bowring  v.  Shepherd,  L.  R.  6 

Q.  B.  .309 
Box,  Re,  1  Hem.  &  Mill.  552 

789,  816 
Boy 06  V.  Augusta  Camp,  14 

Okl.  642;    78  Pac.  322  384 


1602 


942 

782 


Boyce    v.     Continental    Wire 

Co.,  125  Fed.740;    60  C.  C. 

A.  508  1518,  1638 
V.  Trustees  Towsontown 

Sta.   of  M.   E.  Church,  46 

Md.  359  221,  236,  238,241 

Boyd    V.    American    Carbon 

Black  Co.,  182  Pa.  St.  206; 

37  Atl.  937  79,  852 
V.  Chesapeake,  etc.  Canal 

Co.,  17  Md.   195;    79  Am. 

Dec.  646  1551 
V.  Conshohocken  Worsted 

Mills,  149  Pa.  St.  363;    24 

AtL  287  810,  811,  1131 
V.  Kennedy,  38  N.  J.  Law 

146  1432 
V.  Mutual  Fire  Ass'n,  1 16 

Wise.  155;   90  N.  W.  1086; 

94  N.  W.  171  1288 
V.  Peach  Bottom  Ry.  Co. 

90  Pa..St.  169  189,  191 
V.  Recid,  120  N.  Car.  335 ; 

27S.  E.  35;  58Am.  St.  Rep. 

792  768,  775 
V.  Schneider,   131   Fed. 

223;  65  C.C.  A.  209       1285,1357 
Boyer,  Ltd.,  Paul,  v.  Edwardes, 

17  Times  L.  R.  16  355,  356 

Boylan  v.  Huguet,  8  Nevada 

345 

V.  Kelly,  36  N.  J.  Eq.  331 

Boyle  V.  Farmers'  L.  &  T.  Co., 

88  Fed.  930;    32    C.  C.  A. 

142 
Boyle's  Case,     54  L.  J.   Ch. 

550 
Boynton  v.   Roe,    114   Mich. 

401;    72  N.  W.  257        1187,  1201 
Bracken  v.   Nicol    (Ky.),   99 

S.  W.  920  616,  696 

Brackett     v.     Persons     Un- 
known, 53  Me.  228 
Braddock  v.  Philadelphia,  etc 

R.R.  Co.,  45  N.J.  Law  363 


418 
1397 


1631 
168 


924 


602, 
604 
Braddock   Borough   v.    Penn 

Water  Co.,  189  Pa.  St.  379; 

42  Atl.  15  123,  147 

Bradford   v.    Frankfort,    etc. 

R.  R.  Co.,  142  Ind.  383;  40 

N.  E.  741;  41  N.  E.  819  1224 
V.  Harris,  77  Md.  153 ;  26 

Atl.  186  343 

Bradford     Banking     Co.     v. 

Briggs,  12  A.  C.  29  769,  774,  796 
Bradlee  v.  Warren  Five  Cent 

Sav.  Bank,  127  Mass.  107; 

34  Am.  Rep.  351  1380 


TABLE    OF    CASES 
[The  lefi'iences  are  to  pages] 


Bradley  v.  Ballard,  55  111.  4  i;i ; 

8  Am.  Rep.  GoO  8G1 
V.  Chester  Valley  R.  R. 

Co.,  3()Pa.  St.  141  1581,1601 

V.  Carritt  (1903),  A.  C. 

253  1029 

V.  Iloldsworth,  3  M.  & 

W.  422  420 

Bradley  Fertilizer  Co.,  19  Pa. 

Co.  Ct.  271  129,  375,  379 

Bradley  Fertilizer  Co.  v.  South 

Pub.  Co.,  17  X.  Y.  Supp.  587       298 

V.    South    Pub.    Co.,    4 

N.  Y.  Mi.sc.  172:    23  N.  Y. 
Supp.  675  236,  246,  247,  279 

Brad.shaw,   Ex  parte,    15  Ch. 

D.  465  1499,  1513,  1639 

Brady    v.    Johnson,    75    Md. 

445;    26  Atl.  49;    20  L.  R. 

A.  737  1508,  1551 

V.  State,     26  Md.  290 

1515,  1551 

Brainerd  v.  New  York,  etc. 

R.  R.  Co.,25N.  Y.  496  1423, 

1432 

V.  Peck,  34  Vt.  496     1512, 

1513,  1551 

Braintree  Water  Co.  v.  In- 
habitants of  Braintree,  146 
Ma.ss.  482;   16  N.  E.  420  219 

Bramblet  v.  Commonwealth 
Land,  etc.  Co.,  26  Ky.  Law 
Rep.  1176;  83  S.  W.  599; 
27  Ky.  Law  Rep.  156;  84 
S.  W.  545  1165,  1166,  1304, 

1342 

Brampton  &  Lon^town  Ry. 
Co.,  Re,  10  Ch.  177 

Branch  v.  Augusta  Glass 
Works,  95  Ga.  573;  23 
S   F    1  '^8 

^v.Je'^sup.  106  U.  S.  468; 

1  Sup.  Ct.  495  444,  450, 

450,  1507 

Branch,  Sons  &  Co.  v.  Atlan- 
tic, etc.  R.  R.  Co.,  3  Woods 
481  1495 

Branch  of  the  Bank  v.  Collins, 

7  Ala.  95  1316,  1321,  1322 

Brand  v.  Godwin,  15  Daly 
(N.  Y.)  456;  8  N.  Y.  Supp. 
339;    9  N.  Y.  Supp.  743         1365 

Brandenstein    v.    Hoke,     101 

Cal.  131;    35  Pac.  562  244 

Brander  v.    Brander,  4  Ves. 

800  1141, 1143 

Brandreth,  Re.  58  N.  Y.  App. 
Div.  575;  69  N.  Y.  Supp. 
142  679,  679 


295 


1211 


Brannin  v.  Loving,  82  Ky.  370  1357 
Brant  v.  Ehlen,  59  Md.  1  634.  647 
Brass    v.    Worth,    40    Barb., 

(X.  Y.)  648  808 

Bra.ssey  v.  N,  Y.,  etc.  R.  R. 

Co..  19  Fed.  663  1604 

Bra-ssfield     v.     Quincy,     etc. 

R.   R.   Co.,    109  Mo.   App. 

710;    S3  S.  W.  1032  380 

Bratten  v.   CatawLssa  R.   R. 

Co.,   211   Pa.   21;     60   Atl. 

319  494,  1474,  1475 

Breck  v.   Barney,    183  Mass. 

133;    66  X.  E.  643  645 

Breeze  v.  Lone  Pine  Sur- 
prise,   etc.    Co.,   39    Wash. 

602;   81  Pac.  1050  906 

Breinig  v.  Sparrow  (Ind.),  80 

X.  E.  37  80,  853 

Bremen     Savings     Bank     v. 

Branch-Crookes    Saw    Co., 

104  Mo.  425;  16  S.  W^  209  297 
Brendon  v.  Worley,  8  N.  Y. 

Misc.  253;   28  N.  Y.  Supp. 

557  590 

Brennan      v.       Emery-Bird- 

Thayer  Dry  Goods  Co.,  99 

Fed.  971  300 

Brent  v.  Bank  of  Washington, 

10  Pet.  596  768,  769,  774,  1124 
V.  Bank  of  Washington, 

2CranchC.  C.  517  768,  1124 

Brewer    v.    Boston    Theatre, 

104  Mass.  378  935,  944,  945, 

945,  976,  978 

r.  Chelsea  Mutual  Fire 

Ins.Co.,  14  Gray  (Ma.ss.)  203       589 

V.  State,  7  Lea  (Tenn.) 

682  127 

Brewer  Brewing  Co.  v.  Bod- 
die,  181  111.  622;    55  N.  E. 

49  861 

Brewster  v.  Hartley,  37  Cal. 

15;  99  Am.  Dec.  237  191.1022, 
1027,  1031 
V.  Hatch,  122  N.  Y.  349; 

25  X.  E.  505;  19  .Am.  St. 

Rep.  498  311,  340 

V.  Lathrop,  15  Cal.  21    1136 

V.  Sime,  42  Cal.  139  799 

Brick  r.  Brick,  98  U.  S.  514  812 
Brick    &   Stone   Co.,    W.    N. 

(1878)  140  994,  1186 

Bridge  Co.  v.  Mayer,  31  Oh. 

St.  317  1009 

Bridgeport     Bank     v.     New 

York,  etc.   R.   R.   Co..   30 

Conn.  231  685,  685.  714,  718. 

730,  749 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Bridgeport  Sav.  Bank  r.  Eld- 

redse,    28   Conn.    550;     73 

Ani;  Dec.  6SS  1371 

Bridgeport,    etc.    Ice    Co.    v. 

Meader,   72   Fed.    115;     18 

C.  C.  A.  451  286,  1007 

Bridger's  Case.  5  Ch.  305  633 

Bridgers  and  Neill's  Case,  4 

Ch.  266  668 

Bridges  v.  Nat.  Bank  of  Troy, 

185  N.  Y.  140  572,  773,  1124 

Bridse water  Iron  Co.  v.  Liss- 

berger,  110  U.  S.  8;   6  Sup. 

Ct.  241  _  716 

Bridgewater   Navigation   Co. 

(1891),  2  Cli.  317  471 

Brideman  v.  City  of  Keokuk, 

72  Iowa  42;   33  N.  W.  355      421, 

424 
Briggs  V.  McCuIlough,  36  Cal. 

542  231,  384 

V.  Spaulding,  141  U.  S. 

132;    11  Sup.  Ct.  924  1181, 

1182,  1182,  1262,  1274,  1276, 

1276,  1278,  1279,  1281 

V.  Traders  Co.,  145  Fed. 

254  970 

,  Ex  parte,  1  Eq.  483  181 

Bright  V.  Hutton,  3  H.  L.  C. 

341  275,  275,  276,  307 

V.    Lord,   51    Ind.   272; 

19  Am.  Rep.  732  1135,  1135 
V.  Metairie  Cemetery  Co., 

33  La.  Ann.  58  1372 

Brighton     Brewery    Co.,     37 

L.  J.  Ch.  278  1336 

Brill  Co.,  J.  G.,  V.  Norton,  etc. 

St.  Ry.  Co.,  189  Mass.  431; 

75  N.  E.  1090  _  863 

Brinckerhoff  v.  Bostwick,  99 

N.  Y.  185;  1  N.  E.  663       981,1288 

V.  Roosevelt,   143  Fed. 

478;    74  C.  C.  A.  498  967 

Brinkerhoff  v.  Holland  Trust 

Co.,  159  Fed.  191  1354 

Brinkerhoff-Farris  Trust,  etc. 

Co.  V.  Home  Lumber  Co., 

118  Mo.  447;  24  S.  W.  129  571, 
571,  574,  589,  712,  752,  773 
Brinkerhoff  Zinc  Co.  v.  Bovd, 

192Mo.  597;  91  S.  W.  523  1211, 
1268,  1360 
Brinkley    v.    Hambleton,    67 

Md.  169;    8  Atl.  904       617,782, 

783 
Brinkley  Car,  etc.  Co.  v.  Curf- 

man  (Iowa),  114  N.  W.  12  102 
Brinley  v.  Grou,  50  Conn.  60; 

47  Am.  Rep.  618  503,  1138 


Brinley  v.  Mann,  2  Cush. 
(Mass.)  337;  48  Am.  Dec. 
609  398 

Brisbane    v.    Delaware,    etc. 

R.R.Co.,94N.  Y.204       732,  "753, 
755,  756,  1130 

Bristol  County  Sav.  Bank  v. 

Keavy,  128  Mass.  298  1379 

Bristol  Creamery  Co.  v.  Til- 
ton,  47  Atl.  Rep.  591;  70 
N.  H.  239  _        109,  195 

Bristol    LTnited   Breweries   v. 

Abbot  (1908),  1  Ch.  279  1396 

Bristol,  etc.  Trust  Co.  v. 
Jonesboro,  etc.  Trust  Co., 
101  Tenn.  545;  48  S.  W. 
228  123,  220,  298,  1109,  1169, 

1365 

British  &  American,  etc. 
Corp.  V.  Couper  (1894), 
A.  C.  399  532,  534,  534,  534 

British  Asbestos  Co.  v.  Boyd 

(1903),  2  Ch.  439  1230,  1230, 

1230,  1231 

British  Equitable  Ins.  Co.  v. 

Baily  (1906),  A.  C.  35       584,  587 

British  Flax,  etc.  Co.,  60  L.  T. 

215  1038 

British  Guardian  Co.,  14  Ch. 

D.  .335  1261,  1264,  1267,  1285 

British  India,  etc.  Co.  v.  In- 
land Revenue  Comm'rs,  7 
Q.  B.  105  1392 

British  Linen  Co.  v.  South 
American,  etc.  Co.  (1894), 
1  Ch.  108  1598 

British  Nation  Life  Ass.  Ass'n, 

8  Ch.  D.  079  77 

British  Oil  &  Coke  Mills  v. 
Inland  Revenue  Comm'rs 
(1903),  1  K.  B.  089  1495 

British  Power  Traction,  etc. 

Co.  (1906),  1  Ch.  497      1643,  1047, 

1648 

British    Power  Traction    Co. 

(No.  2)  (1907),  1  Ch.  528        1043, 
1047,  1047 

British  Seamless  Paper  Bo.k 

Co.,  17  Ch.  D.  407  24 

British  Sugar  Co.,  3  K.  &  J. 

408  604,  1007,  1007 

British  Vacuum  Cleaner  Co. 
V.    New    Vacuum    Cleaner 
Co.  (1907),  2  Ch.  312        369,  371, 
375,  375,  376 

Briton  Medical,  etc.  Ass'n  v. 

.lones,  61  L.  T.  384  1230 

Brittan  v.  Oakland  Bank  of 
Savings,   124  Cal.  282;    57 


TABLE    OF    CASES 
[The  references  are  to  paRes] 


Pac.  84;    71  Am.  St.  Rep. 

58  72;i,  808,  809,  1329 

Broadway  Bank  v.  McElrath, 

13  N.  J.  K(i.  24  715 

Broadway      Nat.      Bank     v. 

Baker,   176  Mass.  294;    57 

N.  E.  ()03  70 

Broadwell  v.  Merritt,  87  Mo.  95  302 
Brockert  v.  Central  Iowa  Ry. 

Co.,  82  Iowa  3(J9;   47  N.  W. 

102G  1009 

Brocklebank  v.  East  liOndon 

Ry.  Co.,  48  L.  J.  Cli.  729  161G 
Broc'kway    v.    Gadsden,    etc. 

Land  Co.,  102  Ala.  620;    15 

So.  431  602,  611,  614,  120S 

Brock  way   Mfp.   Co.,   Re,  89 

Me.  121;   35  Atl.  1012;   56 

Am.  St.  Rep.  401  1290,  1357 

Bronson     v.     LaCrosse,     etc. 

R.  R.  Co.,  2  Wall.  283       932,  984, 

985 
Bronson  Electric  Co.  v.  Rheu- 

bottorn,  122  Mich.  608;   81 

N.  W.  563  572 

Brooke  v.  Day  (Ga.),  59  S.  E. 

769  147,  148,  237 

Brooklyn  Heights  Realty  Co. 

V.  Kurtz,   115  N.  Y.  App. 

Div.  74  1262 

Brooklyn,     Queens     County, 

etc.  R.  R.  Co.,  185  N.  Y.  171  141 
Brooklyn    Union   Gas   Co.   v. 

City    of    New    York,     115 

N.  Y.  App.  Div.  69  890 

Brooklyn,  etc.   R.   R.   Co.   v. 

Stronp,  75  N.  Y.  591  1270, 1332 
Brooks  V.   Railway  Co.,    101 

U.  S.  443  1542 

V.     Vermont     Central 

R.  R.  Co.,  14  Blatchf.  463  1493, 
1585,  1588 
V.  Vermont  Central  R.  R. 

Co.,  22  Fed.  211  1622 

Brooks,    Jenkins    &    Co.    v. 

Mayor,    etc.     of    Torquay 

(1902),  1  K.  B.  601  403,  404 

Broome  v.  Galena,  etc.  Packet 

Co.,  9  Minn.  239  25 

Brophv  V.  .\inerican  Brcwinc; 

Co. ,  2 11  Pa . 596 ; 6 1  A 1 1 .  1 23  1245 
Hrotlierliood       of       Railroad 

Trainmen    v.    Newton.    79 

111.  App.  500  577,  577,  578,  590 
r>rouf!;hton    v.    Brousiliton,    5 

De  G.  M.  &  G.  160  1325 

V.    Manchester    Water- 
Works  Co.  (1819),  3  B.  & 

Aid.  1  828 


Brown  v.  Adams,  5  Bi.ss.  181       696 

V.  Andrew,  13  Jur.  938         308 

V.  Black,  8  Ch.  939       708,  7.S.3 

V.  Bokee,  53  Md.  155  424, 

678 

V.   Bradford,    103    Iowa 

378;  72  N.  W.  648  11«S 
V.  Brown  (N.  J.),  65  Atl. 

739  503,  1149 

Brown     v.    Chesapeake,     etc. 

Canal  Co.,  73  Md.  567  1682 

V.  Citizens'  Ice,  etc.  Co. 

(N.  J.),  66  Atl.  181  64 

V.  City  of  .Vtchison,  39 

Kans.  37:    17  Pac.  465;    7 

Am.  St.  Rep.  515  855,  859 

V.     Commonwealth,     3 

Grant  Cas.  (Pa. )  209  1040 

V.  Commercial  Fire  Ins. 

Co.,  21  App.  D.  C.  325       402,  402, 

403 
V.  Corbin,  40  Minn.  508; 

42  N.  W.  481  47 

V.  Creston  Ice  Co.,  113 

Iowa  615;  85  N.  W.  750         1246 

V.  Crown   Gold   Milling 

Co.  (Cal.),  89  Pac.  86  1234,  1235 
V.  DeYoung,  167  111.  549 ; 

47  N.  E.  863  982,  982 
V.  Dibble,  65  Mich.  520; 

32  N.  W.  656  1005 
V.  Duluth,  etc.  Rv.  Co., 

53  Fed.  889  645,  962, 1402 
V.  Florida  Soutliern  Ry. 

Co.,  19  Fla.  472  509 
V.  Galveston  Wharf  Co., 

92  Tex.  520;  50  S.  W.  126      1240, 

13S3 
V.  Gellatly,  2  Ch.  751  1 136 

V.  Grand   Fountain,  28 

App.  D.  C.  200  134,  141,  142 

V.  Howard  Fire  Ins.  Co., 

42  Md.  384;    20  Am.  Rep. 

90  728,  735,  736,  738,  759 

V.  Lehigh  Coal  Co.,  49 

Pa.  St.  270  1133 

V.    Maryland   Tel.,   etc. 

Co.,  101  Md.  574;    61  Atl. 

338  141 

V.  Morton,  71  N.  J.  Law 

26;    58  Atl.  95  616 

V.  New  York,  etc.  R.  R. 

Co.,  19  How.  Pr.  (N.  Y.)  84     1571, 

1572 

V.  Pacific  Mail.  etc.  Co., 

5  Blatchf.  525      104S,  Ur)0,  1053, 
1061,    1064,  1064.  1064,  1064 

V.     Republican     Silver 

Mines,    17    Colo.    421;     30 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Pac.  66:   16  L.  R.  A.  426        1237, 
1245,  1247.  1248, 1322 

V.     Republican     Silver 

Mines,  55  Fed.  7     .■).)4,  1001,  1199 

V.  Schleier,  118  Fed.  981 ; 

194  U.  S.  18;    24  Sup.  Ct. 

558  107,  836 

I'.      Scotti.sh-.\merican 

Mortgage  Co..  110  111.  235         232 

V.   Smith,    122     Mass. 

589  781 

V.  Tillinghast,  84  Fed. 

71;      93     Fed.     326;      35 

C.  C.  A.  323  489 
V.  Toledo,  etc.  R.  Co.,  35 

Fed.  444  1611 
V.  Utopia  Land  Co.,  103 

N.  Y.  Supp.  50  978,  979 
V.  Ward,  3  Duer  (N.  Y.) 

660  808,  1439 
V.  Warner,  78  Tex.  543 ; 

14  S.  W.  1032;   22  Am.  St. 

Rep.  67;  11  L.  R.  A.  394        1611 

V.   Weymouth,   36  Me. 

414  1378,  1379,  1379 

V.  Winnisimmet  Co.,  11 

Allen  (Mass.)  326  68,  91 

V.  Wyandotte,  etc.  Ry. 

Co.,  68  Ark.  134;   56  S.  W. 

862  140,  219,  531 

Brown     &     Gregory,      Ltd. 

(1904),  1  Ch.  627;    (1904) 

2  Ch.  448  1430 

Brown  &  Lamed,  Re,  14  R.  L 

371 ;  51  Am.  Rep.  397  1 144, 1 152 
Brown's  Case,  9  Ch.  102  1171 

Brown,  Ex  parte,  18  S.  Car.  87     1654 

,  Ex  parte,  19  Beav.  97         1223, 

1276 
Browne  v.  La  Trinidad,  37  Ch. 

D.  1  34,  285,  996,  1184,  1232 

V.  Monmouthshire  Ry. 

Co.,  13  Beav.  32  951,1109 

V.  St.  Paul  Plow  Works, 

62  Minn.  90;  64  N.  W.  66 


Brownell    v. 
Mass.  442; 


Anthony,     189 
75  N.  E.  746 


Browning  v.  Hinkle,  48  Minn. 

544;     51    N.   W.    605;     31 

Am.  St.  Rep.  691 
V.  Kelly,  124  Ala.  645; 

27  So.  391 
Broyles  v.    McCoy,    5   Sneed 

(Tenn.)  602 
Bruce  v.  Piatt,  80  N.  Y.  379 

V.  Smith,  44  Ind.  1 


192, 
527 

1153, 
1155 


649 
1661 

309 
1182, 
1182 

781 


Brundage    v.    Brundage,    60 

N.  Y.  544  496,  1156 

Brundred  v.  Rice,  49  Oh.  St. 
640:  32  N.  E.  169;  34  Am. 
St.  Rep.  589  245,  261 

Brunner  v.  Brown,   139  Ind. 

600;   38  N.  E.  318  286 

Brunswick  Gas  Light  Co.  v. 
United  Gas,  etc.  Co.,  85  Me. 
532  851 

Brunswick,  etc.  R.  R.  Co.  v. 

Hughes,  52  Ga.  557  1500 

Brunton's  Case,  19  Eq.  302         1421 

Brush  Electric  Light,  etc.  Co. 
V.  City  Council  of  Mont- 
gomery, 114  Ala.  433;  21 
So.  960  1370 

Brussels  Palace  of  Varieties  v. 

Prockter,  10  Times  L.  R.  72       363 

Bruton  v.  Electrical  Engineer- 
ing Corp.  (1892),  1  Ch.  434     1547 

Bryan  V.Baldwin,  52  N.Y.  232       809 

V.    Sturgis    Nat.    Bank 

(Tex.),  90  S.  W.  704       793,  1111, 

1134 
Bryant  v.  D.  C.  Dental  Soc, 

26  App.  D.  C.  461  577,  580 

Bryant's,    etc.    Mill    Co.    v. 

f^elt,  87  Me.  234;    32  Atl. 

888;   47  Am.  St.  Rep.  323; 

33  L.  R.  A.  593  209,  209 

Bryon  v.  Carter,  22  La.  Ann.  98  770 
Bryson    v.    Rayner,    25    Md. 

424;  90  Am.  Dec.  69  803,  811 
Buchan's  Case,  4  A.  C.  549  622, 
788,  789,  790 
Bucher  v.  Dillsburg,  etc.  R.  R. 

Co.,  76  Pa.  St.  306  203 

Buck  V.  Buck,  1  Campb.  547       259 

V.  Jones,  18  Colo.  App. 

250;  70  Pac.  951  635 

V.   Seymour,   46  Conn. 

156  1502,  1510 
V.  Troy  Aqueduct  Co.,  76 

Vt.  75;  56  Atl.  285  588,  1205, 
1210,  1318 
Buckhannon,  etc.   R.  Co.  v. 

Davis,    135   Fed.   707;    68 

C.  C.  A.  345  1616,  1617 

Buckmaster  v.  Consumers'  Ice 

Co.,  5  Daly  (N.  Y.)  313  751 

Bucksport,  etc.  R.  R.  Co.  v. 

Brewer,  67  Me.  295  193 

V.  Buck,  68  Me.  81       191,  386, 

1007,  1007 
Budd  V.   Multnomah  St.  Ry. 

Co.,  15  Oreg.  413;  15  Pac. 

659;  3  Am.  Rep.  169  579,  606, 
607,  657,  666,  1187 


TABLE    OF    CASES      • 
[The  references  are  tu  pages] 


Budd  V.  Munroe,  18  Hun  (N. 

Y.)  316  799,  1177 
V.  Walla  Walla,  etc.  Pub. 

Co.,  2  Wash.  Ty.  347;    7 

Pac.  896  1197,  1201,  1298,  1299 
Buel  V.   Baltimore,   etc.    Ry. 

Co.,24N.  Y.  Misc.  646;   53 

N.  Y.  Supp.  749  1677,  1678, 

1679,  1679,  1683 
Buell    V.    Buckingham,    etc. 

Co.,  16  Iowa  284;    8.5  Am. 

Dec.  516  1187,  1205,  1296,  1315 
Buffalo  German    Ins.   Co.   v. 

Third  Nat.  Bank,  19  N.  Y. 

Misc.  564;  43  N.  Y.  Supp. 

550  574,  751 
V.  Third  Nat.  Bank,  162 

N.  Y.  163;    56  N.  E.  521; 

48  L.  R.  A.  107  571 

Buffalo    Loan,    etc.    Co.    v. 

Medina  Gas  Co.,  12  N.  Y. 

App.  Div.   199;    42  N.  Y. 

Supp.  781  1407,  1450 

Buffalo,    etc.    R.    R.    Co.    v. 

Gary,  26  N. Y.  75      119,  247, 248, 

249 
V.  Clark,  22  Hun  (N.  Y.) 

359  209,  609,  609 

V.  Gifford,  87  N.  Y.  294       174, 

609 

V.  Hatch,  20  N.  Y.  157        101, 

240 
Buffett  V.  Troy,  etc.  R.  R.  Co., 

40  N.  Y.  168  870 

Buffington     v.     Bardon.     80 

Wise.  635 ;  50  N.  W.  776  280,  307 
Buford   V.  Keokuk  Northern 

Line  Packet  Co. ,  69  Mo.  6 1 1  952 
Bugg,  Ex  parte,  2  Drewry  & 

Sm.  452  175,  620 

Buker  v.  Leighton  Lea  Ass'n, 

164  N.  Y.  557;    58  N.    E. 

1085;   s.  c.  18  N.  Y.  App. 

Div.  548;    46  N.  Y.  Supp. 

35  663 

Bulawayo  Market  &  OflBces 

Co.  (1907),  2  Ch.  458  1161,  1167 
Bulkeley  v.  Stephens,  10  L.  T. 

N.  s.  225  1136,1156 

V.    Stephens    (1896),   2 

Ch.  241  1156,  1157 

V.     Worthington     Ecc. 

Soc,  78  Conn.  526;  63  Atl. 

351  1154,  1155 

Bullard    v.    Bank,    18    Wall. 

589  112,  572 

Bullen  V.  Milwaukee  Trading 

Co.,  109  Wise.  41;  85  N.  W. 

115  408 


1341 


Bullock  V.  Falmouth,  etc.  Co., 

85  Ky.  184;  3  S.  W.  129  198 

Bultfontein     Sun      Diamond 

Mine,  12  Times  L.  R.  461 ; 

13  Times  L.  R.  156  351,  363 

Buncombe    Turnpike    Co.    v. 

McCarson,    1    Dev.    &    B. 

(N.  Car.)  306  229 

Bundy  v.  Iron  Co.,  38  Oh.  St. 

300  1069,  1071,  1072 

Bunting's  Admrs.  v.  Camden, 

etc.  R.  R.  Co.,  81  Pa.  St. 

254  1423 

Burbank  v.  Dennis,  101  Cal. 

90;  35  Pac.  444  322,  322,  329 

Burbidge  v.  Morris,  3  H.  &  C. 

664  276,  308 

Burden  v.  Burden,  159  N.  Y. 

287;  54  N.  E.  17  966,  1110, 

1211,  1305,  1312,  1313, 

1313 

V.  Burden  Iron  Co.,  39 

N.  Y.  Misc.  559;    80  N.  Y. 

Supp.  390 
Burdett  v.  Standard  Explora- 
tion Co.,    16  Times  L.  R. 

1 12  428,  429,  430,  430 

Burdick  v.   Dillon,    144  Fed. 

737;  75  C.  C.  A.  603  44 

Burgess     v.     Seligman,      107 

U.  S.  20;  2  Sup.  Ct.  10     191,622, 
622,  623 
V.  St.  Louis  County  R.  R. 

Co.,  99  Mo.  496;    12  S.  W. 

1050  966,  967 

Burgess's  Case,  15  Ch.  D.  507       179 
Burham     v.     San     Francisco 

Fuse  Mfg.  Co.,  76  Cal.  26; 

17  Pac.  939 
Burke  v.  Concord  Railroad,  61 

N.  H.  160 
I'.   Dillingham.  60  Fed. 

729;  9C.  C.  A.  255 
V.    Lechmere,    L.    R.    6 

Q.  B.  297  166,  210,  213 
V.  Lincoln- Valentine  Co., 

28    N.    Y.    Misc.    202;     58 

N.  Y.  Supp.  1077,  1124 
V.  Short,  79  Fed.  6;    24 

C.  C.  A.  422 
V.   Sidra   Bay   Co.,    116 

Wise.  137;  92  N.  W.  568 

V.  Smith,  16  Wall.  390 

359,  705 
Burkhead     v.      Independent 

School   District,    107   Iowa 

29;  77  N.  W.  491  1189 

Burkinshaw  v.  Nicolls,  3  A.  C. 

1004  647,  647,  648 


666 

79 

1619 


297 

1452 

1006 
191, 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Burland  v.  Earle  (1902).  A.  C. 

83       75,  324,  930,  936,  936,.  1 1 10, 

1332 
Burlington    City    Loan,    etc. 

Co.  V.   Princeton   Lighting 

Co.  (N.  J.),  67  Atl.  1019         1669, 

1669 
Burlington     Voluntary     Re- 
lief   Dept.    V.    White,    41 

Nebr.  547;    59  N.  W.  747; 

43  Am.  St.  Rep.  701         577,  577, 
577,  589 
Burmeister    v.    Koster,     107 

N.  Y.  Supp.  636  1553 

Burn    r.    London    &    South 

Wales   Coal   Co.,   7  Times 

L.  R.  118  897,  904,  1252 

Burnes  v.   Burnes,    137   Fed. 

781;  70  C.  C.  A.  357  517 
V.  Pennell,  2  Ho.   Lds. 

Cas.  497  ^  763 

Burnham  v.  Bowen,  111  U.  S. 

776;  4  Sup.  Ct.  675       1562,  1570, 

1571 

,  Re,  140  Fed.  926  1553 

Burns  v.  Beck,  83  Ga.  471 ;  10 

S.  E.  121  160,  1240 
V.  Commencement  Bay, 

etc.  Co.,  4  Wash.  558;    30 

Pac.  668,  709  1237 
V.  St.  Paul  St.  Ry.  Co. 

(Minn.),  112  N.  W.  412  901 

Bumside   v.    Dayrell,    3    Ex. 

224  276,  342 

Burr  V.   M' Donald,  3  Gratt. 

(Va.)  215        63,  1079,  1185,  1224 
V.    Sherwood,    3    Bradf . 

(N.  Y.)  85  678,  791,  792 

V.  Wilcox,  22  N.  Y.  551       154, 

156 
Burrill    V.    Nahant    Bank,    2 

Mete.  (Mass.)  163;   35  Am. 

Dec.  395  1186,  1213 

Burroughs  v.  North  Carolina 

R.  R:  Co.,  67  N.  Car.  376; 

12  Am.  Rep.  611  1132,  1135 

Burrows  v.  Interborough  Met. 

Co.,  156  Fed.  389         57,  968,  969 
V.    Matabele,    etc.     Co. 

(1901),  2  Ch.  23  354,  626 
V.  Niblack,  84  Fed.  Ill ; 

28  C.  C.  A.  1.30  517,  520 

V.  Smith,  10  N.  Y.  550  198 

Burt  V.  Batavia  Paper  Mfg. 

Co.,  86  111.  66  300 

V.  British  Nation  Life  Ass. 

Ass'n,  4  De  G.  &  J.  158      966, 973 
V.  Bull  (1895),    1   Q.   B. 

276  1614,  1015 


618 
1057 


723 


784 


1242 


Burt     V.  Rattle,    31  Oh.   St. 

116  451,456 
V.  Real  Estate  Exchange, 

175  Pa.   St.   619:    34  Atl. 

923 ;  52  Am.  St.  Rep.  858 
Burton  v.  St.  George's  Soc, 

28  Mich.  261 
Burton's  Appeal,    93   Pa.   St. 

214 
Burton,  etc.  Co.,  31  L.  J.  Q.  B. 

62  893,  894 

Burwash  v.  Ballou,  82  N.  E. 

355  (111.) 
Busell  Trimmer  Co.  v.  Coburn, 

188  Mass.   254;    74  N.   E. 

3.34;  09  L.  R.  A.  821 
Busenback     v.     Attica,     etc. 

Gravel  Road  Co.,  43  Ind. 

265  105,  117 

Busey  v.  Hooper,  35  Md.  15; 

6  Am.  Rep.  350  156,  156 

Bush's  Case,  6  Ch.  246       1223,  1325 

,  9  Ch.  554  154 

Bushee  v.  Freeborn,  11  R.  L 

149  501,  503,  1152 

Bushnell  v.  Consolidated  Ice 

Machine  Co.,    138   111.   67; 

27  N.  E.  596      124,  124,  126,  149, 

250 
Butchers'     Beneficial     Ass'n, 

35  Pa.  St.   151 
Butchers',     etc.     Bank,     130 

Mass.  204 
Butler  V.  American  Toy  Co., 

46  Conn.  136 
V.  Cornwall  Iron  Co.,  22 

Conn.  335 
V.  Eaton,  141  U.  S.  240; 

llSup.  Ct.  985 
V.     Montgomery     Grain 

Co.,  85  Mo.  App.  50 
V.  Murphy,  80  S.  W.  337 

(Mo.) 

V.  Rahm.  46  Md.  541 

1503,  1523,  1551,  1553,  1588, 
1588 
Butler  Paper  Co.  v.  Cleveland, 

220  111.  128;  77  N.  E.  99; 

110  Am.  St.  Rep.  230 
Butler  University  v.   Scoon- 

over,  114Ind.  381;  16N.  E. 

642 ;  5  Am.  St.  Rep.  627 
Butt  V.  MacNichol  Construc- 
tion Co.,  140  Fed.  840;  72 

C.  C.  A.  2.52 
V.  Monteaux,  1  K.  &  J. 

98  256,  343 

Butterfield    v.    Cowing,     112 

N.  Y.  86;   20  N.  E.  3694         1439 
xl 


113 
248 


79 


1210 

490 

694 

786 
1498, 


161 


156 


44 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Buttprfly-Terrible  Gold  Min- 

iiifl  Co.  V.  Jirind  (Colo.),  91 

Pile.  1101  751,900 

Butterworth  v.  Kritzer  Mill- 
ing Co.,    llo  Mich.   1;    72 

N.  W.  990  867 

Button  V.  HofFnnan,  61  Wise. 

20;  20  N.  W.  6G7;   50  Am. 

Rep.  i:n  874 

Button  i;.Wightman,  Cro.  Eliz. 

•MS  102 

Buttrick  v.  Nashua,  etc.  R.  R. 

Co.,  62  N.  H.  413;    13  Am. 

St.  Rep.  578  716,  1235 

Butts  V.Wood,  37  N.Y.  317  1203, 

1319 
Buvinger  v.   Evening   Union 

Printing    Co.    (N.    J.),    65 

Atl.  482      1239,  1248,  1511,  1512, 

1553 
Bwlch-y-plvvm  Mining  Co.  v. 

Baymes,  L.  R.  2  Ex.  324  182 

Byam  v.  Bickford,  140  Mass. 

31;  2N.  E.  687  254 

Byers  v.  Rollins,  13  Colo.  22; 

21  Pac.  894  485,  974,  1065 

Byers  Bros.  v.  Maxwell  (Tex.\ 

73  S.  W.  437  184 

Byram    i'.    Sovereign    Camp, 

108  Iowa  430;  79  N.  W. 

144;  75  Am.  St.  Rep.  265  948 
Byrne  v.   Schuyler,  etc.  Mfg. 

Co.,  65  Conn.  336;   31  Atl. 

833;  28  L.  R.  A.  304  71,  75 
V.  Supreme  Circle  (N.  J. 

Sup.  Ct.).  65  Atl.  839  580 

Byronville  Creamery  Ass'n  v. 

Ivers,   100  N.  W.  387;    93 

Minn.  8  124 


Cable  Co.   v.   Rathgeber   (S. 

Dak.),  113  N.  W.  88  386 

Cackett  v.  Keswick  (1902),  2 

Ch.  456  340 

Cadv    V.     Potter,    55    Barb. 

(X.  Y.)  463         714,  714,  754,  754 
Caliill  V.  Kalamazoo  Mut.  Ins. 

Co.,  2  Doug.  (Mich.)  124; 

43  Am.  Dec.  457  581,1185, 

1205 
V.    Maryland    Life    Ins. 

Co.,  90  Md.  333;    45  Atl. 

180;  47  L.  R.  A.  614 
V.  Original  Big  Gvm,  etc. 

Ass'n.  94  Md.  353;   89  Am. 

St.  Rep.  434;  50  Atl.  1044 
Caho  r.  Norfolk,  etc.  Rv.  Co. 

(N.  Car.),  60  S.  E.  640 


394 


613 


1192 


Cairney    v.    Back    (1906),    2 

K.  B.  746  1375, 1546 

Cake  V.   Woodbury,  3  App. 

Cas.  (D.  C.)  60  1621,  1621,  1643, 

1644 

Calculagraph   Co.   v.   Wilson, 

132  Fed.  20  1356 

Calder  Nav.  Co.  v.  Pilling,  14 

M.  &  W.  76  566 

Caldwell  v.  Mutual  Reserve 
Fund  Life  Ass'n,  65  N.  Y. 
Supp.  826  1215,  1215 

Caledonian  Ry.  Co.  v.  Helens- 
burgh, 2  Macq.  H.  L.  391 


V.   Solway   Ry.   Co.,   49 

L.  T.  526 
Calgary   &   Edmonton   Land 

Co.  (1906),  1  Ch.  141 
Calhoun     v.     Memphis,     etc. 

R.  R.  Co.,  2  Flippin  442 


281, 
281 

87 

542 

1502, 
1511 


V.    St.    Louis,    etc.    Ry. 

Co.,  14  Fed.  9  1562,  1570 

California  Bank  v.  Kennedy, 

167  U.  S.  362;    17  Sup.  Ct. 

831  76,  77,  833,  833,  834,  846 

California  Consolidated  Min- 
ing Co.  V.  Manley,  10  Idaho 

786;  81  Pac.  50  300 

California,   etc.   Hotel  Co.   v. 

Callender,  94  Cal.  120;    29 

Pac.  859;   28  Am.  St.  Rep. 

99  154,  428,  600,  625 

Callahan  v.  Chilcott  Ditch  Co. 

(Colo.),  86  Pac.  123  998,  1007 

Callanan  v.  Edwards,  32  N.  Y. 

483  544 

Callender    v.    Painesville    & 

Hudson,  etc.  R.  R.  Co.,  11 

Oh.  St.  516  95,  236 

Caloric  Engine  Co.,  52  L.  T. 

846  1036,  1044 

Calumet  Paper  Co.  v.  Haskell 

Show,  etc.  Co.,  144  Mo.  331; 

45  S.  W.  1115;   66  Am.  St. 

Rep.  425  1211,1217 
V.    Stotts    Investment 

Co.,  96  Iowa  147;   64  N.  W. 

782;  59  Am.  St.  Rep.  362  74, 
74,  279,  297,  298 
Calvert  v.  Idaho  Stage  Co.,  25 

Oreg.  412;  36  Pac.  24^  70,  80 

Cambria    Iron   Co.    v.    linion 

Trust  Co.,  154  Ind.  291;  48 

L.  R.  A.  41;   55  N.  E.  745; 

56  N.  E.  665  1564 

Camilen  v.  Stuart.  144  U.  S. 

104;  12  Sup.  Ct.  585         634,  634 


xli 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Camden  Land  Co.  v.  Lewis, 

101  Me.  78;  63  Atl.  523  314, 

1310,  1311,  1322,  1340 

Camden  Safe  Deposit,  etc. 
Co.  V.  Burlington  Carpet 
Co.,  33  Atl.  Rep.  479 
(X.  J.  Ch.)  1175,  1178,  1496 

Camden  Safe,  etc.  Co.  v. 
Citizens'  Ice,  etc.  Co.  (N.  J. 
Ch.),  61  Atl.  529  1342,  1408 

Camden,  etc.  R.  R.  Co.  v. 
Mays  Landing,  etc.  R.  R 
Co.,  48  N.  J.  Law  530 

Came  v.  Brigham,  39  Me.  35 


853 

229, 

593 


64 


Md 
1456,  1456 
Co.,    18 


Cameron    v.    Tome, 

507;  2  Atl.  837 
Cameron,    etc.    Ry. 

Beav.  339  1303 

Cameron  Town,  etc.  Ins.  Co., 

96  Fed.  756  _         44 

Cammack    v.  Levy  (La.),  45 

So.  925  548 

Cammell,  Ex  parte  (1894),  2 

Ch.  392  925,  1172,  1173 

Cammeyer  v.  United  German 

Lutheran       Churches,       2 

Sandf.  Ch.  (N.  Y.)  186  993, 

1211 
Camp  V.  Barney,  4  Hun  (N. 

Y)373  1615,1617 

V.  Byrne,  41  Mo.  525    161,  235 

Campbell  v.  American  Alkili 

Co.,     125    Fed.    207;      61 

C.  C.  A.  317  601,  616,  618 
V.  Am.  Zylonite  Co.,  122 

N.  Y.  455;    25  N.  E.  853; 

11  L.  R.  A.  596  440,  440 
V.  Argenta,  etc.  Co.,  51 

Fed.  1  1006,  1007 
V.  Compagnie  de  Belle- 
garde,  2  Ch.  D.  181  1598 
V.    Harrison,    3    N.    So. 

Wales  State  Rep.  432  1395 

V.   London   &   Brighton 

Ry.  Co.,  5  Hare  519       1475,  1476 

V.  Maund,  5  A.  &  E.  865    1038, 

1039,  1039 
V.    McPhee,    36    Wash. 

593 ;  79  Pac.  206  630 
V.  Merchants',  etc.  Ins. 

Co.,  37  N.  H.  35;    72  Am. 

Dec.  324  592 
V.   Pitt-sburgh,  etc.  Ry. 

Co.,   137  Pa.   St.  574;    20 

Atl.  949  1632 

V.  Poultney,  6  G.  &  J. 

(Md.)  94;  26  Am.  Dec.  559 

954,  974,  1014 


Campbell  v.  Railroad  Co.,  1 

Woods  368  1485,  1584,  1585 

V.  Santa  Maria,  etc.  Co. 

(Colo.),  95  Pac.  39  1232 

V.  Texas,  etc.  R.  Pi,.  Co., 

2  Woods  263  1625,. 1625 

V.  Upton,  66  N.  Y.  App. 

Div.  434;    73  N.  Y.  Supp. 

1084  1328 

V.  Watson,  62  N.  J.  Eq. 

396;    50  Atl.    120         588,    1267, 
1274,  1274,  1278 

V.  Woodstock  Iron  Co., 

83  Ala.  351;    3  So.    369 

803,  804 
Campbell  &  Zell  Co.  ■;;.  Amer- 
ican Surety  Co.,  129  Fed. 
491  233,  382 

Campbell's  Case,  4  Ch.  D.  470 

1317,  1319,  1400 
Campbell's  Case,  9  Ch.  1        193,  487, 
492,  493 
Canada- Atlantic,  etc.   Co.   v. 
Flanders,  145  Fed.  875;   76 
C.  C.  A.  1  1215,  1215 

Canada  Life  Ass.  Co.  v.  Peel 
Gen.  Mfg.  Co.,  26  Grant 
(Ont.)  477  7ft 

Canada  Southern  Ry.  Co.  v. 
Gebhard,  109  U.  S.  527;  3 
Sup.  Ct.  363  1671,  1672 

Canadian    Imp.    Co.  v.    Lea 

(N.  J.),  69  Atl.  455  1023 

Canadian  Tin  Plate  Co.,    12 

Ont.  L.  R.  594  166,  166,  169 

Canal  Company's  Case,  83  Md. 
549;   35  Atl.  161,354,  581 

1676,  1682,  1682 
Canal,   etc.   Co.   v.   Paas,   95 

Mich.  372;   54  N.  W.  907 

Canal,  etc.  R.  R.  Co.  v.  St. 

Charles,  etc.  R.  R.  Co.,  44 

La.  Ann.  1069;    11  So.  702 

Canal     Co.     v.     Sansom,     1 

Binney  (Pa.)  70 
Canandarqua      Academy     v. 
McKechnie,    19    Hun    (N. 
Y.)  62 
Candelaria     Mining     Co.     v. 

Juarez  Co.,  157  Fed.  315 
Canfield  v.  Gregory,  66  Conn. 

9;   33  Atl.  536  142,235 

V.  Knights  of  Maccabees, 

87  Mich.   626;    49  N.   W. 
875;   24  Am.  St.  Rep.  186; 
13  L.  R.  A.  625; 
Cann  v.    International  Trust 

Co.,  40  Nova  Scotia,  65     936,  1409 
V.  Rector,  etc.  of  Church 


230 


853 
660 


404 
1260 


577 


xlii 


TABLE    OF    CASES 

[Tho  refprences  are  to  pages] 


1205 


2.53,  1081 
Fire 
102; 

594 


959 


925 

323 

1024, 


of  Holy  Redeemer  (Mo.),  98 
S.  W.  781 
Cannon  v.  Brush  Electric  Co., 
96  Md.   446;    54  Atl.   121; 
94  Am.  St.  Rep.  598 

V.    Farmers'    Mut. 

Ass'n,   58  N.   J.   Eq. 
43  Atl.  281 

V.  Trask,  20  Eq.  669         948, 

954,  996,  1014,  1020,  1062 

Ex  parte,  30  Cli.  D.  629      1241 

Cantwell    v.    CoIuml)ia    Ix;ad 

Co.  (Mo.),  97  S.  W.  167 
Cantwell  v.  Stockmen's  Bldg., 

etc.   Union,     88    111.    App. 

247 
Cape  Breton  Co.,  Re,  29  Ch. 

D.  795 
Cape  May,  etc.  Nav.  Co.,  51  N. 

J.  Law  78;    16  Atl.   191 

1024,  1066 
Cape  Sable  Company's  Case, 

3  Bland  Ch.  (Md.)  606         64,  394, 

420 
Capital    City    Brick    Co.    v. 

Jackson,  59  S.  E.  92  (Ga.) 

1328 
Capper's  Case,  1  Sim.  N.  S. 

178 
Capper's  Case,  3  Ch.  458 
Capps  V.   Hastings  Prospect- 

mg  Co.,  40  Nebr.  470;    58 

N.  W.  956;     24    L.    R.    A. 

259;   42  Am.  St.  Rep.  677 
Car  Advertising  Co.  v.   New 

York  City  Advertising  Co., 

107  N.  Y.  Supp.  547 
Caraher  v.  Royal  Ins.  Co.,  63 

Hun  (N.  Y.)  82;    17  N.  Y. 

Supp.  858 
Caratal  (New)  Mines  (1902), 

2  Ch.  498 
Card  V.  Moore,  68  N.  Y.  App. 

Div.  327;    74  N.  Y.  Supp. 

18;    173  N.  Y.  598;    66  N. 

E.  1105  126,  246,  253 
Carden  v.  General  Cemetery 

Co.,  5  Bing.  N.  C.  253 
Cardiff    Workmen's    Cottage 

Co.  (1906),  2  Ch.  627 
Carey  v.  Des  Moines,  etc.  Min- 
ing Co..  81    Iowa  674;    47 
N.  W.  882 

V.  Houston,  etc.  Ry.  Co., 

45  F'ed.  438       '  1629,  1670 

V.  Mayer.  79  Fed.  926; 

25  C.  C.  A.  239  624 
7).  Williams.  79  Fed.  906; 


343 

708 


216 


371 


1344 
1058 


295 
1396 


280 


25  C.  C.  A.  227 


921 


Curgill   r.   Bower,    10  Ch.   D. 

502  1350 

Caridad    Copper  Mining  Co. 

(1902),  2  K.  B.  44  1238 

Carling's  Case,   1  Ch.  D.   115 

1338,  1338,  1338,  1340 
Carling,  Ex  parte,  56  L.  J.  Ch. 

321  179,  184 

Carlisle  v.  Cahawba,  etc.  R. 

R.  Co.,  4  Ala.  70  603 

V.    Soutii    Eastern   Ry. 

Co.,  1  Mac.  &  G.  689     ^  977 

Carlsbad  Water  Co.  v.  New, 

33  Colo.  389;   81  Pac.  34  43 

Carmel,  etc.  Co.  v.  Small,  150 

Ind.  427;    47  N.  E.  11;    50 

N.  E.  476  1250,  1251 

Carmichael's   Case    (1896),   2 

Ch.  643  362 

Carmichaeland  Hewett'sCase, 

30  W.  R.  742  168,  1175 

Carmody  r.  Powers,  60  Mich. 

26;  26  N.  W.  801  306 

Carney  v.  N.  Y.  Life  Ins.  Co., 

162N.  Y.  453;  57N.  E.  78; 

76  Am.  St.  Rep.  347;    49 

L.  R.  A.  471  592,  1189 

Carolina    Coal,    etc.    Co.    v. 

Southern  Ry.  Co.  (N.  Car.), 

57  S.  E.  444  1522 

Carpenter  I'.  Am.  Bldg.&  Loan 

Ass'n,  54  Minn.  403;   56  N. 

AV.  95 ;  40  Am.  St.  Rep.  345 

666,  667 

V.    Black    Hawk    Gold 

Mining  Co.,  65  N.  Y.  43         1408, 

1495,  1523 

V.  Catlin,  44  Barb.  75  1664 

V.  Cliicago,  etc.  Ry.  Co., 

104  N.  Y.  Supp.  152  1476,  1476 
V.  New  York,  etc.  R.  R. 

Co.,  5  Abb.  Pr.  277  973,  1105 

V.  Rommel,  5  Phila.  34       1423 

Carr  v.  Carr,  1  C.  B.  n.  s.  197 


V.  Griffith,  12  Ch.  D.  655 

24, 
V.  Le  Fevre,  27  Pa.  St. 


413 


660, 
663 

1157 

1423 


V.  National    Bank,  etc. 

Co..  167  N.Y.  375:60N.  E. 

649;  82  Am.  St.  Rep.  725  850 

Carriage    Co-operative    Sup- 
ply Co.,  27  Ch.  D.  322  1337, 
1340,  1346 

Carrick  r.  Wigan  Tramways 

Co.,  W.  N.  (1893)  98  1591 

Carrington  i'.  Turner,  101  Md. 

437;   61  Atl.  324  1374 


xliii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Carroll    v.    Mullanphy    Sav. 

Bank,  8  Mo.  App.  249  558, 

560,  693,  744 
Carson  v.  Arctic  Mining  Co., 

5  Mich.  288  667,  667 
V.  Iowa  City  Gaslight  Co., 

SO    Iowa   638;     45   N.   W. 

1068  962,  963,  965,  968 

Carson    City    Sav.    Bank    v. 

Carson  City  Elevator  Co., 

90  Mich.   550;    51   N.  W. 

641 ;  30  Am.  St.  Rep.  454         113, 

852 
Carswell  v.  Farmers'  L.  &  T. 

Co.,  74  Fed.  88;  20  C.  C.  A. 

282  1611,  1612,  1612 

Carter  v.  Gray  (Ark.),  96  S. 

W.  377  .  300 

V.  Sanderson,  5  Bing.  79 

582,  582 
r.   Union  Printing  Co., 

54  Ark.  576;    16  S.  W.  579 

518,  520 
Carter's  Case,  31  Ch.  D.  496  1363 
Carter,  etc.  Co.  v.   Hazzard, 

65  Minn.  432;  68  N.  W.  74 

154,  168,  198,  200,  209,  213 
Cartmell's  Case,  9  Ch.  691  1214 

Cartwright  v.   Dickinson,   88 

Tenn.  476;    12  S.  W.  10.30; 
17  Am.  St.  Rep.  910;    7  L. 

R.  A.  706  195,  516,  610,  702 

Carver  Co.,  E.,  v.  Maniifac- 

turers'    Ins.    Co.,    6    Gray 
(Mass.)  214 
Case  V.  Bank,  100  U.  S.  446 


V.  Hawkins,  53  Miss.  702 


1379 

749, 
750 


1374 


V.  Kelly,  133  U.  S.  21; 

10  Sup.  Ct.  216  836 
V.  New  York  Mut.  Sav. 

etc.  Ass'n,  88  N.  Y.  App. 

Div.  5.38;    85  N.  Y.  Supp. 

104  980 

Case  Mfg.  Co.  v.  Soxman,  138 

U.  S.  431;    11  Sup.  Ct.  360 

307,  310 
Case   Plow   Works,    J.    I.    v. 

Finks,  81  Fed.  529;    26  C. 

C.  A.  46  1617 

Case  of  the  Deane  and  Chap- 
ter of  Femes,  Davis  43  400, 

401 

Casey  v.  Galli,  94  U.  S.  673  225, 

235,  237 

V.  Northern  Pac.  R.  R. 

Co.,  48  Pac.  53;    15  Wash. 

450  1611 


Cass  V.  Manchester,  etc.  Co., 

9  Fed.  640  1188,  1192 
V.   Pittsburg,   etc.    Ry. 

Co.,  80  Pa.  St.  31  194,  606 

Cassatt  V.  Mitchell  Coal,  etc. 

Co.,. 150  Fed.  32  890 

Cassell  V.  Lexington,  etc.  Co., 

10  Ky.   Law  Rep.   486;    9 

S.  W.  Rep.  701  998,  1185 

Cassidy  v.  Uhlmann,  163  N. 
Y.  380;  57  N.  E.  620;  79 
Am.  St.  Rep.  596  1355 

Castellan  v.  Hobson,  10  Eq.  47       783 
Castle  V.  Belfast  Foundry  Co., 

72  Me.  167  1381,  1382,  1382 

Castle   Braid   Co.,    145    Fed. 

224  518,  519 

Castner  v.  Twitchell-Champ- 
lin  Co.,  91  Me.  524;  40 
Atl.  558  1011,  1011,  1012 

Gates  V.  Baxter,  97  Tenn.  443 ; 

37  S.  W.  219  716 

Catholic  Church  v.  Tobbein, 

82  Mo.  418  244,  304 

Cathn  V.   Green,    120  N.   Y. 

441;   24  N.  E.  941  192 

Catskill    Bank    v.    Gray,    14 

Barb.  (N.  Y.)  471  80 

Cattron  v.  First  Universalist 

Soc.,46  Iowa  106  1372, 

1376,  1377 
Caulkins   v.    Gas   Light   Co., 
85  Tenn.  683;  4S.  W.  287; 
4  Am.  St.  Rep.  786  798, 

798,  814 
Cavanaugh     v.     Patterson 

(Colo.),  91  Pac.  1117  1360 

Cawley  &  Co.,  42  Ch.  D.  209        600, 
603,  745,  766,  767 
Cayley  v.   Coburg,   etc.    Ry. 
Co.,    14  Grant  Ch.    (Can.) 
571  1476 

Caylus  V.  New  York,  etc.  R. 

R.  Co.,  10  Hun  (N.  Y.)  295     1494 
Cayuga   Lake   R.    R.   Co.   v. 

Kyle,  64  N.  Y.  185  95,110, 

204 
Cazelais  v.  Picotte,   18  Que- 
bec Sup.  Ct.  538  148 
Cazier    v.     Mackie-Lovejoy 
Mfg.  Co.,  138  Fed.  654;   71 
C.  C.  A.  104                               1356 
C.  D.  &  M.  Co.  V.  Keisel,  43 

Iowa  39  387 

Cecil,  Re,  36  How.  Pr.  (N.  Y.) 

477  1043 

Cedar  Grove  Cemetery  Co., 
Re,  61  N.  J.  Law  422;  .39 
Atl.  1024  922,  1017,  1067 


xliv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Ceeder  v.  Loiul  &  Sons  Lum- 
ber Co.,  8G  Mich.  541;  49 
N.  W.  575;  24  Am.  St. 
Rep.  134  1380 

Celluloid  Mfg.  Co.  v.  Cellonite 

Mfg.  Co.,  32  Fed.  'J4  373 

Center  Creek  Water,  etc.  Co. 
V.  Lindsay.  21  Utah  192; 
GO  Pac.  5.^)9  1344 

Central  .Afiricultural,  etc.  Ass'n 
V.  Alabama  Cold  Life  In.s. 
Co.,  70  Ala.  120  118, 

120,  232,  019 

Central  Bank  v.  Knowlton, 
12  Wise.  024;  78  Am.  Dec. 
709  220 

Central  City  Savings  Bank  v. 

Walker,  00  N.  Y.  424  252 

Central  De  Kaap  Gold  Mines, 

09  L.  J.  Ch.  18  1241,  1242 

Central  l-^lectric  Co.  v. 
Sprague  Electric  Co.,  120 
Fed.  925;  57  C.  C.  A. 
197  917 

Central  of  Georgia  Ry.  Co. 
V.  Paul,  93  Fed.  878;  35 
CCA.  039  1059 

V.   Union   Springs,   etc. 

Ry.  Co.,  144  Ala.  039;    39 

So.  473  250 

Central    Land   Co.    v.    Oben- 

chain,  92  Va.  130;  22  S.  E. 

870  320 

Central  Lumber  Co.  v.   Kel- 

ter,  201  111.  503;  06  N.  E. 

543  85 

Central  Nebraska  Nat.  Bank 

V.  Wilder,  32  Nebr.  454;   49 

N.  W.  309  806,1131 

Central  Ohio  Natural  Gas  & 

Fuel    Co.    V.    Capital    City 

Dairy  Co.,  00  Oh.  St.  90; 

53  N.  E.  711;    64  L.  R.  A. 

395  08 

Central  Park  Fire  Ins.  Co.  v. 

Callaghan,  41  Barb.  448  291 

Central  R.  R.  Co.  v.  Collins, 

40  Ga.  582  76,  905 

V.   Pennsylvania  R.   R. 

Co.,  31  N.  J.  Eq.  475       120,  121, 

121 
Central  R.  R.  &  Banking  Co. 

r.  Ward,  37  Ga.  515  741,743 

Central    R.    R.,    etc.    Co.    v. 

Farmers'   L.   &  T.   Co.,  79 

Fed.  158  1011, 1034 
V.  Farmers'  L.  &  T.  Co., 

110  Fed.  700  830,  14.33,  1430, 
1430,  1472 


Central     R.   R.,  etc.    Co.    v. 

Farmers'   L.  &  T.  Co.,    114 

Fed.  203 ;  52  C.  C  A.  149       85,  836 
V.Smith,  70  Ala.  572;  52 

Am.  Rep.  353  80,  809,  870 

Central  Ry.  Co.  v.  Kisch,  L.  R. 

2  H.  L.  99  177,  184,  184,  180 

Central  Transportation  Co.  v. 

Pullman's,    etc.    Co.,     139 

U.  S.  24;    11  Sup.  Ct.  478 

37,   839,   839,   840 
Central  Trust  Co.  v.  Bridges, 

57   Fed.   753;    0  C.   C.   A. 

539  1082,  1535 
V.  Central  Iowa  Ry .  Co. , 

38  Fed.  889  1543 

V.  Central  Trust  Co.  of 

Illinois,  149  Fed.  789        375,  375, 

379 

V.  Charlotte,  etc.  R.  R. 

Co.,  05  Fed.  204  1508 

V.  Chattanooga,  etc.  R. 

R.  Co.,  09  Fed.  295        1501,  1504 

V.  Chattanooga,  etc.  R. 

R.   Co.,   94   Fed.   275;    30 

C  C  A.  241  1503,  1517 

V.  Cincinnati,  etc.  Ry. 

Co.,  58  Fed.  500  1021,  1028, 

1007,  1007 

V.  Clark,  81  Fed.  209;  26 

C  C.  A.  397  1571 

V.   Columbus,   etc.   Ry. 

Co.,  87  Fed.  815  85 

V.  Condon,  67  Fed.  84; 

14  C  C  A.  314  1007,  1221, 

1371,  1552 

V.     Continental     Iron 

Works,  51  N.   J.    Eq.    005; 
28  Atl.   595;    40   Am.   St. 

Rep.  539  1497 

V.    Continental    Trust 

Co.,  80  Fed.  517;    30  C  C 

A.  235  1011 
V.  Denver,  etc.  R.  Co.,  97 

Fed.  239;    38  C  C  A.  143 

1035,  1054 
V.  East  Tennessee  Land 

Co.,  110  Fed.  743  322 
V.  East  Tennessee,  etc. 

Ry.  Co.,  30  Fed.  895  1508 
V.  East  Tennessee,  etc. 

Ry.    Co.,      69     Fed.    353, 

357  1019 

V.  East  Tennessee,  etc. 

Ry.  Co.,  09  Fed.  058  1501 

V.  East  Tennessee,  etc. 

Ry.  Co.,  70  Fed.  704       1543 

V.   East  Tennessee,  etc. 

Co.,  79  Fed.  19      1011,  101 1 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Central  Trust  Co.  v.  East  Ten- 
nessee, etc.  R.  R.  Co.,  80 
Fed.  624;26C.  C.  A.  30 

1568, 

V.  Georgia  Pac.  Ry.  Co., 

87  Fed.  288;    30  C.  C.  A. 
648 

V.  Hennen.  90  Fed.  593; 

33  C.  C.  A.  189 

V.  Indiana,  etc.  R.  Co., 

98  Fed.  666 

V.  Kneeland,  138  U.  S. 

414;     11   Sup.   Ct.   357 

1538, 
V.  Lappa  (Pa.),  65  Atl. 


—  V.  Louisville  Trust  Co., 
87  Fed.  23 

—  V.  Louisville,  etc.  Ry. 
Co.,  70  Fed.  282 

—  V.  Louisville,  etc.Ry.Co., 
81  Fed.  772 

—  V.  Marietta,  etc.  R.  R. 
Co.,  48  Fed.  14 

—  V.  Marietta,  etc.  Ry. 
Co.,  73  Fed.  589 

—  V.  Marietta,  etc.  Ry.  Co., 
75  Fed.  209;  21  C.  C.  A. 
307;  75  Fed.  193;  21 
C.  C.  A.  291 

—  V.  New  York,  etc.  R.  R. 
Co.,  110  N.  Y.  250;  18  N. 
E.  92;  IL.  R.  A.260       1617, 

—  V.  New  York,  etc.  Water 
Co.,  74  N.  Y.  Supp.  135; 
176  N.  Y.  546;  68  N.  E. 
1115 

—  V.  Ohio  Central  R.  Co., 
23  Fed.  306 

—  V.  Peoria,  etc.  Ry.  Co. 
(Chamberlin's  Case),  104 
Fed.  418;   43  C.  C.  A.  613 

—  V.  Peoria,  etc.  Ry.  Co. 
(Baldwin's  Case),  104  Fed. 
420;  43  C.  C.  A.  616 

—  V.  Seasongood,  130  U.  S. 
482;  9Sup.  Ct.  575 

—  V.  Sloan,  65  Iowa  655; 
22  N.  W.  916 

—  V.  St.  Louis,  etc.  Ry.  Co., 
41  Fed.  551  1561, 

—  V.  St.  Louis,  etc.  Ry.  Co., 
40  Fed.  426 

—  V.  Texas,  etc.  Ry.  Co.,  23 
Fed.  846 

—  V.  Texas,  etc.  Ry.  Co.,  27 
Fed.  178 

—  V.  Thurman,  94  Ga.  735; 
20Sup.  Ct.  141  1558, 


1562, 
1572 


1633 

1552 

1437 

1508, 
1539 

332 
1490 
1497 
1543 

985 
1669 


1650 


1618 


1438 
1611 


1636 


1636 
1646 
1655 
1617 
1617 
1593 


1559 


1560 
xlvi 


Central  Trust  Co.  v.  L"^nadilla 
Valley  Ry.  Co.,  72  N.  Y. 
Supp.  189;  35  N.  Y.  Misc. 
604  1585,  1585 

V.  U.  S.  Rolling  Stock 

Co.,  56  Fed.  5  1628 
V.  Utah  Central  Ry.  Co., 

16  Utah  12;    50  Pac.  813     1566, 

1572 
V.  Wabash,  etc.  Ry.  Co., 

23  Fed.  863  1612 

V.  Wabash,  etc.  R.  Co., 

24  Fed.  98  1567 
V.  Wabash,  etc.  Ry.  Co., 

25  Fed.  693  1599 
V.  Wabash,  etc.  Ry.  Co., 

26  Fed.  11  1617 
V.  Wabash,  etc.  Ry.  Co., 

30  Fed.  332  1569 
V.  Wabash,  etc.  Ry.  Co., 

32  Fed.  187  1621 
V.  Wabash,  etc.  Ry.  Co., 

32  Fed.  566  1568 
V.  Wabash,  etc.  Ry.  Co., 

36  Fed.  622  1490 
V.  Warren,  121  Fed.  323; 

58  C.  C.  A.  289  45 
V.  Washington  Co.  R.  R. 

Co.,  124  Fed.  813  984,  1503, 
1585,  1629 
V.  Western  N.  C.  R.  Co., 

89  Fed.  24  833 
V.  Worcester  Cycle  Mfg. 

Co.,  93  Fed.  712;  35  CCA. 

547  1501,  1501,  1594,  1595 
V.  Worcester  Cycle  Mfg. 

Co.,  114  Fed.  659  1608,  1608 

Central  Turnpike  Corp.  v.  Val- 
entine, 10  Pick.  (Mass.)  142  189 
Chable    v.    Nicaragua   Canal, 

etc.  Co.,  59  Fed.  846  898,  898 
Chadwnck  v.  Old  Colony  R.  R. 

Co.,    171    Mass.    239;     50 

N.  E.  629  1521 

Chaffe    V.    Ludeling,    27    La. 

Ann.  607  252 

Chaffee  v.   Middlesex  R.   R. 

Co.,    146    Mass.    224;      16 

N.  E.  34  1463,  1464,  1475, 
1476,  1476 
V.    Quidneck    Co.,    14 

R.  I.  75  963 
V.  Rutland  R.  R.  Co.,  55 

Vt.  110  450,  450,  452,  1118, 
1122,  1416,  1421 
V.  Rutland  R.  R.  Co.,  53 

Vt.  345  1582,  1582,  1582,  1582 
Chamberlain  v.  Bromberg,  83 

Ala.  576;  3  So.  434  1187 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Chamberlain  v.  Connecticut 
Central  R.  R.  Co.,  54  Conn. 
472 ;  'J  Atl.  L'44 

V.  New  York.  etc.  R.  R. 

Co.,  71  Fed.  030  1009,  1609 

V.  Painesville,  etc.  R.  R. 

Co.,  15  Oh.  St.  225  189,  191, 

191,193,994 

Chamberlin  v.  Mammotli  Min- 
ing Co.,  20  Mo.  90 

Chambers  v.  Chambers  & 
McKee,  185  Pa.  St.  105; 
39  Atl.  822 

V.     Falkner,    05    Ala. 

448 

V.  Manchester,  etc.  Ry. 

Co..  5  B.  &  S.  588 

Chambersburg     Ins.     Co.     v. 

Smith,  11  Pa.  St.  120  099,763 
Chandler  v.   Bacon,   30   Fed. 

538  274,  1338,  1338 
V.  Hoag,  2  Hun  (N.  Y.) 

613;   s.  c.  03  N.  Y.  024 

V.  Monmouth  Bank,  13 

N.  J.  Law  255 

Chandler  Mtge.  Co.  v.  Loring, 

113  111.  App.  423 
Chapin  v.  Vermont,  etc.  R.  R. 

Co.,  8  Gray  (Mass.)  575 
Chapleo  v.    Brunswick   Bldg. 

SocOQ.  B.  D.  096 
Chaplin  v.  Clarke,  4  Ex.  402 
Chapman   v.    Atlantic   Trust 

Co.,    119    Fed.    257;     145 

Fed.  820 

V.  Bates,  61  N.  J.  Eq. 

658;    47  Atl.  638:    88  Am. 

St.  Rep.  459         1029,  1048,  1052, 

1053 

V.   Iron  Clad  Rheostat 

Co.,  62  N.  J.  Law  497;    41 

Atl.  690  518,  520,  852 

V.  Lynch,  156  N.  Y.  551 ; 

51  N.  E.  275  856 

Chapman's  Case  (1895),  1  Ch. 

771  634,  637.  639,  639 

Chappelle  v.  Chappelle  (Ky.). 

99S.  W.  959  420,1115 

Chappell's  Case,  6  Ch.  902  766 

Charitable  Corp.  v.  Sutton,  2 

Atk.  400  1101,1259,1264, 

1273,  1281,  1281,  1285,  1349 
Charles  River  Bridge  v.  War- 
ren Bri.lge,  11  Pet.  420  35 
Charles  S.  Higgins  Co.  v. 
Higgins  Soap  Co.,  144 
N.  Y.  462;  39  N.  E.  490; 
43  Am.  St.  Rep.  769;  27 
L.  R.  A.  42                        376,  387 


1469 


1373 


1187 
86 


64 


1182 

1246 

958 

1432 

831 
342 


1640 


Charlestown  Boot,  etc.  Co.  v. 

Dunsmore,  00  X.  H.  85  1192 

Charlotte,   etc.   R.   R.   Co.  v. 

lilakely,  3  Strob.  (S.  Car.) 

245  157,  197 
V.  Chester,  etc.  R.  R.  Co., 

118  N.  Car.  1078;  24  S.  E. 

Rep.  709 
Charlottesville     v.     Southern 

Ry.   Co.,  97  Va.  428;    34 

S.  E.  98 
Charlton    v.    Newcastle,    etc. 

Ry.  Co.,  5  Jur.  N.  S.  1090 
Charter       Acknowledgments, 

Re,  28  Pa.  Co.  Ct.  Rep.  187 


1612 


25 


79 


119, 
121 


Charter   Gas    Engine    Co.    v. 

Charter,  47  111.  App.  36  998, 

1228,  1298,  1317 

Chase  V.  Lord,  77  N.  Y.  1     150,  151 

151,  416 

V.   Mich.  Tel.  Co.,    121 

Mich.  631;  80  N.  W.  717         512, 

879 

V.  Sycamore,  etc.  R.  R. 

Co.,  38  111.  215  157,920,921 

V.  Tuttle,  55  Conn.  455; 

12    Atl.    874;     3    Am.    St. 
Rep.  64  1178,1199,1201, 

1212,  1212 

V.  Vanderbilt,  62  N.  Y, 

307  465.  474,  977,  1354 

Chaytor  v.  Horn  (1905),  1  Ch. 

233  1 ^^^ 

Cheale  v.  Kenward,  3  De  G.  & 

J.  27  785,  787,  787 

Cheever  v.  Meyer,  52  Vt.  66         716 
Cliemical  Nat.    Bank  v.  Col- 
well,  132  N.  Y.  250;  30  N. 
E.  644  695,  1168,  1176,  1262 

V.  Wagner,  93  Ky.  525; 

20  S.  AV.  535;  40  Am.  St. 
Rep.  206  1328,  1378 

Chenango  Co.,  19  Wend.  (N. 

Y.)  635       1038,  1059,  1059,  1065, 

1065 
Chenowith    v.    Pac.    Express 

Co.,  93  Mo.  App.  185         853,  867 
Chequasset  Lumber  Co.,  112 

Fed.  56  393 

Cheraw,    etc.    R.    R.    Co.    v. 

White,  14  S.  Car.  51  162,  230 

Cherry  v.  Frost,  7  Lea  (Tenn.) 

1    ^  694,723 

Chesapeake  Oyster,  etc.  Co., 

112  Fed.  960  44 

Chesapeake     &    Ohio    Canal 

Co.   r.  Blair,  45  Md.  102         1413. 

1414 


xlvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Chesapeake,  etc.   Ry.   Co.  t\ 

Deepwater    Ry.     Co.,     57 

W.  Va.  641;  50  S.  E.  890  305, 
913,  914,  915 
V.  Miller,  114  U.  S.  176; 

5  Sup.  Ct.  813  1521,  1522,  1522 
Cheshire  Banking  Co.,  32  Ch. 

D.  301  170 

Chester  v.   Buffalo  Car  Mfg. 

Co.,   70  N.    Y.   App.    Div. 

443;  75  N.  Y.  Supp.  428  1151 
Chester  Glass  Co.  v.  Deevey, 

16  Mass.  94;    8  Am.  Dec. 

128  853 

Chesterfield,  etc.  Colliery  Co. 

V.  Black.  37  L.  T.  740  1311 

Chestnut    Hill,    etc.    Co.    v. 

Rutter,  4  Serg.  &  R.  (Pa.) 

6;  8  Am.  Dec.  675  869 

Chetlain  v.  Republic  Life  Ins. 

Co.,  86  111.  220  196 

Chew  V.  Bank  of  Baltimore, 

14  Md.  299  709,  754,  755 
V.  Keck,  4  Rawle  (Pa.) 

163  404,  405 
Chewacla  Lime  Works  v.  Dis- 

mukes,  87  Ala.  344 ;    6  So. 

122;  5  L.  R.  A.  100  851,  856 

Chicago  V.  Cameron,  120  111. 

447;    11  N.  E   899  952,  972 

V.  Mills,  204  U.  S.  321  970 

Chicago  Bldg.  &  Mfg.  Co.  v. 

Talbotton    Creamery,    etc. 

Co.,  106  Ga.  84;    31  S.  E. 

809  280,  280,  310 

Chicago  Deposit  Vault  Co.  v. 

McNulta,    153    U.    S.    554; 

14  Sup.  Ct.  915 
Chicago  Dock  Co.  v.  Canity, 

115  111.  155;  3  N.  E.  448 
Chicago  Edison  Co.  v.   Fay, 

164  III.    323:     45    N.    E. 

534  728, 729, 729,  754,  754,  755 
Chicago  Hansom  Cab  Co.  v. 

Yerkes,    141    111.    320;     30 

N.  E.  667;  33  Am.  St.  Rep. 

315  1080,  1083,  1312 

Chicago-.Ioplin  Lead  &  Zinc 

Co.,  104  Fed.  67  22 

Chicago  Macaroni,  etc.  Co.  v. 

Boggiano,  202  111.  312;    67 

N.  E.  17  982,  1016,  1056 

Chicago  Mut.  Life,  etc.  Ass'n 

V.     Hunt,     127     111.     257; 

20  N.    E.  55;    2  L.  R.  A. 

549  1025 

Chicago  Pneumatic  Tool   Co. 

V.    Munsell,    107    111.    App. 

344  1372 


1644 


25 


Chicago  Tire  Co.  v.  Chicago 
Nat.  Bank,  176  111.  224;  52 
N.  E.  52  1382 

Chicago  Title,  etc.  Co.  v. 
State  Bank  of  Ambia,  86 
Fed.  863;   30  C.  C.  A.  443         663 

Chicago,  etc.  Co.  v.  Biddison, 

46  111.  App.  423  1237 
Chicago,    etc.    Granaries    Co. 

(1898),  1  Ch.  263  1419,  1463 

Chicago,  etc.  R.  R.  Co.  v. 
Coleman,  18  111.  297;  68 
Am.  Dec.  544  1374 

V.  Fosdick,  106  U.  S.  47 ; 

1  Sup.  Ct.  10        1461,  1462,  1462, 

1465, 1466,  1466,  1467,  1467, 

1468, 1484, 1595,  1623,  1624, 

1625,  1638,  1675 

Chioigo,  etc.  R.R.  Co.  v.  Iowa, 

94  U.  S.  155  33 

V.  Keegan,   185  111.  70; 

56  N.  E.  1088  848 
V.  Lewis,  53  Iowa  101 ;  4 

N.  W.  842  406,  848 
V.  Marseilles,  84  111.  145       517 

V.  McCammon,  61  Fed. 

772;   IOC.  C.  A.  50  1635 

V.  Pyne,  30  Fed.  86      1420,  1472 

V.  Stafford  Co.,  36  Kans. 

121;   12  Pac.  593  147,  149 

V.  Towle,  10  Ind.  App. 

540;  37  N.  E.  358 

Cliicago,     etc.     Ry.     Co.     v. 

Ayres,     140    111.    644;     30 

N.  E.  687 

V.  James,  22  Wise.  194 

V.  Lowenthal,  93  111.  433 

1534,  1540 

V.   McGuire    (Ind.),    65 

N.  E.  932 

V.    Southern     Indiana 

Ry.  Co.   (Ind.),  70  N.  E. 
843 

V.  State  (Ark.),  106  S. 

W.  199 

V.  Tice  (111.),  83  N.  E. 

818 

V.  Union  Pac.  Ry.  Co., 

47  Fed.  15  992,  1003,  1003 
Chickering,  Re,  56  Vt.  82  1592 
Chicora  Co.  r.  Crews,  6  S.  Car. 

243  258,  259 

Chiera  v.  Brevoort,  97  Mich. 

638;  57  N.  W.  193 
Chilberg   v.    Siebenbaum,    41 

Wash.  663 ;  84  Pac.  598 
Chilcott  V.   Washington,  etc. 

Colonization   Co.    (Wash.), 

88  Pac.  113  288 


1632 


80 
1374 


1510 


868 

226 

1510 


1061 
614 


x]\'iii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Child  V.   Hudson's 
2  P.  Wms.  207 


Bay  Co., 

567,  571,  660, 
774 

V.  HuKg,  41  Cal.  519  808 

V.  New  York,  etc.  R.  R. 

Co.,  129  Mass.  170         1453,  1457, 
1461,  1665 
Childers  v.  Shepherd,  142  Ahi. 

385;  39  So.  235  1402 

Childst;.  Hvird,  32W.  Va.  66; 

9  S.  E.  362  123,  126,  254 

Chillington  Iron  Co.,  29  Ch. 

D.  159  1038 

Chiniquy  v.   Bishop   of   Chi- 
cago, 41  111.  148 
Chorley,  Ex  parte,  11  Eq.  157 


249 
1420, 
1421 


Chott  V.   Tivoli   Amusement 

Co.,  114  111.  App.  178  924 

Chouteau  v.  Allen,  70  Mo.  290 

1425,  1436 
Chouteau  Ins.  Co.  v.  Floyd,  74 

Mo.  286  606 

Chouteau  Spring  Co.  v.  Har- 
ris, 20  Mo.  382  695,  701,  745 
Choutteau        Ins.       Co.       v. 

Holmes's    Adm'r,    68    Mo. 

601;   30  Am.  Rep.  807  1201 

Chrisman-Sawyer       Banking 

Co.  V.  Independence  Wool 

Mfg.  Co.,  168  Mo.  634;    68 

S.  W.  1026  521,  524 

Christensen  v.  Eno,  106  N.  Y. 

97;    12  N.  E.  648;   60  Am. 

Rep.  429  601,  630 

Christian  v.  Atlantic  &  North 

CaroUna    R.    R.    Co.,    133 

U.   S.   233;     10    Sup.    Ct. 

260  804 

Christian,  etc.  Grocery  Co.  v. 

Fruitdale  Lumber  Co.,  121 

Ala.  340 ;  25  So.  566  239,  245 

Christian  Union  v.  Yount,  101 

U.  S.  352  837,  837 

Christie  v.  Taunton,  etc.  Co. 

(1893),  2  Ch.  175  1440,  1440 

Christopher   v.    Norvell,    201 

U.  S.  216;  26  Sup.  Ct. 

502  708 

Christopher  v.  Noxon,  4  Ont. 

672      1005,  1007, 1058,  1226, 

1232,  1309 

Chubb  V.  Upton,  95  U.  S.  665      248, 

483,  492 

Church  V.  Church  Cementico 

Co.,  75  Minn.  85;   77  N.  W. 

548  287,  297,  1238 
V.  Citizens'  St.  R.  Co..  78 

Fed.  526  941,  969,  980 

d 


Church,  M.  E.  v.  Picketts,  19 

N.  Y.  482  229 

Church  of  the  Holy  Com- 
munion, 14  Phila.  121  127 

Church  of  St.  Staiii.slaus  v. 
Algemeine  Verein,  31  X.  Y. 
App.  Div.  133;  52  N.  Y. 
Sup[).  922;  164  N.  Y.  606; 
58  N.  K.  1086  303,  304 

Cincinnati  Mut.,  etc.  Ass.  Co. 
V.  Rosenthal,  55  111.  85;  8 
Am.  Rep.  626  865 

Cincinnati  Volksblatt  Co.  v. 
Hoffmeister,  (52  Oh.  St. 
189;  56  N.  E.  1033;  78 
Am.  St.  Rep.  707;  48  L.  R. 
A.  732        902,  902,  903,  904,  905, 

907 

Cincinnati,  etc.  R.  R.  Co.  v. 
Danville,  etc.  Ry.  Co.,  75 
111.  113  250 

V.  Duckworth,  1  Oh.  Circ. 

Dec.  618  957,  958,  958 

Cincinnati,  etc.  Ry.  Co.  v. 
Citizens'  Nat.  Bank,  56 
Oh.  St.  351;  47  N.  E.  249: 
43  L.  R.  A.  777  734,  738,  741 

V.  Third  Nat.  Bank,   1 

Oh.  Circ.  Ct.  199^  734,  741 

Citizens'  Bank  v.  Kalamazoo 
Co.  Bank,  111  Mich.  313; 
69  N.  W.  663  772,  776,  776 

Citizens'   Bldg.,  etc.  Ass'n  v. 

Coriell,  34  N.  J.  Eq.  383         1264, 
1274,  1274 

Citizens'    Life    Ass.    Co.     v. 

Brown  (1904),  A.  C.  423  1362 

Citizens'  Loan  Ass'n  v.  Lyon, 

29  N.  J.  Eq.  110  1259 

Citizens'  Mutual  Fire  Ins.  Co. 
V.  Sortwell,  8  Allen  (Mass.) 
217  994,  996,  1012 

Citizens'  Nat.  Bank  v.  El- 
liott, 55  Iowa  104;  7  N.  W. 
470;   39  Am.  Rep.  167  1237, 

1247 

Citizens'  State  Bank  v.  Haw- 
kins, 71  Fed.  369;  18 
C.  C.  A.  78  834 

Citizens'  Trust,  etc.  Co.  v. 
Tompkins,  97  Md.  182;  54 
Atl.  617  1345,  1602 

Citizens',  etc.  Trust  Co.  v. 
Union  Mining,  etc.  Co.,  106 
Fed.  97  985 

City  V.  Lamson,  9  Wall.  477 

1447,  1448,  1448,  1449 

City  Bank  v.  Bruce.  17  N.  Y. 

507  517,  523,  526,  1187 


TABLE    OF    CASES 
[The  references  are  to  pages] 


City  Council  7*.  Jane  Moore- 
head,  2  Rich.  Law  (S.  Car.) 
430  406 

Citv  Electric  St.  Ry.  v.  First 
IS'at.  Bank.  62  Ark.  33;  34 
S.  W.  89;  31  L.  R.  A.  535; 
54  Am.  St.  Rep.  282       1370,  1376, 

1377 

City  Nat.  Bank  v.  Merchants', 
etc.  Xat.  Bank  (Tex.),  105 
S.  W.  338  1306,  1306,  1307 

City  of  Atlanta  v.  Gate  City 

Gas  Light  Co.,  71  Ga.  106  6 

City  of  Chicago  v.  Cameron, 

22  111.  App.  91  964,  968,  971 

City  of  Defiance  v.  Schmidt, 

123  Fed.  1 ;  59  C.  C.  A.  159       397 

Citv  of  Elizabeth  v.  Force,  29 

X.  J.  Eq.  587  1435 

City  of  Franklin  v.  Caldwell 

(Ky.),  96  S.  W.  605  1126 

City  of  Goodland  v.  Bank  of 
Darlington,  74  Mo.  App. 
365  37,  75,  846,  852 

City  of  Indianapolis  v.  Con- 
sumers' Gas  Trust  Co., 
144  Fed.  640;  75  C.  C.  A. 
442        ^  ^  71 

City  of  Kalamazoo  v.  Kala- 
mazoo, etc.  Power  Co.,  124 
Mich.  74;  82  N.  W.  811  39 

City  of  Kansas  v.  Hannibal, 

etc.  R.  R.  Co.,  77  Mo.  180  399, 

406 

City  of  Lincoln  v.  Lincoln  St. 
Ry.  Co.,  67  Nebr.  469;  93 
N.  W.  766  1497 

City  of  London  Brewery  v. 
Inland  Revenue  Comm'rs 
(1899),  1  Q.  B.  121  1495 

City  of  London  El.  Lighting 
Co.  V.  London  Corporation 
(1901),  1  Ch.  602  1305,  1309 

City  of  Louisville  v.  Louisville 
Water  Co.,  26  Ky.  Law 
Rep.  425;   81  S.  W.  698  876 

City  of  Madison  v.  Madison 
Gas,  etc.  Co.  (Wise),  108 
N.  W.  65  961 

City  of  Quincy  v.  Burlington, 
etc.  R.  R.  Co.,  94  111.  537 


City  of  South  St.  Paul  v. 
Lamprecht  Bros.  Co.,  88 
Fed.  449;  31  C.  C.  A.  585 

City  of  Spokane  v.  Amster- 
damsch  Trustees  Kantoor, 
22  Wash.  172;  60  Pac.  141 


1503. 
1521 


1464 


844, 
963 


I 


Clafiin  v.  South  Carolina  R.  R. 

Co.,  8  Fed.  118       1456,  1473,  1531 

1531 
Clancy  v.  Onondaga  Fine  Salt 

Mfg.  Co.,  62  Barb.  (N.  Y.) 

395  261 

Chandler  v.  Bacon,  30  Fed. 

Rep.  538  274 

Clap  V.  Interstate  Ry.  Co.,  61 

Fed.  537  1602 

Clapp  V.  Astor  (N.  Y.),  2  Edw. 

Ch.  379  1114,  1137 

V.  Peterson,  104  111.  26       518 

Clark   V.   Am.    Coal    Co.,   86 

Iowa  436;    53  N.  W.  291; 
17  L.  R.  A.  557       680,  969,  1298, 

1320 

V.    Balm,   Hill    &'  Co. 

(1908),  1  K.  B.  667  1395 

V.  Bever,  139  U.  S.  96; 

11  Sup.  Ct.  468  631 
V.    Brown   (Tex.),    108 

S.  W.  421  1189 
tj.Campbell,  23  Utah  569 ; 

65  Pac.  496;   90    Am.   St. 

Rep.  716;  54  L.  R.  A.  508  1135 
V.  Central  R.  R.  etc.  Co., 

66  Fed.  803;  14  CCA.  112 

1561,  1562 

V.    Clark    (Mich.),    115 

N. W.  416  517 
V.  Continental  Imp.  Co., 

57  Ind.  135  163 
V.  Farmers  Mfg.  Co.,  15 

W^end.  (N.  Y.)  256  402,  1423 
V.  German  Mut.  Fire  Ins. 

Co.,  7  Mo.  App.  77  384 

V.     German     Security 

Bank,  61  Miss.  611  715 

V.  Iowa  City,  20  Wall. 

583  1449,  1459 
V.  Jones,  87  Ala.  474;   6 

So.  362  384 
V.  Lexington  Stoveworks, 

24  Ky.  Law  Rep.  2247;   73 

S.  W.  788  _  _        645 

V.  National  Linseed  Oil 

Co.,     105    Fed.     787;      45 

C  C.  A.  53  957 
V.  Rhode  Island  Locomo- 
tive Works,  24  R.  I.  307; 
53  Atl.  47  890 

V.  St.  Louis,  etc.  R.  R. 

Co.,  58  How.  Pr.  (N.  Y.)  21 

1472,  1601 

V.  Turner,  73  Ga.  1  483 

Clark  Co.,  James  v.  Colton, 
91  Md.  195;  46  Atl.  386; 
49  L.  R.  A.  698  1276,   1305 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Clark's  Case,  7  Eq.  550  612,  1242 
Clarke  v.  Central  R.  R.,  etc. 

Co.,  .50  Fed.  338;    15  L.  R. 

A.  683  1026 
V.  Central  R.  R.,  etc.  Co., 

54  Fed.  556  1641 
V.  Central  R.  R.,  etc.  Co., 

66  Fed.  16  1602,  1660 

V.  City  of  Janesville,  1 

Biss.  98  1449,  1451 

V.    Eastern    Bldg.    etc. 

Ass'n,  89  Fed.  779  890,  890, 

904,  969 

V.  Hart,  6  H.  L.  Cas.  633       658, 

661,  665 

V.  Lexington  Stove- 
works,  24  Kv.  Law  Rep. 
1755;    72  S.  W.  286  645 

V.  Lincoln  Lumber  Co., 

59  Wise.  655;  18N.W.492        632 

V.  O.  &   S.  W.  R.  R.,   5 

Nebr.  314  294 

V.  Richmond,  etc.  Co., 

62  Fed.  328;    10  C.  C.  A. 

387  1026,  1026 

V.  Thomas,  34  Oh.  St.  46      490, 

492 
Clarke's  Case,  27  L.  T.  843  662 

,  8  Ch.  D.  635  154,  159 

Clarke  &   Helden's  Case,  37 

L.  T.  222  568,  1334 

Clarkson     v.     Clarkson,      18 

Barb.  (N.  Y.)  646  1150,  1154 
Clarkson  Homer.  Chesapeake, 

etc.  Ry.  Co..  92  N.  Y.  App. 

Div.  491;    87  N.  Y.  Supp. 

348;     182  N.   Y.   507;    74 

N.  E.  1118  1431,  1431,  1432 
V.  Missouri,  etc.  Ry.  Co., 

182  N.  Y.  47;  74  N.  E.  571 

758,  758,  1431,  1431,  1432 
Clawson  v.  Clayton  (Utah),  93 

Pac.  729  899,  902,  904,  905 

Clay  V.  East  Tennessee,  etc. 

R.  R.  Co.,  6  Heisk.  (Tenn.) 

421  1503, 1515,  1519,  1551 
V.  Selah  Valley,  etc.  Co., 

14  Wash.  543;   45  Pac.  141 

1493,  1586,  1586,  1587,  1594 
Clayton  v.  Gresham,  10  Ves. 

288  1141 

Clayton  Engineering  &  Elec- 
trical Const.  Co.,  90  L.  T. 

283  1639,   1640 

Cleaveland  v.  Mullin,  96  Md. 

598;  54  At  1.  665  147,209,211 
Clegg  V.  Hamilton,  etc.  Co., 

61     Iowa    121;     15  N.    W. 

865  128 


Clem  V.  Newcastle,  etc.  R.  R. 

Co.,  9   Ind.  488;    68  Am. 

Dec.  653  185 

Clemens  v.  Hecksher,  185  Pa. 

St.  476;   40  Atl.  80  799 

Clement  v.  City  of  Lathrop, 

18  Fed.  885  379 
V.  U.  S.,  149  Fed.  305;  79 

C.  C.  A.  243  107,  225 
V.  Young-McShea  Amuse- 
ment Co.  (N.  J.),  60  Atl.  4 19     1071 
v.  Young-McShea  Amuse- 
ment Co.  (N.  J.),  67  Atl.  82 

1078,   1196 
Clements  v.  Bowes,  17  Simons 

167;    1  Drewry  684  342 
V.   Sherwood-Dunn,   95 

N.     Y.    Supp.     766;      108 

N.  Y.  App.  Div.  327  786,  786 

Clergue  v.  Humphrey,  31  Can. 

Sup.  Ct.  66  307 

Cleveland  Iron  Co.,  16  W.  R. 

95  178 

Cleveland      Paper      Co.      v. 

Courier  Co.,  67  Mich.  152; 

34  N.  W.  556  79 

Cleveland  RoUing-Mill  Co.  v. 

Texas,  etc.  Ry.  Co.,  27  Fed. 

250  600 

Cleveland,  etc.  Co.  v.  Taylor 

Bros.  Co.,  54  Fed.  82  1006 

Cleveland,  etc.  R.  R.  Co.  v. 

Knickerbocker   Trust    Co., 

64  Fed.  623  1574 

V.  Robbins,  35  Oh.  St.  483 

732,  732,  753,  753,  755,1130 
Clevenger  v.  Moore,  71  N.  J. 

Law  148;    58  Atl.  88  172 

Clews  V.  Friedman,  182  Mass. 

555;    66  N.  E.  201  717 

Clews  &  Co.  V.  First  Mortgage 

Bondholders,  51  Ga.   131       1452 
Clifton  Heights  Land  Co.  v. 

Randell,   82   Iowa  89;    47 

N.  W.  905  254 

Clinch  V.  Financial  Corpora- 
tion, 4  Ch.  117  967,  972,  977 
Clinton  Novelty  Iron  Works 

V.  Neiting  (Iowa),  111  N.  W. 

974  128 

Clive  V.  Clive,  Kay  600       815,  1137, 

1157 
Clokey  v.  Evansville,  etc.  R. 

R.  Co.,  16  N.  Y.  App.  Div. 

304;    44  N.  Y.  Supp.  631 


Close  V.  Glenwood  Cemetery, 
107  U.  S.  466;  2  Sup.  Ct. 
267 


1450, 
1452 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Clowe  V.  Imperial  Pine  Prod- 
uct Co.,  114  N.  Car.  304; 
19  S.  E.  153  394 

Clowes  V.  Brettell,  11  M.  &  W. 

461  295 

V.  Miller,  60  N.  J.  Eq. 

179;    47  Atl.  345  1051,  1052 

Clyde  V.  Richmond,  etc.  R.  R. 

Co.,  55  Fed.  445  1585,  1587 
V.  Riclimond,  etc.  R.  R. 

Co.,  63  Fed.  21  1612 

Clyde  Tin  Plate  Co.,  47  L.  T. 

439  1513 

Coal    Co.    V.    Land   Co..    106 

Tenn.  41;  60S.  W.  502  1525 

Coal  Belt  Electric  Ry.  Co.  v. 

Peabody  Coal  Co.  (111.),  82 

N.  E.  627  876 

Coalport  Cliina  Co.  (1895),  2 

Ch.  404  765 

Coats,  Re,  73  N.  Y.  App.  Div. 

178;  76N.  Y.  Supp.  730  895 
,  Re,  75  N.  Y.  App.  Div. 

469;  78  N.  Y.  Supp.  425  430 
,  Re,  75  N.  Y.  App.  Div. 

567;  78  N.  Y.  Supp.  429   893, 

894 
Coats,  J.  &  P.  V.  Crossland,  20 

Times  L.  R.  800  1355 

Cobb  V.  Bryan,  83  S.  W.  887 

(Tex.)  239,  239,  239,  380 
V.  Fant,  36  S.  Car.  1 ;   14 

S.  E.  959  1154 
V.  Lagarde,  129  Ala.  488 ; 

30  So.  326  894,  902,  906 

Cobbett     V.     Woodward,     5 

Sawy.  403  1161 

Coble  V.   Beall,    130  N.  Car. 

533;  41  S.  E.  793  960 

Cochran  v.  Arnold,  58  Pa.  St. 

399  222,  240,  245,  261 

V.  McGee,  53  S.  W.  519      1122 

V.  Pittsburg,  etc.  R.  Co., 

150  Fed.  682  1587,  1594,  1595 
Cockburn  v.  Peel,  3  De  G.  F.  & 

J.  170  1445 

V.  Union  Bank,  13  La. 

Ann.  289  894,  903,  905 

Cockrill   V.    Abeles,    86    Fed. 

505;  30  C.  C.  A.  223  91,  489, 
497,  1265 
V.  Cooper,  86  Fed.  7;  29 

C.  C.  A.  529  1259,  1266 

Cocksedge    v.    Metropolitan, 

etc.  Ass'n,  64  L.  T.  826  178 

Coddington  v.  Canaday,   157 

Ind.  243;    61  X.  E.  567  634, 

1274,  1284,  1286 

V.  Gilbert,  17  N.  Y.  489   1413 


lii 


Codman  v.  Vermont,  etc.  R.  R. 

Co,.  16  Blatchf.  165  1433 

Coe  V.  Columbus,  etc.  R.  R. 

Co.,  10  Oh.  St.  372;  75  Am. 

Dec.  518       1400, 1490, 1503, 

1635 
V.  Delaware,  etc.  R.  R. 

Co.,  34  N.  J.  Eq.  266  1535 
V.  East  &  West  R.  R.  Co., 

52  Fed.  531       1069,   1306,   1309, 

1402 

V.  Johnson,  18  Ind.  218       1495, 

1551 

V.  Knox  County  Bank, 

10  Oh.  St.  412  1551 

V.   McBrown,    22    Ind. 

252  1551 

V.  New  Jersey  Midland 

Ry.  Co.,  31  N.  J.  Eq.  105         405, 
1245,  1466,  1564,  1639 
Coffey  V.  Coffey,  179  111.  283; 

53  N.  E.  590  683,  721 
Coffin  V.  CoUins,  17  Me.  440         915, 

917 
Cogan  V.   Conover  Mfg.   Co. 

(N.  J.),  60  Atl.  408  1570 

V.    Conover    Mfg.    Co. 

(N.  J.),  65  Atl.  484  1372 

Cogswell     V.     Second     Nat. 

Bank,  78  Conn.  75;  60  Atl. 

1059  541,  543 

Colien  V.  Wilkinson,  1  Mac.  & 

G.  481  73 

Coit   V.   Gold  Amalgamating 

Co.,  119  U.  S.  343;    7  Sup. 

Ct.  231  635,  636 

Colburn  v.  Riley,  1 1  Colo.  App. 

184;    52-Pac.  684  811 

Colby  V.  Efjuitable  Trust  Co., 

106  N.  Y.  Supp.  801;    55 

N.  Y.  Misc.  355  1307 

Cole  V.  Millerton  Iron  Co.,  59 

Hun  (N.  Y.)217;   13  N.  Y. 

Supp.  851  1315,  1328 

Coleman  v.  Coleman,  78  Ind. 

344  253 
V.  Columbia  Oil  Co.,  51 

Pa.  St.  74  517,521,1134 
V.  Howe,  154  111.  458;  39 

N.  E.  725;  45  Am.  St.  Rep. 

133  636,  636 
V.  Llanelly  Ry.,  etc.  Co., 

17  L.  T.  Rep.  86  1528 

V.  San  Rafael,  etc.  Co., 

49  Cal.  517  845,  862 

V.  Second  Ave.  R.  R.  Co., 

38  N.  Y.  201  1297 

V.    Spencer,    5    Blackf. 

(Ind.)  197  157,  716 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Color  V.  Grainger  County,  74 

Fed.  IG;  20  C.  C.  A.  2G7  66 
V.  Tacorna  Ry.,  etc.  Co., 

65  N.  J.  E(i.  347;    54  Atl. 

413;   103  Am.  St.  Rep.  786         71, 
646,  1026 
Coleridge    Creamery    Co.    v. 

Jenkins,  66  Nebr.   129;  92 

N.  W.  123  861 

Coles  V.  liank  of  England,  10 

Ad.  &  I-:.  437  728 
V.  Iowa  State,  etc.  Ins. 

Co.,  18  Iowa  425  593 
V.    Kennedy,    81     Iowa 

360;  46   N.   W.    1088;    25 

Am.  St.  Rep.  503  185 

Colgate  V.  U.  S.  Leather  Co. 

(N.  J.),  67  Atl.  657  140,  141, 

447,  447,  968,  971,  1081,  1307 
College    Park    Electric    Belt 

Line  v.  Ide  &  Son,  15  Tex. 

Civ.  App.  273;  40  S.  W.  64 

1276, 1318,  1324 
Collie's  Claim,  12  Eq.  246  1209 
Collier   v.    Consolidated    Ry., 

etc.   Co.,   57   Atl.  417;     70 

N.  J.  Law  Rep.  313        1186,  1226 
V.  Doe  ex  clem.  Alexan- 
der. 142  Ala.  422 :  38  So.  244       408 
Collingham  v.  Sloper  (1893),  2 

Ch.  96  1555,  1556 
V.  Sloper  (1901),  1  Ch. 

769  1672 

Collinewood  ?.'.   Berkeley,    15 

C.  B.  N.  s.  145  308,  308 

Collins  V.  Collins,  12  Eq.  455         424 
Collum,  Ex  'parte,  9  Eq.  236  200 

Colman  v.  Oil  Co.,  25  W.  Va. 

148  1373, 1375 

Colmer,     James,     Ltd.,     Re 

(1897),   1   Ch.  524  544 

Colonial    Bank   v.    Cady,    15 

A.  C.  267  682,  687,  687,  694, 
722,  722,  725,  788,  790 
V.  Hepworth,  36  Ch.  D. 

36  722 
V.    Wliinney,    1 1    App. 

Cas.  426  422,  423,  685,  732, 

747,  748 

V.  Willan,  5  P.  C.  417  1073 

Colonial    Dames   of   America 

V.  Colonial  Dames  of  New 

York,  29  N.  Y.  Misc.  10;  60 

N.  Y.  Supp.  302 ;  63  N.  Y. 

App.  Div.  615;    71   N.  Y. 

Supp.  1134  371 

Colonial     Investment    & 

Agency  Co.,   19  Vict.  381 


Colonial  Trust  Co.  v.  McMil- 
lan, 188  Mo.  547;  87  S.  W. 
933;   107  Am.  St.  Rep.  335 


622, 
628 


520. 
620 


Colonist  Printing  &  Pub.  Co. 

V.  Dunsnmir,  32  Can.  Super. 

Ct.  679  474 

Colorado    Land,    etc.    Co.    v. 

Adams,  5  Colo.  App.   190; 

37  Pac.  39  284,  286 
Colorado  Springs  Co.  v.  Amer- 
ican Pub.  Co..  97  Fed.  843; 

38  C.  C.  A.  433  87,  861,  992, 

1193 
Colorado  Trading,  etc.  Co.  v. 

-Veres  Commission  Co.,    18 

Colo.  App.  253 ;  70  Pac.  954  298 
Colpe  V.   Jubilee  Mining  Co. 

(Cal.),  84  Pac.  324  594 

Colciuitt  V.   Howard,   11   Ga. 

556  304 

Colt  V.  Ives,  31  Conn.  25;  81 

Am.  Dec    161  715 

Coltman  v.  Coltman,  19  Ch. 

D.  64  1260 

Coltness  Iron  Co.  v.  Black,  6 

A.  C.  315  1099 

Colton    V.    Williams,  65    111. 

App.  466  698,  702,  712 

Colton    Improvement   Co.    v. 

Richter,  26  N.  Y.  Misc.  26 ; 

55  N.  Y.  Supp.  486  328,  1300 

Coltrane   v.    Templeton,    106 

Fed.  370;  45  C.  C.  A.  328  973 
Columbia     Bank     v.     Gospel 

Tabernacle,  127  N.  Y.  361; 

28  N.  E.  29  1210,  1379,  1379 
Columbia  Bldg.,  etc.  Ass'n  v. 

Jun(iuist,  111  Fed.  645  593 

Columbia  Bottom  Levee  Co. 

V.  Meier,  39  Mo.  53  1032 

Columbia  Iron  Works  v.  Na- 
tional Lead  Co.,   127  Fed. 

99;  62  C.  C.  A.  99  43 

Columbia      Nat.      Bank      v. 

Mathews,  85  Fed.  934;    29 

C.  C.  A.  491  489,  492,  1045 

Columbia    Nat.    Bank's    .\p- 

peal.  16  Wkly.  Notes  Cas. 

(Pa.)  357  1006 

Coluinliia  Nat.  Sand  Dredg- 
ing Co.,  136  Fed.  710  958 
Columbia,   etc.   Trust   Co.   v. 

Kentucky  Union  Ry.   Co., 

60   Fed.   794:    9  C.   C.   A. 

2()4  1457.  1507.  1624,  1627 

Columbian     Bank's     Estate, 

147   Pa.  St.  422;    23  Atl. 

625,  626,  628  518 


Uii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Columbus  Trust  Co.   v.   Mo- 

sher.  100  N.  Y.  Supp.  1066; 

51  N.  Y.  Misc.  270  1107 

Columbus,   etc.    R.    R.    Co.'s 

Appeals,  109  Fed.  177;  48 

C.  C.  A.  275  1450,  1508,  1534, 
1539,  1634,  1634,  1669,  1669 
Colville's  Case,  48  L.  J.  Ch. 

633  523 

Colvin  V.  Williams,  3  H.  «&  J. 

(Md.)  38;  5  Am.  Dec.  417  422 
Col  well  V.  Col  well  Lead  Co., 

76  N.  Y.  App.  Div.  615;  78 

N.  Y.  Supp.  607  894 

Comanche  Cotton  Oil  Co.  v. 

Browne   (Tex.),   92  S.   W. 

450  214 

Combination    Trust    Co.     v. 

Weed,  2  Fed.  24  1319 

Combs  V.  Smith,  78  Mo.  32  1613 
Comeau   v.    Guild    Farm    Oil 

Co.,  3  Daly  (N.  Y.)  218  715 

Commercial  Bank  v.  Chatfield, 

121  Mich.  641;    80  N.   W. 

712  1283, 1368 
V.   Chatfield,    127  Mich. 

407;  86  N.  W.  1015  1283,  1368 
V.     French,     21     Pick. 

(Mass.)  486;  32  Am.  Dec.  280  380 
V.  Kortright,  22  Wend. 

(N.  Y.)  348;    34  Am.  Dec. 

317  685,  694,  749,  753, 
807,  808 
V.  Nolan,  7  How.  (Miss.) 

508  865,  868 
V.    Pfeiffer,    108   N.    Y. 

242;  15  N.  E.  311  248 

■ V.  Warthen,  119  Ga.  990; 

47  S.  E.  536  601 

Commercial  Bank  of  Canada 

V.  Great  Western  Ry.  Co., 

13  L.  T.  105  1221 
Commercial  Fire  Ins.  Co.  v. 

Board  of  Revenue  of  Mont- 
gomery County,  99  Ala.  1; 

14  So.    490;     42   Am.    St. 

Rep.   17  75,  77 

Commercial     Life     Ass.,     27 

L.  J.  Ch.  803  1240 

Commercial    Nat.     Bank    v. 

Brill,    37    Nebr.    626;     56 

N.  W.  382  1377 
V.  Burch,   141   111.  519; 

31  N.  E.  420;    33  Am.  St. 

Rep.  331  518 
V.  Gibson,  37  Nebr.  750; 

56  N.  W.  616  617 
V.  Pine,  82  Fed.  799;  27 

C.  C.  A.  171  84 


Commercial  Nat.  Bank  v. 
Weinhard,  192  U.  S.  243; 
24  Sup.  Ct.  253  1191 

Commercial  Wood,  etc.  Co.  v. 
Northampton  Portland  Ce- 
ment Co.  (N.  Y.),  82  N.  E. 
730  1216 

Commissioners  of  Craven  v. 
Atlantic,  etc.  R.  R.  Co.,  77 
N.  Car.  289  66,  1401 

Commissioners     of     Douglas 

Countyr.Bolles,94U.S.104       241 

Commissioners  of  Johnson 
Co.  V.  Thayer,  94  U.  S.  631 


Commissioners  of  Knox  Co.  v. 
Aspinwall,  21  How.  539 


1434, 
1486 

1220, 
1448 


368 

1249 
1435 


1040 
1031 


1522 


Common    v.     McArthur,    29 

Can.  Sup.  Ct.  239  241,  663 

Commonwealth   v.    American 

Snuff  Co.  (Ky.),  101  S.  W. 

364 
V.  Arrison,  15  Serg.  &  R. 

(Pa.)  127;  16Am.  Dec.  531 

V.  Bank,  98  Mass.  12 

V.  Boston  &  Albany  R. 

R.  Co.,   142  Mass.   146;    7 

N.  E.  716  496,  497,  523 
V.   Bringhurst,    103   Pa. 

St.  134;  49  Am.  Rep.  119 
V.   Cain,   5  Serg.    &  R. 

(Pa.)  510 
V.  Central  Pass.  Ry.  Co., 

52  Pa.  St.  506 
V.  Christian,  9  Phila.  556 

1363,  1364 

V.  Conover,  10  Phila.  55 

1013, 1013,  1014 

v.-Compton,  137  Pa.  St. 

138;  20  Atl.  417  695,  712 
V.  CuUen,  13  Pa.  St.  133; 

53  Am.  Dec.  450  1068,  1186 
V.   Dalzell,  152  Pa.  St. 

217;  25  Atl.  535;  34  Am. 

St.  Rep.  640  1020,  1021,  1023 
V.  Detwiller,  131  Pa.  St. 

614;       18     Atl.     990;      7 

L.  R.  A.  357  1013,  1015,1025, 
1040,  1167,  1168,  1184 
V.   Eagle   Fire   Ins.   Co., 

14  Allen  (Mass.)  344  1239 
V.     Empire     Pass.     Ry. 

Co.,    1.34  Pa.  St.  237;     19 

Atl.  629  901,  904 

V.  Graham,  64  Pa.  St.  339     1249 

V.      Keystone     Electric 

Light,  etc.  Co.,  193  Pa.  St. 

245;  44  Atl.  326  43 

Uv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


495 


2b 
1249 


Commonwealth  v.  Lehigh  Ave. 

Ry.Co.,  129P:i.  St.  405;   18 

Atl.  414,  498 ;  5  L.  R.  A.  .'^67       108 
V.  Licking  Valley  lildg. 

Ass'n,    2G    Ky.    Law    Rep. 

730;  82  S.  W.  4.35        107,  133,  141 
V.    Monoiigahela    Bridge 

Co.  (Pa.),  64  Atl.  909  877 
V.    New    York,    etc.    R. 

Co.,    132  Pa.   St.   591;     19 

Atl.  291;  7L.  R.  A.  634  419, 
846,  877 
V.  Patterson,  158  Pa.  St. 

476;  27  Atl.  998  1017,  1023, 

1056 
V.  PhcEnix  Iron  Co.,  105 

Pa.   St.   Ill;  51   Am.  Rep. 

184  894,  894,  895,  905 
Pittsburg,  etc.  Ry.  Co., 

74  Pa.  St.  83 
V.  Reinoehl,  163  Pa.  St. 

287;      29     Atl.     896;      25 

L.  R.  A.  247 

V.  Smith,  45  Pa.  St.  59 

V.      Smith,      10      Allen 

(Mass.)  448;    87  Am.  Dec. 

672         63,  66,  1408,  1532 
V.   Stevens,  168  Pa.  St. 

582;  32  Atl.  Ill      1064,  1249 
V.    Stevenson,  200  Pa. 

509;  50  Atl.  91  1169 
V.     Susquehanna,  etc. 

R.  R.  Co.,  122  Pa.  St.  306; 

15  Atl.  448;  1  L.  R.  A.  225 

1527,  1530 
V.  Watmough,  6  Whart. 

117  715 
V.  Wickersham,  66  Pa. 

St.  134  1032,  1206 
V.  Woelper,  3  Serg.  it  R. 

(Pa.)  29;  8  Am.  Dec.  628        913, 
1012,  1037.  1059,  1059 
V.   Woodward,   4   Pliila. 

124  1023,  1024 
V.     Wyman,     8     Mete. 

(Mass.)  247  _     _   _  1365 

Commonwealth  of  Virginia  i\ 

Chesapeake,  etc.  Canal  Co., 

35  Md.  1  1670 
V.  State  of  Md.,  32  Md. 

501  1450,  1455,  1456,  1457. 

1457,  1677,  1680 
Commonwealth     for     Mercer 

County    Court    v.    Spring- 
field, etc.  Turnpike  Co.,  10 

Hush  (Ky.)  2.-)4  1122 

Commonwoaltli  c.r  rel.  .\tty.- 

Gen.  ?".  Moiiongliol'i  P.ridge 

Co.  (Pa.),  64  Atl.  909  873 


Commonwealth  ex  rel.  Jack- 
son V.  Smith,  45  Pa.  St.  59 


996, 
1231 


930 


116 


1614 
184 


Commonwealth  ex  rel.  Lacko- 

vic   V.   Jankovic  (Pa.),   65 

Atl.  1099 
Commonwealth  ex  rel.  Nick- 

erson  v.  Conover,  30  Leg. 

Int.  (Pa.)  200 
Commonwealth    Roofing   Co. 

V.    North    American    Trust 

Co.,     135     Fed.     984;      68 

C.  C.  A.  418 
Components  Tube  Co.  v.  Nay- 

lor  (1900),  2  Ir.  1 
Compton  V.  Jesup,  167  U.  S. 

1;   17  Sup.  Ct.  795  1625,  1629 
V.  Railway  Co.,  45  Oh. 

St.  592;   16  N.  E.  110  1500 
V.  Van  Volkenburgh,  34 

N.  J.  Law  Rep.  134  569 

Conant   v.   Millaudon,   5   La. 

Ann.  542  1014,  1014,  1020, 

1058,  1065, 1066, 1167 
Conant,  Ellis  &  Co.  v.  Seneca 

County  Bank,  1  Oh.  St.  298       774 
Concord  First  Nat.  Bank  v. 

Hawkins,    174   U.    S.   364; 

19  Sup.  Ct.  739  75,  834 

Cone  V.  Russell,  48  N.  J.  Eq. 

208;  21  Atl.  847     _        1029,  1029 
Congregational      Society     of 

Bethany     v.     Sperry,      10 

Conn.  200  994 

Conklin  v.  U.  S.  Shipbuilding 

Co.,  140  Fed.  219  1598,  1599 
V.  U.  S.  Shipbuilding  Co., 

143  Fed.  631 
Conlev    V.    Mathieson    Alkali 

Works,  190  U.  S.  406;    23 

Sup.  Ct.  728 
Connecticut    Mut.    Life    Ins. 

Co.  V.  Cleveland,  etc.  R.  R. 

Co.,  41  Barb.  (N.  Y.)  9 

1450,  1452 
Connecticut  River  Sav.  Bank 

V.  Fiske,  60  N.  H.  363      110,  868. 

1409 
Connell  v.  Stalker.  21  N.  Y. 

:\Iisc.  609;  48  N.  Y.    Supp. 

77  585,  588 

Conner    v.    Bramble,    6    Oh. 

N.  P.   195 
Connor  ?'.  Tennessee  Central 

Ry".  Co..  109  Fed.  931;  48  C. 

C.  A.  7.30;  54L.  R.  A.  687 
Conro  V.  Port  Henrj'  Iron  Co., 

12  Barb.  (N.  Y.)  27       387,  1193, 

1211 


1242 


1449, 


1639 


1629 


Iv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Consett  Iron  Co.  (1901),  1  Ch. 

23G  42,  135 

Consolidated    Copper    Co.    v. 

Peddie,  5  Rettie  393  98,  189, 

193,  1175 
Consolitlated  Fruit  Jar  Co.  v. 
^^■isner.    103    N.    Y.    App. 
Div.  453;    93  N.  Y.  Supp. 
128  1329 

Consolidated    Gas    Co.,     106 

N.  Y.  Supp.  407  107 

Consolidated    Land    Co.,    20 

W.  R.  855  1415 

Consolidated    Plaster    Co.    v. 

Wild  (Colo.).  94  Pac.  285         1344 
Consolidated    Rendering    Co. 

(Vt.),  GO  Atl.  790    _  891,  891 

Consolidated  Rendering  Co. 
V.  Vermont,  28  Sup.  Ct. 
178  891,  891 

Consolidated  Tel.,  etc.  Co.,  43 

Atl.  Rep.  433  (N.  J.)       922,  1017 
Consolidated   Vinegar  Works 
V.  Brew,  112  Wise.  610;  88 
N.  W.  603  1259 

Consolidated  Water  Co.  v. 
City  of  San  Diego,  89  Fed. 
272;   92  Fed.  759  1485,  1554, 

1585 
Consolidated    Water    Power 
Co.  V.  Nash,  109  Wise.  490; 
85  N.  W.  485  1188 

Consols  Ins.  Ass'n  v.  Newall, 

3  Fost.  &  F.  130  203 

Constant  v.  St.  Alban's 
Church,  4  Daly  (N.  Y.) 
305  .  1210 

Consterdine    v.    Consterdine, 

31  Beav.  330  794,  813 

Consumers'  Gas  Trust  Co.  v. 
Quinby,  137  Fed.  882;  70 
C.  C.  A.  220  46,  469,  982 

Continental  Fire  Ass'n  v. 
Masonic  Temple  Co.  (Tex.), 
62  S.  W.  930  853 

Continental  Ins.  Co.  v.  New 
York,  etc.  R.  R.  Co.,  187 
N.Y.225;  79N.  E.  1026  1306, 
1311,  1312 
Continental  Ins.  Co.  v.  New 
York,  etc.  R.  R.  Co.,  103 
N.  Y.  App.  Div.  282;  93 
N.  Y.  Supp.  27  1307,  1312 

Continental  Nat.  Bank  v. 
Eliot  Nat.  Bank,  7  Fed.  369 


Continental  Oxygen  Co. 
(1897),  1  Ch.  511 

Continental  Securities  Co.  v. 
Northern  Securities  Co.,  66 
N.  J.  Eq.  274;  57  Atl.  876. 


1622 


538, 
542,  637 

V. 


Continental  Nat.  Bldg.,  etc. 
Ass'n  V.  Miller,  44  Fla.  757; 
33  So.  404 


684, 
715 


Continental     Trust     Co. 
American    Surety    Co.,    80 
Fed.  180;  25  C.  C.  A.  364       1633 

V.  Peterson  (Nebr.),  107 

N.  \y.  786  55 

V.  Toledo,  etc.  R.  Co., 

59  Fed.  514  1602,  1620,  1620 

Continental  Trust  Co.  v.  Tole- 
do, etc.  R.  R.  Co.,  82  Fed. 
642  1402 

V.   Toledo,  etc.    R.    R. 

Co.,  93  Fed.  532  1570 

Continental  Varnish,  etc.  Co. 
V.  Secretary  of  State,   128 
Mich.  621;   87  N.  W.  901         134, 
149,  442,  486 

Contracting,  etc.  Bldg.  Co. 
V.  Continental  Trust  Co., 
108  Fed.  1;  47  C.  C.  A. 
143  1455 

Converse  v.  Hood,  149  Mass. 
471;  21  N.  E.  878;  4  L. 
R.  A.  521  1030,  1063 

V.  United  Shoe  Machin- 
ery Co.,  185  Mass.  422;  70 
N.  E.  444  928,  947 

Conway  v.  John,  14  Colo.  30; 

23  Pac.  170  716 

Conyngham's  Appeal,  57  Pa. 

St.  474         808,  809,  1329 

Cooch  V.   Goodman,  2  Q.  B. 

580  396 

Cook  V.  Am.  Tubing,  etc.  Co. 

(R.  I.),  65  Atl.  641      84,  393 

V.   Berlin   Woolen   Mill 

Co.,  43  Wise.  433  944,  1312, 

1335,  1367 

—  V.    Carpenter,    212    Pa. 
177;    61  Atl.  804  616,  618, 

697,  746 
— V.  Carpenter,  212  Pa.  165; 
61  Atl.  799;    108  Am.  St. 
Rep.  854  614 

—  V.  Chittenden,  25  Fed. 
544  193,  196 

—  V.  Climber  Co.,  75  Miss. 
121;  21  So.  795  319 

—  V.  Detroit,  etc.  Ry.  Co., 
43  Mich.  349;   5  N.  W.  390 


957 


—  V.  Equitable  Bldg.,  etc. 
Ass'n,  104  Ga.  814;  30  S. 
E.  911 


1632 


456 


hn 


TABLE    OF    CASES 

[The  refert'Dces  are  to  pages] 


281 
1120 


761 
Y. 

7G1,  1350 
14 

610 
96,  98,  99 


Cook  ?;.  Monroe,  45  Nebr.  349; 

63  N.  W.  800         1 130,  1 134,  1 134 
V.  Sliennan,  20  Fed.  167        1348 

V.  Sterling  Electric  Co., 

150  Fed.  766;    80  C.  C.  A. 
502 

Cook  County  Brick  Co.  v. 
Kaelilcr,  83  111.  App.  448 

Cook  Mfg.  Co.,  Louis  v.  Ran- 
dall, 62  Iowa  244;  17  N. 
W.  507  297,  297 

Cooley  V.  Brainerd,  38  Vt.  394      1582 

V.  Curran,    104    N.    Y. 

Supp. 424 

V.    Curran,    104    N. 

Supp.  751  426 

Coolgardie,    etc.     Mines, 

Times  L.  R.  277 

,  76  L.  T.  N.  s.  269 

Coombs  V.  Barker,  31  Mont 

526;    79  Pac.   1  1323,  1344 
V.  Harford,  99  Me.  426; 

59  Atl.  529  1012 

Cooney  ?'.  Booth  Packing  Co., 

169  III.  370;   48  N.  E.  406         848 
Cooper  V.  Dismal  Swamp  Canal 

Co.,  6  N.  Car.  195      420,  750,  751 

V.  Frederick,  9  Ala.  738 

517,  524 

V.  Griffcn  (1892),   1  Q. 

B.  740  1177,1177 
V.  Hill,  94  Fed.  582;  36 

C.  C.  A.  402      92,  1259,  1265, 

1284,  1288 
V.  Illinois  Central  R.  R. 

Co.,38N.  Y.  App.  Div.  22; 

57  N.  Y.  Supp.  925    791,  1429, 
1430,  1431,  1431 
Coopers  &  Clark  v.   Wolf,  15 

Oh.  St.  523     1503,  1551,  1553 
Copeland  v.      Copeland,  7 

Bush  (Ky.)  349 
t".  Johnson  Mfg.  Co.,  47 

Hun  (N.  Y.)  235 

V.   North   Eastern   Ry. 

Co.,  6  E.  &  B.  277 

Coppage  V.  Hutton,  124  Intl. 

401;  24  N.  E.  112;   7  L.  R. 

A.  591  202,209,211,212 

Copper  Miners'  Co.  v.  Fox,  16 

Q.B.  229(1851);  15.Jur.703 
Coppes    V.    t^nion    Nat.,    etc. 

Loan  A.ss'n  (Ind.),  69  N.  E. 

702 
V.  Union  Nat.,  etc.  Ass'n 

(Ind.),  67  N.  E.  1022 
Coppin  V.  Greenlees,  etc.  Co., 

38  Oh.  St.  275;  43  Am.  Rep. 

425  517,  858 


420 

1316 

679 


825 


920 

918 


Coquard  v.  Nat.  Linseed  Oil 

Co.,  171  111.  480;    49  N.  E. 

563  907 
V.  St.  Louis  Cotton,  etc. 

Co.,  7  S.  W.  Rep.  176  (Mo.) 

519,  542 
Corbett  v.  Woodward,  5  Savvy. 

403  1199,  1200,  1207, 1276 

Corbin  v.   E.  Taussig  &  Co., 

132  Fed.  662  372 

Corbus  V.  Alaska,  etc.  Mining 

Co.,  187  U.  S.  455;  23  Sup. 

Ct.  157  938,  946,  947,  949, 

950 
Corcoran  v.  Chesapeake,  etc. 

Canal  Co.,  1  Mac  A.  (D.  C.) 

358;  94  U.  S.  741    1449,  1460, 
1485,  1485,  1678 
V.  Snow  Cattle  Co.,  151 

Mass.  74;  23  N.  E.  727    1380 
V.   Sonora  Mining,  etc. 

Co.,  71  Pac.  127;  8  Idaho 

651  658,  913,  919 

Cordova     Union     Gold     Co. 

(1891),  2  Ch.  580  633 

Corey  v.  Morrill,  61  Vt.  598; 

17  Atl.  840  120 

Corgan  v.  George  F.  Lee  Coal 

Co.    (Pa.),   67  Atl.   655         1111, 

1134 
Corinne  Mill,  etc.  Co.  v.  To- 

ponce,   152   U.  S.  405;    14 

Sup.  Ct.  632  1246 

Cork,  etc.   Ry.   Co.   v.   Caze- 

nove,  10  Q.  B.  935  173,  173 

V.  Goode,  13  C.  B.  826        601, 

615 
Cork  &  Youghal  Ry.  Co.,  4  Ch. 

748  63 

Corn  V.  Skillern,  87  S.  W.  142 

(Ark.)  519,  1127 

Cornbrook    Brewing    Co.    v. 

Law     Debenture     Corp. 

(1904),  1  Ch.  103 
Cornell  v.  Massey,  L.  R.  8  C. 

P.  328 
Cornell  University  v.  Fiske,  136 

U.    S.    152;      10  Sup.    Ct. 

775 
Cornick   v.    Richards,   3   Lea 

(Tenn.)   1  684,  715 

Cornwall  Minerals  Ry.  Co.,  48 

L.  T.  N.  s.  41 

,  (1897)  2  Ch.  74 

Cornwall,     etc.    Mining    Co. 

V.  Bennett,  5  H.  &  N.  423 


1396 
1365 


848 


1644 
1447 


Ivii 


Corporation  of  Barnstable  v. 
Lathey,  3  T.  R.  303 


912, 
914 

889 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Corry    v.    Londonderry,    etc. 

Ry.  Co.,  29  Bear.  263  459, 

459,  1103,  1104 

Cortes  Co.  r.  Thannhauser,  45 

Fed.  730  314,  316 

Corwith  V.  Culver,  69  111.  502 

154,  608 

Costa  Rica  Ry.  Co.  v.  For- 
wood  (1900),  1  Ch.  756; 
(1901)  1  Ch.  746  1305.  1308, 

1333,  1334 

Costello  V.  Outterson,  112  N. 
Y.  App.  Div.  680;  98  N. 
Y.  Supp.  880  _         1359 

V.  Portsmouth  Brewing 

Co.,  69  N.  H.  405;   43  Atl. 

640  572 

Coster  r.  Parkersburg  Branch 

R.  R.  Co.,  131  P>d.  115  1617 

Cotheal  v.  Brouwer,  5  N.  Y. 

562  899,  904,  908 

Cottam   V.   Eastern  Counties 

Ry.  Co.,  1  J.  &  H.  243  14-30 

Cotter  V.  Butte,  etc.  Smelt- 
ing Co..  31  Mont.  129;  77 
Pac.  509  154 

Cotterell,  Ex  parte,  32  L.  J. 

Ch.  66  1175 

Cotting  V.  New  York,  etc.  R. 
R.  Co.,  54  Conn.  156;  5 
Atl.  851  _  455,  1098 

Cotton  V.  Imperial,  etc.  Cor- 
poration (1892),  3  Ch.  454 

51,  51 

Cotton  Jammers,  etc.  Ass'n 
V.  Taylor,  23  Tex.  Civ.  App. 
367;    56  S.  W.  553  580,  596 

Couch  V.  City  Fire  Ins.  Co., 
38  Conn.  181;  9  Am.  Rep. 
375  _  868 

Coughlin  V.  Knights  of  Co- 
lumbus (Conn.),  64  Atl.  224       588 

Countv  Court  v.  B.  &  O.  R.  R. 

Co.,^35  Fed.  161  1206,  1210, 

1217 

County   of   Beaver   v.    Arm- 
strong,  44   Pa.   St.   63  1449, 
1451,  1460 

County  of  Gloucester  Bank  v. 
Rudry  Methyr  Colliery 
Co.  (1895),  1  Ch.  629  1222 

County    of    Leavenworth    v. 

Barnes,  94  I'.  S.  70  248 

Countv  of  Macon  v.  Shores, 

97  t.  S.  272  219 

County  Life  Ass.  Co.,  5  Ch. 

288  1225 

Court  of  Honor  v.  Hutchens 

(Ind.),  82  N.  E.  89  584 


Covenant  Mut.  Life  Ass'n  v. 

Kentner,   188  111.  431;    58 

N.  E.  966  584 

Coventry  and   Dixon's   Case, 

14  Ch.  D.  660  1170,  1227,  1261 
Covert  V.  Rogers,  38  Mich.  363 ; 

31  Am.  Rep.  319  1199,  1201 

Covington,    etc.    Plank-Road 

Co.  V.  Moore,  3  Ind.  510  150, 
152,  1227 
Covington,  etc.  R.  R.  Co.  v. 

Bowlers'     Heirs,     9     Bush 

(Ky.)  468  1342,  1343 

Cowan  V.  Caledonian  Club,  46 

N.Y.  App.  Div.  288;  61  N. 

Y.  Supp.  714  1032 

Cowdrey    v.    Galveston,    etc. 

R.  R.  Co.,  93  U.  S.  352  1642, 

1436 
V.  Railroad  Co. ,  1  Woods 

331  1621,  1621,  1643 

Cowell  V.  City  Water  Supply 

Co.,  I'SO  Iowa  671;    105  N. 

W.  1016  1662 
V.  Springs  Co.,  100  U.  S. 

55  113,  837 
Cox  V.  Dublin  City  Distil- 
lery Co.  (1906),  1  Ir.  446  1547 
V.  First  Nat.  Bank,  119 

N.  Car.302;26S.  E.  22  792,814 
V.  National  Coal,  etc.  Co. 

(W.  Va.),  56S.  E.  494         177,271 

V.  Paul,  175  N.  Y.  328; 

67  N.  E.  586  908 
V.  Robinson,  82  Fed.  277; 

27  C.  C.  A.  120  1375 
V.  Stokes,  156  N.  Y.  491 ; 

51  N.  E.  316  1661,  1663 

V.  Terre  Haute,  etc.  R. 

R.  Co.,   133  Fed.  371;    66 

C.  C.  A.  433  838,  1612 

Cox's  Case,  33  L.  J.  Ch.  145  618 

Coxe  V.  Hunteville  Gas  Co., 

106  Ala.  373;  17  So.  626  1288 
V.  State,  144  N.  Y.  396, 

409 ;    .39  N.  E.  400  244,  250 

Coy  V.  Title   Guarantee,  etc. 

Co.,  157  Fed.  794  1607 

Coyote,  etc.  Co.  v.  Ruble,  8 

Oreg.  284  123,  150,  150,  209, 

280 
Cozart  V.   Herndon,    114  N. 

Car.  252;    19  S.  E.  158  166 

Craft    V.    Indiana,    etc.    Ry. 

Co.,  166  111.  580;   46  N.  E. 

1132  1496,1600 

V.  South  Boston  R.  R. 

Co.,  150  Mass.  207;  22  N.  E. 

920;  5  L.  R.  A.  641       1378,  1380 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Craig  V.  Benedictine  Sisters 
Hospital  Ass'n,  88  Minn. 
535;   93  N.  \V.  609  22,  39 

V.     First    Presbyterian 

Church,  88  Pa.  St.  42;    32 

Am.  Rep.  417  1011,1202 

V.    Hesperia,    etc.    Co., 

113  Cal.  7;   45  Pac.  10;   54 
Am.  St.  Rep.  316;  35  L.  R. 

A.  306  749,  771 

V.   Vicksburg,  31   Miss. 

216  1423 
Medicine  Co.r.  Merchants 

Bank,    59    Hun    (N.     Y.) 

561;    14N.  Y.  Supp.  16  1206 

Cram  v.  Bangor  House  Pro- 
prietary, 12  Me.  354  912,  1210 
Cramer  v.  Bird,  6  Eq.  143  977, 

1260 
Crampton  v.  Varna  Ry.  Co., 

7  Ch.  562  395,  395 

Crandall  v.  Lincoln,  52  Conn. 

73;  52  Am.  Rep.  560  516,  519, 
519,  520,  520,  520,  520,  525 
Cranor  Co.,  A.   J.,  v.   Miller 

(Ala.),  41  So.  678  339 

Cratty  v.  Peoria  Law  Library 

Ass'n,  219  111.  516;    76  N. 

E.  707  451,  464,  465,  466 

Cravens  v.  Eagle  Cotton  Mills 

Co.,  120  Ind.  6;    21  N.  E. 

981;    16  Am.  St.  Rep.  298       188, 

193 
Crawford  v.  Albany  Ice  Co., 

aeOreg.  535;  60'Pac.  14  1371, 
1376,  1377 
V.  Northeastern  Ry.  Co., 

3  Jur.  N.  S.  1093  458 
V.  Prairie  Creek  Ditching 

Ass'n.  44  Ind.  361  94 
V.  Provincial  Ins.  Co.,  8 

Up.  Can.  C.  P.  263  692,  751 
V.  Roney  (Ga.),  55  S.  E. 

499  522,  600 
V.  Roney  (Ga.),  61  S.  E. 

117  1129 

V.  State,  52  Oh.  St.  62         1249 

Crawley's  Case,  4  Ch.  322  167,  171 
Credit    Assurance,    etc.    Co. 

(1902),  2  Ch.  601  536,537 

Credit  Co.,  11  Ch.  D.  256  904 

V.  Arkan.sas,  etc.  R.  R. 

Co.,  15  Fed.  46  1485,  1049 
V.  Howe  Machine  Co.,  54 

Conn.  357;    8  Atl.  472;    1 

Am.  St.  Rep.  123  862 

Credit    Foncior    of    England, 

Re.  L.  R.  11  Eq.  3.^.6  5.34 

Creek  v.  State,  77  Ind.  180  1249 


752 


1299 
139 


104  Am.  St. 
L.  R.  A.  76 
Crichton's  Oil 
Ch.  86 


342 

811 


li 


Crenshaw  v.  Columbian  Min- 
ing Co.,  110  Mo.  App.  355; 
86  S.  W.  260 
Crescent  City  Brewing  Co.  v. 
Flanner,  44  La.  Ann.  22 ;   10 
So.  384 
Cressona     Sav.     Fund,     etc. 
Ass'n,  1  Leg.  Rec.  (Pa.)  245 
Cress  well    v.    Oberly,    17    111. 

App.  281  123,  246,  253 

Creyke's  Case,  5  Ch.  63  608 

Crichton  v.  Webb   Press  Co., 
113   La.   167;    36  So.  926; 
Rep.  500;    67 

1082,  1111,  1112 
Co.   (1902),  2 

471,  1101 
Crickmer's  Case,  10  Ch.  614 

640,  641 
Cridland  v.  De  Mauley,  1  De 

G.  &  S.  459 
Crimp  V.  McCormick  Co.,  71 

Fed.  356;    18  C.  C.  A.  70 
Crissey  v.  Cook,  67  Kans.  20 ; 

72  Pac.  541  658,661,661,665 
Crittenden  v.  Southern  Home 

Bldg.,  etc.  Ass'n,   111  Ga. 

266;  36  S.  E.  643  586,  593 

Crittenden,  etc.  Co.  v.  Cowles, 

66  N.  Y.  App.  Div.  95;    72 

N.  Y.  Supp.  701 
Crocker-Wheeler  Co.  v.  Bul- 
lock, 134  Fed.  241 
Cromie's   Heirs  v.   Louisville 

Orphans    Home,    3    Bush 

(Ky.)  365 
Cromwell  v.  County  of  Sac,  96 

U.  S.  51  1433,    1434, 

1441.  1442,  1450,  1460 
V.  Willis,  96  Md.  260 ;  53 

Atl.  1116 
Cronin  v.  Patrick  County,  89 

Fed.  79 
Crook  V.  Scott,  65  X.  Y.  App. 

Div.  139;  72  X.Y. Supp. 516; 

174N.  Y.520:66N.  E.  1106 

V.  Seaford,  6  Ch.  551 

Crosby  v.  Morristown,  etc.  R. 

R.  Co.  (Tenn.),  42  S.  W.  507 

1647,  1648,  1656 
V.  New  London,  etc.  R. 

R.  Co.,  26  Conn.  121  1448 
V.  Stratton,  17  Colo.  212: 

68  Pac.  130  507,  509,  509 

Croskv  V.  Bank  of  Wales,  4 

Giff.  314  295,  625,  633 

Cross  V.  Eureka  Lake.  etc.  Co. 

73  Cal.  302:    14  Pac.  885; 

2  Am.  St.  Rep.  808      •  811 


1341 
890 


848 
1436, 


1366 
1432 


1106 
395 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Cross  V.  Evans,  86  Fed.  1 ;  29 

C.  C.  A.  523  1643 

V.  PhcEiux  Bank,   1    R. 

I.  39  769,  770,  774 

V.  Pinckneyville  Mill  Co., 

17  111.  54  126,  239,  239 

V.   West  Va.,  etc.   Ry. 

Co.,   37    W.    Va.   342;     16 
S.  E.  587;   18  L.  R.  A.  582, 

1167,  1169 

Crossman  v.  Hilltown  Turn- 
pike Co.,  3  Grant's  Cas. 
(Pa.)  225  404,  405,  406 

Grossman's  Estate,  14  Pa. 
Dist.  Rep.  40 

Crouch  V.  Credit  Foncier  of 
England,  L.  R.  8  Q.  B. 
374 

Crow  V.  Florence  Ice,  etc.  Co., 
143  Ala.  541;   39  So.  401 


1148 


1423 


946, 
1250 


V.  Green,  1 1 1  Pa.  St.  637 ; 

5  Atl.  23 
Crowley    v.    Genesee    Mining 

Co.,  55  Cal.  273 
i;.  Sandhurst,  etc.  Co., 

23  Vict.  L.  R.  661 
Crown  Bank,  Re,  44  Ch.  D.  634 

94,  99,  383 
Crown  Lease  Proprietary  Co., 

14  Times  L.  R.  47 
Crown  Slate  Co.  v.  Allen,  199 

Pa.  239;   48  Atl.  Rep.  968 
Crumlish  v.  Central  Imp.  Co., 

38  W.  Va.  390;    18  S.  E. 

456;   45  Am.  St.  Rep.  872; 

23  L.  R.  A.  120 
Crump  V.  U.  S.  Mining  Co.,  7 

Gratt.  (Va.)  352;    56  Am. 

Dec.  116 
Cud  V.  Rutter,  1  P.  Wms.  570 
Culberson  v.  Ala.  Const.  Co. 

(Ga.),  56  S.  E.  765  298,  298 

Cullen  V.  Coal  Creek,  etc.  Co., 

42  S.  W.  Rep.  693  (Tenn.)       967, 
968,  1288 
Culleme  v.  London,  etc.  Bldg. 

Soc,  25  Q.  B.  D.  485  1264, 

1267,  1281 
Cullman    Fruit    &    Produce 

Ass'n,  155  Fed.  372  408,  1372 

Culp   V.   Mulvane.   66   Kans. 

143;  71  Pac.  273  717 

Culver  V.  Third  Nat.  Bank,  64 

111.  .528  916 

Cumberland  Coal  Co.  v.  Sher- 
man, 30  Barb.  .553  (N.  Y.)      300, 
1045,  1298,  1300,  1303,  1304 
1311,  1312 


337 

392 

56,  70 


356 

618 


1247 


1374 

785 


1299 
1061 


833 


249 
1626 


594 


831 


Cumberland  Coal,  etc.  Co.  v. 

Parish,  42  Md.  598 

V.  Sherman,  20  Md.  117 

Cumberland     Land     Co.     v. 

Daniel,     52     S.     W.     446 

(Tenn.)  301,  302 

Cumberland  Tel.,  etc.  Co.  v. 

Evans\dlle,  127  Fed.  187 

V.  St.   Louis,    etc.    Ry. 

Co.,    117  La.   199;    41  So. 
492 

Gumming  v.  Metcalfe's  Lon- 
don Hydro,  2  Manson  418 

Gummings  v.  Webster,  43  Me. 
192 

Gunliffe,  Brooks  &  Co.  v. 
Blackburn  Bldg.  Soc,  9 
A.  C.  857 

Cunningham  v.  Ala.  Life  Ins., 

etc.  Co.,  4  Ala.  652  571,  767, 

776 

V.   German   Ins.   Bank, 

101  Fed.  977;    41  C.  G.  A. 

609  109,  492,  497,  511,  531, 

992 

V.  Holly,  Mason,  Marks 

&Co.,    121   Fed.   720;    58 
G.  C.  A.  140 

V.  Vermont,  etc.  R.  R. 

Co.,  12  Gray  (Mass.)  411 

V.     Wechselberg,     105 

Wise.  359;    81  N.  W.  414 

Cunningham's     Appeal,     108 

Pa.  St.  546  500,  507 

Gunninghame  v.  City  of  Glas- 

cow  Bank,  4  A.  C.  607       706,  812 
Gunyus  v.  Guenther,  96  Ala. 

564;    11  So.  649 
Cupit  V.  Park  City  Bank,  20 

Utah  292;    58  Pac.  839 


628 

1114 

960 


384 


1179, 

1225 


877 
786 


1035 
502, 


Curran  v.  Arkansas,  15  How. 

304 
Currie  v.  Jones,   138  N.  Gar. 

189;  50  S.  E.  560 
V.   Mutual  Ass.  Soc,  4 

Hen.    &  Munf.    (Va.)  315; 

4  Am.  Dec.  517 

V.  Wliite,  45  N.  Y.  822 

502,  1135 
Gurrie's  Case,  11  W.  R.  46  206, 

1340 
Currier    v.    Continental    Life 

Ins.  Co.,  53  N.  H.  538       588,  589 
V.  Lebanon  Slate  Co.,  56 

N.  H.  262     517,  518,  534,  534 
V.  N.  Y.,  etc.  R.  R.  Co., 

35  Hun  (N.  Y.)  355    944,  961, 
1527,  1554 


Ix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Curry  v.  Scott,  54  Pa.  St.  270 

V.   Woodward,  53  Ala. 

371 

Curtice  v.  Crawford  County 
Bank,  110  Fed.  S-iO  770, 

V.     Crawford     County 

Hank,  118  Fed.  390 

Curtin  v.  Salmon  River,  etc. 
Co.,  130  Cal.  345 :  62  Pac. 
552;   80  Am.  St.  Rep.  132 

Curtis  V.  McCullough,  3  Ne- 
vada 202  1249, 

V.  Meeker,  62  111.  App. 

49  126, 

V.    Natalie    Anthracite 

CoalCo.,89N.Y.App.  Div. 
61;  85  N.  Y.  Supp.  413; 
affirmed  in  181  N.  Y.  543; 
73  N.  E.  1122 

V.    Osborn    (Conn.),   65 

Atl.  968         503,  1154,  1446, 

V.    Piedmont    Lumber, 

etc.  Co.,  109  N.  Car.  401; 
13  S.  ?:.  944 

V.  Tracy.   169  111.  233; 

48  N.  E.  399;  01  Am.  St. 
Rep.  168 

Curtiss  V.  Leavitt,  15  N.  Y.  1 

66,  856,  861,  865, 
Cushing  Sulphite  Fibre  Co.  v. 

Cushing,    2    New    Brunsw. 

Eq.  539  1259,  1273, 

Cushman  v.  Bonfield,  36  111. 

App.  436 

V.  Cloverland  Coal,  etc. 

Co.  (Ind.),  S3  N.  E.  390 

V.   Thayer  Mfg.  Jewelry 

Co..  76  N.  Y.  365;  32  Am. 
Rep.  315     700,  732,  751, 

Cussons,  Re,  73  L.  J.  Ch.  296 
Cutter  V.  Iowa  Co.,  128  Fed. 

505  1626, 

Cutting  V.  B.  &  O.  R.  R.  Co., 

35   N.    Y.    Misc.    616;     72 

N.  Y.  Supp.  27 

V.  Damarel,  88  N.  Y.  410 

696 

V.  Florida,  etc.  Co.,  43 

Fed.  747 

V.   Taveres,  etc.   R.  R. 

Co.,  61  Fed.  150;  9  C.  C.  A. 

401  1561, 

Cutting,  Ex  parte,  94  U.  S.  14 

Cuvkcntlall  v.  Douglas,  19 
Hun(N.  Y.)577      118,1005, 


157, 
509 

614 


769 

993. 
1203 

1326 

,248 


854 
1446 

394 


254 
63, 
867 


1332 
1659 
1382 


751, 
752 
304 

1660 


16.36 
616, 
,  699 

1618 


1.563 
984, 
986 

1032 


Cuyler  v.  City  Power  Co.,  74 

Minn.  22;  76  \.  W.  948        31,  43 

Cyclists'  Touring  Club  (1907). 

1  Ch.  269  135,  135 

D 

Dabney  v.  Stevens,  2  Sweeney 

(N.  Y.)  415;    40  How.  Pr. 

(N.  Y.)  341  592 

Dacovich  v.  Canizas  (Ala.),  44 

So.  473  522 

Dadson's  Case,  12  Times  L.  R. 

482  351.  360,  522 

Dady  v.  Georgia,  etc.  Ry.  Co., 

112  Fed.  838  982 

Daily   Telegraph    Newspaper 

Co.   V.   Cohen,   5   New   So. 

Wales  State  Rep.  520       730,  731, 

731 
Dain   Mfg.    Co.   v.   Trumbull 

Seed  Co.,  95  Mo.  App.  144; 

68  S.  W.  951  616,  692 

Dale  V.  Hayes,  40  L.  J.  Ch.  244  1 141 
Dale  &  Plant,  Re,  43  Ch.  D. 

2.55  1241 

,  Re,  61  L.  T.  206  283,  285, 

286 
Dallas,  etc.  Cold  Storage  Co. 

V.  Crawford,    18  Tex.   Civ. 

App.  176;  44  S.  W.  875  1.382 

Dalrymple  v.  Lauman,  23  Md. 

376  1419,  1526 

Dalton  Time  Lock  Co.  v.  Dal- 

ton,  66  L.  T.  704  149,  205 

Daly  V.  New  York,  etc.  Ry. 

Co.,  55  N.  J.  Eq.  595;    38 

Atl.  202  1539 

Dame  v.  Crochiti,  etc.   Imp. 

Co.  (N.  Mex.),  79  Pac.  296  1465 
Dana   v.    American   Tobacco 

Co.  (N.  J.),  65  Atl.  730 ;  69 

Atl.  223  ■  788,  789,  999 
V.  Bank  of  U.  S.,  5  Watts 

&  Serg.  (Pa.)  223  1187 
V.  Brown,  1  J.  J.  Marsh 

(Ky.)  304  684 

Danburv.  etc.   R.   R.   Co.   r. 

Wilson.  22  Conn.  435  605,  1378 
Dancy  v.  Clark.  24  App.  D.  C. 

487  45,  46,  47,  105,  114,  123. 

150,  1175 

Dane  v.  Young,  61  Me.  160       512, 

513,  576,  762 

Danforth  v.  Nat.  State  Bank, 

48  Fed.  271  869 

Daniell  v.  Roval  British  Bank, 

1  H.  &  N.  681  925 

Daniels  v.  Hart,  1 18  Mass.  543     1582 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Daniher  v.  Grand  Lodge,  10 

Utah  110;    37  Pac.  245  576 

Dannebroge  Gold,  etc.  Co.  v. 

Ailment,  26  Cal.  286  118 

Dannmeyer   i".    Coleman,    11 

Fed.  97  956,  970,  982 

Danville,  etc.  R.  R.  Co.  v. 
Brown,  90  Va.  340;  18 
S.  E.  278  1165,  1166 

D'Arcy    v.   Tamar,   etc.    Ry. 

Co.,  L.  R.  2  Ex.  158       1209,  1209 

1209 

Darnall  v.   Dickens,  4  Yerg. 

(Tenn.)  7  _  407 

Darrah  v.  Wheeling  Ice,  etc. 
Co.,  50  W.  Va.  417;  40 
S.  E.  373  593,  594 

Darrin  v.  Hoff,  99  Md.  491; 

58  Atl.  196  561,  1012 
Dartmouth  College  v.  Wood- 
ward, 4  Wheat.  518       3,  33,  1251 

Dashwood     v.     Cornish,     13 

Times  L.  R.  337  1238 

D.  A.  Tompkins  Co.  v.   Ca- 
tawba Mills,  82  Fed.  780  958, 
1485,  1586 

V.  Chester  Mills,  90  Fed. 

37  1492 

Davenport  v.  Crowell,  65  Atl. 

557  (Vt.)  966 

V.  Dows,  18  Wall.  626  974 

V.  Lines,  77  Conn.  473; 

59  Atl.  603     1095,  1268,  1268 
V.  Piano  Implement  Co., 

70  111.  App.  161        429,  429 

V.  Receivers,  2  Woods 

519  164 

Davey  &  Co.  v.  Williamson  & 

Son  (1898),  2  Q.  B.  194  1546 

David    Bradley   Mfg.    Co.    v. 

Chicago,  etc.  Traction  Co. 

(111.),  82  N.  E.  210      60,  113,  133 
David  Ireland  &  Co.  (1905), 

1  Ir.  1.33  1264 

Da\nd  Lloyd  &  Co.,  6  Ch.  D. 

339  1598 

David  Payne  &  Co.  (1904),  2 

Ch.  608  861,  1235,  1235,  1407 

David  Reus,  etc.  Co.  v.  Con- 
rad, 101  Md.  224;    60  Atl. 

7.37  1274 

Davidson  v.  Grange,  4  Grant 

(Can.)  377  954,  1250 
V.  Hobson,  59  Mo.  App. 

130  245 

V.    Old    People's,    etc. 

Soc,    39    Minn.    .303;     39 

N.  W.  803 ;    1  L.  R.  A.  482      589, 

592 


1175 


848 
196 


1222 

1605 
807 
172 


1211 


948 


950 


Davidson  v.  State,  20  Fla.  784     1249 

V.  Westchester  Gas- 
Light  Co.,  99  N.  Y.  558;  2 
N.  E.  892 

Davidson  College  v.  Cham- 
bers' Extrs.,  3  Jones  Eq. 
(N.  Car.)  253 

Davidson's  Case,  4  K.  &  J.  688 

Da  vies  v.  Harvey  Steel  Co.,  6 
N.  Y.  App.  Div.  166;  39 
N.  Y.  Supp.  791  1373,  1381 

V.  Monroe  Water  Works 

Co.,   107  La.   145;    31  So. 

694  965,  1245 

V.   R.  Bolton,   etc.  Co. 

(1894),  3  Ch.  678 

V.  Vale  of  Evesham  Pre- 
serves, 73  L.  T.  150 
Davies'  Case,  33  L.  T.  834 

-,  41  L.  J.  Ch.  659 

Davis  V.  Brown  County  Coal 

Co.  (S.  Dak.),  110  N.  W. 

113 
V.  Commercial  Pub.  Co., 

1  State  Rep.  (N.  So.  Wales) 

Eq.  37 
V.  Congregation  Tephilas 

Israel,  40  N:  Y.  App.  Div. 

424;  57  N.  Y.  Supp.  1015 

V.   Dexter  Butter,   etc. 

Co.,  52  Kans.  693;  35  Pac. 

776  286,  288 

V.  Duncan,  19  Fed.  477    1689, 

1615,  1620 

V.   Edwards,   41   Wash. 

480;  84  Pac.  22  1372 
V.  Flagstaff  Silver  Mining 

Co.,  2  Utah  74  1117,1189 
V.  Gemmell,  70  Md.  356; 

17  Atl.  259  944 
V.  Gemmell,  73  Md.  530; 

21  Atl.  712  983,  986 

V.    Georgetown    Bridge 

Co.,  1  Cranch,  C.  C.  147  1379 
V.  Hardwicke  (Tex.),  94 

S.  W.  359  807 
V.  Haycock,  L.  R.  4  Ex. 

373  782 
V.  Hofer,  38  Oreg.  150; 

63  Pac.  56  1350 
V.  Jackson,  152  Mass.  58 ; 

25  N.  E.  21;    23  Am.  St. 

Rep.  801        502,  1140,  1147,  1147 

V.    Maysville   Creamery 

Ass'n,  63  Mo.  App.  477  280 

V.  Mempliis  City  Ry.  Co., 

22  Fed.  883  1240 
V.  Miller  Signal  Co.,  105 

111.  App.  657  684 


Ixn 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1359 
792 


526 


280 


1317 


592 
244, 


Davis  V.  Mills,  194  U.  S.  451; 
24  Sup.  Ct.  692 

V.    Nat.     Eagle    Bank 

(R.  I.),  50  Atl.  530 

V.  Old  Colony  R.  R.  Co., 

131    Mass.    258;     41    Am. 

Rep.  221  81,851,853 

V.  Proprietors  of  Meet- 
ing-House, 8  Mete.  (Mass.) 
321 

V.    Ravenna    Creamery 

Co.,     48    Nebr.     471;      67 
N.  W.  436 

V.  Rock  Creek,  etc.  Co., 

55  Cal.  359;    36  Am.  Rep. 
40 

V.  Rockingham  Invest- 
ment Co.,  89  Va.  290;  15 
S.  E.  547 

V.  Stevens,  104  Fed.  235 

251,  252 
V.  Thomas  &  Davis  Co., 

63  N.  J.  Eq.  572;    52  Atl. 

717  1322, 1322 
V.  U.  S.  Electric,  etc.  Co., 

77  Md.  35;  25  Atl.  982      76,  959, 

1026,  1306 

V.  Valley  Electric  Light 

Co.,  61  N.  Y.  Supp.  580 

V.  West  Saratoga  Bldg. 

Union,  32  Md.  285 

Davis    Bros.   v.   Montgomery 

Furnace,  etc.  Co.,  101  Ala. 

127;  8  So.  496  636,  1415 

Davis  Mill  Co.  v.  Bennett,  39 

Mo.  App.  460  918,  919,  1034, 

1322 
Davis,   etc.   Co.   v.   Hillsboro 

Creamery  Co.,  10  Ind.  App. 

42 ;    37  N.  E.  549  286,  289 

Davis,     etc.     Wheel    Co.     v. 

Davis,  etc.  Wagon  Co.,  20 

Fed.  699        ^  300 

Davison  v.  GillFes,  16  Ch.  D. 

347  n.  1099,  1100 

Davoue  v.  Fanning,  2  Johns. 

Ch.  (N.  Y.)  252  1307 

Da%ves'  Case,  6  Eq.  232  669 

Dawney,  Arcliibald  D.,  Ltd., 

Re,  83  L.  T.  47  205,  642 

Dawson  v.  African,  etc.   Co. 

(1898),  1  Ch.  6  1168,  1168, 
1230,  1230 
V.    Braime's   Tadcaster 

Breweries  (1907),  2  Ch.  359  1558 
Day  V.  Day,  1  Dr.  &  Sm.  261      789, 

789 

V.  Holmes,  103  Mass.  306      807. 

807 


288 
66 


Day  V.  Mill  Owners'  Mut. 
Fire  Ins.  Co.,  75  Iowa  694; 
38  N.  W.  1 13  138 

V.  Ogdensburgh,  etc.  R. 

R.  Co.,  107  N.  Y.  129;    13 

N.  E.  765  1676,  1080 

V.  Postal  Tel.  Co.,  66  Md. 

354;  7  Atl.  608  121,882 

V.  Spiral  Springs  Buggy 

Co.,  57  Mich.  146;    58  Am. 
Rep.  352;  23  N.  W.  628  854, 

855,  856 

V.  Sykes  &  Co.,  55  L.  T. 

763  1607 

V.  Worcester,  etc.  R.  R. 

Co.,    151    Mass.    302;     23 
N.  E.  824  1476 

Day,  Ex  parte,  1  Ch.  D.  699         200 
Dayton  Hydraulic  Co.  v.  Fil- 
senthall,  116  Fed.  961;    54 
C.  C.  A.  537  1613 

Dayton  Ins.  Co.  v.  Kelly,  24 
Oh.  St.  345;  15  Am.  Rep. 
612  394,  868 

Dayton  Nat.  Bank  v.  Mer- 
chants' Nat.  Bank,  37  Oh. 
St.  208  810 

Dayton,    etc.    R.    R.    Co.    v. 

Hatch,  1  Disney  (Oh.)  84         189, 
634,  636,  1191 
Deaderick  v.  Wilson,  8  Baxt. 

(Tenn.)  108  1351 

Dean  v.  Baldwin,  99  III.  App. 

582  635 

V.  Biggs,  25  Hun  (N.  Y.) 

122  1514 

Deane  v.  Hodge,  35  Minn. 
146;  27  N.  W.  917;  59 
Am.  Rep.  321  1244 

Dearborn  v.  Washington  Sav. 
Bank,  18  Wash.  8;  50  Pac. 
575  658,  661,  768,  769 

Dearie  v.  Hall,  3  Russ.  1  684 

Deaton  Grocery  Co.  v.  Inter- 
national Harvester  Co. 
(Tex.),  105  S.  W.  556  86,  851 

De  Bardeleben  v.  Bessemer 
Land,  etc.  Co.,  140  Ala. 
621;  37  So.  511  1340 

Debenture  Corp.  v.  Murietta, 

8  Times  L.  R.  496  1592 

De    Betz's    Petition.    9   Abb. 

N.  c.  (N.  Y.)  246  1585,  1671 

De  Beville's  Case,    Baron,   7 

Eq.  11  207,  207 

De    Bost    V.    Palmer    Co..    1 

How.  Pr.  N.  .s.  (N.  Y.)  501         592 
De  Camp  v.  Alward,  52  Ind. 

468  1188 


Ixiii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


De  Camp  v.  Dobbins.  29  N.  J. 
Eq.36;s.  c.  31N.J.  Eq.  671 


54, 
847 

De   Caumont   v.    Bogert,    36 

Hun  (N.  Y.)  382       687,  712 

Decker  v.  Gardner,  124  N.  Y. 
334:  26  N.  E.  814;  11 
L.  R.  A.  480    1597,  1599,  1610, 

1613 

Dedham  Institution  for  Sav- 
ings V.  Slack,  6  Cush. 
(Mass.)  408  _         1379 

Deepwater  Council  v.  Renick 

(W.  Va.),  53  S.  E.  552  408 

Deering  v.  Hibernian  Banking 

Co.,  16  W.  R.  578  769 

De£fell  v.  White,  L.  R.  2  C.  P. 

144  405 

Degnan  v.  Thoroughman,  88 

Mo.  App.  62  408 

De    Graff   v.    Thompson,    24 

Minn.  452  1516 

De  Graffenried  v.  Brunswick, 
etc.  R.  R.  Co.,  57  Ga.  22        1616 

De  Koven  v.  Alsop,  205  111. 
309;  68  N.  E.  930;  63 
L.  R.  A.  587  503,  1143,  1144 

De  la  Cuesta  v.  Ins.  Co.,  136 
Pa.  St.  62;  20  Atl.  505;  9 
L.  R.  A.  631  508 

Delacy  v.  Neuse  Nav.  Co.,  1 
Hawks  (N.  Car.)  274;  9 
Am.  Dec.  636  427,  658,  666 

Deland  v.  Williams,  101  Mass. 

571  1146 

Delaney  v.  Delaney,   175  111. 

187;  51  N.  E.  961  589 

Delano  v.  Case,  121  111.  247; 
12  N.  E.  676;  2  Am.  St. 
Rep.  81;  s.  c.  17  111.  App. 
531  1357 

V.  Smith  Charities,  138 

Mass.  63  1034,  1166 

De  la  Vergne,  etc.  Co.  v.  Ger- 
man Savings  Inst.,  175 
U.  S.  40;   20  Sup.  Ct.  20  76 

838,  840,  1069 

Delaware,  etc.  Canal  Co.  v.  Pa 
Coal  Co.,  21  Pa.  St.  131 


Delaware,  etc.  R.  R.  Co.  v. 

Irick,  23  N.  J.  Law  Rep. 

321 
V.  Oxford  Iron  Co.,  38 

N.  J.  Eq.  340 
Deloach  v.  Jones,  18  La.  447 
Demarest  v.  Flack,  128  N.  Y 

205;    28    N.    E.   645;     13 

L.  R.  A.  854 


1225, 
1226 


386 

572 

87 


120 


Demarest  v.  Spiral  Riveted 
Tube  Co.,  71  N.  J.  Law  14; 
58  Atl.  161  880,  1069,  1211 

Deming  v.  Beatty  Oil  Co.,  72 

Kans.  614;  84Pac.  385  975, 

975 

Dempster  v.  Rosehill  Ceme- 
tery Co.,  206  111.  261;  68 
N.  E.  1070  430 

Dempster  Mfg.  Co.  v.  Downs, 
126  Iowa  80;  101  N.  W. 
735;    106  Am.  St.  Rep.  340       115 

Den  ex  dein.  American  Primi- 
tive Soc.  V.  Pilling,  24 
N.  J.  Law  653  1008 

Den  ex  dem.  Tours  v.  Vreelandt, 

2  Halst  (N.  J.)  352  404,  404 

Denham  &  Co.,  25  Ch.  D.  752       1276 
1278,  1280 

Denney    v.     Cleveland,    etc. 

R.R.  Co.,  28  Oh.  St.  108  190, 

1475,  1475 

Dennis  v.  Joslin  Mfg.  Co.,  19 
R.  I.  666;   36  Atl.  129;    61 
Am.  St.  Rep.  805       912,  917,  919, 
1069,  1071 

Dennison  v.  Austin,  15  Wise. 

334  1211 

V.    Keasbey    (Mo.),    98 

S.  W.  546  786 

Denniston    v.    Chicago,    etc. 

R.  R.  Co.,  4  Biss.  414  1559 

Denny  v.  Lyon,  38  Pa.  St.  98; 

80  Am.  Dec.  463  723,  724 

Denny  Hotel  Co.  v.  Schram,  6 
Wash.  134;  32  Pac.  1002; 
36  Am.  St.  Rep.  130         121,  607 

Densmore  Oil  Co.  v.  Densmore, 

64Pa.  St.  43        123,150,312,322, 
323,  325,  329 

Dent   V.    London    Tramways 

Co.,  16  Ch.  D.  344  465,  1100 

Denton  v.  Macniel,  2  Eq.  352       337, 

342 

Denver  Fire  Ins.  Co.  v  Mc- 
Clelland, 9  Colo.  11;  9  Pac. 
771;    59  Am.  Rep.  134  142, 

852  855 

Denver  Hotel  Co.,  Re  (1893), 

1  Ch.  495  534,  534,  538 

Denver,  etc.  R.  Co.  v.  U.  S. 

Trust  Co.,  41  Fed.  720  1412, 

1412 

Depew  V.  Col  ton  (N.  J.),  46 

Atl.  728  1371 

De  Peyster  v.  American  Fire 

Ins.  Co.,  6  Paige  (N.Y.)  486     1093 

Derby  Canal  v,   Wilmot,   9 

East  360  401,  401 


Ixiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


56 

369 
166 


580 
340 


423 
1605 


574 


1500 


772 


1168, 


Deringer's  Acltnr.  v  Deringer's 

Adinr.,  5  Houst.  (Del.)  416; 

1  Am.  St.  Hop.  150 
Dermatine  Co.  v.  Ashworth, 

21  Times  L.  R.  510 
De  Rosaz's  Case,  21  L.  T.  10 
Derry  v.  Great  Hive,  etc.  of 

Maccabees,  135  Mich.  494; 

98  N.  W.  23 

V.  Peek,  14  A.  C.  337 

De  Ruvigne's  Case,  5  Cli.  D. 

306        629,  1169,  1336,  1339,  1340 
Desinge  v.  Beare,  37  Cli.  D. 

481 
Des  Moines  Gas  Co.  v.  West, 

44  Iowa  23 
Des    Moines    Nat.    Bank    v. 

Warren   County   Bank,   97 

Iowa  204;   66  N.  W.  154 
Des  Moines,  etc.  R.  R.  Co.  v. 

Wabash,  etc.  Ry.  Co.,  135 

U.  S.  576;   10  Sup.  Ct.  753 
Des  Moines,  etc.  Trust  Co.  v. 

Des  Moines  Bank,  97  Iowa 

668;  66  N.  W.  914 
Despatch  Line  of  Packets  v. 

Bellamy  Mfg.  Co.,  12  X.  H. 

205;    37  Am.  Dec.  203 

1210,   1217,   1225 
D'Esterre  v.  City  of  Brooklyn. 

90  Fed.  586  1432,  1432 
Detroit  v.   Dean,    106   U.   S. 

537;    1  Sup.  Ct.  560  970,970 
V.  Detroit  Citizens'  Rv. 

Co.,  184U.  S.  368;  22  Sup. 

Ct.  410 

Detroit  Driving  Club  v.  Fitz- 
gerald, 109  Mich.  670;    67 

N.  W.  899  39,  261,  608 

Detroit    Schuetzen    Bund    v. 

Detroit  Agitations   Verein, 

44  Mich.  313;  6N.  W.  675; 

38  Am.  Rep.  270  258,  267 

Devaux,  Re,  54  Ga.  673  96 

Development  Co.   of  Central 

&  West  Africa  (1902),  1  Ch. 

547  533 

Deverges  v.  Sandeman,  Clark 

&  Co.  (1902).  1  Cli.  579     809,  811 
Devine  t'.  Frankford  Steel,  etc. 

Co.,  205  Pa.  St.  114,  54  Atl. 

578  957,  966 

Dewey  V.  St.  Albans  Trust  Co., 

57  Vt.  332 
V.  Toledo,  etc.  Ry.  Co., 

91  Mich.  351;    51   N.   W. 
1063 

Dewing  v.  Perdicaries,  96  U. 
S.  193 


107 


652 


852 


741 
h 


De  Witt  V.  Hastings,  69  N.  Y. 

518  216,  247 
V.  San  Franci-sco,  2  Cal. 

289  69,  70 

De.\ine     Patent     Packing    & 

Rubber  Co.,  88  L.  T.  791  113, 
131,  480,  555 
Dexter  v.  Phillips,  121  Mass. 

178;    23  Am.  Rep.  261  1443 

Dexter  Horton  &  Co.  v.  Mc- 

Cafferty   (Wash.),  84  Pac. 

733  804 

Dexter     Savings     Bank     v. 

Friend,  90  Fed.  703  1374 

Dexterville,  etc.  Boom  Co.,  Re, 

4  Fed.  873  1568 

Diamond    Drill,    etc.    Co.    v. 

Kelley  Bros.,  130  Fed.  893  310 
Dicido  Pier  Co.,  iie  (1891),  2 

Ch.  354  545 

Dick  V.  Lehigh  Valley  R.  R. 

Co.,  4  Pa.  Dist.  Rep.  56  1063 

V.  State  (Md.),  68  Atl.^  826     230 

Dickenson    v.    Central    Nat. 

Bank,    129  Mass.   279;    37 

Am.  Rep.  351  717,  717 
V.  Chamber  of  Commerce, 

29  Wise.  45 ;  9  Am.  R"p.  544  566 
Dickerman  v.  Northern  Trust 

Co..  176  U.  S.  181;  20  Sup. 

Ct.  311  261,  262,  322,  628,  1404, 
1424,  1470,  1624.  1625,  1626 
Dickinson     v.      Consolidated 

Traction  Co.,  114  Fed.  232; 

119  Fed.  871;    56  C.  C.  A. 

401  949.  949,  951,  969 

Dickson     v.     McMurray,     28 

Grant  Ch.  (Up.  Can.)  533       1059, 

1059 

V.    Swansea- Vale    Co., 

L.  R.  4.  Q.  B.  44  1420 

Dieterle  v.  Ann  Arbor  Paint, 

etc.  Co..  143  Mich.  416;   107 

N.  W.  79  180,  205 

Dietrich  v.  Rothenberger,  25 

Kv.  Law  Rep.  338 ;  75  S.  W. 

27'l  1357 

Dillaway  v.  Boston  Gaslight 

Co..  174  Mass.  80;  54  N.  E. 

359  963,  1493 

Diller  v.  Brubaker.  52  Pa.  St. 

498:   91  Am.  Dec.  177^  808 

Dillingham  v.  Hawk,  60  Fed. 

494:    9  C.  C.  A.    101:    23 

L.  R.  A.  517  1617.  1618 

V.  Scales.  24  S.  W.  975 

(Tex.)  1619 

Dillon  V.  Barnard    21  Wall. 
430  1557 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Dimmick  v.  Stokes  (-AJa.),  43 

So.  854  1231 

Dimock  v.  Central  Rawdon 
Mining  Co.,  36  Nova  Scotia 
337  984 

Dimpfel  v.  Ohio,  etc.  Ry.  Co., 
110  U.  S.  209;  3  Sup.  Ct. 
573  970 

Dingeldein  v.  Third  Ave.  R.  R. 

Co..  9  Bosw.  (N.  Y.)  79  298 

Dinkier  v.  Baer,  92  Ga.  432; 

17  S.  E.  953  779,  781 

Dinsmore  v.  Racine,  etc.  R.  R. 

Co.,  12  Wise.  649  1503,  1520 

Discoverers'     Finance    Corp. 

(1908).  1  Ch.  141  618,  618 

Dissette  v.  Lawrence  Pub.  Co., 
9  Oh.  Circ.  Ct.  Rep.  n.  s. 
US  962,971 

Distilling,  etc.  Co.  v.  People 
ex  rel.  Malony,  156  111.  448; 
41  N.  E.  188;  47  Am.  St. 
Rep.  200  263 

District  of  Columbia  v.  Cam- 
den Iron  Works,  181  U.  S. 
453;  21  Sup.  Ct.  680         397,  398 
District  Grand  Lodge  v.  Cohn, 

20  111.  App.  335  557,  588 

Dittman  v.  Distilling  Co.,  54 
Atl.  Rep.  570  (N.  J.  Ch.)       57,  57, 

79 
Dixie  Cotton  Oil  Co.  v.  Morris 

(Ark.),  94  S.  W.  933  1372 

Dixon  V.  Evans,  L.  R.  5  H.  L. 

606  665 

V.    Kennaway    &    Co. 

(1900),  1  Ch.  833       720,  737,  737, 
737,  738, 1279 
Doak  V.  Bank  of  the  State,  6 

Ired.  Law  (N.  Car.)  309  803 

Doan  V.  Vestry  of  Parish 
of  Ascension  (Md.),  64  Atl. 
314  380 

Dobbins  v.   Walton,   37   Ga. 

614;   95  Am.  Dec.  371  771 

Dock  V.  Schlichter  Jute  Cord- 
age Co.,  167Pa.  St.  370;  31 
Atl.  656  496,  498,  517 

Dockstader  v.   Y.   M.   C.   A. 

(Iowa),  109  N.  W.  906  1196 

Doctor    V.    Harrington,     196 

U.  S.  579;   25  Sup.  Ct.  355       975 
Dodd  V.  Pittsburg,  etc.  R.  R. 

Co.  (Ky.),  106  S.  W.  787  936, 

1085 
Dodds   V.    Hills,    2    Hem.    & 

Mill.  424  710,711,711,814 

Dodge  V.  Woolsey,  18  How. 
331  950 


405 
404 


1210 


556 


59 
1674 


Dodge  Stationery  Co.  v. 
Dodge,  145  Cal.  380;  78 
Pac.  879  372,  376,  377 

Doe  V.  Northwestern  Coal,  etc. 

Co.,  78  Fed.  62        82,  1272,  1319, 

1328 
Doe  ex  dem.  Bank  of  England 
V.  Chambers,  4  Ad.  &  El. 
410 
Doe  Kings  College  v.  Kennedy, 

5  Up.  Can.  Q.  B.  577 
Doernbecher  v.  Columbia  City 
Lumber  Co.,  21  Oreg.  573; 
28  Pac.    899;    28  Am.   St. 
Rep.  766  1210, 

Doherty  v.  Mercantile  Trust 
Co.,  184  Mass.  590;  69  N.  E. 
335 
Dole  V.  Wooldredge,  135  Mass. 

140  274,  336 

Domestic    Telegraph    Co.    v. 
Newark,  49  N.  J.  Law  344; 
8  Atl.  128 
Dominion  of  Canada  Co.,  55 

L.  T.  347 
Donald   v.   American    Smelt- 
ing,   etc.    Co.,    62    N.    J. 
Eq.  729;  48  Atl.  771         488,630, 

635 
-. V.  Manufacturers'  Export- 
Co.,  142  Ala.  578;  38  So. 
841 
Donaldson,  Coburn  &  Knox, 
5  New  So.  Wales  St.  Rep. 
725 

V.  Orchard  Crude  Oil  Co. 

(Cal.),  92  Pac.  1046 
Donelly  v.  Pancoast,  15  N.  Y. 
App.  Div.  323;    44  N.  Y. 
Supp. 104 
Donnell      v.       Herring-Hall- 
Marvin  Co.,  208  U.  S.  267 

388,  1085 
Donovan  v.  Purtell,  216  111. 

629;   75  N.  E.  334  874,886 

D'Ooge  V.   Leeds,   176  Mass. 

558;    57  N.   E.    1025  1142, 

1144, 1145 
Dooley  v.  Cheshire  Glass  Co., 

15  Gray  (Mass.)  494         119,  127, 
228,  228,  240,  369,  370 

V.    Gladiator,    etc.    Co. 

(Iowa),  109  N.  W.  864       749,  753 

V.    Wolcott,     4    Allen 

(Mass.)  406  233 

Doolittle,  Re,  23  Fed.  544  1620 

Domes  v.  Supreme  Lodge,  75 
Miss.  466;  23  So.  191       552,  556, 
583.  585 


957 


534 
1377 


1227 
377, 


Ixvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Dorr  V.  Life  Ins.  Clearing  Co., 
71  Minn.  38;   73\.  W.  035; 
70  Am.  St.  Rep.  309 
Dorris  v.  French,  4  Hun  292 
V.  Sweeney,  60  N.  Y.  463 


770 
331 
214, 
216 


925 

230 

1411, 


1467 
72 

1381 

51 


Dorsey  Harvester  Revolving- 
Rake  Co.  V.  Marsh,  7  Fed. 
Cas.  939  147,  382 

Dorsey  Machine  Co.  v.  Mc- 
Caffrev,  139  Ind.  545;  38 
N.  E.  208;  47  Am.  St.  Rep. 
290  182,  183 

Dossett  V.  Harding,  1  C.  B. 
N.  s.  524 

Dotson  V.  Milliken,  27  App. 
D.  C.  500 

Doty  V.  Oriental  Print  Works 
Co.  (R.  I.),  67  Atl.  586 

1495,  1520 

V.   Patterson,    155   Ind. 

60;   56  N.  E.  668       241,  243,  249 
Dougan  v.  Evansville,  etc.  R. 

R.    Co..    15    N.    Y.    App. 

Div.  483;   44  N.  Y.  Supp. 

503 
Dougan's  Case,  8  Ch.  540 
Dougherty  v.  Hunter,  54  Pa. 

St.  380 
Doughty  V.  Lomagunda  Reefs 

(1902),  2  Ch.  837 
Douglass  i\   Cline,    12  Bush. 

(Ky.)  608     1517.  1559,  1565,  1602 

V.  Merchants'  Ins.  Co., 

118  N.  Y.  484;    23  N.  E. 

806;    7  L.  R.  A.  822        594,  1276 
Dousman  v.   Wisconsin,  etc. 

Co.,  40  Wise.  418  507,  948 

Douthitt  V.  Stinson,  63  Mo. 

268  254,  303 

Dover     Coalfield     Extension 

(1907),  2  Ch.  76;  (1908),  1 

Ch.  65  1242 

Doveyv.Cory(1901),A.C.477 

769,  1101,  1102,  1104, 

1262,  1268,  1278 

Dow  V.  Gould,  etc.  Mining  Co., 

31  Cal.  629 
V.  Iowa  Central  Ry.  Co., 

70  Hun  186;  24  N.  Y.  Supp. 

292 

V.  Memphis,  etc.  R.  R. 

Co.,  20  Fed.  260  1562,  1584, 

1600,  1603 

V.  Memphis,  etc.  R.  R. 

Co.,  32  Fed.  185  1491 

V.  Mempiiis  R.  R.  Co., 

124  U.  S.  652;    8  Sup.  Ct. 

673  1516,  1600,  1603 

Ixv 


709 


1664 


Dowagiac  Mfg.  Co.  v.  Iligin- 

botham,  15  S.  Dak.  547;  91 

N.  W.  330  228 

Dowling  V.  Wheeler,  117  Mo. 

App.  169;    93  S.  W.  924  778 

Downer'.s  Adm'r  v.  Zanesville 

Bank,  Wriglit  (Oh.)  477  771,  774 
Downing  v.  Marshall,  23  N.  Y. 

366;  80  Am.  Dec.  290  68 
V.    Mount    Washington 

Road  Co.,  40  N.  H.  230       42,  851, 
854,  859 

1'.  Potts,  23  N.  J.  Law  66 

157, 1016,  1017,  1019,  1019 
V.  Thompson,  103  Va.  58; 

48  S.  E.  506  732 

Downs   V.  Farmers'  L.  &  T. 

Co.,  79  Fed.  215;   24  C.  C. 

A.  500  1517,  1631 

Doyle  V.  Douglas  Machinery 

Co.,  73  111.  273  230 
V.  Mizner,  42  Mich.  332; 

3N.  W.  968  118,238,242 

Drake  v.  Herndon  (Ky.),  91 

S.  W.  674  147 

V.  Hudson  River  R.  R. 

Co.,  7  Barb.  (N.  Y.)  508  556 

Draper  v.  Blackwell,  138  Ala. 

182;   35  So.  110  523,  526 

V.  Manchester,  etc.  Ry. 

Co.,  3  De  G.  F.  &  J.  23  890 

Dreeben  v.   First  Xat.   Bank 

(Tex.),  99  S.  W.  850  1374,  1379 
Drennen  v.  Mercantile  Trust, 

etc.  Co.,  115  Ala.  592;     23 

So.  164;    67  Am.  St.  Rep. 

72;    39  L.  R.  A.  623  1559, 

1560,  1562,  1570 
Dressel  v.  North  State  Lumber 

Co.,  107  Fed.  255  103 

Driffield  Gas  Light  Co.  (1898), 

1  Ch.  451  434,  435 

Driscoll  V.  West  Bradley,  etc. 

Co.,  59  X.  Y.  96  571,  593 

Driver  r.  Broad  (1893),  1  Q.  B. 

744  ^         1393,  1439 

Droege  v.  Emery  (Ky.),  105 

S.  W.  374  234 

Drogheda  Steam  Packet  Co. 

(1903),  1  Ir.  512  1123 

Droitwich  Patent  Salt  Co.  v. 

Curzon.  L.  R.  3  Ex.  35  512 

Dronfield  Silkstone  Coal  Co., 

17  Ch.  D.  76  516,  657,  830 

Drummond's  Case,  4  Ch.  772      205. 

206,  634 

Drurv  r.  Cross,  7  Wall.  299        1637 

V.    Midland   R.    R.   Co., 

127  Mass.  571  1632 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Dublin  Draperj'  Co.,  13  L.  R. 

Ir.  174  1396,  1504,  1504 

Dublin,  etc.  Ry.  Co.  v.  Ack- 

erman,  59  S.  E.  10  (Ga.)         1382 

Dubuque  Female  College  v. 
Township  District,  13  Iowa 
555  283,  286 

Duck  V.  Tower  Galvaniz- 
ing Co.  (1901),  2  K.  B.  314     1224, 

1406 

Duckett  V.  Grover,  6  Ch.  D. 

82  933 

Duckworth,  Re,  2  Ch.  578  613 

Dudley  v.  Armenia  Ins.  Co., 

115  N.  Y.  App.  Div.  380  928, 

962,  1350,  1353 

V.  Kentucky  High  School, 

9  Bush  (Ky.)  576  1076 
Dueber,     etc.     Mfg.     Co.    v. 

Dougherty.  62  Oh.  St.  589 ; 

57  N.  E.  455  711,  712 

Duffield  V.  Barnum  Wire,  etc. 
Works,  64  Mich.  293;  31 
N.  W.  310  177 

Duggan  V.  Colorado  Mort- 
gage, etc.  Co.,  11  Colo.  113; 
17  Pac.  105         117,  118,  229,  245 

Duke  V.  Cahawba  Nav.  Co., 

10  Ala.  82;    44  Am.  Dec. 

472  148,  221,  229,  915 
V.  Cahawba  Nav.  Co.,  16 

Ala.  372  222 
V.  Markham,  105  N.  Car. 

131;     10   S.    E.    1017;     18 

Am.  St.  Rep.  889  1068 
V.   Taylor,   37    Fla.    64; 

19  So.  172 ;  53  Am.  St.  Rep. 

232;    31  L.  R.  A.  484  162, 

251,  1009 

Duke's  Case,  1  Ch.  D.  620  111, 

207 
Dunbar  v.  American  Tel.,  etc. 

Co.,  224  111.  9;    79  N.  E. 

423  57,  58,  954,  1026 

Dunbar  Box,  etc.  Co.  v.  Mar- 
tin,   103  N.   Y.   Supp.   91; 

53  N.  Y.  Misc.  312  1372 

Duncan   v.   Atlantic,   etc.   R. 

R.  Co.,  88  Fed.  840  1623,  1624 
• V.  Maryland  Sav.  Inst., 

10  G.  &  J.  (Md.)  299  423 
V.  Mobile,  etc.  R.  R.  Co., 

2  Woods  542  1565 
V.  Trustees,  3  Cent.  L.  J. 

579  1559 

Duncomb  v.  New  York,  etc. 

R.  R.  Co.,   84  N.   Y.    190; 

8.  c.  98  N.  Y.  1       67,  1317,  1342, 

1405 


Duncuft  V.  Albrecht,  12  Sim. 

189  _      422,  785,  785,  787 

Dunham    v.    Cincinnati,    etc. 

Ry.  Co.,  1  Wall.  254  1452, 
1465,  1503,  1534,  1537,  1550 
V.   City  Trust  Co.,    101 

N.  Y.  Supp. 87  761 
V.  Earle,  8  Fed.  Cas.  41, 

No.  4,  149  1520,  1551 

V.  Isett,  15  Iowa  284         1515, 

1551 
Dunlop  V.  Dunlop,  21  Cli.  D. 
583     •  708,  768,  770,  772 

V.  Mercer,  156  Fed.  545 

864,  866 
Dunlop  Pneumatic  Tyre  Co. 

V.  Dunlap  Motor  Co.  (1907), 

A.  C.  430  376,  377,  377 

Dunn  V.  Howe,  107  Fed.  849; 

47  C.  C.  A.  13  621 
V.    New    Orleans    Bid?. 

Co.,  8  La.  483  1005 

Dunn's    Adm'r   v.    Kyle,    14 

Bush  (Ky.)  134  1276,  1278 

Dunning  v.  Bates,  186  Mass. 

123;  71  N.  E.  309  302,  1661 

Dunphy   v.    Traveller   News- 
paper Ass'u,  146  Mass.  495; 

16  N.  E.  426  938,941,942, 

943,  967,  980 
Dunsmuir  v.  Colonist  Printing 

&  Pub.  Co.,  9  British  Co- 
lumbia 290       560,  932,  992,  1193, 

1194 
Dunsterv.  Bernards  Land,  etc. 

Co.  (x\.  J.),  65  Atl.  123     1003,  1003 
Dunster's  Case  (18  4),  3  Ch. 

473  206,  1178 

Dunston     v.      Imperial     Gas 

Light  Co.,  3  B.  &  Adol.  125      553, 

1237 
Dupee  V.  Boston  Water  Power 

Co.,  114  Mass.  37  517 
V.   Chicago   Horse  Shoe 

Co.,  117  Fed.  40;    54  C.  C. 

A.  426  202 

Dupignac    v.    Bernstrom,    83 

N.  Y.  Supp.  350  1120 

Du  Pont  V.  Bushong,  1  Wkly. 

Notes  Cas.  (Pa.)  378  1527 

V.  Tilden,  42  Fed.  87    629,  647 

Dupuy  V.  Eastern  Bldg.,  etc. 

Ass'n,  93  Va.  460;   25  S.  E. 

537;  .35  L.  R.  A.  215  563 
V.  Terminal  Co.,  82  Md. 

408;    33  Atl.  889;    34  Atl. 

910  72,  958 

Duquesne     College     Charter, 

Re,  12  Pa.  Co.  Ct.  Rep.  491      376 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Du  Quoin   Star,   etc.   Co.   v. 

Thorwell,  3  111.  App.  395  912 

Durant    v.    Iowa    County,    1 

Woolw.  ()9  1435,  1448 

Durfee   v.    Harper,   22   Mont. 

373;  56  Pac.  5cS9  1064 

Durgin  v.   Smitli^   133   Mich. 

331;  94  N.  W.  1044  307 

Durham  v.  Monumental  Silver 

Mining  Co.,  9  ()reg.  41  751 

Durham   Bldg.   Soc,    12   Eq. 

516  830,831,832,862 

Durkee  v.  People,  155  111.  354 ; 

40  N.  E.  626;    46  Am.  St. 

Rep.  340  474,  1031 

Durlatcher  v.Frazer.S  Wj'om. 

59  ;  55  Pac.  306;  SO  Am.  St. 

Rep.  918  297 

Duryea  v.   Zimmerman,    106 

N.  Y.  Supp.  237  340 

Dutchess,  etc.   R.   R.  Co.  v. 

Mabbett,  58  N.  Y.  397  104,  104, 
131,  203,  203 
Dutenhoferr.  Adirondack  Ry. 

Co.,  14  N.  Y.  Supp.  558  1663, 

1672,  1674 
Du  Vivier  v.  Gallice,  149  Fed. 

118;  80  C.  C.  A.  556  298 

Dwight  V.  Smith,  9  Fed.  795      1438, 

1489 

V.  Smith,  13  Fed.  50  1447, 

1489 
Dwinnell  v.  Minneapolis  Fire 

etc.  Ins.  Co..  97  Minn.  340; 

106  N.  W.  312  483 

Dyert).  Drucker,  108N.  Y.  App. 

Div.  238 ;  95  N.  Y.  Supp.  749  383 
V.  Rich,  1  Mete.  (Mass.) 

180  302 

Dykers     v.     Allen,     7     Hill 

(N.  Y.)  497;   42  Am.  Dec. 

87  418,  419 

Dykman  v.   Keeney,    154  N. 

Y.  483;  48  N.  E.  894  1259, 

1285 

E 

Eagle  Iron  Co.  v.  Colyar,  156 

Fed.  954  932,  985,  1011 

Eagle,  etc.  Mfg.  Co.  v.  Browne, 

58  Ga.  240  1238 

Eakins  v.  .\m.  White  Bronze 
Co.,  75  Mich.  568;  42 
N.  W.  982  1248 

Eakwright  r.  Logansport,  etc. 

R.  R.  Co.,  13  Ind.  404       105,  604 

Eales  V.  Cumberland  Black- 
lead  Mine  Co..  6  H.  &  N. 
481  1296,  1299,  1300,  1321 


Earl    of    Lindsey    v.     Great 

Northern  Ry.  Co.,  10  Hare 

664  281,  395 

Earl  of  Shrewsbury  v.  North 

StatTordshire  Ry.  Co.,  1  Eq. 

593  281,  281 

Earle  v.  Carson,  188  U.  S.  42: 

23  Sup.  Ct.  254         616,  619,  619, 

695 
V.  Coyle,  97  Fed.  410;  38 

C.  C.  A.  226  695,  696,  763 
V.  Seattle,  etc.  Ry.  Co., 

56  Fed  909  942,  958,  969,  971 
Earp's  Appeal,  28  Pa.  St.  368  1 137, 
1147,  1149 
Earp's  Will,  1  Pars.  Eq.  (Pa.) 

453  1137,  1149,  1443 

East  Anglian  Rys.  Co.  v.  East- 
ern  Counties  Ry.   Co.,    11 

C.  B.  775  828,  829 

East   Birmingham   Land  Co. 

V.  Dennis,  85  Ala.  565;    5 

So.  317;  7  Am.  St.  Rep.  73; 

2  L.  R.  A.  836  682,  683,  727 

East  Gloucestershire  Ry.  Co. 

V.    Bartholomew,    L.    R.   3 

Ex.  15  155,  157,  159 

East  New  York,  etc.  R.  R.  Co. 

V.   Lighthall,   30   How.   Pr. 

(N.  Y.)  481  637,  1381 

East      Norway      Church      v. 

Froislie,  37  Minn.  447;   35 

N. W.  260  249 

East    Pant    Du,    etc.   Co.    v. 

Merryweather,    2   Hem.    & 

Mill.  254  932,  933,  933,  1080, 

1312 
East  St.  Louis  Connecting  Ry. 

Co.  V.  Jarvis,  92  Fed.  735         838, 

874 
East   Tennessee,   etc.    R.    R. 

Co.    V.    Evans,    6    Heisk. 

(Tenn.)  607  386 
V.    Gammon,    5    Sneed 

(Tenn.)  567  586 

East  Wheal   Mining  Co.,  33 

Beav.  119  748 

Easterly  v.  Barber,  65  N.  Y. 

252        •  1225, 1227 

Ea.stern  Bldg.,  etc.  Ass'n  v. 

Williamson,  189  U.  S.  122; 

23  Sup.  Ct.  527  832,  838 

Eastern   Cable   Co.    t;.    Great 

Western     Mfg.     Co.,     164 

Mass.  274;  41  N.  E.  295  1413 

Eastern  Counties  Rv.  Co.  v. 

Broom,  6  Exch.  314  869 
V.  Hawkes,  5  H.  L.  C. 

331  283,  861 


TABLE    OF    CASES 
[The  references  are  to  pages] 


604 


1672 
1607 


1365 


Eastern  Plank  Road  Co.  v. 
Vaughan,  20  Barb.  (N.  Y.) 
155 

V.   Vaughan,   14  N.   Y. 

546  112,208 

Eastern  R.  R.  Co.,  Re,   120 

Mass.  412  1493 

Eastern  Townships  Bank  v. 
St.  Johnsburv,  etc.  R.  R. 
Co.,  40  Fed.  423  1437,  1450, 

1452 
Eastern  Tube  Co.  v.  Harrison, 

140  Fed.  519      352,  357,  359,  366 
Eastern  &  Midlands  Ry.  Co., 

45  Ch.  D.  367,  386         1574,  1606, 

1644 

,  67  L.  T.  N.  s.  711 

(No.  2).  66  L.  T.  153 

East  ham  v.  York  State  Tele- 
phone Co.,  86  N.  Y.  App. 
Div.  562;    83  N.  Y.  Supp. 
1019 
Eastman         v.        Parkmson 

(Wise.),  113  N.  W.  649      63,  65, 

1221 
Easton  v.  Houston,  etc.  Ry. 

Co.,  38  Fed.  12  1568 

V.  Houston,  etc.  Ry.  Co., 

38  Fed.  784  1611 

V.  Houston,  etc.  Ry.  Co., 

40  Fed.  189  1490,1491,1621, 

1621 
Easton    Nat.    Bank    v.    Am. 
Brick  &  Tile  Co.  (N.  J.),  64 
Atl.  917;    s.  c.  60  Atl.  54 
(N.  J.)  627,  628,  647,  1234 

V.  Am.  Brick  &  Tile  Co. 

(N.  J.),  64  Atl.  1095  635 

Eastwick's  Case,  34  L.  T.  84      1289, 

1340 
Easun    v.    Buckeye    Brewing 

Co.,  51  Fed.  156  71,  72,  76 

Eaton  V.  Aspinwall,  19  N.  Y. 

119  241,  250 

V.  New  England  Tel.  Co., 

68  Me.  63  729,  729 

V.   Robinson,    19   R.    I. 

146;   31  Atl.  1058;   32  Atl. 

339;  29  L.  R.  A.  100       982,  1240 

V.  Walker,  76  Mich.  579 ; 

43N.  W.638;6L.  R.A.  102       244 
Eaton,  etc.  R.  R.  Co.  v.  Hunt, 

20  Ind.  457  1584,  1588 

Ebbett's  Case,  5  Ch.  302  173 

Ebbw  Vale  Steel,  etc.  Co.,  4 

Ch.  D.  827  532,  540 

Ebelhar  v.  German  Am.  Sec. 

Co.  (Ky.),  91  S.  W.  262  1128, 

1268 


Ebenezer    Timmins 
(1902),  1  Ch.  238 


V. 

Co. 


&    Sons 
149,  155,  205, 
642 
Manufac- 
6    Gray 


1379 


852 


787 


E.    Carver   Co. 
turers'    Ins. 
(Mass.)  214 
Eckman  v.  Chicago,  etc.  R.  R. 
Co.,  169  111.  312;    48  N.  E. 
496;  38  L.  R.  A.  750 
Eckstein  v.  Downing,  64  N.  H. 
248;    9  Atl.  626;    10  Am. 
St.  Rep.  404 
Eclipse   Mining  Co.,    17   Eq. 

490  433,  434 

Ecuadorian  Ass'n  v.  Ecuador 

Co.  (N.  J.),  65  Atl.  1051  188, 

198,  630 

V.  Ecuador  Co.,  61  Atl. 

481 
Eddleman  v.   Union   County 
Traction,  etc.  Co.,  217  111. 
409;  75  N.  E.  510 
Eddy  V.   Co-operative   Dress 
Ass'n,  3  N.  Y.  Civ.  Proc. 
Rep.  442 
Eddystone    Marine    Ins.    Co. 

(1893),  3  Ch.  9  637,  639 

Edelhoff    V.    Horner-Miller 
Mfg.  Co.,  86  Md.  595;    39 
Atl.  314 

V.  State,  5  Wyom.   19; 

36  Pac.  627 
Edelstein   v.    Schuler   &   Co. 

(1902),  2  K.  B.  144       1423,  1425, 

1425 
Eden  v.  Ridsdale,  etc.  Co.,  23 

Q.  B.  D.  368        1333,  1334,  1338, 
^  1339 

Edgerly  v.  Emerson,  3  Foster 
(23  N.  H.)  555;  55  Am. 
Dec.  207  912,  912,  917,  1205, 

1210,  1211 
Edgerton  v.  Electric  Imp.  Co., 
50  N.  J.  Eq.  354;    24  Atl. 
540  199,  632 

Edgewood  Borough  v.  Scott, 

29  Pa.  Sup.  Ct.  156  35,  61 

Edinburgh,  etc.  Ry.  Co.  v. 
Hebblewhite,  6  M.  &  W. 
707  661,  668 

Edison  v.  Edison  United 
Phonograph  Co.,  52  N.  J. 
Eq.  620;  29  Atl.  195 
Edison  Storage  Battery  Co. 
V.  Edison  Automobile  Co., 
67N.  J.  Eq.  44;  56  Atl.  861 

376,  377 
Edmonds  v.  Blaina  Furnace 
Co  ,  36  Ch.  D.  215  1392 


632 


249 


1242 


1553 

228 


958 


374, 


Ixx 


TABLE    OF    CASES 
[The  references  are  to  pag^sl 


Edmonds  v.  Company  of 
Watermen  &  Liglitermcn, 
24  L.  J.  Magistrate  Cases, 
124  564 

Edward  Nelson  &  Co.  v. 
Faber  &  Co.  (1903),  2  K.  B. 
367  1545,  1548 

Edwards  v.  Bates  County,  99 

Fed.  905;   40  C.  C.  A.  161       1440 

V.    Bates  County,  163 

U.  S.  269 ;  16  Sup.  Ct.  967   1448 

V.    Bates    County,     117 

Fed.  526  916.  1434,  1436 

V.  Bay  State  Gas  Co.,  91 

Fed.  942  957,  976 

V.  Bay  State  Gas  Co.,  91 

Fed.  946  1679 

V.   Bay  State   Gas  Co., 

130  Fed.  242  983 

V.  Fairbanks,  27  La.  Ann. 

449  844 

V.   Grand   Junction   Ry. 

Co.,  1  Myl.  &  C.  650  281 

V.  Mercantile  Trust  Co., 

124  Fed.  381  956,  956,  967, 
969,  979 
V.  Michigan  Tontine  In- 
vestment Co.,  132  Mich.  1; 
92  N.  W.  491  850,  856 

■ V.    National       Window 

Glass,  etc.  Ass'n  (N.  J.),  58 
Atl.  527 

V.      Standard      Rolling 

Stock  Syndicate  (1893),   1 
Ch.  574 

,  Ex  parte,  64  L.  T.  561 

Eells  V.  Johann,  27  Fed.  327 
Efland  v.   Southern  Ry.   Co. 

(N.  Car.),  59  S.  E.  355 
Egilbert    v.    Superior    Court 

(Cal.),  91  Pac.  748  906,  1367, 

1376 
Ehle  V.  Chittenango  Bank,  24 

N.  Y.  548  1118,1119 

Ehrmann  Bros.  (1906),  2  Ch. 

697 
Eichbaum  v.  City  of  Chicago 
Grain  Elevators  (1891),  3 
Ch.  459 

V.  Sample,  213  Pa.  216; 

62  Atl.  837 
Eidman  v.   Bowman,  58   111. 

444 ;  1 1  Am.  Rep.  90       487,499. 

1189 
Einstein  v.  Rochester  Gas,  etc. 
Co.,  146  N.  Y.  46;  40  N.  E. 
631  482 

Eisfeld  V.  Kenworth,  50  Iowa 

389  128 


979 


1604 

181 

1551 

25 


1396 


524 

786 


Elder  i'.  New  Zealand  Co.,  30 

L.  T.  285  160,  189,  608 

ICklred  v.  American  Palace 
Car  Co.,  105  Fed.  457;  44 
C.  C.  A.  554  969,  975 

V.  American  Palace  Car 

Co.,  99  Fed.  168;  s.  c.  96 
Fed.  59;  103  Fed.  209;  105 
Fed.  455;  45  C.  C.  A.  1; 
105  Fed.  457;  44  C.  C.  A. 
554  969,  975 

V.  Ripley,   97   111.   App. 

.-)03  928,  1350 

Eldridge  v.  Smith,  34  Vt.  484    1520, 

1522 
Electric  Co.  v.  Edison  Elec- 
tric, etc.  Co.,  200  Pa.  516; 
50  Atl.  164  499,  507 

Electric  Fireproofing  Co.  v. 
Smith,  113  N.  Y.  App.  Div. 
615  339,  1347 

Electric  Welding  Co.  v.  Prince 

(Mass.),  81  N.  E.  306        175,  178, 
348,  350,  351,  356,  356, 
356,  358,  363,  363,  364 
Elevator,  etc.  Co.  v.  Memphis, 
etc.   R.   R.   Co.,   85  Tenn. 
703;  5S.  W.  52;  4  Am.  St. 
Rep.  798 
Eley  V.  Positive  Life  Ass.  Co., 
1  Ex.  D.  20 

V.  Positive,  etc.  Ass.  Co., 

1  Ex.  D.  88 
Elgin    Nat.     Watch    Co.    v. 

Loveland,  132  Fed.  41      123,  371, 
373  373 
Elias,  Re,  40  N.  Y.  Supp.  910 ; 

17  N.  Y.  Misc.  718       1025,  1176 

Elizabethtown  Gas  Light  Co. 

V.  Green,  46  N.  J.  Eq.  118; 

49  N.  J.  Eq.  329;  24  Atl.  560 

Elk  Brewing  Co.  v.  Neubert, 

213  Pa.  171;   62  Atl.  782 
Elkhorn    Land,    etc.    Co.    v. 
Childers  (Ky.),  100  S.  W. 
222 
Elkington's  Case,  2  Ch.  511 
Elkins  V.  Camden,  etc.  R.  R. 
Co.,  36  N.  J.  Eq.  5 

V.  Camden,  etc.  R.  R.  Co., 

36  N.  J.  Ea.  233         459,  467,  467 

V.   Camden,  etc.   R.   R. 

Co.,  36  N.  J.  Eq.  467      954,  1194, 
1194,  1326 

V.  Chicago,  1 19  Fed.  957      969 

Ellerman    v.    Chicago    Grand 
Junction  Rys.,  etc.  Co.,  49 
N.  J.  Eq.  217;  23  Atl.  287         39, 
52,  62,  76,  86,  94,  95 


452 

285 


34 


245 
1307 


420 
633 

57 


bcxi 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Elliot  V.  Richardson,  L.  R  5 

C.  P.  744  1029 

Elliott  V.   Baker  (Mass.),  SO 

N.  E.  450  510,  1271 
V.    Fanners'    Bank    (W. 

Va.).  57  S.  E.  242  1317,  1318 
V.  Sibley,  101  Ala.  344; 

13  So.  500  1250 

Ellis     V.     Barfield,     W.     N. 

(1891)  84  1140 
V.  Boston,  etc.  R.  R.  Co., 

107  Mass.  1  1517,  1517,  1550 
V.  French  Canadian,  etc. 

Ass'n,    189  Mass.   566;    76 

N.  E.  207  1126,1359 
V.  Howe  Macliin  ■  Co.,  9 

Daly  (N.  Y.  78  852,  880 
V.  N.  C.  Institution,  68 

N.  Car.  423  593,  594,  1224 

V.  Proprietors  of  Essex 

Merrimack  Bridge,  2  Pick. 
(Mass.)  243  1133 

V.   Vernon,   etc.   Water 

Co.,  86  Tex.  109;   23  S.  W. 

858  1650 
V.  Ward,  137  Til  509 ;  25 

N.  E.  530  1265,  1288,  1360 

Ellison    V.    Branstrator,    153 

Ind.  146;  54  S.  E.  433  406,  407 
. V.  Mobile,  etc.  R.  R.  Co., 

36  Miss.  572  151,  185 

Ellsworth     V.     Dorwart,     95 

Iowa  108;    63  N.  W.  588; 

58  Am.  St.  Rep.  427  894,  894 
899,  901,  904,  907 
V.  St.  Louis,  etc.  R.  R. 

Co.,  98  N.  Y.  553  1403 

Ellsworth,    etc.    Mfg.    Co.    v. 

Faunce,  79Me.440;  lOAtl. 

2,50  1011,  1225,  1225 

Elmira.  etc.  Mill  Co.  v.  Erie 

Ry.  Co.,26N.  J.  Eq.  284  1617 
Eisner  and  McArthur's  Case 

(1895),  2  Ch.  759  640,  640,  641 
Elve  V.  Boynton  (1891),  1  Ch. 

501  20,  20 

Elwell  V.  Fosdick,   134  U.  S. 

500;  lOSup.  Ct.  598  1485 
V.  Grand  Street,  etc.  R. 

R.  Co..  67  Barb.  (N.  Y.)  83  1509 
Ely  V.  Hanford,  65  111.  267  324 
V.  Sprague,  1  Clarke  Ch. 

(N.  Y.)  351  1114 

Elvea  V.  I^high  Salt  Mining 

Co.,  169  N.  Y.  29;    61  N. 

E.  992  1023 

Elyton  Land  Co.  v.  Dowdell, 

113  Ala.  177:    20  So.  981; 

59  Am.  St.  Rep.  105  72,  78 


Emerson  v.  European,  etc.  Ry. 
Co.,  67  Me.  387;  24  Am. 
Rep.  39         1503, 1512, 1515, 1519 

V.  Gaither,  103  Md.  564 

1125, 1259,  1263, 
1285,  1288,  1289 
Emerson  Co.  v.  Nimocks,  88 

Fed.  280  226 

Emery  v.  Parrott,  107  Mass. 

95  274,  336,  1270,  1346 

Emlen  v.  Lehigh  Coal,  etc.  Co., 
47  Pa.  St.  76;   86  Am.  Dec. 
518  _  1472 

Emma  Silver  Mining  Co.,  10 

Ch.  194  890,   891 

V.  Grant,  11  Ch.  D.  918        293, 

320,  321 

V.  Grant,  17  Ch.  D.  122 

327,  1284,  1346,  1346 

V.  Lewis,  4  C.  P.  D.  396 

271,  273,  274,  318,  320 
Emmerling  v.  First  Nat.  Bank, 
97  Fed.  739;    38  C.  C.  A. 

399  841 

Emniitt  v.  Springfield,  etc.  R. 

R.  Co..  31  Oh.  St.  23        609,  625 
Empire  Mfg.  Co.  v.  Stuart,  46 

Mich.  4S2 ;    9  N.  W.  527  248 

Empire  IMills  v.  Alston  Gro- 
cery Co.,  4  Willson  Civ. 
Cas.  (Tex.)  §  221  252 

Empire   Steam,   etc.   Co.   v. 
DeLavel    Dairy,    etc.     Co. 
(N.  J.),  67  Atl.  711  1362 

Empress  Engineering  Co.,  Re, 

16  Ch.  D.  125  _  283 

Engel  V.  South  Metropolitan 
Brewing  Co.  (1892),  1  Ch. 
442  1513,  1599 

Engelhardt  v.  Fifth  Ward 
Loan  Ass'n,  148  N.  Y.  281; 
42  N.  E.  710;  35  L.  R.  A. 
289  586 

England    v.    Dearborn,    141 

Mass.   590;    6  N.   E.   837       880, 

1381 
Englefield  Colliery  Co.,  8  Ch. 

D.  388  295 

English   &  Colonial   Produce 

Co.  (1906),  2  Ch.  435        289,  293, 
294,  296 
English,  etc.  Investment  Co. 
V.  Brunton  (1892),  2  Q.  B. 
700  1534,  1547 

Ennis  Cotton  Oil  Co.  v.  Burke, 
39  S.  W.  966  (Tex.  Civ. 
App.)  287,  307,  309 

Ennis  &  West  Clare  Ry.  Co., 

3  L.  R.  Ir.  01  224 


Ixxii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Enterprise  Ditch  Co.  v.  Mof- 
fitt,  58Nebr.  042;  79  N.  W. 
5()0;  45  L.  11.  A.  647;  76 
Am.  St.  Rep.  122  650,  652 

Enterprise     Mut.     Beneficial 

Ass'n,  10  Phila.  380  103,  120 

Eppriglit    V.    Nickerson,    78 

Mo.  482  66,  1 188 

Equitable  Endowment  Ass'n 
V.  Fisher,  71  Md.  430;  18 
Atl.  808  592,  594 

Etiuitable  Gas  Light  Co.  v. 
Baltimore  Coal  Tar,  etc.  Co., 
65  Md.  73;   3  Atl.  108  1375 

Equitable  Reversionary  Int. 
Soc.  V.  Fuller,  IJ.  &  H.  379 


Equitable    Securities    Co.    v. 

Johnson     (Cal.),    85    Pac. 

840 
Erd  V.   Bavarian,  etc.  Ass'n, 

67  Mich.  233;  34  N.  W.  555 


1446 


695 


580 


Erie  City  Iron  Works  v.  Bar- 
ber,   106   Pa.   St.    125;     51 

Am.  Rep.  508  869 

Erie   Lumber  Co.,    150   P'ed. 

817  1650 

Erie    Printing    Co.     v.    Erie 

Lithographing    &    Printing 

Co.,  31  Pa.  Co.  Ct.  1  371,  375 

Erie,  etc.  R.  R.  Co.  v.  Patrick, 

2  Keyes  (N.  Y.)  256  176 

Erlanger    v.    New    Sombrero 

Phosphate  Co.,  3  App.  Cas. 

1218  271,316,316,316,329 

Ernest  v.  Croysdill,  29  L.  J. 

Ch.  580  1260 
V.    Loma    Gold    Mines 

(1897),  1  Ch.  1  1036,  1036, 
1044,  1044 
V.  Nicholls,  6  H.  L.  Cas. 

401  1305 

Ernst  V.   Elmira  Mun.   Imp. 

Co.,24N.Y.  Misc.  583;  54 

N.  Y.  Supp.  116  441 

Emy  V.  G.  W.  Schmidt  Co., 

197  Pa.   St.  475;    47  Atl. 

877  969,  980 

Erskine    v.    Loewenstein,    82 

Mo.  301  648,  736 
V.  Mcllrath.  60  Minn.  485 ; 

62  N.  W.  1130  1615 

Erskine,    Oxenard    &   Co.    v. 

Sachs  (1901),  2  K.  B.  504  809 

Ervin  v.  Oregon,  etc.  R.   R. 

Co..  22  Hun  (N.  Y.)  566  889 
V.  Oregon  Ry.,  etc.  Co., 

28  Hun  (N   Y.)  269  968 


Ervin  v.  Oregon,  etc.  Naviga- 
tion Co.,  27  Fed.  625        1082,1082 

Esgen  V.  Smith,  113  Iowa  25; 

84  N.  W.  954  026 

Esparto  Trading  Co.,  12  Ch. 

U.  191  525,  664,  665,   1173, 

1175 

Esper    V.    Miller,    131    Mich. 

334;   91  N.  W.  013  ^        287 

Espuela  Land,  etc.  Co.,  W.  N. 

(1900)  1.39  1000,  1002 

Essex  Turnpike  Corp.  v.  Col- 
lins, 8  Ma.ss.  292  ^  109 

Estabrook,  Ex  mirte,  8  Fed. 
Cas.  794;    2  Lowell  547         862, 

1380 

Estell    V.   University  of    the 

South,  12  Lea  (Tenn.)  476  70 

E.stes  V.  German  Nat.  Jiank, 

62  Ark.  7;   34  S.  W.  85  1211 

Estcy  Mfg.  Co.  I'.  Runnels,  55 
Mich.   130;    20  N.  W.  823 

234,  237 

E.  Swindell  &  Co.  v.  Bain- 
bridge  State  Bank  (Ga.), 
60  S.  E.  13  866 

Etna  Coal,  etc.  Co.  v.  Marting 

Iron,  etc.  Co.,  127  Fed.  32        1583 

Etna  Ins.  Co.,  Re  (1871),  Ir. 

Rep.  6  Eq^298  178 

Ettlinger  v.  Persian  Rug,  etc. 
Co..  142  N.  Y.  189;  36 
N.E.  1055;  40  Am.  St.  Rep. 
587  1587 

Etty  V.  Bridges,  2  Y.  &  Colly 

Ch.  486  801 

Eureka  Fire  Hose  Co.  v.  Eu- 
reka Rubber  Mfg.  Co.  (N. 
J.),  60  Atl.  561  373 

European    Central    Ry.    Co., 

4  Ch.  D.  33  1442 

European,    etc.    Ry.    Co.    v. 

Poor,  59  Me.  277  1303,  1334, 

1335 

Eustace  v.  Dublin  Trunk  Ry. 

Co.,  6  Eq.  182  200,201 

Euston  V.  Edgar  (Mo.),  105  S. 

W.  773  262,  628 

Evans  v.  Boston  Heating  Co., 
157  Mass.  37;  31  N.  E. 
698  1004 

V.  Chapman,  80  L.  T.  381 

132,  589 

V.  Davies  (1893),  2  Ch. 

216  423 

V.    Johnson,    149    Fed. 

978;  79  C.  C.  A.  488  84,  838 

V.  Lee,  11  Nevada.  194       407, 

1376 


Ixxiii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Evans  v.  Smallcombe,  L.  R.  3 

H.  L.  249  665 

r.    Southern    Turnpike 

Co..  IS  Ind.  101  231 

V.  I'nion  Pac.  Ry.  Co.,  58 

Fed.  497  970,  971 

Evans'  Case.  2  Ch.  427  203 

Evansville  Nat.  Bank  v.  Met- 
ropolitan Nat.  Bank,  2 
Biss.  527  571,  769 

Evansville  Public  Hall  Co. 
V.  Bank  of  Commerce,  144 
Ind.  34 :  42  N.  E.  1097  1306 

Evansville.  etc.  R.  R.  Co.  v. 

Evansville,    15    Ind.    395        244, 

1109 
Evarts  v.  Killingsworth  Mfg. 

Co.,  20  Conn.  447  873,  875. 

875,  924,  924,  1367,  1375 
Evenson     v.     Ellingson,     67 
Wise.  634;    31  N.  W.  342 

244 
Everet   v.    Williams,    9    Law 

Quarterly  Review  197  258 

Everitt  v.  Automatic  Weigh- 
ing Machine  Co.  (1892),  3 
Ch.  506  769 

Evertson  v.  Nat.  Bank  of 
Newport,  66  N.  Y.  14;  23 
Am.  Rep.  9  1451,  1451.  1461, 

1463,  1464 
Excelsior  Ins.  Co.,  38  Barb. 

(N.  Y.)  297  1163,  1191 

Excelsior    Petroleum    Co.    v. 

Lacey,  63  N.  Y.  422  1358 

Excelsior  Water  Co.  v.  Pierce, 

90  Cal.  131;    27  Pac.  44  416, 

416,   1098,  1099,  1099,  1100, 
1103,  1104,  1104,  1104,  1109, 
1117 
Exchange     Bank    v.    Macon 
Construction  Co.,  97  Ga.  1; 
25  S.  E.  326;    33  L.  R.  A. 
800  873,  878,  1569,  1570 

Exchange    Drapery    Co.,    38 

Ch.  D.  171  435 

Exeter,  etc.  Ry.  Co.  v.  Buller, 
5Eng.  Rv.  &Can.  Cas.  211; 
16  L.  J.  Ch.  449  930,  933 

Ex-Mi.ssion  Land  Co.  v. 
Plash.  97  Cal.  610;  32 
Pac.  600  272,  321,  327 

Exter  V.  Sawyer,  146  Mo.  302 ; 

47  S.  W.  951  322,  326 

Eyre's  Case,  31  Beav.   177         766. 
^  1327 

Eyster  v.  Centennial  Board  of 

Finance,  94  U.  S.  500       425,  1091, 

1099 


Factors,  etc.  Ins.  Co.  v.  Har- 
bor Protection  Co.,  37  La. 

Ann.  233  121 
V.   Marine   Dry   Docks, 

etc.  Co.,  31  La.  Ann.  149  732 

Fadness  v.  Baunberg,  73  Wise. 

257;   41  N.  W.  84  302 

Fahrney  v.   Kelly,    102  Fed. 

403  716 

Fairbank  v.  Merchants'  Nat. 

Bank,  132  111.   120;    22  N. 

E.  524  806,  806,  810,  812, 

1135,  1136 
Fairfield     County     Turnpike 

Co.  V.  Thorp,  13  Conn.  173 

1078,  1231 
Fairtitle   ex   dem.  Mytton    v. 

Gilbert  (1787),  2  T.  R.  169 

828,  829 
Falcone  v.   Societa  Sarti,   61 

N.  Y.  Supp.  873  562 

Fallon  V.  United  States  Direct- 

tory  Co.,   86  N.    Y.    App. 

Div.  29 ;  83  N.  Y.  Supp.  359 
Falls     City     Tinware     Co.'s 

Trustee    v.    Levine    (Ky.), 

104  S.  W.  716 
Famous    Shoe,    etc.    Co.    v. 

Eagle  Iron  Works,  51  Mo. 

App.  66 
Faneuil  Hall  Bank  v.   Bank 

of      Brighton,      16      Gray 

(Mass.)  534 
Fanning  v.  Insurance  Co.,  37 

Oh.  St.  339;    41  Am.  Rep. 

517 
Farley  v.  St.  Paul,  etc.  Ry. 

Co.,  4  McCrary  138 
Farmers'    Bank    v.     Diebold 

Safe,  etc.  Co.,  66  Oh.  St. 

367;  64  N.  E.  518;  90  Am. 

St.  Rep.  586;    58  L.  R.  A. 

620  726 
V.  McKee,  2  Pa.  St.  318 

Farmers'  Bank  of  Md.  v.  Igle- 

hart,  6Gill  (Md.)  50 

Farmers'  Bank  of  Maryland's 

Case,   2   Bland    (Md.)   394 

768,  769 

Farmers'  Bank  of  Vine  Grove 

Smith,   49   S.    W.   810; 


105  Ky.  816;    88  Am.  St. 
Rep.  341 
Farmers'  L.  &  T.  Co.  v.  Amer- 
ican Waterworks  Co.,   107 
Fed.  23  1516, 


957 

520 

1377 

863 

174 
1636 

i,  739 

1372 

770 

,  776 

293 
1638 


Ixxiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Farmers'  L.  &  T.  Co.  v.  Bank- 
ers, etc.  Tel.  Co.,  148  N.  Y. 
315:  42  N.  E.  707;  ol  Am. 
St.  Rep.  (590 ;  3 1  L.  R.  .\ .  403     1 570 

V.  Cape  Fear,  etc.  R.  R. 

Co.,  62  Ted.  075  1602,  1602 

V.  Ca[)e  Fear,  etc.  Ry. 

Co.,  71  Fed.  38  1585 

V.  Cary,  13  Wise.  110  1515 

V.  Central  R.  R.  Co..  17 

Fed.  758  1634 

V.  Central  R.,  etc.  Co., 

120  Fed.  1006  120 

V.  Central  R.  R.  of  Iowa, 

7  Fed.  537  1015,  1020,  1633 
V.  Central  R.  R.  of  Iowa, 

8  Fed.  60  1621 
V.  Centralia,  etc.  R.  Co., 

96  Fed.  636  1646,  1646,  1647 

V.  Chicago,  etc.  R.  Co., 

118  Fed.  204  1617 

V.  Chicago,  etc.  R.  R.  Co., 

68  Fed.  412  1494 

V.  Chicago,  etc.  Ry.  Co., 

27  Fed.  146         1593,  1602,  1623, 
1020,  1072,  1675 

— ■ —  V.  Chicago,  etc.  Ry.  Co., 

42  Fed.  6  1612,  1612 

V.  Chicago,  etc.  Ry.  Co., 

44  Fed.  653  1634,  1634 

V.  Clowes,  3  N.  Y.  470  87 

V.  Commercial  Bank,  11 

Wise.  207  1503 

' V.  Commercial  Bank,  15 

Wise.  424;    82   Am.    Dec. 

689  1532 

■ V.  Denver,  etc,  Ry.  Co., 

126  Fed.  46         1538,  1538 

V.   Detroit,  etc.  R.  R. 

Co.,  71  Fed.  29     1496,  1516, 

1517,  1518, 1548, 
1568,  1568,  1573 

V.  Farmers'  L.  &  T.  Co. 

of  Kansas,  1  N.  Y.  Siipp.  44       375 

V.  Grape  Creek  Coal  Co., 

65  Fed.  717;   13  C.  C.  A.  87 

1465,  1465 

V.  Green  Bay,  etc.  R.  R. 

Co.,  6  Fed.   100;    10  Biss. 

203  1628,  1628,  1628,  1630 

V.  Green  Bay,  etc.  Ry. 

Co.,  45  Fed.  004  1568 

V.  Hendrickson,  25  Barb. 

(N.  Y.)  484  1396 
V.  Housatonic  R.  R.  Co., 

152  N.  Y.  251;    46  N.  E. 

504  1248 

V.   Iowa  Water  Co.,  78 

Fed.  881  1456,  1466,  1627 

Lxxv 


Fanners'  L.  &  T.  Co.  v.  Kansas 
City,  etc.  R.  R.  Co.,  53  Fed. 
182  l5C>:i, 

V.  Lake  St.  Elevated  R. 

Co.,  122  Fed.  914 

V.    Louisville,    etc.    Ry. 

Co.,  103  Fed.  110 

V.  Madison  Mfg.  Co.,  153 

P^ed.  310  1343, 

V.  Mann,  4  Robt.  (N.  Y.) 

356 

V.  Meridian  Waterworks 

Co.,  139  Fed.  061  1498, 

1552, 

V.  Missouri,  etc.  Ry.  Co., 

21  Fed.  264 

V.  New  England  Water- 
works Co.,  137  Fed.  729; 
70  C.  C.  A.  163 

V.  New  York,  etc.  Ry. 

Co.,  94  N.  Y.  Supp.  928 

V.  New  York,  etc.  Ry. 

Co.,  150  N.  Y.  410;  44 
N.  E.  1043;  55  Am.  St. 
Rep.  689;  34  L.  R.  A.  76 

1595, 

V.  Northern  Pac.  R.  R. 

Co.,  58  Fed.  257 

V.  Northern  Pac.  R.  R. 

Co.,  60  Fed.  803 

V.  Northern  Pac.  R.  R. 

Co.,  61  Fed.  546  1602, 

V.  Northern  Pac.  R.  R. 

Co.,  66  Fed.  169      1585,  1587, 

V.  Northern  Pac.  R.  R. 

Co.,  68  Fed.  36  1565, 

V.  Northern  Pac.  R.  R. 


Co.,  70  Fed.  423  1585, 

—  V.  Northern  Pac.  R.  R. 
Co.,  71  Fed.  245 

—  V.  Northern  Pac.  R.  R. 
Co.,  74  P^ed.  431  1561, 

—  V.  Northern  Pac.  R.  R. 
Co.,  79  Fed.  227 

—  V.  Nova  Scotia,  etc.  Ry. 
Co.,  24  Nova  Scotia  542 

—  V.  Oregon  Pac.  R.  R.  Co., 
31  Oreg.  237;  48  Pac.  706; 
65  Am.  St.  Rep.  822;  38 
L.  R.  A.  424 

—  ?'.  Oregon,  etc.  R.  R.  Co., 
40  Pac.  1089;   28  Oreg.  44 

—  V.  Oregon,  etc.  R.  R.  Co., 
67  Fed.  404 

—  V.  Penn  Plate  Glass  Co., 
186  U.  S.  434;  22  Sup.  Ct. 
842 


1572 

1581 

1659 

1434 

1373 

1.521, 
1604 

1659 

1456 
1595 

1082, 
1593 

1612 

1621 

1602 

,1595 

1567 

1587 

1567 

1565, 
1568 

1568 

1584 

1640 

1627, 
1629 

1453 
1483 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Farmers'  L.  &  T.  Co.  v.  Perry, 

3  Sandf.  Ch.  (N.  Y.)  339  75,  87 
• V.     Rockawav     Valley 

R.  R.  Co..  69  Feci.  9  1400 
V.  San  Diego  St.  Car  Co., 

45  Fed.  518  1080,  1310, 
1402,  1406 
V.  San  Diego,  etc.  Co.,  49 

Fed.  188  1510,  1608 

V.  Stuttgart,  etc.  R.  R. 

Co.,  92  Fed.  246  1566 

V.   Toledo,   etc.   R.    R. 

Co.,  54  Fed.  759      67,  1405,  1405, 

1435 
V.  Toledo,  etc.  Ry.  Co., 

67  Fed.  49  109,  492,  986,  1525, 
1526,  1624 
V.  Vicksburg,  etc.  R.  R. 

Co.,  33  Fed.  778  1565,  1570 
i\  Winona,  etc.  Ry.  Co., 

59  Fed.  957  1593,  1603 

Farmers'  Mfg.  Co.  v.  Spruks 

Mfg.  Co.,  119  Fed.  594  1356 

Farmers'  Nat.  Bank  v.  Sutton 

Mfg.  Co.,  52  Fed.  191;  3  C. 

C.  A.  1;    17  L.  R.  A.  595 


862, 
867 
716 


175 


845 
517 

1334 


V.  Wilson,  58  Cal.  600 

Farmers'  &  Mech.  Bank  v. 
Nelson,  12  Md.  35 

Farmers',  etc.  Bank  v.  Bald- 
win, 23  Minn.  198;  23  Am. 
Rep.  683 

V.  Champlain,  18  Vt.  131 

— —  V.  Downey,  53  Cal.  466; 
31  Am.  Rep.  62 

V.  Haney,  87  Iowa  101; 

54  N.  W\  61  572,  770 

V.  Iglehart,  6  Gill  (Md.) 

50  773,  791 

V.   Mosher,   100  N.   W. 

133;    94  N.  W.   1003;    68 
Nebr.  713 

V.    Waco   Electric   Ry. 

Co.  (Tex.),  36  S.  W.  131 


715 


1435, 
1562 
V.  Wasson,  48  Iowa  336; 

30  Am.  Rep.  398  571,  1335,  1335 
V.  Wayman,  5  Gill  (Md.) 

3.36  814,  814 

Farmers',    etc.     Ins.     Co.    v. 

Chase,  56  N.  H.  341  1214,  1215 
Farmers',  etc.  Trust  Co.  v.  St. 

Joseph,    etc.    Ry.    Co.,    3 

Dill.  412  1396 

Farmers',  etc.  Turnpike  Co., 

25  Pa.  St.  303  404 

Farmington     Sav.     Bank    v. 

Fall,  71  Me.  49  868 


Farnesworth  v.   Robbins,  36 
Minn.  369;    31  N.  W.  349 


518, 
524 


Farnham    v.    Benedict,     107 

N.  Y.  159;    13  N.  E.  784  245 

Farnsworth  v.  Drake,  11  Ind. 

101  251 

Farrar  v.  Walker,  13  Nat.  B. 

Reg.  82  177 

Farrell  v.  Gold  Flint  Mining 

Co.,  32  Mont.  416;   80  Pac. 

1027  1210 

V.  Union  Trust  Co.,  77 

Mo.  475  1582 

Farrington  v.  Putnam,  90  Me. 
405;  37  Atl.  652;  38  L.  R. 
A.  339  847 

V.  South  Boston  R.  R. 

Co.,    150    Mass.    406;     23 
N.  E.  109;  15  Am.  St.  Rep. 

222;  5  L.  R.  A.  849  736,  741 

Farwell  v.  Babcock,  27  Tex. 

Civ.  App.    162;    65  S.  W. 

509  969,  1076 
V.  Colonial  Trust  Co.,  147 

Fed.  480;  78  C.  C.  A.  22  777 

V.   Great  Western  Tel. 

Co.,  161  111.  522;   44  N.  E. 

891  1617 

V.    Houghton    Copper 

Works,  8  Fed.  66  913,  914, 

1042,  1199,  1210,  1223 
V.  Tweddle,  10  Abb.  n.  c. 

(N.  Y.)  94  1446 

Farwell,  John  V.  Co.  v.  Wolf, 

96  Wise.  10;  70  N.  W.  289; 

71  N.  W.  109;    65  Am.  St. 

Rep.  22;  37  L.  R.  A.  138  844 

Fatman   v.    Lobach,    1    Duer 

(N.  Y.)  354  723 

Faulds  V.  Yates,  57  111.  416; 

11  Am.  Rep.  24  1029 

Faure   Electric,  etc.   Co.,   40 

Ch.  D.  141  354,  1274 

V.  Phillipart,  58  L.  T. 

525  600,  614,  1205,  1205,  1232 
Fawcett  v.  Charles,  13  Wend. 

(N.  Y.)  473  1183 

V.   New   Haven   Organ 

Co.,  47  Conn.  224  1376 
Fay  V.  Gray,  124  Mass.  500  418, 
807,  812 
V.  Noble,  7  Cush.  (Mass.) 

188  252,  252 

V.     Noble,     12     Cush. 

(Mass.)  1  591,  1370 

Fayette  Land  Co.  v.  Louis- 
ville, etc.  R.  R.  Co.,  93  Va. 
274;  24  S.  E.  1016  393,  847 


Ixxvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Fayetteville,  etc.  Ry.  v.  Aber- 
deen, etc.  R.  R.  Co.  (N. 
Car.),  oo  S.  E.  345  147,  160 

Fear  v.  iiartiett,  81  Md.  435; 
32  Atl.  322;  33  L.  R.  A. 
721  180,  181 

Fearing  v.  Glenn,  73  Fed.  1 16 ; 

19  C.  C.  A.  388  1181,  1182, 

1182 
Featherstone  v.  Cooke,  16  Eq. 

298  943,  958 

Featherstonebaugh     v.      Lee 

Moor,  etc.  Co.,  1  Eq.  318  97 

Feckheimer  v.  Nat.  Exchange 

Bank.  79  Va.  80  571,  751 

Fee  V.  Nat.  Masonic  Accident 

Ass'n,    110   Iowa  271;    81 

N.  W.  483       553.  562.  1214, 1216 

Feige  v.  Burt,  118  Mich.  243; 

77  N.  W.  928;   74  Am.  St. 

Rep.  390  807,  808 

Feitel  v.   Dreyfous,    117   La. 

756 ;  42  So.  259 
Felgate's  Case,  11  L.  T.  613 
Felker  v.  Sullivan  (Colo.),  83 

Pac.  213 
Felton  V.  West  Iron,  etc.  Co., 

16  Mont.  81:  40  Pac.  70 
Ferguson  v.  Toledo,  etc.  R.  R. 
Co.,   85  N.    Y.   App.    Div. 
352;    S3  N.  Y.  Supp.  283; 
183  N.  Y.  557 
Fernscliild       v.       Yuengling 
Brewing  Co.,  154  N.  Y.  667 ; 
49  N.  E.  151 
Ferrao's  Case,  9  Ch.  355 
Ffooks  V.  South  Western  Ry. 

Co.,  1  Smale  &  G.  142       965,  969, 

972 
Fidelity    &    Deposit    Co.    v. 
National     Bank    of    Com- 
merce   (Tex.),    106   S.    W. 
782  833,  1354 

Fidelity  Insurance  Co.  v. 
German  Savings  Bank.  127 
Iowa  591;   103  N.  W.  958  74, 

91,  846 

V.  Shenandoah  Valley  R. 

Co..  32  W.  Va.  244;  9  S.  E. 
ISO 
Fidolity  Ins.,  etc.  Co.  v.  Nor- 
folk, etc.  R.  R.  Co.,  72  Fed. 
704 

V.  Norfolk,  etc.   R.   R. 

Co.,  88  Fed.  815 

V.  Norfolk,  etc.  R.  Co., 

90  Fed.  175 

V.    Roanoke  Iron  Co.,  68 

Fed.  623 


208 
202 

627 

1247 


1632 


1659 
642 


Fidelity  Ins.,  etc.  Co.  v.  She- 
nandoah Valley  R.  R.  Co., 
33  W.  Va.  761;  11  S.  E.  58 

1416,  1473,  1669 

V.    Shenandoah    Valley 

R.  R.  Co.,  86  Va.  1;  9  S.  E. 

759;  19  Am.  St.  Rep.  858      1457, 
1564,  1507,  1569,  1570, 
1571 
Fidelity  Mutual  Aid  Ass'n,  12 
Wkly.  Notes  Cas.  (Pa.)  209 
Fidelity  Trust  Co.  v.   Hobo- 
ken,  etc.  R.  Co.  (N.  J.),  63 
Atl.  273  1554,  1555,  1601 

V.  Leliigh  Valley  R.  R. 

Co.  (Pa.),  64  Atl.  829       4 


407 


1536 
1632 


1542 


134 


460. 
462 


—  V.  Louisville  Gas  Co.,  26 
Ky.    Law    Rep.    401;     81 

S.  W.  927  a3,  66, 

—  V.  Staten  Island  Clay  Co 
(N.  J.  Ch.),  67  Atl.   1078 


1507, 
1509 


1650 


Fidelity    Trust,    etc.    Co.    v. 

Mobile  Street-Raihvay  Co., 

53  Fed.  850  1489 

Fidelity,  etc.  Co.  v.  Roanoke 

Iron' Co.,  81  Fed.  439  1426, 
1439,  1542 
V.  L'nited,  etc.  Canal  Co., 

36  N.  J.  Eq.  405  1472,  1601 
V.  West  Pa.,  etc.  R.  R. 

Co.,    138  Pa.   St.  494:    21 

Atl.  21;    21  Am.  St.  Rep. 

911  1408,  1450 

Fidelity,    etc.    Vault    Co.    v. 

Mobile  Street  Ry.  Co.,  54 

Fed.  26  1660 

Field  V.    Eastern,   etc.    Loan 

Ass'n,    117   Iowa    185;    90 

N. W.  717  584 
V.  Field,  9  Wend.  (N.  Y.) 

394  1011, 1056 
V.  Girard  College,  54  Pa. 

St.  233  1363 
V.  Lamson,  etc.  Mfg.  Co., 

162  Mass.  388;    38  N.  E. 

1126;  27  L.  R.  A.  136      450,  450, 
464,  466 
r.    Union    Box    Co.,  2 

\\'kly.  Notes  Cas.  (Pa.)  426     1247 
Fielden    v.    Lancashire,    etc. 

Ry.  Co.,  2  De  G.  &  Sm.  531       443 
Fields  V.  Cook,  16  La.  Ann. 

153  123 

United  Brotherhood, 
App.  258  659 

U.  S.,  27  App.  D.  C. 


—  V. 

60  111. 

—  V. 

433 


30 


Ixxvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Fifth  Ave.  Bank  r.  Forty-sec- 
ond St..  etc.  R.  R.  Co.,  137 

N.  Y.  231;    33  N.  E.  378; 

33  Am.  St.  Rep.  712;    19 

L.  R.  A.  331        730,  736,  739,  740 
743,  784 
Fifth  >J"at.  Bank  v.  Navassa 

Phosphate  Co.,   119  N.  Y. 

256;  23  N.  E.  737  1370 
V.  Pittsburgh,  etc.  R,  R. 

Co.,  1  Fed.  190  960 

Fifth    Ward    Sav.    Bank    v. 

First  Nat.  Bank,  48  N.  J. 

Law  513 ;  7  Atl.  318       63,  66,  1378 
Fifty-four     First      Mortgage 

Bonds,  Re,  15  S.  Car.  304      1473, 
1531,  1607 
Figge  V.  Bergenthal  (Wise), 

109  N.  W.  581;    HON.  W. 

798  1076,  1243,  1288 

Fillebrown  v.   Hayward,   190 

Mass.  472;  77  N.  E.  45  1186, 

1321,  1328 
Fillmore  v.   Great  Camp,  66 

N.  W.  675;    109  Mich.  13  948 

Finance  Co.  v.  Charleston,  etc. 

R.  R.  Co.,  45  Fed.  436  1602 
V.  Charleston,  etc.  R.  R. 

Co.,  46  Fed.  508  1610,  1613 
V.  Charleston,  etc.  R.  R. 

Co.,  52  Fed.  524  1563 
V.  Charleston,  etc.  R.  R. 

Co.  (Moon,  intervenor),  52 

Fed.  526  1561,  1567 
V.  Charleston,  etc.  R.  R. 

Co.,  62  Fed.  205;    10  C.  C. 

A.  323  1561,  1563,  1567,  1571 

Finance  &  Issue  v.  Canadian 

Produce  Corp.  (1905),  1  Ch. 

37  160,  194,  525 

Financial     Corporation,      28 

W.  R.  760  77 

,2Ch.714        100,547,547,547, 

548,  549,  659,  664 
Finck   V.    Schneider   Granite 

Co.,  187  Mo.  244;  86  S.  W. 

213;  106  Am.  St.  Rep.  452      261, 

263 
Fine  v.  Hornsby,  2  Mo.  App. 

61,  64  422 

Fine    Cotton    Spinners,    etf". 

Ass'n  V.  Harwood  Cash  & 

Co.  (1907),  2  Ch.  184         376,  377 
Finletter  v.  Acetylene  Light 

Co.,  215  Pa.   86;    64  Atl. 

429  617,  636,  645 

Finley    Rubber,    etc.    Co.    v. 

Finley,   32   Atl.    Rep.    740 

(N.  J.  Ch.)  1240 

IXXA 


Finlev  Shoe  &  Leather  Co.  v. 

Kurtz,  34  Mich.  89  488,  494, 

1069,  1190 
Finn  v.  Brown,  142  U.  S.  56; 

12  Sup.  Ct.  136         705,  706,  706, 
921,  1127,  1128,  1173, 
1276 
Finnegan  v.   Noerenberg,   52 

Minn.  239;   53  N.  W.  1150; 

38  Am.  St.  Rep.  552  44,  45, 

104,  243,  246,  247 
Finney's  Appeal,  59  Pa.  St. 

398  715 

Finucane's   Case,    17   W.    R. 

•813  167 

Firemen's  Ins.  Co.,  Ex  parte, 

6  Hill  (N.  Y.)  243  751 

Firestone  v.  First  Slavish,  etc. 

Church,  215  Pa.  8;   63  Atl. 

1038  557 

Firestone    Tire,    etc.    Co.    v. 

Vehicle  Equipment  Co.,  155 

Fed.  676  103 

First  Ave.  Land  Co.  v.  Hilde- 

brand,  103  Wise.  530;    79 

N.  AV.  753  317 
V.  Parker,  111  Wise.  1; 

86  N.  W.  604;    87  Am.  St. 

Rep.  841  730,  731 

First      Baptist      Church      v. 

Harper,  191  Mass.  196;    77 

N.  E.  778  915,  915 

First  Baptist  Soc.  v.  Rapalee, 

16  Wend.  (N.  Y.)  605  118 

First  Church  of  Christ,  Scien- 
tist, Re,  205  Pa.  St.  543; 

55  Atl.  536;    97  Am.   St. 

Rep.  753;  63  L.  R.  A.  411       261, 

267 
First  Division  of  St.  Paul,  etc. 

R.   R.   Co.   V.   Parcher,    14 

Minn.  297  1521,  1522,  1522 


First  Nat.  Bank,  152  Fed.  64 

V.    Abilene    Hotel    Co. 

(Tex.),  103  S.  W.  1120 

V.  Alexander  (Ala.),  44 

So.  866 

V.  American  Nat.  Bank, 

173  Mo.  153;  72  S.  W.  1059 


44 

1377 

853 

84, 
833 
1551 


V.  Anderson,  75  Va.  250 

V.   Armstrong,  42  Fed. 

193  301 
V.  Asheville,  etc.  Lumber 

Co.,  116  N.  Car.  827;  21 

S.  E.  948      1202,  1210,  1381 
V.  Bacon,  113  N.  Y.  App. 

Div.  612;  98  N.  Y.  Supp. 

717  804 


TABLE    OF    CASES 
[Tbe  references  are  to  pages] 


First  Nat.  Bank  v.  Benning- 
ton, IG  lilatchf.  .33 

V.  lirbiii's  Estate,  70  \'t. 


1449 
1285 


599;  41  Atl.  586 

—  V.  Christopher,  40  X.  J. 

Law  435;  29  Am.  Rep.  262     1235 

—  V.    Church    Federation, 
129  Iowa  268;    105  N.  W. 

578  291,  306 

V.  Converse,  200  U.  S. 

425;  26  Sup.  Ct.  306      22,  74,  80, 

834 

—  V.   Council    Bluffs,   etc. 
Co.,  56  Hun  (N.  Y.)  412; 

9  N.  Y.  Supp.  859  1378,  1378 

—  V.  County  Comm'rs  of 
Scott  Co.,  14  Minn.  77;   100 

Am.  Dec.  194  1436,  1461 

V.  Davies,  43  Iowa  424         126 

V.  D.  Ivieffer  Milling  Co., 

95  Ky.  97 ;  23  S.  W.  675  109, 

110,  142,  859,  1409 

V.  De  Morse  (Tex.),  26 

S.  W.  417  _  1124 
V.  Dovetail,  etc.  Gear  Co., 

143  Ind.  534;  42  N.  E.  924  227 
V.  Drake,  29  Kans.  311; 

44  Am.  Rep.  646  1238,  1247, 

1277,  1311,  1321,  1331 

V.  Drake,  35  Ivans.  564; 

11  Pac.  445  1210 

V.  East  Omaha  Box  Co., 

2  Nebr.  (Unofficial  Rep.) 

820;  90  N.  W.  223         1206,  1222 

V.  Ewing,  103  Fed.  168; 

43  C.  C.  A.  150   1542,  1542,  1566, 
1633,  1654,  1655 

V.   Garretson,  107  Iowa 

196;   77N.  W.  856  1379 

V.  Gifford,  47  Iowa  575         689, 

701,  711 

V.  Greenville  Oil  Co.,  24 

Tex.    Civ.    App.    645;     60 

S.  W.  828  833 

V.  Grosshans,  61  Nebr. 

575;  85  N.  W.  542  867 
r.  Hartford,  etc.  Ins.  Co., 

45  Conn.  22  769,  770,  776 
V.  Hastings,  7  Colo.  App. 

129;  42  Pac.  691      697,  716 

V.  Hogan,  47  Mo.  472    1377 

V.   Holland,  99  Va.  495; 

39  S.  E.  126;  86  Am.  St. 

Rep.  898;  55  L.  R.  A.  155  423, 
712,  712 
V.  Lamon,  130  N.  Y.  366 ; 

29N.  E.  321  1185 
V.   Lucas,  21  Nebr.  280; 

31  N.  W.  805  1372 

Ix 


First  Nat.  Bank  v.  National 

Broadway  Bank,  156  N.  Y. 

459;  51  N.  E.  398;  42  L. 

R.  A.  139  •  748,  798 
V.  Nat.  Exchange  Bank, 

92  U.  S.  122  74,  75,  77 
V.  New,  146  Ind.  411 ;  45 

N.  E.  597  1381 
V.  Orinoco  Shipping,  etc. 

Co.,  21  Times  L.  R.  39     1471, 

1474 

i;.  Peavey,  69  Fed.  455         628 

V.  Peoria  Watch  Co.,  191 

111.  128;  60  N.  E.  859  521,  521 
V.  Pierson,  24  Minn.  140; 

31  Am.  Rep.  341  844,  845 
V.  Radford  Tru-st  Co.,  80 

Fed.  569;  26  C.  C.  A.  1  1586. 

1669,  1669 

V.  Rockefeller,  195  Mo. 

15:  93S.  W.  761       118,  129,  221, 

240 
V.  Root,  107  Ind.  224;  8 

N.  E.  105  810 
V.  Salem  Capital,  etc. Co., 

39  Fed.  89  517,  519 
V.  Shedd,  121  U.  S.  74; 

7  Sup.  Ct.  807  1625,  1671 
V.  Sioux  City  Terminal, 

etc.  Co.,  69  Fed.  441  1496 
V.  Stribling,  16  Okl.  41; 

86  Pac.  512  690,  732 
V.  Taliaferro,  72  Md.  164 ; 

19  Atl.  364  701.  723,  1436 

V.  Tisdale,  84  N.  Y.  655       920, 

1372 

V.     Tisdale,     18     Hun 

(N.  Y.)  151  1276 

V.  Trebein  Co.,  59  Oh. 

St.  316;   52  N.  E.  834       296,298, 

886 

V.  William  R.  Trigg  Co. 

(Va.),  56  S.  E.  158  43,  1624 

V.  Winchester,  119  Ala. 

168;  24   So.  351;   72   Am. 

St.  Rep.  904  835,  874,  1071, 

1072 

V.  Wyman,  16  Colo.  App. 

468;    66  Pac.  456       1560,   1570. 

1671 

V.  Wyoming  Valley  Ice 

Co.,  136  Fed.  466       43,  491,  492. 

1323 
First  Nat.  Bank  of  Charlotte 
V.  Nat.  Exchange  Bank,  39 
Md.  600  74 

First   Nat.    Fire    Ins.    Co.    v. 

Salisbury,  130  Mass.  303         1584, 
1586,  1594 


TABLE   OF    CASES 
[The  references  are  to  pages] 


First   Parish   v.    Stearns,    21 

Pick.  14S 
Fishel  V.   Goddard,  30  Colo. 

147;    69  Pac.  007         1315, 


10G5 

1343, 
1357 
Fisher  v.  Black  &  White  Pub- 
lishing Co.  (1901),  1  Ch.  174       40, 
465,  466 

V.  Bush,  35  Hun  (N.  Y.) 

641  1030, 1030 

V.  Essex  Bank,  5  Gray 

(Mass.)  373  677,  694,  716 

I'.  Graves,  80  Fed.  590        1280, 

1281 

V.  Hull,  etc.  Ry.  Co.,  25 

Sol.  J.  353  1108 

V.  Jones,  82  Ala.  117;   3 

So.  13  698,  699 

V.  Parr,  92  Md.  245;   48 

Atl.  621  1259,  1279,  1281, 

1285,  1286 

,  Ex  parte,  20  S.  Car.  179       1084 

Fisk  V.  Potter,  2  Abb.  Ct.  App. 

Dec.    (N.   Y.)    138         1535,  1540 

Fitch  V.  Constantine  Hydrau- 
lic Co.,  44  Mich.  74;  6 
N.  W.  91  1373,  1378 

V.   Wetherbee,    110   111. 

475 

Fitchburg    Savings    Bank   v. 

Torrey,  134  Mass.  239 
Fitchett  V.  Murphy,  46  X.  Y. 

App.  Div.   181;    61  N.  Y. 

Supp.  182  941, 


451 
695 


962 


1463 
1470 


592 


North  Pa.  R.  R.  Co 

5  Phila.  132 
Fitzgeorge,  Re  (1905),  1  K.  B. 

462 
Fitzgerald  v.  Equitable,  etc. 

LifeAss'n,  18N.  Y.St.  Rep 

914;   3  N.  Y.  Supp.  214 

V.  Fitzgerald,  etc.  Mal- 

lory  Co.,  44  Nebr.  463;    62 

N.  W.  899  1196, 1306, 1307 

V.  Missouri  Pac.  Ry.  Co., 

45  Fed.  812  874,  876 

V.  Persse  (1908),   1   Ir. 

279  1474 

Fitzgerald,  etc.  Co.  v.  Fitz- 
gerald, 137  U.  S.  98;  11 
Sup.  Ct.  36  1246,  1381 

Fitzgerald's  Estate  v.  Union 
Sav.  Bank,  65  Nebr.  97;  90 
N.  W.  994  607,  614 

Fitzhugh  V.  Bank  of  Shep- 
herdsville,  3  T.  B.  Monr. 
(Ky.)  126;    16  Am.  Dec.  90     427 

Fitzpatrick  v.  Dispatch  Pub. 

Co.,  83  Ala.  604:  2  So.  727      497 


331 
1214 


1300 
301 

1503 
230 


786 


Fitzpatrick  v.  Rutter,  160  111. 

282;  43  N.  E.  392  248 

Fitzroy   Bessemer  Steel  Co., 

Re,  50  L.  T.  n.  s.  144       327,  1339 
Fitzsimmons  v.  Lindsay,  205 

Pa.  79;   54  Atl.  488  573 

Fitzwater  v.  Nat.  Bank  of 
Seneca,  62  Kans.  163;  61 
Pac.  684  984 

Fitzwilliam  v.  Travis,  65  111. 

App.  183  341,  342 

Flagg  V.  Stowe,  85  111.  164  ^  254 

Flagler  Engraving  MachineCo. 

V.  Flagler,  19  Fed.  468 
Flagstaff    Co.    v.    Patrick,    2 

Utah  304 
Flaherty  v.  Benevolent  Soc, 

99  Me.  253 ;   59  Atl.  58      585,  588 
Flanagan  v.  G.  W.  Ry.  Co.,  7 
Eq.  116 

V.  Lyon,  54  N.  Y.  Misc. 

372;    105  N.  Y.  Supp.  1049 

Flanagan  Bank  v.  Graham,  42 

Oreg.  403;  71  Pac.  137,790 

Fleener  v.  State,  58  Ark.  98 ; 

23  S.  W.  1 
Fleishman  v.  Woods,  135  Cal. 

256;    67  Pac.  276 
Fleming  v.  Wallace,  2  Yeatcs 

(Pa.)  120  915,  916,  924 

Fletclier  v.  Ann  Arbor  R.  R. 
Co.,  116  Fed.  479;  53  C.  C. 
A.  647  1485,  1638 

V.  Chicago,  etc.  Ry.  Co., 

67  Minn.  339;    69  N.   W. 
1085 

V.  Eagle  (Ark.),  86  S.  W. 

810 

V.  McGill,  110  Ind.  395; 

ION.  E.  651;  11  N.  E.  779 
Fletcher  &  Sons  Co.,  George 
N..  V.  Alpena  Circuit  Judge, 
1.36  Mich.  511;  99  N.  W. 
748  869,  951 

Fletcher's  Case,  17  I>.  T.  136         168 
Flinn  v.  Bagley,  7  Fed.  785  628 

Fhnt  V.  Pierce,  99  Mass.  68; 

96  Am.  Dec.  691         595,  595,  651 
Flippin  V.   Kimball,  87  Fed. 

258;    31  C.  C.  A.  282  1617 

Flitcroft's    Case,    21    Ch.    D. 

519  1094,  1161,  1261,  1265, 

1287,  1289 
Floating  Dock,  etc.  Co.,  In  Re 

(1895),  1  Ch.  691        530,  536,  536 
Florence  Land,*  etc.  Co.,    10 

Ch.  D.  530  1499, 1504 

,  29  Ch.  D.  421  149,  155, 

155,  159,  196,  199,  199,  200 


1206 

1279 

428 


Ixxx 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Florida  Sav.  Bank  v.  Rivers, 
30  Fla.  57.5;    18  So.  8.50 


11G9, 
130C 


Florsheim  &  Co.  v.  Fry,  109 
Mo.  App.  487;  84  S.  W. 
102;i  233 

Hour  City  Nat.  Bani<  v.  Shire, 
88  N.  Y.  App.  Div.  401;  84 
N.  Y.  Supp.  810;  179  N.Y. 
587;    72  N.  E.  1141  156,  635 

Flynn  v.  Brooklyn  City  R.  R. 

Co.,  158  N.  Y.  493  9.36 

V.    Columbus   Club,    21 

R.  I.  534;  45  Atl.  551  1246 
V.  Third  Nat.  Bank,  122 

Mich.  642;  81  N.  \V.  572  960 
Fogg  V.  Blair,  139  U.  S.  118; 

11  Sup.  Ct.  476  631 

FoUit   V.    Eddystone   Granite 

Quarries  (1892).  3  Ch.  75  1674 

FoLsom  V.  Detrick  Fertilizer, 

etc.  Co.,  85  Md.  52;  36  Atl. 

446  885 

Fontana  v.   Pacific  Can  Co., 

129  Cal.  51 ;   61  Pac.  580  451 

Foote  V.  Anderson,  123  Fed. 

659  .  921 

V.    Illinois    Trust,    etc. 

Bank,  194  111.  600;  62  N.  E. 

834  784 
,     Appellant,     22     Pick. 

(Mass.)  299  1114,1137,1155 

Forbes  v.  Memphis,  etc.  R.  R 

Co.,  2  Woods  323 
Forbes'  Case,  19  Eq.  353 


973 

1174, 

1175 

206 


Forbes  &  Judd's  Case,  5Ch.  270 
Force  v.  Age-Herald  Co.,  136 

Ala.  271 ;    33  So.  866 
Ford  V.  Central  Trust  Co.,  70 

Fed.  144;    17  C.  C.  A.  31 
V.  Easthampton  Rubber 

Co.,     158    Mass.     84;      32 

N.    E.    1036;    35   Am.    St. 

Rep.  462 ;    20  L.  R.  A.  65 
V.  Hill.  92  Wise.  188:  66 

N.  W.  115;  53Am.  St.  Rep. 

902  394,  1382 
V.  Kansas  City,  etc.  Ry. 

Co..  .52  Mo.  App.  439 
Ford    River    Lumber   Co.    v. 

Perron  (Mich.),  Ill  N.  W. 

1074 
Forde,  Ex  parte,  30  Ch.  D.  1 53 
Fordvce  v.  Kan.sas  City,  etc. 

R.'R.  Co.,    145    Fed.'  566 
V.  Omaha,  etc.  R.  R.  Co., 

145  Fed.  544  1561,  1563,  1563 

1564 


1357 
1571 


1121 


958 


910 
640 

1543 


Foreign  &  Colonial  Govern- 
ment Trust  Co.  (1891),  2 
Ch.  395  136,  136 

Foreman  v.  Bigelow,  4  Cliff. 

508  628,  647 

V.  Central  Trust  Co.,  71 

Fed.  776;    18  C.  C.  A.  321       1617, 

1041 
Fore-Street    Warehouse    Co. , 

59  L.  T.  N.  s.  214  5.33 

Forest  Land  Co.  v.  Bjorkquist, 
110  Wise.  547;    86  N.  W. 
183  273 

Forrest  v.  Manchester,  etc. 
Ry.  Co.,  30  Beav.  40;  4 
DeG.  F.  &  J.  125  91,  965 

Forrest  of  Dean  Coal  Co.,  10 

Ch.  D.  450  1283 

Forrest    Glen    Brick    Co.    v. 

Gade,  55  111.  App.  181       918,  1005 

1342 
Forrest's   Executors  v.   Lud- 

dington,  68  Ala.  1  1623 

Forrester  v.  Boston,  etc.  Min- 
ing Co.,  21  Mont.  544;  55 
Pac.  229,  353        72.  965.  968,  971 

V.    Boston,   etc.   Mining 

Co..  29  Mont.  .397;  74  Pac. 
1088;  76  Pac.  211  983,983 

Forsyth  v.  Brown.  33  Wklv. 

Notes  Cas.  (Pa.)  72  995.  1016, 

1045. 1061.  1163,  1163 
Fort  Madison  Lumber  Co.  v. 
Batavian    Bank.    71    Iowa 
270;  32N.  W.336;  60  Am. 
Rep.  789  716 

Fort  Miller,  etc.  Co.  v.  Pajme 

17  Barb.  (N.  Y.)  567  191 

Fort  Payne  Rolling  Mill  v. 
Hill.  174  Mass.  224;  54 
N.  E.  532  1299, 1321 

Fort  Pitt  B.  &  L.  Ass'n  v. 
Model  Plan  B.  &  L.  Ass'n, 
159  Pa.  St.  308;  28  Atl.  215  134 
139  140,  371,  371,385 
Fort  Smith  Wagon  Co.  v. 
Baker  (Ark.),  105  S.  W. 
.591  1372 

Fort  AVavne  Gas  Co.  v.  Nie- 
man.  33  Ind.  App.  178;  71 
N.  E.  59  383 

Fort  Wavne.  etc.  R.  R.  Co.  v. 

Mellett.  92  Ind.  .535  1617 

Fortier  v.  New  Orleans  Nat. 
Bank.  112U.  S.  439;  5  Sup. 
Ct.  234  382 

Fortin  v.  U.  S.  Wind.  etc. 
Pump  Co..  48  m.  451;  95 
Am.  Dec.  560  228 


/ 


Ixxxi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Fosdick  V.  Car  Co.,  99  U.  S. 

256  1536,   1569 

V.  Schall,  99  U.  S.  235   1393, 

1535,  1536,  1539,  1540.  1558, 

1.562,  1566,  1569 

Foss  V.  Harbottle.  2  Hare  461       928, 

929,  934,  943,  944,  994,  997, 

1231 

Foster  v.  Bank  of  Abingdon, 

88  Fed.  604  1357 
V.  Bank  of  England,  8  Q. 

B.  689  893 
V.  Bear  Valley,  etc.  Co., 

65  Fed.  836  1310 

V.  Borax  Co.  (1901),   1 

Ch.  326  51,  73 
V.  Greenwich  Ferry  Co., 

5  Times  L.  R.  16  1183,  1251 
V.  Mansfield,  etc.  Co.,  146 

U.  S.  88;  13  Sup.  Ct.  28  1311 
V.  Mansfield,  etc.  R.  R. 

Co.,  36  Fed.  627  1636,  1637 
V.  Moulton,  35  Minn.  458; 

29  X.  W.  155  254 

V.  MuUanphy,  etc.  Co., 

92  Mo.  79;   4  S.  W.  260  1315 

V.  New  Trinidad  Lake 

Asphalt  Co.   (1901),   1  Ch. 

208  1093 

V.    Ohio-Colorado,    etc. 

Mining  Co.,  17  Fed.  1.30         1380 

V.   Oxford  Ry.  Co.,    13 

C.  B.  200  1179,  1296,  1296 
V.  Seymour,  23  Fed.  65         331, 

1290,  1291 

V.  Shaw,  7  S.  &  R.  (Pa.) 

156  404 

V.   Tyne  Pontoon,   etc. 

Co.,  63  L.  J.  Q.  B.  50       737,  737, 
742,  742,  757 

V.  White,  86  Ala.  467; 

6  So.  88  901.  902,  902,  904 
V.  White  Cloud  City  Co., 

32  Mo.  .505  229 

Fothergill's  Case,  8  Ch.  270     205,  641 
Foulke  V.  San  Diego,  etc.  R.  R. 

Co.,  51  Cal.  .365 
Foulkes   V.   Quartz  Hill,  etc. 

Mining     Co.,     Cababe     & 

Ellis  156 
Fountain  Spring  Park  Co.  v. 

Roberts,  92  Wise.  345;    66 

N.    W.    399;     53    Am.    St. 

Rep.  917  273.  327,  1333 

Fountaine  v.  Carmathen  Rv. 

Co.,  5  Eq.  316  12^21,  1528 

Fowler    V.     Broad's     Patent 

Night   Light  Co.  (1893),  1 

Ch.  724  1514,  1599 


394 


181 


622 


559 


Fowler  v.  Cowing,  152  Fed. 
801 

V.  Great  Southern  Tel., 

etc.  Co.,  104  La.  751;    29 
So.  271 

V.   Jarvis-Conklin  Mge. 

Co.,  63  Fed.  888  1602,  1602, 

1660 
Fox  V.  Mackay,  125  Cal.  57; 

57  Pac.  670  1079 

V.  Martin,  64  L.  J.  Ch. 

473  686,  696,  722 

V.   Robbins    (Tex.),   62 

S.  W.  815  ^       1324 

V.   Robbins    (Tex.),    70 

S.  W.  597  884,  1324 

V.  Seal,  22  Wall.  424  1542 

Fox's  Case,  5  Eq.  118  179,  525 

Frames   v.    Bultfontein   Min- 
ing Co.  (1891),  1  Ch.  140         471 
France  v.  Clark,  26  Ch.  D.  257       690, 
691,  691,  722,  722,  807,  807 
Francis    v.    New    York,  etc. 

R.  R.  Co.,  108N.  Y.  93;   15 

N.  E.  192 
Francklyn    v.    Sprague,    121 

U.  S.  215;   7  Sup.  Ct.  951 
Franco-Texan     Land    Co.   v. 

Laigle,  59  Tex.  339        1008,  1009, 

1045,  1225,  1225 

Franey  v.  Warner,  96  Wise. 

222;   71  N.  W.  81 
V.  Wauwatosa  Park  Co., 

99  Wise.  40;   74  N.  W.  548 
Frank  v.  Denver,  etc.  Ry.  Co., 

23  Fed.  123  15.38,  15.39,  1644 

V.   Drenkhahn,   76  Mo. 

508  304 

V.  Morrison,  55  Md.  399       613, 

613,  6.33 

V.  Morrison,  58  Md.  423         557 

Franks  v.   Mann,    106  Wise. 

118;  81  N.  W.  1014;  48  L. 

R.  A.  8.56 
Frankfort  Bank  v.  Johnson, 

24  Me.  490 
Frankfort,  etc.  Turnpike  Co., 

V.  Churchill,  6  T.  B.  Monr. 

(Ky.)    427;     17  Am.    Dec. 

159 
Frankland's    Case,    Leigh    & 

Cave  Cr.  Cas.  276  230,  230 

Franklin  Ave.,  etc.  Sav.  Inst. 

V.   Board  of  Education,  75 

Mo.  408 
Franklin    Bank   v.    Commer- 
cial Bank,  36  Oli.  St.  350; 

38  Am.  Rep.  594  709,  845 
V.  Johnson,  24  Me.  490  1204 


182 
299 


336 
181 


118 
1187 


288 


844 


Ixxxii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Franklin  Co.  v.  Lewiston  In- 
stitution, 68  Me.  43;  28 
Am.  Rep.  9  74,  854,  856,  862 

Franklin     I'ire     Ins.     Co.     v. 

Hart,  'Al  Md.  59  280 

V.  Jenkins,  3  Wend.  (N. 

Y.)  130  1285,  1286,  1287 

Franklin  Nat.  Bank  v.  New- 
combo,  1  \.  Y.  App. 
Div.  294;  37  N.  Y.  Supp. 
271  808 

Franklin  Trust  Co.  v.  Ruth- 
erford, etc.  El.  Co.,  57  N. 
J.  Eq.  42;   41  Atl.  488;    58 
N.J.Eq.584;  43Atl.  1098        917, 
919,   1012,   1045,   1400 

Franz  v.  Teutonia  Bldg.  Ass'n, 

24  Md.  259  233 

Fra.ser  v.  Cooper,  21   Ch.  D. 

718  1592 

V.  Whalley,  2  Hem.  & 

Mill.    10  943,  965 

Eraser  River  Mining,  etc.  Co. 
V.  Gallagher,  5  Britt.  Co- 
lumb.  82  647,  928 

Eraser's  Adm'r  v.  Richmond, 
etc.  R.  R.  Co.,  81  Va.  388 

1516,  1517 

Frayter  v.  Old  Nat.  Bank,  101 

Fed.  391:  42  C.  C.  A.  133  810 

Frazier  v.  Ry.  Co.,  88  Tenn. 

138;    12  S.  W.  537  6,  1543 

V.Simmons,  139  Mass.  531 

2N.  E.  112  781 

Freckmann  v.  Supreme  Coun- 
cil, 96  Wise.  133;  70  N.  W. 
1113  660 

Fred  Macev  Co.  v.  Macey,  143 

Mich.  138;    106  N.  W.  722        315, 
316,331 

Frederick  El.  Light,  etc.  Co. 
V.  Mayor,  etc.  of  Frederick 
City,  84  Md.  599;  36  Atl. 
362;    36  L.  R.  A.  130  43 

Frederick  Milling  Co.  v.  Fred- 
erick, etc.  Co.  (S.  Dak.), 
106  N.  W.  298  985,  1374 

Freeman    v.    Appleyard,    32 

L.  J.  Ex.  175  423 

V.  Machias  Water,  etc. 

Co.,  38  Me.  343  161 

V.  Sea  View  Hotel  Co., 

57  N.  J.  Eq.  68;    40  Atl. 

218  71,  1302 

Frellsen    v.    Strader   Cypress 

Co.,   110  La.  877;    34  So. 

857  1276 

Freman  v.  Whitbread,  1  Eq. 

266  1156,  11. ")6 


Fremont     Carriage     Co.     v. 

Thomsen,    65    xN'ebr.    370; 

91  N.  W.  376  192,  517,  527 

French  v.  Donoliue,  29  Minn. 

Ill;    12  N.  W.  354  233,  844 
V.  Fuller, 23  Pick.  (Mass.) 

108  1120, 1354 
V.  Jones,  191  Mass.  522; 

78  N.  E.  118;    7  L.  R.  A. 

N.  s.  525 
1'.  White  (Vt.),  62  Atl.  35 


1522 
690, 
793 


751 


228 


104 


Frenkel  v.   Hudson,  82  Ala. 

158;    2  So.   758;    60  Am. 

St.  Rep.  736  154,  158 

Freon  v.  Carriage  Co.,  42  Oh. 

St.  30;    51  Am.  Rep.  794 
Fresno    Canal,    etc.    Co.    v. 

Warner,    72    Cal.  379;    14 

Pac.  37 
Frick  Co.  v.  Norfolk,  etc.  R. 

R.  Co.,  86  Fed.  725;   32  C. 

C.  A.  31 
Fricker  v.  Americas  Mfg.,  etc. 

Co.,  124  Ga.  165;    52  S.  E. 

65  1339,  1343 

Fripp  V.   Chard  Ry.   Co.,    11 

Hare  241  1603,1606 

Frishmuth  v.  Farmers'  L.  & 

T  Co.,  107  Fed.  169;  46  C. 

C.  A.  222 ;  s.  c.  95  Fed.  5        1487, 
1488,  1488,  1488,  1489,  1489, 
1489 
Fritze  v.  Equitable  Bldg.,  etc. 

Soc,  186  111.  183;   57  N.  E. 

873  583,  1322 

Front    St.,    etc.    Ry.    Co.    v. 

Drake,  84  Fed.  2o7  1568 

Frost  &  Co.,  S.  (1899),  2  Ch. 

207  640,  640 

Frostburg  Mining  Co.  v.  Cum- 
berland, etc.  R.  R.  Co.,  81 

Md.  28;   31  Atl.  698 
Frye  v.  Tucker,  24  111.  180 
Fuches  V.  Hamilton,  etc.  Pub. 

Co.,  lOOnt.  497  529,1190 

Fudickar  v.   East   Riverside, 

etc.  Di.st.,   109  Cal.  29;   41 

Pac.  1024 
Fugure  v.  Mutual  Society,  46 

Vt.  362 
Fulsram  v.  Macon,  etc.  R.  R. 

Co.,  44  Ga.  597         154.  198,  428 
Fuller     V.     Alexander     Hol- 
lander &  Co..  01  N.  J.  Eq. 

648:    47  Atl.  646:    88  Am. 

St.  Rep.  456        890,  89 1 ,  898,  905, 

907 
V.  Rowe,  57  N.  Y.  23  252 


107 
1378 


1298 
586 


Ixxxiii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Fuller  V.  Venable,    118   Fed. 

543 ;  55  C.  C.  A.  309  1664,  1665 
V.  White  Feather  Re- 
ward (1906),  1  Ch.  S23  72 
Fullerton  v.  Fordvce,  121  Mo. 

1;    25  S.  W.  587;    42  Am. 

St.  Rep.  516  1617 

Funsten  v.   Funsten  Co.,   67 

Mo.  App.  559  1300,  1320 

Furber  v.  National  Metal  Co., 

103  N.  Y.  Supp.  490  808 

Furbush,  etc.  Co.,  M.  A.,  v. 

Liberty   Woolen   Mills,   81 

Fed.  425  1473 

Furdoniee's  Case,   3   Ch.    D. 

264  623 

Furness    v.    Catherham    Ry. 

Co.,  27  Beav.  358  1546 

Furness's    Estate,    12    Phila. 

(Pa.)  130  1446 

G 

Gabert  v.  Olcott  (Tex.),  22  S. 

W.  Rep.  286  1608 

Gade  v.  Forest  Glen  Brick 
Co.,  165  111.  367;  46  N.  E. 
286  131,  534 

Gaehle's   Piano   Mfg.    Co.    v. 

Berg,  45  Md.  113  192 

Gaff  V.  Flesher,  33  Oh.  St.  107 

244 
Gaffney  v.  Colvill,  6  Hill  (N. 

Y.)  567         1128,  1268,  1268,  1286, 
1286,  1287,  1287,  1359,  1360 
Gage  V.  Fisher,  5  N.  Dak.  297; 
65  N.  W.  809;  31  L.  R.  A. 
557  1029,  1030 

V. Pontiac,  etc.  R. R.  Co., 

105  Mich.  335;    63  N.  W. 

318  1633 

• V.  Riverside  Trust  Co., 

156  Fed.  1002  970,  975 

Gager  v.  Paul,  111  Wise.  638; 

87  N.  W.  875  _    _      .      1127 

Gaines  v.  Bank  of  Mississippi, 

12  Ark.  769  ,  233 

■ V.  Supreme  Council,  140 

Fed.  978  .  586 

Gaither     v.     Bauernschmidt 

(Md.),  69  Atl.  425  1286,  1349 

Galbraith  v.  People's  Bldg.  & 
Loan  Ass'n,  43  N.  J.  Law 
389  751 

V.  Shasta  Iron  Co.,  143 

Cal.  94;    76  Pac.  901       231,  1221 
Galena,  etc.  R.  R.  Co.  v.  Bar- 
rett, 95  111.  467  1415 

V.  Menzies,  26  111.  121         1515, 

1551 


Gallery  v.  Nat.  Exchange 
Bank,  41  Mich.  169;  32 
Am.  Rep.  149  1296 

Galveston  City  Co.  v.  Sibley, 

56  Tex.  269  430 

Galveston  Hotel  Co.  v.  Bol- 
ton, 46  Tex.  633  607 
Galveston  R.  R.  Co.  v.  Cow- 
drey,  11  Wall.  459          1208,  1515, 
1534,  1550,  1589,  1590,  1592, 
1625 
Galvanized  Iron  Co.  v.  Wes- 

toby,  8  Ex.  17  608 

Gamble  v.  Queens  County 
Water  Co.,  123  N.  Y.  91; 
25N.  E.  201;9L.R.A.527 

1079,  1080,  1299, 
1312,  1400,  1404 
Gamewell,  etc.  Co.  v.  Fire  & 
Police,   etc.   Co.,    116   Ky. 
759;   76S.  W.  862  876 

Gansey  v.  Orr,  173  Mo.  532; 

73  S.  W.  477  425 

Garcin   v.   Trenton   Rubber 
Mfg.  Co.    (N.   J.),   60  Atl. 
1098  895,  904 

Garden  City  Sand  Co.  v. 
American,  etc.  Crematory 
Co.,  205  111.  42;  68  N.  E. 
724  648 

Garden  Gully  Mining  Co.  v. 

McLister,  1  A.  C.  39  658,  665, 

1069,  1163,  1226,  1226,  1231 
Gardner  v.  Butler,  30  N.  J. 

Eq.  702  1247,  1295,  1316 

V.  Canadian  Mfg.  Co.,  31 

Ont.  488  1310 

V.  Hope  Ins.  Co.,  9  R.  I. 

194;    11  Am.  Rep.  238  651 

V.  London,  etc.  Ry.  Co., 

2  Ch.  201  1605,  1676,  1677 

Gardner  Sav.  Bank  v.  Taber- 
Prang  Art  Co.,  189  Mass. 
363;   75  N.  E.  705  459 

Garey  v.  St.  Joe  Mining  Co. 

(Utah),  91  Pac.  369        33,  34,  101 
Garling  v.  Baechtel,  41  Md. 

305  609 

Garmany  v.  Lawton,  124  Ga. 
876;  53  S.  E.  669;  110 
Am.  St.  Rep.  207  917,  992, 

1073,  1192 
Garmire  v.  Am.  Mining  Co.,  93 

III.  App.  331  1170,1250 

Garnett  v.  Richardson,  35  Ark. 

144  123,  126,  251,  274 

Garretson  v.  Equitable  Mut. 
etc.  Ass'n,  93  Iowa  402; 
61  N.  W.  952  331,  1214 


Ixxxiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Garretson  v.  Pacific  Crude  ( )il 

Co.,  146  Cal.  184;    79  Pac. 

838  330 

Garrett     v.     Belmont     Land 

Co.,  94  Tenn.  459;    29  S. 

W.  726  392 
V.  Burlinp:ton  Plow  Co., 

70    Iowa   697;     29   N.    W. 

395;  59  Am.  Rep.  461  109 
V.  Dillsburg,  etc.  R.  R. 

Co.,  78  Pa.  St.  465  202 
V.  Kan.sas  Citv  Coal  Min. 

Co.,  113  Mo.  330;  20  S.  W. 

965;  35  Am.  St.  Rep.  713  199, 
339,632 

V.  May,  19  Md.  177  1677 

Garrison  Canninp;  Co.  v.  Stan- 
lev  (Iowa),  110  N.  W.  171  87, 
857,  1329 
Gartside  v.  Silkstone,  etc.  Co., 

21  Ch.  D.  762  401,  401,  1410, 

1530,  1532 
Gartside  Coal  Co.  v.  Maxwell, 

22  Fed.  197  245 
Garwood     v.     Ede,      1     Ex. 

264  341 

Gary  v.  York  Mining  Co.,  9 

Utah  464  :   35  Pac.  494  652 

Gashwiler  v.  Willis,  33  Cal.  1 1 ; 

91   Am.  Dec.  607  706,  993, 

1193,  1211 
Gaskell  v.  Chambers  (No.  3), 

26  Beav.  360  1320 

Gasquet     v.     Crescent     City 

Brewing  Co.,  49  Fed.  496  649 

Gastonia  Cotton  Mfg.  Co.  v. 

W.  L.  Wells  Co.,   128  Fed. 

369;  63C.  C.  A.  HI  249 

Gates  V.   Boston,  etc.  R.  R. 

Co.,  53  Conn.  333;    5  Atl. 

695  1468,  1671 

Catling  Gun  Co.,  Re,  43  Ch. 

D.  628  534,  534 

Gaty  V.  HoUiday,  8  Mo.  App. 

118  806,806 

Gause    v.    Commonwealth 

Trust  Co.,  106  N.  Y.  Supp. 

288  78,  346,  854 

Gauthier,  etc.  Co.  v.  Ham,  3 

Colo.   App.    559;     34   Pac. 

484  230 

Gavin  v.   Pacific   Coast,   etc. 

Union  (Cal.).  84  Pac.  270  905 
Gay  V.  Kohlsaat,  223  111.  260; 

79  N.  E.  77  1359 

G.  E.  B.,  Re  (1903),  2   K.   B. 

340  612,  613 

Geisse  v.  Taylor  (1905),  2  K. 

B.  658  1546 


Gellerman  v.  Atlas  Foundry, 

etc.   Co.    (Wa.sh.),  87  Pac. 

1059  433,  584,  918 

Gelpcke    v.    Blake,    19    Iowa 

263  525 

Gemmell  v.  Davis,  75  Md.  546; 

23  Atl.   1032;    32  Am.  St. 

Rep.  412  768,  773,  806,  806 

811,  1124,  1124,  1134 
General  Auction,  etc.   Co.   v. 

Smith  (1891).  3  Ch.  432  1317 

General    Electric    Co.    v.    La 

Grande,  etc.  Co.,  79  Fed.  25     1586 

V.  La  Grande,  etc.  Co., 

87  Fed.  590;    31   C.  C.  A. 

118  1586 

i'.   West  Ashville   Imp. 

Co..  73  Fed.  386       961,  984 
General  Exchange  Bank,  6 

Ch.  818  773 

V.  Horner,  9  Eq.  480  1320, 

1333 
General  Provident  Ass.   Co., 

Re,  14  Eq.  507  1364 

General  South  American  Co., 

2  Ch.  D.  337  1393,  1396 

Geneva   Mineral   Springs  Co. 

V.   Steele,  111  N.  Y.  App. 

Div.  706;    97  N.  Y.  Supp. 

996  922 

Genoa  v.  Woodruff,  92  U.  S. 

502  1449,  1460 

Gent   V.   Manufacturers,   etc. 

Ins.  Co..  107  111.  652  278,  280 

Gentel  v.  Raps  (1902),  1  K.  B. 

160  564 

George  v.  Central  R.  R..  etc. 

Co.,  101  Ala.  607;  14  So. 

752    942. 960. 1026. 1063, 1082 
V.  Nevada  Central  R.  R. 

Co.,    22   Nevada   228;     38 

Pac.  441  822 

George    E.    Llovd    &    Co.    v. 

Matthews,  223  111.  477;   79 

N.  E.  172;  7L.  R.  A.  n.  s. 

376  1373 

George   N.    Fletcher  ct   Sons 

Co.  V.  Alpena  Circuit  .Iiulge, 

136  Mich.  511;    99  X.  W. 

748  869.  951,  1401 

George  Newman  &  Co.  (1S95\ 

1  Ch.  674  83.  1069.  1283,  1321 

George     Routledge    &    Sons 

(1904),  2  Ch.  474  141S.  1473 

George  Wliitechurch.  Ltd..  r. 

Cavanagh  (1902).  A  C.  117 

649.  703.  743.  744 
George's  Creek  Co.  v.  Detmol.l 

1  Md.  Ch.  371  393,  394 


Ixxxv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Georgetown     College,     Pres., 

etc.  of,  V.  Browne,  34  Md. 

450  55 

Georgetown    Water    Co.     v. 

Central,   etc.   Co.,    17   Ky. 

Law  Rep.  1270;    34  S.  W. 

435;    35  S.  W.  636  1221 
V.  Fidelity  Trust,  etc.  Co. , 

117Ky.  325;  78S.  W.  113     1405, 
1424,  1517 
Georgia    Co.    v.    Castleberry, 

43  Ga.  187  298,  298 

Georgia  Co-op.,  etc.  Ass'n  v. 

Borchardt,  123  Ga.  181;  51 

S.  E.  429  383 

Georgia    Ice   Co.    v.   Meakin, 

70  Ga.  637  279 

Georgia  Southern,  etc.  R.  R. 

Co.    V.    Mercantile    Trust, 

etc.  Co.,  94  Ga.  306;   21  S. 

E.  701;    47  Am.  St.   Rep. 

153;  32L.  R.  A.208         244,246, 
249, 1401,  1503 
Georgia,  etc.  Ry.  Co.  v.  Bar- 
ton, 101  Ga.  466;   28  S.  E. 

842  1503,  1515 

German        Aged        People's 

Home    V.    Hammerbacker, 

64Md.  595;   3  Atl.  678;   54 

Am.  Rep.  782  853 

German  Bank  v.  Stumpf,   6 

Mo.  App.  17  235 

German  Date  Coffee  Co.,  20 

Ch.  D.  169  98 

German  Ins.  Co.  v.  Strahl,  13 

Phila.  (Pa.)  512  222 

German  Land  Ass'n  v.  Schol- 

ler,  10  Minn.  331  254,  255 

German    Nat.    Bank   v.    Ky. 

Trust  Co.,  19  Ky.  Law  Rep. 

361;  40S.  W.  458  772 

German  Savings  Bank  v.  Des 

Moines     Nat.     Bank,     122 

Iowa  737;   98  N.  W.  606         1328 
V.  Renshaw,  78  Md.  475; 

28  Atl.  281  701,  723,  808,  808 
V.  Wulfekuhler,  19  Kans. 

60  517,  526 

German  Security  Bank  v. 
Jefferson,  10  Bush  (Ky.) 
326  769 

German  Union,  etc.  Ass'n  v. 

Sendmeyer,  50  Pa.  St.  67  752 

Germania  Iron,  etc.  Co.  v. 
King,  94  Wise.  439;  69 
N.  W.  181;  36L.  R.  A.  51 

Germania  Sangerbund,  12  Pa. 
Co.  Ct.  Rep.  89 


Germantown  Passenger  Ry. 
Co.  V.  Fitler,  60  Pa.  St. 
124;    100  Am.  Dec.  546  658, 

658,  662 
Germantown,  etc.  Ins.  Co.  v. 
Dhein.   43   Wise.   420;    28 
Am.  Rep.  549  868 

Germer  v.  Triple  State  Oil 
Co.  (W.  Va.),  54  S.  E. 
509  1007 

Germicide  Co.,  65  Hun  (N.  Y.) 

606;  20  N.  Y.  Supp.  495         1029 
Gernsheim   v.    Central    Trust 
Co.,  61  Hun  (N.   Y.)  625; 
16  N.  Y.  Supp.  127;   40  N. 
Y.  St.  967  1662,  1662,  1662. 

1663 
Gerry  v.  Bismark   Bank,    19 

Mont.  191;   47  Pac.  810  1316 

Getchell        v.         Dusenbury 

(Mich.),  108  N.  W.  723  183 

Getty  V.  Devlin,  54  N.  Y.  403        274, 
310,  336 
Gettysburg     Nat.     Bank     v. 
Brown,  95  Md.  367 ;  52  Atl. 
975  490,  490,  548,  609 

Geyer  v.  Western  Ins.  Co.,  3 

Pittsburg  (Pa.)  41  571,  770, 

773 
Geyser-Marion  Co.  v.   Stark, 
106  Fed.  558;    45  C.  C.  A. 
467  797,  797,  798 

Gibbes  v.  G.  &  C.  R.  R.  Co., 

13  S.  Car.  228  1457,  1669 

Gibbons  v.  Anderson,  80  Fed. 

345  1279 

V.  Mahon,  136  U.  S.  549; 

10  Sup.  Ct.  1057  1144,  1151 

Gibbs  V.  Long  Island  Bank, 
83  Hun  (N.  Y.)  92;  31 
N.  Y.  Supp.  406         111,  572,  574 

775 
Gibbs  &  West's  Case,  10  Eq. 

,312  66,  1245 

Gibert  v.  Washington  City, 
etc.  R.  R.  Co.,  33  Gratt. 
(Va.)  586  1449,  1460,  1508, 

1586,  1607,  1629,  1670 
Gibson  v.   Barton,   L.   R.    10 

Q.  B.329       1213,1214,1227,1233 

V.   Goldthwaite,   7  Ala. 

281 ;  42  Am.  Dec.  592       408,  1371 

V.  Lenhardt,  101  Pa.  St. 

522  1423 

Giesen  v.  London,  etc.  Mge. 
603,  Co.,  102  Fed.  584;  42 
605        C.  C.  A.  515         576,  616,  697,  697 

Gifford    V.     Thompson,     115 
104        Mass.  478  1153 

Ixxxvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Gilbert  v.   Erie  Rldg.  Ass'n, 

184  Pa.  St.   554;    39  Atl. 

291  723,  808 
V.  Finch,  173  N.  Y.  455; 

66  N.  E.  133;    93  Am.  St. 

Rep.  G23;   61  L.  R.  A.  S07       1265 

V.  Hole,  2  S.  Dak.  164; 

W.  1  848 

Nantucket   Bank,   5 
97  381 

Seatco  Mfg.  Co.,  98 
208  84 

Gilbert'.s  Case,  5  Ch.  559  744 

Gilbough     V.     Norfolk,     etc. 

R.  R.  Co.,  1  Hughes  410        1423, 
1436,  1461 
Gilchrist  V.  Collopy,  26  Ky. 

Law  Rep.  1003;    82  S.  W. 

1018  1010,  1011.  1163,  1250 
V.  Helena,  etc.  R.  R.  Co., 

47  Fed.  593 
Gildersleeve   v.    Wolf    Islan 

Ry.,  etc.  Co.,  3  Ch.  Chamber 

Rep.  (Out.)  358- 
Giles  V.  Hutt,  3  Ex.  18 
V.  Stanton,  86  Tex.  620; 

26  S.  W.  615 
Gilfillan  v.  Union  Canal  Co., 

109U.S.  401;3Sup.Ct.304 
Gilkey  v.  Paine,  80  Me.  319; 

14  Atl.  205  1143,  1145 

V.   Town  of  How,    105 

Wise.  41;  81N.  W.  120  241 

Gilkinson  v.  Third  Ave.  R.  R. 

Co.,47N.  Y.  App.  Div.  472; 

63  N.  Y.  Supp.  792  712,  751 
Gill  V.  Balis,  72  Mo.  424  525 
V.  New  York  Cab  Co.,  48 

Hun  (N.  Y.)  524;    1  N.  Y. 

Supp. 202 
Gill's  Adm'x  v.  Ky.,  etc.  Min 

ing  Co.,  7  Busli  (Ky.)  635 
Gillespie  v.  City  of  Glascow 

Bank,  4  A.  C.  632  795,  813 

Gillett  V.   Dodge  (Oreg.),  89 

Pac.  741  333 
V.  Missouri  Vallev  R.  R. 

Co.,  55  Mo.  315;    17  Am. 

Rep.  653  870,  870 

V.   Whiting,    120  N.   Y. 

402;    24    N.  E.  790:    s.  c. 
141N.  Y.  71:  35  N.  E 
38  Am.  St.  Rep.  762 

Gillette   v.    Aurora    Rv. 
228  111.261;  81  N.  E. 


1397 


393 
663 

1517 

1671 


1248 
147 


939 ; 

,    Co.. 
1005 


808 


Gillig,  Mott  &  Co.  1 
pendent  Gold,  etc. 
Nevada  247 


243, 
244,  250 
.    Inde- 
Co.,    1 

24,  25 


Gillisv.  Bailey,  21  N.H.  149 


1213, 
1214 


Gilman   v.    Des   Moines,   etc. 
R.  R.  Co.,  41  Iowa  22 

V.  Gross,  97  Wi.sc.  224; 

72  N.  \y.  885 
V.  Illinois,  etc.  Tel.  Co., 

91  U.  S.  603 
V.  Sheboygan,  etc.  R.  R. 

Co.,  37  Wise.  317 
Gilman,    etc.    R.    R.    Co.    v. 

Kelly,  77  111.  426  1.331, 
Gilman's  Case,  31  Ch.  D.  420 
Gilmer  v.  Morris,  43  Fed.  456 
V.  Morris,  80  Ala.  78;  60 

Am.  Rep.  85 
Gilpin  V.  Howell,  5  Pa.  St.  41 ; 

45  Am.  Dec.  720 
Ginz  V.  Stumph,  73  Ind.  209 
Gipson  V.  Morris,  36  Tex.  Civ. 

App.   593;    83  S.  W.  226; 

73  Tex.  85  1034,  1057 
Girard  Ins.  Co.  v.  Cooper,  162 

U.  S.  529;    16Sup.  Ct.  879 
Girard  Life   Ins.  Co.  v.   An- 
nuity, etc.  Iron  Co.,  20  Pa. 
Sup.  Ct.  304 
Girard   Life    Ins.,  etc.  Co.  v. 
Loving  (Kans.),  81  Pac.  200 
Girard  Trust  Co.  v.   Cooper, 

51  Fed.  332;  2  C.  C.  A.  245 

V.     McKinley-Lanning, 

etc.  Trust  Co.,  143  Fed.  355 

V.  Mellor,    156   Pa.  St. 

579;  27  Atl.  662 

V.  Summit  Branch  Coal 

Co.,  22  Pa.  Sup.  Ct.  495 
Gitzhoffen  v.  Sisters  of  Holy 

Cross        Hospital        Ass'n 

(Utah),  88  Pac.  691 
Giveen  v.  Gans,  91  N.  Y.  App. 

Div.  37;    86  N.   Y.   Supp. 

450;     181   N.   Y.   538;    73 

N.  E.  1124  1310,  1313 

Given    v.    Times-Republican 

Printing  Co.,  114  Fed.  92; 

52  C.  C.  A.  40  875 
Glastlir  Copper  Mines  (1906), 

1  Ch.  365  1614,  1615,  1655, 

1656 
Glass  ?'.  Basin,  etc.  Mining  Co., 
77  Pac.  302:   31  Mont.  21 

V.      Pioneer      Rubber 

Works,  31  Vict.  L.  R.  754 

1033.  1330 

V.  Tipton,  etc.  Co.,  32 


1492 

160 

1516 

1632 

1335 
206 
811 

811 

418 

812 


1644 


1490 
921 

1612 

1492 
804 

1416 


22,39 


1163 
34. 


Ind.  376 
Gleadow  v.  Hull  Glass  Co. 
L.  J.  Ch.  44 


19 


381 


1244 


Ixxxvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Gleason   v.    Canterburj-,    etc. 

Ins.  Co.,  73  X.  H.  583;    64 

Atl.  187 
Gledhill's  Case,  3  DeG.  F.  & 

J.  713 
Glen  V.  Breard,  35  La.  Ann. 

875 
Glen  Iron  Works,  17  Fed.  324; 

20  Fed.  G74 
Glen  Salt  Co.,  17  N.  Y.  App. 

Div.  234;    45  N.  Y.  Supp. 

568  1019,  1050,  1053 

Glengarj'    Consolidated    Min- 
ing   Co.    V.    Boehmer,    28 

Colo.  1 ;    62  Pac.  839 


1224 
169 

47 
600 


1082. 

1083 

771 


Glenn  v.  Abell,  39  Fed.  10 

V.  Bergman,  20  Mo.  App. 

343  238 

V.  Busey,  5Mack.(  D.  C.) 

233  208 

V.  Clabaugh,  65  Md.  65; 

3  Atl.  902  624 

V.  Hatchett,  91  Ala.  316; 

8  So.  656  517,  524 

V.  Howard,  81  Ga.  383; 

8  S.  E.  636 ;  12  Am.  St.  Rep. 

318  614 

V.  Howard,  65  Md.  40;  3 

Atl.  895  623,   623,   624,   793. 

1514 

V.  Liggett,  47  Fed.  472         915, 

916,  920,  921 

V.  Liggett,  135  U.  S.  533; 

10  Sup.  Ct.  867 

V.  Macon,  32  Fed.  7 

V.  Marbury,   145  U.   S. 

499;    12  Sup.  Ct.  914 

i;.  Porter,  73  Fed.  275 ; 

19  C.  C.  A.  503 

V.  Springs,  26  Fed.  494 

V.  Williams,  60  Md.  93 

Glen  wood  Coal  Co.,  6  Pa.  Co. 

Ct.  Rep.  575 
Glenwood  Mfg.  Co.  v.  Syme, 
109  Wise.  355;    85  N.  W. 
432  1342,  1342 

Globe  Blocks  Gold  Mining  Co., 

12  Times  L.  R.  92  362,  364 

Globe  Mutual  Benefit  Ass'n, 
Re,  135N.  Y.  280;  32  N.  E. 
122;  17L.  R.  A.  547 
Globe  Publishing  Co.  v.  State 
Bank,  41  Nebr.  175;  59 
N.  W.  683;  27  L.  R.  A. 
854 
Gloninger  v.  Pittsburgh,  etc. 
R.  R.  Co.,  139  Pa.  St.  13; 
21  Atl.  211 


614 
614 

614 

617 
921 
614 

95 


120 


252 


64 


Glossop  V.  Glossop  (1907),  2 

Cli.  370       1182,1182,1182,1367, 

1367 
Glover  v.  Giles,  18  Ch.  D.  173       222 

V.   Manila,   etc.   Milling 

Co.   (S.  Dak.),   104  N.  W. 
261  944,  959 

Gluckstein   v.  Barnes  (1900), 

A.  C.  240  315,  324,  328,  329 

Glucose  Sugar  Refining  Co.  v. 
American  Glucose  Sugar 
Refining  Co.  (N.  J.),  56  Atl. 
861  369,  371,  372 

Glymont,  etc.  Co.  v.  Toler,  80 

Md.  278;  30  Atl.  651       141,    147, 

278 
Godbold  V.  Branch  Bank,  11 
Ala.  191;   46  Am.  Dec.  211 

1264,  1286 
Goddard  v.  Chicago,  etc.  Ry. 
Co.,  202  111.  362;    66  N.  E. 
1066  25,  25 

V.  Merchants'  Exchange, 

9  Mo.   App.  290;    78  Mo. 
609 
Godfrey    v.    McConnell,    151 
Fed.  783 

V.  Ohio,  etc.  Ry.  Co.,  116 

Ind.  30;    18  N.  E.  61 
Goetz  V.  Knie,  103  Wi.sc.  366; 

79  N.  W.  401 
Gogebic    Investment    Co.    v. 
Iron    Chief    Min.    Co.,    78 
Wise.  427;    47  N.  W.  726; 
23  Am.  St.  Rep.  417 
Gold  V.  Paynter,  101  Va.  714; 

44  S.  E.  Rep.  920 
Gold  Bluff  Mining,  etc.  Corp. 
V.  Whitlock,  75  Conn.  669 ; 
55  Atl.  175  1006,  1062,  1062, 

1164,  1181,  1183 
GoldCo.,  11  Ch.  D.  701  627 

Gold  Mining  Co.  v.  National 

Bank,  96  U.   S.  640         866,  868 
Gold  Reefs  of  Western  Aus- 
tralia V.  Dawson  (1897),  1 
Ch.  115 
Golden  Age,  etc.  Co.  v.  Lang- 
ridge  (Colo.),  88  Pac.  1070 
Goldshear  v.  Barron,  42  N.  Y. 
Misc.  198;     85  N.  Y.  Supp. 
395 
Goldsmith   v.   Swift.  25   Hun 

(N.  Y.)  201  1150,  1151 

Good  V.  Ash,  3  Keb.  307  401 

Good  Land  Co.  v.  Cole  (Wise), 

HON.  W.  895  117,120 

Goodale  Lumber  Co.  v.  Shaw, 

41  Oreg.  544;    69  Pac.  546       123 


565 
1271 
1609 
1187 


628 
601 


933 
1379 


1330 


Ixxxviii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Gooday  v.  Colchester,  etc.  Ry. 

Co.,   17  Beav.    132  281,  283 

Goodell    V.    Verdugo    Cafton 

Water  Co.,  138  Cal.  308 ;  71 

Pac.  354  1296,  1330 

Gooderham  v.  Toronto,  etc. 

Ry.  Co.,  8  Ont.  App.  Rep. 

G85  .  1574 

Goodin  v.  Cincinnati,  etc.  Co., 

18  0h.  St.  169    1305,1311,1332 

1333 
Goodman     v.     Am.     Writing 

Paper  Co.  (N.  J.),  66  Atl. 

607  627.  1096,  1096 
V.  Cincinnati,  etc.  R.  R. 

Co.,  2  Disn.  (Oh.)  176  1623 

Goodwin    v.    Hardy,    57    Me. 

143;    99  Am.  Dec.  758 


Gorman-Wright  Co.  v.  Wright, 
134  Fed.  363;    67  C.  C.  A 
345  422,  963 

Gorrissen's  Case,  8  Ch.  507       171, 
347,  347 

Gosden  v.  Dotterill,  1  Myl.  & 

K.  56  421 

Gosling  V.  Gaskell  (1897),  A.  C. 

575  1580 

Gottschalk  v.  Stover,  85  Mo. 

App.  566  619 

Goultiurn  Valley  Butter,  etc. 
Co.  V.  Bank  of  New  South 
Wales,  26  Vict.  L.  R.  351 


873, 

874 


340 


786 


371 


1107, 
1131 

V.  McGehee.  15  Ala.  232       612 

V.  Ottawa,  etc.  Ry.  Co., 

13  Up.  Can.  C.  P.  254       747,  751 

V.  Robarts,  1  A.  C.  476; 

L.  R.  10  Ex.  337  1423 

V.  U.  S.  Annuity,  etc.  Co., 

24  Conn.  591  912,  918,  923 

V.  Wilbur,  104  III.  App. 

45 
Goodwin  Gas  Stove,  etc.  Co.'s 
Appeal,  117Pa.  St.  514;    12 
Atl.  736;    2  Am.  St.  Rep. 
696 
Goodyear's      India      Rubber 
Glove  Mfg.  Co.  V.  Goodyear 
Rubber  Co.,  128  U.  S.  598; 
9  Sup.  Ct.  166 
Gorder  v.   Plattsmouth,  etc. 
Co.,  36  Nebr.  548 ;  54  N.  W. 
830  407,  1317,  1318 

Gordon  v.  Newman,  62  Fed. 

686;    10  C.  C.  A.  587  1653 

V.  Parker,  10  La.  56  782 

V.  Preston,  1  Watts  (Pa.) 

385;  26  Am.  Dec.  75       409,  1080, 
1210,  1217,  1218 

V.  Sea  Fire  Life  Ass.  Soc, 

1  H.  &  N.  599  109,  831,  862, 

1409 

V.  Tweedy,  71  Ala.  202         923 

Gordon's  Exrs.  v.  Richmond, 

etc.  R.  R.  Co.,  78  Va.  501       443, 
451,  451,  455,  462,  463 
Gores  v.  Day,  99  Wise.  276;  74 

N.  W.  787  961,  1357 

V.  Elliott,  108  Wise.  465; 

84  N.  W.  865  1357 

V.  Field,  109  Wise.  408 ; 

84  N.  W.  867;    85  N.  W. 

411  1288 


Gould  V.  Fuller,  79  Minn.  414; 

82  N.  W.  673  22 

V.  Head,  41  Fed.  240       751,  752 

V.  Olympic  Min.  Co.,  49 

N.  Y.  Misc.  612;   96  N.  Y. 

Supp.  455  908,  908 
V.  Oneonta,  71  N.  Y.  298       428, 


—  V.  W.  J.  Gould  &  Co.,  134 
Mich.  515;   97  N.  W.  576 


613 

1372, 
1377 


Goulding  v.  Clark,  34  N.  H. 

148 
Gourlie  v.  Chandler,  41  Nova 

Scotia  341 
Governments    Stock    Invest- 
ment Co.  (1891),  1  Ch.  649 

136, 383 

Governments  Stock  Invest- 
ment Co.  (No.  2),  (1892),  1 
Ch.  597  136,  137 

Governments  Stock  Invest- 
ment Co.  V.  Manila  Ry.  Co. 
(1897),  A.  C.  81  1546,  1548 

Gow  V.  Collin,  etc.  Lumber 
Co.,  109  Mich.  45;  66N.  W. 
676 

Gowdy  Gas,  etc.  Co.  v.  Patti- 
son,  29  Ind.  App.  261 ;  64 
N.  E.  485 

Gowen's  Appeal,  10  Wkly.  N. 
Cases  (Pa.)  85 

Gower's  Case,  6  Eq.  77 

Goy  &  Co.  (1900),  2  Ch.  149 

1426,  1429 

Goyer,  etc.  Co.  v.  Wildberger, 

71  Miss.  438;    15  So.  235  716 

Graebner  v.  Po.st.  119  Wise. 
392;  96  N.  W.  783;  100 
Am.  St.  Rep.  890  557,  605 

Grafflin  v.  Robb,  84  Md.  451 : 

.35  .\tl.  971  798,  799 

Grafflin  Co.  v.  Woodside.  87 

Md.  146;    39  Atl.  413       572,  573 


995 
187 
48, 


237 


492 

1011 

665 

1426, 


Ixxxix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


381 


578 


624 
1315 


Grafner  v.  Pittsburg,  etc.  Ry. 

Co..  207  Pa.   St.  217;    56 

Atl.  426  1238,  1319 

Grafton  Grocerj'  Co.  v.  Home 

Brew-ins  Co.  (W.  Va.),  54 

S.  E.  349 
Graftstrom  v.  Frost  Council, 

19   X.    Y.    Misc.    180;     43 

N.  Y.  Supp.  266 
Graham   v.    Birkenhead,   etc. 

Ry.  Co..  2  Mac.  &  G.  146       73,  966 
V.  Boston,  etc.  R.  R.  Co., 

118  U.  S.  161;    6  Sup.  Ct. 

1009  1625, 1637 

V.    Dubuque    Specialty 

etc.     Works     (Iowa),     114 

N.  W.  619  983,  983 

V.  First  Nat.  Bank,  84 

N.  Y.  393 ;  38  Am.  Rep.  528       792 

V.   House-building,  etc. 

Ass'n,     52     S.     W.     1011 
(Tenn.)  580,  582 

V.  Partee,  139  Ala.  310; 

35  So.  1016;    101  Am.  St. 

Rep.  32  407,  408 
?;.  Piatt,  28  Colo.  421;  65 

Pac.  30 
V.  Railroad  Co.,  102  U.  S. 

148 

V.  Van  Diemen's  Land 

Co.,  1  H.  &  N.  541  660,  793, 

1002,  1004 
Gramophone  &  Typewriter  v. 

Stanley  (1906),  2  K  B.  856       878 
Granby  Mining  Co.  v.  Rich- 
ards. 95  Mo.  106;    8  S.  W. 

246 
Grand  Central  Lodge  v.  Gro- 

gan,  44  111.  App.  Ill 
Grand  Lodge  v.  Graham,  96 

Iowa  592;    65  N.  W.  837; 

31  L.  R.  A.  133    371,  372,  374 
V.   Reneau,  75  Mo.  App. 

402  589 

V.  Waddill,  36  Ala.  313    86,  857 

Grand  Rapids,  etc.  R.  R.  Co. 

V.    Sanders,    54    How.    Pr. 

(N.  Y.)  214  _  1461 

Grand  Rapids  Furniture  Co. 

V.  Grand  Hotel,  etc.  Co.,  11 

Wvom.  128;    70  Pac.  838; 

72' Pac.  687  296,   300,  1186 

Grand  Rapids  Safety  Deposit 

Co.  V.  Cincinnati  Safe,  etc. 

Co.,  45  Fed.  Rep.  671         272,319 
319,  1338,  1339 
Grand    River   Bridge   Co.    v. 

Rollins,  13  Colo.  4;  21  Pac. 

897  279,  293 


219 
949 


Grand  River  Colleger.  Robert- 
son, 67  Mo.  App.  329  141 

Grand    Tower    Mfg.    Co.    v. 

Ullman,  89  111.  244  1582 

Grand    Trunk    Ry.    Co.,    88 

Fed.  636     ^  1642 

V.   Central  Vermont  R. 

Co.,  78  Fed.  690  1562 

V.  Central  Vermont  R. 

Co.,  81  Fed.  60  1643 

V.  Central  Vermont  R. 

Co.,  81  Fed.  541  1611 

V.  Central  Vermont  R. 

Co.,  88  Fed.  620  1573 

V.  Central  Vermont  R. 

Co.,  88  Fed.  622^     1584,  1585 

V.   Central  Vermont  R. 

Co.,  90  Fed.  163  1568 

V.  Central  Vermont  R. 

Co.,  91  Fed.  569  1654 

V.  Central  Vermont  R. 

Co.,  103  Fed.  740  1635 

V.  Central  Vermont  R. 

Co.,  105  Fed.  411  1449,  1453, 

1460 
Grand  Valley,  etc.  Co.  v.  Fruita 

Imp.  Co.   (Colo.),  86  Pac. 

324  588,  604,  666,  879 

Granger  v.  Bassett,  89  Mass. 

462  1157 

V.  Grubb,  7  Phila.  (Pa.) 

350  559,  560,  566,  569, 

569,  992,  1005,  1011 
Grangers'  Ins.  Co.  v.  Turner, 

61  Ga.  561  182 

Grangers'  Life,  etc.  Ins.  Co. 

V.  Kamper,  73  Ala.  325  111, 

112,  480,  483 
Granite      Roofing      Co.      v. 

Michael,  54  Md.  65  629 

Grant  v.  East  &  West  R.  R. 

Co.,  54  Fed.  569;  4  C.  C.  A. 

511  645 
V.  Langstaff,  52  III.  App. 

128  948 

—  V.  Mechanics  Bank,  15  S. 
&  R.   (Pa.)    140  774,  775 

—  V.  Norway,  10  C.  B.  665         739 

—  V.  Ross,  100  Ky.  44;  37 
S.  W.  263  1128 

—  V.  Southern  Contract  Co., 
104  Ky.  781;  47  S.  W.  1091 


—    V.     United     Kingdom, 
etc.  Co.,  40  Ch.  D.  135 


1127 

1310, 
1332 

—  V.  Winona,  etc.  Ry.  Co., 
85  Minn.  422 ;  89  N.  W.  60       1 494, 
1639,  1639 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Grape    Creek     Coal     Co.     v. 

Farmers'  L.   &  T.  Co.,  63 

Fed.  891;  12  C.  C.  A.  350  1465 

1466,  1507,  1625,  1625 
Grape     Sugar,     etc.     Co.     v. 

Small,  40  Md.  395  278,  281 

Graton  &  Knight  Mfg.  Co.  v. 

Redelsheimer,     28     Wash. 

370;    68  Pac.  879  844 

Gratz  V.   Redd,   4   B.    Monr. 

(Ky.)  178  1094,  1104,  1105, 

1259 
Graves  v.  Colby,  9  Ad.  &  E.  356  595 
V.  Mono  Lake,  etc.  Co., 

8lCal.  303;  22Pac.  665  1298, 
1313,  1317,  1319 
Gray   v.   Christian    Soc.,    137 

Mass.   329;    50  Am.   Rep. 

310  580,  1003 
V.  Fuller,  17  N.  Y.  App. 

Div.  29;    44  N.  Y.  Supp. 

883  1285,  1286 

V.    Monongahela    Nav. 

Co.,  2  Watts  &S.  (Pa.)  156; 

37  Am.  Dec.  500  381,  386 

V.    Portland    Bank,    3 

Mass.  364;  3  Am.  Dec.  156 

481,  499,  500,  500,  507,  508 
V.  South  &  North  R.  R. 

Co.,  43  So.  859  956,  985,  986 
V.  Stevenson,  25  Vict.  L. 

R.  476 
V.  Stone,  69  L.  T.  282 


659 

771, 
771 


Graydon's  Exrs.  v.  Graydon, 

23  N.  J.  Eq.  229  424 

Graye    v.    Turnpike    Co.,    4 

Rand.  (Vu.)  578  _  229 

Great  Central  Freehold  Mines 

V.    Brandon,    30    Vict.    L. 

R.  97  992,  1192 

Great  Falls,  etc.,  Ins.  Co.  v. 

Harvey,  45  X.  H.  292  563 

Great    Falls,    etc.    R.    R.    v. 

Copp,  38  X.  H.  124  650 

Great   Lu.\embourg  Ry.  Co. 

V.  Magnay,  25  Beav.  586         1316, 

1332 
Great  North  of  England  Ry. 

Co.  V.  Biddulph,  7  M.  &  W. 

243  603 

Great   Northern    Ry.    Co.    v. 

Coal      Co-operative      Soc. 

(1896),  1  Ch.  187  26,  1395 
V.    Kennedy,    4    Exch. 

417  667,  769 

Great     Northern     Salt,     etc. 

Works,  44  Ch.  D.  472  911, 

1213 


Great  North- West  Central 
Ry.  Co.  V.  Charlebois  ( 1899), 
A.  C.  114  829 

Great  Western,  etc.  Mfg.  Co. 
V.  Harris,  128  Fed.  321;  63 
C.  C.  A.  51  1128 

Great  Western  Ry.  Co.  v. 
Birmingham,  etc.  Ry.  Co., 
2  Phill.  597  283,  951 

V.  Rushout,  5  DeG.   & 

Sm.  290  87,  946,  950,  962 

Great    Western    Tel.    Co.    v. 

Burnham,  79  Wise.  47;   47 

N.    W.    373;     24  Am.   St. 

Rep.  698  433,  602 
1'.  Gray,  122  111.  630;  14 

N.  E.  214  614 

V.   Haight,  49  111.  App. 

633  191 
V.  Purdy,  83  Iowa  430; 

50  N.  W.  45;  162  U.  S.  329 

16  Sup.  Ct.  810  614 

Great  Wheal  Polgroth,  49  L. 

T.  20  272,  1363 

Greater  Pittsburg  Real  Es- 
tate Co.  V.  Riley,  210  Pa. 

St.  283 ;  59  Atl.  1068  208 

Greathouse  v.  Martin  (Tex.), 

94  S.  W.  322  1248,  1316, 

1322 
Greeley  v.  Provident  Savings 

Bank,  98  Mo.  458;    US. 

W.  980  1617 

Green    v.    Abietine    Medical 

Co.,  96  Cal.  322;    31   Pac. 

100  428,  627,  653 
V.  Barrett,  1  Simons  45         342 

V.    Bissell    (Conn.),    65 

Atl.  1056  1137,  1146 

V.  Board  of  Trade,  174 

111.  585;    51  N.  E.  599;   49 

L.  R.  A.  365  580,  580 

V.  Coast  Line  R.  R.  Co., 

97  Ga.  15;  24S.  E.  814;  54 
Am.  St.  Rep.  379;  33  L.  R. 
A.  806  1568 

V.  Compton.  41   N.  Y. 

Misc.  21;    83  N.  Y.  Supp. 

588  974 

V.  Felton  (Ind.),  84  N.  E. 

IGG  1080,  1312 

V.  Grigg,  98  N.  Y.  App. 

Div.  445;    90  N.  Y.  Supp. 

565  238 

V.  Hedenberg,    159   111. 

489;  42  N.  E.  851;  50  Am. 

St.  Rep.  178  944,  963 
V.  London  General  Om- 
nibus Co.,  7  C.  B.  N.  s.  290        869 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1032 


Green  v.  Seymour,  3  Sandf .  Ch. 
(N.  Y.)  285 

Green     Mount,     etc.     Co.     v. 

Bulla,  45  Ind.  1  700,  750 

Green's  Case.  18  Eq.  428  1166 

Greenbrier  Industrial  Exposi- 
tion V.  Ocheltree,  44  W.  Va. 
626;  30  S.  E.  78  490 

V.  Rodes.  37  W.  Va.  738; 

17  S.  E.  305  118,   130,  202, 

202,  214 

Greene  v.  Buckley,  120  Fed. 

955  1356 

V.  Dennis,  6  Conn.  292  54, 

54,  230 

V.  Dispeau,  14  R.  I.  575        803, 

811,811 

V.  Hereford    (Ariz.),   95 

Pac.  105  918 

V.  Middlesborough  Town 

&  Lands  Co.  (Ky.),  89 
S.  W.  228;  28  Ky.  Law 
Rep.  303  84,  97,  851 

V.   Sigua   Iron   Co.,   88 

Fed.  203;  31  C.  C.  A.  458        706, 

706 

V.  Smith,  17  R.   L  28; 

19  Atl.  1081  503,  1152 

Greenfield    Savings    Bank   v. 

Simons,  133  Mass.  415  1272 

Greenleaf    v.    Ludington,    15 

Wise.  558;  82  Am.  Dec.  698 

732,  732,  756 
Greenough   v.  Alabama,  etc 

R.  R.  Co.,  64  Fed.  22 


1170, 
1170 

1011 


Greenpoint    Co.    v.    Whitin, 

69  N.  Y.  328 
Greensboro,     etc.     Turnpike 

Co.   V.   Stratton,    120   Ind. 

294;   22  N.  E.  247  1244,  1246 

Greenville  Compress,  etc.  Co. 

V.  Planters   Compress,  etc. 

Co.,  70  Miss.  669;     13  So. 

879;  35  Am.  St.  Rep.  681        852, 

854 
Greenville  Gas  Co.  v.  Reis,  54 

Oh.  St.  549;  44  N.  E.  271       1276, 

1277 
Greenwell  v.  Porter  (1902),  1 

Ch.  530  1029,  1029,  1348 

Greenwood  v.  Algeciras  Ry. 

Co.  (1894),  2  Ch.  205  1645, 

1649 
V.  Freight  Co.,  105  U.  S. 

13  939,  945 

Greenwood  Ice  Co.  v.  Georgia 

Home    Ins.    Co.,    72    Miss. 

46;    17  So.  83  1306 


Greer  v.  Chartiers  Ry.  Co.,  96 

Pa.  St.  391;    42  Am.  Rep. 

548  164,  166,  170 

Gregg  V.  Granby  Mining,  etc. 

Co.  (Mo.),  65  S.  W.  312  6 
V.  Mercantile  Trust  Co., 

109  Fed.  220;    48  C.  C.  A. 

318;   124  Fed.  721;  59  C.  C. 

A.  637;    197  U.  S.  183;   25 

Sup.  Ct.  415  1559,  1562,  1567 

1567,  1567,  1568 

V.    Metropolitan   Trust 

Co.,  197  U.S.  183;  25  Sup. 
Ct.  415;  109  Fed.  220;  48 
CCA.  318;   124  Fed.  721; 

59  C  C  A.  637  1564 

Gregg's  Case,  15  W.  R.  82  168 

Gregory  v.  Patchett,  33  Beav. 

595  966,  975 

Gresham  v.  Island  City  Sav- 
ings Bank,  2  Tex.  Civ.  App. 

52;  21  S.  W.  556  650,  749, 

751 
Greymouth  Point,   etc.   Coal 

Co.  (1904),  1  Ch.  32  1203 

Gridley  v.  Lafayette,  etc.  Ry. 

Co.,  71  111.  200  1237 

Grier  v.   Hazard,   Hazard  & 

Co.,  13  N.  Y.  Supp.  583  293 

Griffin  v.  Clinton  Line,  etc.  R. 

R.  Co.,  11  Fed.  Cas.  27  118, 
233,  233,  238,  242 
V.  Inman,  Swann  &  Co., 

57  Ga.  370  1306 
V.  Knoblock  (Colo.),  77 

Pac.  370  713 

V.    Macon    County,   36 

Fed.  885;    2  L.  R.  A.  353       1459 
Griffing  v.  Griffing  Iron  Co., 
61  N.  J.  Eq.  269;    48  Atl. 
910  1113 

V.  Griffing  Iron  Co.,  96 

Fed.  577  957 

Griffing  Bros.  Co.  v.  Winfield 

(Fla.),  43  So.  687  392,  404, 

406 
Griffing  Iron  Co.,  Re,  63  N.  J. 

Law  Rep.  168;  41  Atl.  931; 

63  N.  J.  Law  Rep.  357 ;    46 

Atl.  1097  560,  992,  1002, 

1006,  1164,  1183,  1183,  1192 
Griffith  V.  Blackwater  Boom, 

etc.  Co.,  48  S.  E.  442;    55 

W.  Va.'  604;    69  L.  R.  A. 

124;    46  W.  Va.  56;    33  S. 

E.  125        1300,  1310,  1316 

V.  Paget,  6  Ch.  D.  511    469 

Griffiths  Cycle  Corp.,  85  L.  T. 

675;  85L.  T.  776  1642 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Grimbly  v.  Harrold,  125  Cal. 

24;    57  Pac.  558;    73  ^Vm. 

St.  Rep.  I'J  949 

Grim  wade  v.  Mutual  Society, 

52  L.  T.  409  1282 

Grissell's  Case,   1  Ch.  528  612, 

612,  613 
Groel  V.  United  Electric  Co., 

132  Fed.  252  975 

V.    United   Electric   Co. 

(N.  J.),  61  Atl.  1061  939 

Groeltz    v.    Armstrong    Real 

Estate  Co.,  115  Iowa  602; 

89  N.  W.  21  34 

Groh's  Sons,  M.,  v.  Groh,  80 

N.  Y.  App.  Div.  85;   SON. 

Y.  Supp.  438  1069 

Groton  Bridge,  etc.  Co.  v.  Am. 

Bridge  Co.,  151  Fed.  871  866 

Grover  v.  Cavanaugh  (Ind.), 

82  N.  E.  104  163,  184,  448 

Grubb  V.  Mahoning  Naviga- 
tion Co.,  14  Pa.  St.  302  229 
Grubbs-Wiley    Grocery    Co., 

96  Fed.  183  1239 

Gruber   v.    Washington,    etc. 

R.  R.  Co.,  92  N.  Car.  1  870 

Grundy  v.  Pine  Hill  Coal  Co., 

10  Ky.  Law  Rep.  833;  9  S. 

W.  Rep.  414  1238 

Grymes  v.  Hone,  49  N.  Y.  17; 

10  Am.  Rep.  313  712 

Guarantee  Co.  v.  East  Rome 

To\\Ti  Co.,  96  Ga.  511;    23 

S.  E.  503;  51  Am.  St.  Rep. 

150  797,  806,  806,  811,  1131 

Guarantee  Trust,  etc.  Co.  v. 

Philadelphia,   etc.   R.   Co., 

52  N.  Y.  Supp.  116;   31  N. 

Y.  App.  Div.  511  1561,1571 

Guaranty  Trust  Co.  v.  Atlan- 
tic Coast  El.  R.  R.  Co.,  138 

Fed.  517;  71  C.  C.  A.  41  876, 
1509,  1.509,  1510 
V.  Chicago,  etc.  Co.,  158 

Fed.  1015  1649 
'V.  Galve-ston  City  R.  R. 

Co.,107P>d.311;46C.C.A. 

305  451,  451,  1540.  1571, 1572 
V.  Green  Cove.  etc.  R.  R. 

Co.,  139  U.  S.  137;  11  Sup. 

Ct.  512    1433, 1593, 1593, 1593 

1596 

V.   North  Chicago,  etc. 

Co.,  130  Fed.  801;  65  C.  C. 

A.  65  960 

V.   Troy   Steel   Co.,   33 

N.  Y.  Misc.  484;   68  N.  Y. 
Supp.  915  1528 


1029 


844 


Guardian  Trust,   etc.   Co.    v. 

Fislier,  200  U.  S.   57;    26 

Sup.  Ct.  186  1543,  1552 

Guardian  Trust  Co.  v.  White 

Cliffs,    etc.    Co.,    109    Fed. 

523      1584,  1593,  1593,  1596, 

1600 
Guckert  v.  Hacke,  159  Pa.  St. 

303;  28  Atl.  249      123,  231, 

248,  251,  384 

Guernsey  v.  Cook,  120  Mass. 

501 
Guffey  Petroleum  Co.  v.  Chai- 

son  TownsiteCo.  (Tex.),  107 

S.  W.  609 
Guilford  v.  Minneapolis,  etc. 

Ry.  Co.,  48  Minn.  560;    51 

N.  W.  658;  31  Am.  St.  Rep. 

694  1420.  1423,  1425,  1528 
V.   Western   Union  Tel. 

Co.,  43  Minn.  434;  46 N.  W. 

70  431, 431 
V.  Western  Union  Tel.  Co. 

59   Minn.   332;     61   N.   W. 

324;    50  Am.  St.  Rep.  407       431, 
431,  732,  733 
Guillaume  v.  K.  S.  D.  Fruit 

Co.  (Oreg.),  86  Pac.  883        1196 
Guinness  v.  Land  Corporation, 

22Ch.  D.  349         40,97,111,431, 
452,  564 
Guinzbei^  v.   H.   W.   Downs 

Co.,  165  Mass.  467:  43  N. 

E.  195;  52  Am.  St.  Rep.  525 
Gulliver  v.  Roelle,  100  111.  141 
Gumaer  v.  Cripple  Creek,  etc. 

Co.  (Colo.),  90  Pac.  81       969,  1203 
1205,  1247,  1371 
Gump  V.  Sibley,  79  Md.  165         849 
Gund  V.  Ballard  (Nebr.),  103 

N.  W.  309  1323, 1329 

Gunderson  v.    Illinois  Trust, 

etc.  Bank,  199  111.  422;   65 

N.  E.  326 
Gundlach   v.   Germania,   etc. 

Inst.,  49  How.  Pr.  (N.  Y.) 

190 
Gunn  V.  Central  R.  R.  etc.  Co., 

74  Ga.  409  79,  870 
V.  London,  etc.  Fire  Ins. 

Co.,  12  C.  B.  N.  s.  694       280,  284 
Gunn's  Case,  3  Cli.  40  166 

Gunnison  Gas  &  Water  Co.  v. 

Whitaker,  91  Fed.  191 
Gunther    &    Bro.    v.  Baskett 

Coal  Co.,  107  Ky.  44;  52 

S.  W.  931 
Gurlev  V.  Reed,  190  Mass.  500 : 

77  iST.  E.  642  6S3. 


809 
416 


984 


590 


843 


1354 


11 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Gurney  v.  Atlantic,  etc.  Ry. 

Co.,  58  N.  Y.  358  1567 

Custard's  Case,  8  Eq.  438  165, 

548,  782 
Guthrie  v.  Harkness,  199  U.  S. 

148;    26  Sup.  Ct.  4  894,  896 

Gutta  Percha  Corp.,  15  Times 

L.  R.  183  350,  364,  750 

Gutterson   v.    Lebanon    Iron, 

etc.  Co.,  151  Fed.  72  1616 

G.  V.  B.  Mining  Co.  v.  First 

Nat.  Bank,  95  Fed.  23;   36 

C.  C.  A.  633  397,  860 

H 

Haacke  v.  Knights  of  Liberty, 

etc.  Club,  76  Md.  429;   25 

Atl.  422  222,  261 

Haas  V.  Bank  of  Commerce, 

41  Nebr.  754;  60  N.  W.  85  229, 
231  249 
Haas  Co.,  131  Fed.  232;    65 

C  C  A.  218  512 

Habershon's  Case,  5  Eq.  286  643 
Hackensack  Water  Co.  v.  De 

Kay,  36  N.  J.  Eq.  548  1220, 

1225,  1408 
Hackett   v.    Multnomah   Ry. 

Co.,  12  Oreg.  124;    6  Pac. 

659;  53  Am.  Rep.  327  70,80 
V.  Northern  Pac.  Ry.  Co., 

140  Fed.  717  457 
V.  Northern  Pac.  Ry.  Co., 

36   N.    Y.    Misc.    583;     73 

N.  Y.  Supp. 1087       192,  443,  527, 

1190 
Hackettstown  Nat.   Bank  v. 

Yuenling  Brewing  Co.,   74 

Fed.  110;  20  C.  C.  A.  327       1527, 

1672 
Hadden  v.   Linville,   86  Md. 

210;  38  Atl.  37,  900  1373,  1381 
Haden  v.  Farmers',  etc.  Fire 

Ass'n,  80  Va.  683  _  592 

Hadleigh  Castle  Gold  Mines 

(1900),  2  Ch.  419  1058 

Hadley  &  Co.  v.  Hadley,  77 

L.  T.  131  1310 

Haebler    v.    N.    Y.    Produce 

Ex-change,  149  N.  Y.  414; 

44  N.  E.  87  581 

Hagar  v.  Union  Bank,  63  Me. 

509  773,  1122,  1124 

Hager  v.  Cleveland,  36   Md. 

476  608,  913,  915 

Hagerman  v.  Ohio  Bldg.  etc., 

Ass'n,  25  Oh.  St.  186  119,  248, 
557,  581,  590,  595,  624 


Hagerstown  Mfg.  Co.  v.  Keedy, 
91  Md.  430;   46  Atl.  965 

Hagerstown  Turnpike  Road 
Co.  V.  Creeger,  5  H.  &  J. 
(Md.)  122;   9  Am.  Dec.  495 


844, 
1306 


230, 
380 


Haggert   Bros.   Mfg.   Co.,    19 

Ont.  App.  582  199,  203,  204, 

614 
Hahn's  Appeal,  7  Atl.  Rep. 

482  (Pa.)     _  490 

Haines    v.    Ivinderhook,    etc. 

Ry.  Co.,  33  N.  Y.  App.  Div. 

154;   53  N.  Y.  Supp.  368       1050, 
1053,  1054,  1054,  1176 
Haines     Mercantile     Co.     v. 

Highland   Gold   Mines   Co. 

(Oreg.),  88  Pac.  865  884 

Hair  v.  Burnell,  106  Fed.  280       429, 
716,  750 
Halbert    v.    San    Saba,    etc. 

Ass'n  (Tex.),  34  S.  W.  636       120 
Hale  V.  Burlington,  etc.  Ry. 

Co.,  13  Fed.  203  1542 
V.  Cheshire  R.  R.  Co., 

161  Mass.  443 ;  37  N.  E.  307 
V.  Frost,  99  U.  S.  389 


470 
1566, 
1572 


V.  Henkel,  201  U.  S.  43; 

26  Sup.  Ct.  370  891,  891 
V.  Mason,  160  N.  Y.  561 ; 

55  N.  E.  202  1270 
V.  Nashua,  etc.  R.R.  Co., 

60  N.  H.  333       1493,  1493,  1586, 

1640 
Haley  v.  Halifax  Street  Ry. 

Co.,  25  Nova  Scotia  L.  R. 

140  1603,  1607 

Halifax  Sugar  Refining  Co.  v. 

Francklyn,59  L.  J.  Ch.  591      1198, 

1199,  1222 

Hall  V.    Alabama,  etc.   Imp. 

Co.,  143  Ala.  464;    39  So. 

385 
V.  Carey,  5  Ga.  239 

V.  Henderson,   126  Ala. 

449;  28  So.  531;  85  Am.  St. 
Rep.  53;    61  L.  R.  A.  621 

520,  520,  1276,  1276 

V.  Herter  Bros.,  83  Hun 

19;  31  N.Y.  Supp.  692;  90 
Hun  280;  35  N.  Y.  Supp. 
769;  157  N.  Y.  694;  51 
N.  E.  1091  290,  297 

V.    MuUanphv    Planing 

Mill  Co.,  16  Mo.  App.  454       1542 

V.  Nieukirk  (Idaho),  85 

Pac.  485  959 


518 
915 


518, 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Hall  V.  Old  Talargoch  Lead 

Mining  Co.,  3  Ch.  D.  749  183 

V.  Publishing  Co.,  180  Pa. 

St.   561;    37  Atl.    106  1224 

V.  Rose  Hill,  etc.  Road 

Co.,  70  111.  673  739 

V.  Sullivan  R.  R.  Co.,  1 

Brunner  Coll.  Cas.  613;    11 
Fed.  Cas.  257       1521,  1584,  1584, 

1635 

V.  U.  S.  Ins.  Co.,  5  Gill 

(Md.)  484  604,  612,  767,  771 

V.  Vermont,  etc.  R.  R. 

Co.,  28  Vt.  401       278,  293,  1237, 

1246 

V.   Wagner,    111  N.   Y. 

App.   Div.    70;    97  N.   Y. 
Supp.    570  727,  727 

Hall  &  Co.,  A.  W.,  37  Ch.  D. 

712  647,  648 

Hall    Mfg.    Co.  V.   Am.   Ry. 

Supply  Co.,  48  Mich.  331  852 
Hall's  Case,  5  Ch.  707        524,  663, 

664 
Hall's  Safe  Co.  v.  Herring- 
Hall-Marvin  Safe  Co.,   146 

Fed.  37;  76  C.  C.  A.  495  377 
Hallam  v.  Indianola  Hotel  Co., 

56  Iowa  178;  9  N.  W.  Ill     1324, 

1344 
Hallenborg  v.   Corre  Grande 

Copper  Co.  (Ariz.),  74  Pac. 

1052  958 

Hallett,  Ex  parte,  1  Manson 

380  793 

Hallmark's    Case,    9   Ch.    D. 

329  1276 

Hallowell,      etc.      Bank      v. 

Hamlin,  14  Mass.  178  925 

Halpin    v.    Mutual    Brewing 

Co.,  20  N.  Y.  App.  Div.  583 ; 

47  N.  Y.  Supp.  412  1166,  1180 
Halsey  v.  Ackerman,  38  N.  J. 

Eq.  501  1259 

Halstead  v.   Dodge,    1   How. 

Pr.  N.  s.  (N.  Y.)  170  1227,  1359 
Hambleton   v.    Central    Ohio 

R.  R.  Co.,  44  Md.  551  736,  738, 
742,  759 
V.  Glenn,  72  Md.  351 ;  20 

Atl.  121  602 
V.  Glenn,  72  Md.  331 ;  20 

Atl.  115  602.  606.  613,  613 

V.  Rhind,   84    Md.  456; 

36  Atl.  597 :  40  L.  R.  A.  216  277 
Hambro  r.  Hull,  etc.  Fire  Ins. 

Co..3H.  &N.  789  379 

Hamburger  v.  Miller,  48  Md. 

317  403 


Hamill  v.  Royal  Arcanum,  152 

Pa.  537;   25  Atl.  645  919 

Hamilton     v.     Clarion,     etc. 

R.  R.  Co.,  144  Pa.  St.  34; 

23  Atl.  53;    13  L.  R.  A.  779       250 
V.  Desjardins  Canal  Co., 

1  Grant  (Can.)  1  932,  943 
V.  Grant,  30  Can.  Sup. 

Ct.  566 
V.  Smith,  5  Jur.  N.  8.  32 


Co. 


696 
275, 
276 


173 


- — -    V.    Vaughan,    etc. 
(1894),  3  Ch.  589 

Hamilton,  etc.  Co.  v.  Rice,  7 

Barb.  (N.  Y.)  157        208,  607,  914 

Hamilton  Nat.  Bank  v. 
American  Loan,  etc.  Co., 
66  Nebr.  67;  92  N.  W.  189         37, 

383 

Hamilton  Road  Co.  v.  Town- 
send,  13  Ont.  Rep.  534       117,  120, 
120,  221 

Hamilton  Trust  Co.  v.  Clemes, 
17  N.  Y.  App.  Div.  152;  45 
N.  Y.  Supp.  141;  163  N.Y. 
423;   57  N.  E.  614  152,  1175, 

1225   1499 

Hamilton's  Case,  8  Ch.  548      '  1176 

Hamlin  v.  European,  etc.  Ry. 

Co.,  72  Me.  83  1510 

V.  Jerrard,  72  Me.  62  1509 

V.  Toledo,  etc.  R.  R.  Co., 

78  Fed.  664;    24  C.  C.  A. 
271 ;  36  L.  R.  A.  826        415,  450, 
450,  451,  451,  452,  469,  474, 
977,  984,  1028 

V.  Union  Brass  Co.,  68 

N.  H.  292;   44  Atl.  385  1210 

Hammerly      v.       Mercantile 

Trust,    etc.    Co.     123   Ala. 

596;    26  So.  646  1564 

Hammock  v.   Loan  &  Trust 

Co.,  105  U.  S.  77  1496,  1627, 

1630 
Hammond  v.  Edison  Illumi- 
nating Co.,   131  Mich.  79; 

90  N.  W.   1040;    100  Am. 

St.  Rep.  582  499,  500,  507 

V.  Hastings.   134  U.  S. 

401 ;    10  Sup.  Ct.  727       680,  770, 


—  V.  Port  Royal,  etc. 
Co.,  15S.  Car.'lO 

—  V.  Straus,  53  Md.  1 


773 

Ry. 

1632 
160.  219, 
220.  921 
998.  1035 


,  Re,  139  Fed.  898 

Hamor    v.    Taylor-Rice    En- 
gineering Co.,  84  Fed.  392       518. 
518,  520 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1221 

82 

249 
620 

15G8 

847 


1134 

1312 

1659 
1614 


Hampsliire  Land  Co.  (1896), 

2  Ch.  743 
Hampson    v.    Price's    Patent 

Candle  Co.,  45  L.  J.  Ch.  437 
Hampton  v.  Clinton  Co.,  65 

N.  J.  Law  158:  46  Atl.  650 

V.  f^oster,  127  Fed.  468 

V.  Norfolk,  etc.  Ry.  Co., 

127  Fed.  662 
Hamsher  v.  Hamsher,  132  III. 

273;    23  N.  E.  1123 
Hanchett  v.  Blair,   100  Fed. 

817;    41  C.  C.  A.  76       875,  1081, 

1083 
Hancock  v.  Clark,  68  Vt.  302; 

35  Atl.  317 
V.  Holbrook,  40  La.  Ann. 

53;   3  So.  351 
■ V.  Toledo,  etc.  R.  R.  Co., 

9  Fed.  738 
Hand  v.  Blow,  82  L.  T.  750 
V.  Evans  Marble  Co.,  88 

Md.  226;   40  Atl.  899        298,298 
V.  Savannah,  etc.  R.  R. 

Co.,  21  S.  Car.  162  1591 
V.  Savannah,  etc.  R.  R. 

Co.,  12  S.  Car.  314  1535,  1670 
V.  Savannah,  etc.  R.  R. 

Co.,  17  S.  Car.  219       1456,  1640, 
1643,  1670 
Handley  v.  Stutz,  139  U.  S. 

417;    11  Sup.  Ct.  530       492,  627, 
628,  630,  630,  911,  1006,  1009 
Handy  v.  Cleveland,  etc.  R.  R. 

Co.,  31  Fed.  689  1602,  1618 

Hankins  v.  Newell  (N.  J.),  66 

Atl.  929  1041,  1249 

Hanly,  Ex  parte,  41  Ch.  D.  215     278, 

295 
Hannav.  Lyon,  179  N.  Y.  107; 

71  N.  E.  778  944,  962,  974 

■ V.  People's  Nat.  Bank,  7') 

N.  Y.  App.  Div.  224;    78 

N.  Y.  Supp.  516;  76  N.  Y. 

Supp.  224  1282,  1350 
V.   State  Trust  Co.,   70 

Fed.  2;   16  C.  C.  A.  .586;  30 

L.  R.  A.  201         1650,  1650,  1650, 

1651 
Hannan's   King  Mining  Co., 

14  Times  L.  R.  314  764,  764 

Hanson  v.  Little  Sisters  of  the 

Poor,  79  Md.  434;    32  Atl. 

1052;   32  L.  R.  A.  293 
■ V.  Minnesota  Scaiidina- 

\'ian,  etc.  Ass'n,  59  Minn. 

123;   60  N.  W.  1091 
Hapgoods  V.  Lusch,  107  N.  Y. 

Supp.  331 


847 


590 


175 


890 


1201 


495 


1210 
621 


1259 


Harbaugh  v.  Middlesex  Secu- 
rities Co.,  110  N.  Y.  App 

Div.  633;    97  N.  Y.  Supp 

350 
Harben  v.  Phillips,  23  Ch.  D 

14  1040,  1042,  1058,  1194, 

1207,  1230,  1251 
Hardin  v.  Iowa  Ry.,  etc.  Co., 

78  Iowa  726;  43N.  W.  543; 

6  L.  R.  A.  52 
Hardin  County  v.  Louisville, 

etc.  R.  R.  Co.,  92  Ky.  412; 

17  S.  W.  860 
Harding  v.  American  Glucose 

Co.,  182  111.  551;    55  N.  E. 

577;   74  Am.  St.  Rep.  189; 

64  L.  R.  A.  738  940,  951 
V.  Vanderwater,  40  Cal. 

77 
Hardoon    v.   Belilios   (1901), 

A.  C.  118 
Hardy  v.  Metropolitan  Land 

Co.,  7  Ch.  427 
Hare  v.  L.  &  N.  W.  Ry.  Co., 

Johns.  722  729,962,968 

Harpending  v.  Dutch  Church, 

16  Pet.  455  848 

V.  Munson,  91  N.  Y.  650  1324, 

1344,  1636,  1636 
Harper  v.   Smith,  93  N.  Y. 

App.  Div.  608;  87  N.  Y. 

Supp.  516 
Harpold  v.  Stobart,  46  Oh.  St. 

397;  21  N.  E.  637;   15  Am. 

St.  Rep.  618 
Harriman  v.  Northern  Secu- 
rities Co.,  197U.  S.  244;  25 

Sup.  Ct.  493 
V.  Southam,  16  Ind.  190 

V.     Woburn     Electric 

Light  Co.,  163  Mass.  85;  39 

N.  E.  1004  1496,  1503 

Harrington   v.    Victoria,   etc. 

Dock  Co.,  3  Q.  B.  D.  549 
Harris   v.  Bank  of  Mobile,  5 

La.  Ann.  538 
V.  Franklin  Bank,  77  Md. 

423;  26  Atl.  523 

V.    Gateway   Land  Co., 

128  Ala.  652;    29  So.  611 

599,  614 

V.    Independence    Gas 

Co.  (Kans.),  92  Pac.  1123 


1063 


699 


542 
244 


320 
717 
810 
250, 


V.   Leming   Harris,   etc. 

Works,     43    S.     W.     Rep. 
(Tenn.)  869 

—  V.  McGregor,  29  Cal.  124 


858, 
867 


1247 
103, 


103,  104,  246 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Harris  v.  Muskingum  Mfg.  Co., 
4  Blackf.  (Ind.)  267;  29 
Am.  Dec.  372  383,  1078 

V.  Quincy,  etc.  Ry.  Co. 

(Mo.).  101  S.  W.  601   1609,  1609 

V.   Runnels,  12  How.  79   864 

V.   San  l''ranci.sco  Sugar 

Ref.  Co.,  41  Cal.  393   497,  1111, 

1119 

V.  Stevens,  7  N.  H.  454   1135 

V.  Union  Pac.  Ry.  Co.,  13 

Fed.  522  1342 

V.    Youngsto^\Ti  Bridge 

Co.,  90  P^d.  322 ;  33  C.  C.  A. 
69;  93  Fed.  355;  35  CCA. 

341  1535, 1536, 1537, 1537,  1628 
Harris's  Appeal,  12  Atl.  Rep. 

743  (Pa.)  804 

Harris's  Case,  7  Ch.  587  167,  1215 
Harrison    v.    Annapolis,    etc. 

R.  R.  Co.,  50  Md.  490  1496 

V.  Heathorn,  6  Man.  & 

Gr.  81  7 

V.  Mexican  Ry.  Co.,  19 

Eq.  358  439,  441,  441,  442 

V.  Morton,  83  Md.  456; 

35  Atl.  99  915,  916,  916 

V.   Pryse,  Barnard.   Ch. 

324  757 
V.  Remington  Paper  Co., 

140  Fed.  385:  72  CCA.  405  921 
1'.  St.  Etienne  Brewery 

Co.  (1893),  W.  N.  108  1514, 

1599 
V.  Thomas,  112  Fed.  22; 

50  C  C  A.  98        941,  1259,  1316, 

1316 
V.  Union  Trust  Co.,  144 

N.  Y.  326;    39  N.  E.  353         1493 

V.  Vermont  Manganese 

Co.,  1  N.  Y.  Misc.  402;   20 

N.  Y.  Supp.  894  278 

,  Ex  parte,  69  L.  T.  204       350, 

304 

,  Ex  parte,  28  Ch.  D.  363       767, 

•  767,  793 
Harrison's  Case,  3  Ch.  633  166 

,  6  Ch.  286  766 

Harrod  v.   Hamer,  32  Wise. 

162  123,  127,  220 

Harrogate's  Estates  (1903),  1 

Ch.  498  1396,  1497 

Harrold  v.  Plenty  (1901),   2 

Ch.  314  805,  809 

Hart  V.  American  Cotton  Co., 

41    N.    Y.    Misc.    436;     84 

N.  Y.  Supp.  1065  890 

V.  Evanson   (N.   Dak.), 

105  N.  W.  942  1357,  1357 

0  xc 


Hart  V.  Frontino  Gold  Mining 

Co.,L.R.  5Ex.  Ill      736,742,742 

V.  Globe  Ins.  Co.,   113 

Fed.  307  620 

V.     Ogdensburg,     etc. 

R.  R.  Co.,  89  Hun  (N.  Y.) 

316;  35  N.  Y.  Supp.  566  968, 

1312 
V.  Seymour,  147  111.  598; 

35  N.  E.  246  254 
V.  St.  ChaHes  St.  R.  R. 

Co.,  30  La.  Ann.  758  504,  507 
Hart's  Case,  6  Eq.  512  173 

Harter  v.  Eltzroth,   111   Ind. 

159;   12N.  E.  129  784 

Hartford      v.      Co-operative 

Homestead  Co.,  128  Mass. 

494  590 

Hartford,  etc.   R.  R.  Co.  v. 

Croswell,  5  Hill  (N.  Y.)  383  610 
Hartley     v.      Pioneer      Iron 

Works,   181  N.  Y.  73;    73 

N.  E.  576  523,  523 

Hartley's  Case,  10  Ch.  157  642 

Hartman      v.      Pennsylvania 

Range  Boiler  Co.,  24  Pa. 

Co.  Ct.  Rep.  324  222 

Hartridge  v.  Rockwell,  R.  M. 

Charlt.  (Ga.)  260  509,  517,  522 
Harts  V.  Brown,  77  111.  226  1317, 
1317,  1344,  1344 
Hartt  V.  Harvey,  32  Barb,  i^o 

(X.  Y.)  1057,  1058,  1065,  1250 
Harvard  College  v.  Amory,  9 

Pick.  (Mass.)  446  413,  1091, 

1143 
Harvey  v.  Board  of  Trustees, 

142  Cal.  391 ;  75  Pac.  1086  398 
V.  Grand  Lodge,  50  Mo. 

App.  472  593,  663 
I'.  Linville  Improvement 

Co.,    118   X.   Car.  693;    24 

S.  E.  489;  54  Am.  St.  Rep. 

749  1052 

V.  Schuvlkill  Real  Es- 
tate, etc.  Co'.,  24  Pa.  Co.  Ct. 

Rep.  593  592 

V.  West  Side  Elevated 

(Patented)  Ry.  Co.,  13  Hun 

(X.  Y.)  392  1379 

Harvey-AN'atts  Co.  v.  Wor- 
cester Umbrella  Co.  (Mass.), 
78  X.  E.  886  645 

Harwoocl  v.  Railroad  Co.,  17 

Wall.  78  1637,  1637 

Hasbrouck  v.  Rich,   113  Mo. 

App.  389:    88  S.  W.  131         1552 

i".  A'andevoort,  4  Sandf. 

(X.  Y.)  74  803,  811 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Hascard  v.   Somany,   Freem. 

504  ^       1011,  1202,  1203 

Hasenritter  v.  Kirchhofifer,  79 

Mo.  239  235 

Haskell  v.  Read,  68  Nebr.  107 ; 

93  N.  W.  997;    96  N.  W. 

1007  1022,  1056,  1250 
V.  Wortliington,  94  Mo. 

560;  7  S.  W.  481  98,  185,  214, 
214,  607 
Haskins  v.  Albany,  etc.  Ry. 

Co.,  74N.  Y.  App.  Div.  31; 

76  N.  Y.  Supp.  667  1448 

Haslett    V.    Wotherspoon,    2 

Rich.  Eq.  (S.  Car.)  395  297,  309 
Hassall    v.    Wilcox,    130    U. 

S.  493;    9  Sup.  Ct.  590 


Hasselman  v.  U.  S.  Mtge.  Co., 

97  Ind.  365 
Hastings    v.    Blue    Hill,    etc. 

Corp.,  9  Pick.  (Mass.)  80 


1542, 
1552 

237 

1225, 
1226 
V.  Brooklyn  Life  Ins.  Co. , 

138N.  Y.473;  34N.  E.289    1377, 

1381 

V.  Drew,  76  N.  Y.  9  1127 

Hastings  Lumber  Co.  v.  Ed- 
wards, 188  Mass.  587;    75 

N.  E. 57  606,1190 

Hastings,  Re,  105  N.  Y.  Supp. 

834  901 

,  106  N.  Y.  Supp.  938  901 

Hatch  V.  City  Bank,  1  Rob. 

(La.)  470  894,  897,  905 
V.  Coddington,  95  U.  S. 

48  67 

V.  Dana,  101  U.  S.  205         600 

V.  Lucky  Bill  Mining  Co., 

25  Utah  405;  71  Pac.  865      1185, 

1210 
Hatcher  v.  Toledo,  etc.  R.  R. 

Co.,  62  111.  477  1522 

Hattersley   v.    Earl   of   Shel- 

bume,  31  L.  J.  Ch.  873  87,  931, 
951,  965 
Haun  V.  Mulberry,  etc.  Co.,  33 

Ind.  103  607 

Hause    v.     Mannheimer,     67 

Minn.  194;  69  N.  W.  810  248 
Havana  Electric  Ry.   Co.  v. 

Central  Trust  Co.,  107  N.  Y. 

Supp.  680  1557 

Havemeyer  v.  Havemeyer,  43 

N.Y.  Sup.  Ct.  506  1029 
V.  Havemeyer,  45  N.  Y. 

Sup.  Ct.  464  1030 
V.  Havemeyer,  86  N.  Y. 

618  1030 


294 


Haven    v.    Adams,    4    Allen 

(Mass.)  80  1549 
V.  Emery,  33  N.  H.  66       1486 

V.  Grand  Junction,  etc. 

Co.,  109  Mass.  88  1449,  1451, 

1456 
Haven  Gold  Mining  Co.,  20 

Ch.  D.  151  98 

Havens  v.  Bank  of  Tarboro, 
132  N.  Car.  214;    43  S.  E. 
639;  95  Am.  St.  Rep.  627        731, 
739,  741 

V.   Hoyt,   6  Jones  Eq. 

(N.  Car.)  115  1312 

Hawes  v.  Anglo-Saxon  Petro- 
leum Co.,  101  Mass.  385  147, 
149,  150,  417 

V.  Oakland,  104  U.  S.  450      945, 

970 

Hawkeye  Co.  v.  Bank,  157 
Fed.  253 

Hawkins  v.  Citizens  Real  Es- 
tate, etc.  Co.  (Oreg.),  64 
Pac.  320  189,  613 

V.  Glenn,  131  U.  S.  319; 

9  Sup.  Ct.  739  614,  620 

V.  Maltby,  4  Ch.  200  782 

Hawley  v.  Gray  Bros.,  etc. 
Co.,  106  Cal.  337;  37  Pac. 
609  1382 

V.  Upton,  102  U.  S.  314        154, 

154,  166,  167,  198, 
615,  628 

Hax  V.  Davis  Mill  Co.,  39  Mo. 

App.  453  1202,  1205,  1223, 

1248 

Hay  V.  Swedish,  etc.  Ry.  Co., 
5  Times  L.  R.  460 

V.  Swedish,  etc.  Ry  Co., 

8  Times  L.  R.  775 

V.  Washington,  etc.  R. 

R.  Co.,  4  Hughes  327 

Hay's  Case,  10  Ch.  593 

1337,  1340,  1340 
Haycraft     Gold     Reduction, 
etc.  Co.  (1900),  2  Ch.  230 


1674 

1612 

1638 
1333, 


996, 
1209 


Hayden    v.    Atlanta    Cotton 

Co.,  61  Ga.  233 
V.  Brown,  94  Fed.  15 

V.  Charter  Oak  Driving 

Park,  63  Conn.  142;  27Atl. 
232 

V.    Official    Hotel    Red 

Book  Co.,  42  Fed.  875    1310,  1313 

V.  Thompson,  36  U.  S. 

App.  361;    71  Fed.  60;    17 

C.  C.  A.  592         1128,1129,1129, 

1259 


922 
1259 


735 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Hayden  v.  Williams,  9G  Fed. 

279;  37  C.  C.  A.  479         912,  920, 

1128 
Hayes  v.  Columbus,  etc.  Ry. 

Co.,  67  Fed.  630  1616 
V.  Fidelity  Ins.,  etc.  Co., 

105  Fed.  160  621 

V.     Jasper    Land    Co. 

(Ala.),  41  So.  909  959 

V.  Morgan's  Lf\.,  etc.  Co., 

117  La.  593;  42  So.  150  6 

V.  Pierson,  65  N.  J.  Eq. 

353;45Atl.  1091  ;58Atl.72S     1315 

V.  Shoemaker,  39  Fed. 

319  616,  695 
V.  Stirling,  14  Ir.  C.  L. 

Rep.  277  341,  342 

Haynes  v.   Brown  (Okl.),  89 

Pac.  1124  689,  781 

Hays  V.  Franklin  Co.  Lumber 

Co.,35Nebr.  511;  53  N.  W. 

381  661 
V.  Pittsburgh,  etc.  R.  R. 

Co.,  38  Pa.  St.  81  173,  6p3 

Hayt,  Re,  39  N.  Y.  Misc.  356; 

79  N.  Y.  Supp.  845  430 

Hayward  v.  Leeson,  176  Mass. 

310;     57    N.    E.    656;     49 

L.  R.  A.  725  320,  320,  326,  328, 
329.  330,  1338, 1338, 1339 

V.   Pilgrim   Society,   21 

Pick.  (Mass.)  270  913 

Haywood  v.  Lincoln  Lumber 
Co.,  64  Wise.  639 ;  26  N.  W. 
184  958,  1299,  1315 

Hazard  v.  Durant,   11  R.   L 

195  937,  939,  944,  955 

Hazeltine  v.  Belfast,  etc.  R. 
R.  Co.,  79  Me.  411;  10  Atl. 
328;  1  Am.  St.  Rep.  330  464, 

466,  1104 

Hazelton  Boiler  Co.  v.  Hazel- 
ton  Tripod  Boiler,  Co.  137 
lU.  231;  28  N.  E.  248  371 

V.      Hazelton     Tripod 

Boiler  Co.,  142  111.  494;  30 

N.  E.  339  377 

Hazlehurst  v.  Savannah,  etc. 

R.  R.  Co.,  43  Ga.  13  76,  440, 

558,  1169 
Head  v.  Providence  Ins.  Co., 

2  Crane h  127  394,  827 


,  Ex  parte,  15  L.  T.  262 

Heald  v.  Owen,  79  Iowa  23; 

44  N.  W.  210 
Heard  v.  Eldridge,  109  Mass. 

258;  12  Am.  Rep.  687 


782, 
787 

253 

1091. 
1155 


Hearst  v.  Putnam  Mining  Co., 
28  Utah  184;  77  Pac.  753; 
107  Am.  St.  Rep.  698;  66 
L.  R.  A.  784  972,  981 

Heart  v.  State  Bank,  2  Dev. 

Eq.  (N.  Car.)  HI  744,  768 

Heartt  v.  Sherman,  82  N.  E. 

417  (111.)  1171 

Heaston  v.  Cincinnati,  etc. 
R.  R.  Co.,  16  Ind.  275;  79 
Am.  Dec.  430  202,  604 

Heath    v.    Erie    Ry.    Co.,    8 

Blatchf.  347  949,  962,  1354 

V.  Silverthorn,etc.Co.,39 

Wise.  146        161,  1009,  1022, 1023 

Hebb's  Case,  4  Eq.  9  167 

Hebberd  v.  Southwestern 
Land  Co.,  55  N.  J.  Eq.  18; 
36  Atl.  122  1404 

Hebgen  v.  KoefHer,  97  Wise. 

313;    72  N.  W.  745  313,  316 

Hecht,  Liebmann  &  Co.  v. 
Phoenix  Woolen  Co.,  121 
Fed.  188  172 

Heck  V.  Bulkeley  (Tenn.),  1 

S.  W.  612  1123 

V.     McEwen,     12    Lea 

(Tenn.)  97  113,253 

Heckman's    Estate,    172   Pa. 

St.  185;  33  Atl.  552  291,  310 

Hecla,    etc.     Mining    Co.    v. 

O'Neill,  19  N.  Y.  Supp.  592      282, 
289  303 

Hedges  v.  Paquett,  3  Oreg.  77    1320, 

1325 

Heggie  v.  People's  Bldg.  & 
Loan  Ass'n,  107  N.  Car. 
581;   12  S.  E.  275  518 

Heights  of  Maribyrnong  Es- 
tate Co.,  22  Vict.  L.  R.  432      700, 

782 

Heineman  v.  Marshall,  117 
Mo.  App.  546;  92  S.  W. 
1131  1337 

Heinig  v.   Adams,   etc.   Mfg. 

Co.,  81  Ky.  300  128 

Heinze  v.  South  Green  Bay, 
etc.  Co..  109  Wise.  99;  85 
N.  W.  145  1224, 1382 

Heinzelman  v.  Druids  Relief 
Ass'n,  38  Minn.  138;  36 
N.  W.  100         558.  560,  914,  1032 

Heironimous  v.  Sweeney,  83 
Md.  146;  34  Atl.  823;  55 
Am.  St.  Rep.  333;  33 
L.  R.  A.  99  63,  853 

Heiton  v.  Waverly  Hydro- 
pathic Co.,  4  Rettie  Sc.  830     1068, 

1221 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Heller  v.  Nat.  Marine  Bank, 

89  Md.  602;    43  Atl.  800; 

73  Am.  St.  Rep.  212;  45  L. 

R.  A.  438  425,  455,  1398 

Hellman  v.  Forty-second  St., 

etc.  R.  R.  Co.,  74  Hun  529; 

26  N.  Y.  Supp.  553;    148 

N.  Y.  727;   42  N.  E.  723  740 
i\  Pennsylvania  Electric 

Veliicle  Co.  (X.  J.),  67  Atl. 

834 
Helm  V.  Sttiggett,  12  Ind.  194 


469 
752, 

775 


1620 


Helmore  v.  Smith  (No.  2),  35 

Ch.  D.  449 
Helping       Hand       Marriage 

Ass'n,  15  Phila.  644  117,  267 

Hemenway  v.  Hemenway,  134 

Mass.  446  1444,  1445,  1446 
V.  Hemenway,  181  Mass. 

406;  63  N.  E.  919         1092,  1144, 

1154 
Hem  in  way  v.  Heminway,  58 

Conn.  443;   19  Atl.  766  897 

Hempfling  v.  Burr,  59  Mich. 

294 ;  26  N.  W.  496  808 

Hendee  v.  Pinkerton,  14  Allen 

(Mass.)  381  1187,  1189 

Henderson  v.   Bank  of  Aus- 
tralasia, 40  Ch.  D.  170  82,  82 

V.  Bank  of  Australasia, 

45  Ch.  D.  330        954,  1004,  1004, 

1034,  1034,  10.56 

V.  Lacon,  5  Eq.  249  162 

V.  Royal  British  Bank, 

7  E.  &  B.  356 

V.  Virden  Coal  Co.,  78 

111.  App.  437 

V.  Walker,  55  Ga.  481 

,  Ex  parte,  19  Beav.  107 

Henderson    Woolen    Mills  v. 

Edwards,  84  Mo.  App.  448 
Hendon    v.    North    Carolina 

R.  R.  Co.,  127  N.  Car.  110; 

37  S.  E.  155 
V.  North  Carolina  R.  R. 

Co.,   125  N.  Car.   124;    34 

S.  E.  227 
Hendricks  v.  Montagu,  17  Ch. 

D.  638 
Hendrickson   v.    Bradley,    85 

Fed.  508 ;  29  C.  C.  A.  303      938,  980 
Hendrie,    etc.     Mfg.     Co.    v. 

Parry  (Colo.),  86  Pac.  113 
Hennell  v.  Strong,  25  L.  J.  Ch. 

407 
Hennesey   v.    Muhleman,    40 

N.  Y.  App.   Div.   175;    57 

N.  Y.  Supp.  854 


925 

847 
1619 
1223 

309 


430 


430 
373 


1640 
815 


1188 


Hennessy  v.  Griggs,  1  N.  Dak. 

52;  44  N.  W.  1010  298 

Henriech  v.  Lidberg,  105  111. 

App.  495  338 

Henry  v.  Great  Northern  Ry. 

Co.,  1  DeG.  &  J.  606  458 

V.  Jackson,  37  Vt.  431  588 

V.  Michigan  Sanitarium, 

etc.     Ass'n     (Mich.),     110 

N.  W.  523  1246 

V.  Rutland,  etc.  R.  R. 

Co.,  27  Vt.  435  1246 

V.  Simanton,  64  N.  J.  Eq. 

572;  54  Atl.  153  306 

Henry  Pound,  Son  &  Hutch- 
ins,  42  Ch.  D.  402  1581 

Herald  Shoe  Co.  v.  Okla- 
homa Pub.  Co.  (Old.),  79 
Pac.  Ill  226 

H.  E.  Randall,  Ltd.  v. 
British  &  American  Shoe 
Co.  (1902),  2  Ch.  354         387,  387 

Herbert  v.  Kenton,  etc.  Ass'n, 

74  Ky.  296  563 

Herbert  Kraft  Co.  v.  Bank  of 
Orland,  133  Cal.  64;  65 
Pac.  143  665,  666,  754,  807 

Hercules  Oil  Ref.  Co.  v. 
Hocknell  (Cal.),  91  Pac. 
341  1280 

Hercules  Mut.  Life  Ass.  Soc, 

12  Fed.  Cas.  12  23 

Hercynia  Copper  Co.  (1894), 

2  Ch.  403  1172 

Herdegen  v.   Cotzhausen,   70 

Wise.  589;  36N.  W.385    744,  771 

Hereford  Waggon  Co.,  Re,  2 

Ch.  D.  621  293,  335 

Heritage,  Ex  parte,  9  Eq.  5     705,  705 

Herman  v.   Rhode,   34   Hun 

(N.  Y.)  161  1250 

V.   Supreme  Lodge,   66 

N.    J.    Law    77;    48    Atl. 

1000  923 

Hermann  v.  Hodges,  16  Eq. 

18  1415 

V.    Maxwell,  47   N.  Y. 

Sup.  Ct.  347  806 

Heme  Bay  Waterworks  Co., 

10  Ch.  D.  42  1683 

Herrick  v.  Humphrey  Hard- 
ware Co.  (Nebr.),  103  N.  W. 
685  744,  753,  768 

Herring  v.  New  York,  etc. 
R.  R.  Co.,  105  N.  Y.  340; 
12  N.  E.  763  1598 

V.    Ruskin,    etc.    Ass'n 

(Tenn.),  52  S.  W.  Rep.  327      571, 

572,  573 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Herring-Hall-Marvin    Co.    v. 

Hall's  Safe  Co.,  208  U.  S. 

5o4  ;i77,  388 

Herrington  v.  Lisbon,  47  Iowa 

11  1210 

Hersey  v.  TuUy,  8  Colo.  App. 

110;  44  Pac.  854  306,  307 
V.  Veazie,  24  Me.  9;    41 

Am.  Dec.  364  928,  944,  974 

Hershcy  v.  Welch,  96  Minn. 

145;   104  N.  W.  821  810 

Heslin  v.  Eastern  BKlg.,  etc. 

Ass'n,  28  N.  Y.  Misc.  376; 

59  N.  Y.  Supp.  572  577 

Hess  V.  Sloane,  66  N.  Y.  App. 

Div.  522;    73  N.  Y.  Supp. 

313;     173  N.    Y.   616;    66 

N.  E.  1110  85 
V.  Truinbo,  27  Ky.  Law 

Rep.  320;   84  S.  W.  1153  048 

Hess  Manufacturing  Co.,  23 

Can.  Sup.  Ct.  644;   21  Ont. 

App.  66  272,  322,  634 

Heuer  v.  Carmichael,  82  Iowa 

288:  47  N.  W.  1034  108,  253 

Hewel  V.  Hogin  (Cal.),  84  Pac. 

1002  1450 

He%\-itt's  Case,  25  Ch.  D.  283      1 170, 
1I7I,  1172 
Hey    V.     Dolphin,    92     Hun 

(N.  Y.)    230;     36    N.    Y. 

Supp.  627  1030,  1048,  1053 

Hiatt  V.  Griswold,  5  Fed.  573       807 
Hibblewiiite  v.   McMorine,   6 

M.  &  W.  200  685,  685 

Hibbs  V.   Brown,   190  N.  Y. 

167;   82  N.  E.  1108 
Hibernia      Bldg.      Ass'n      v. 

McGrath.  154  Pa.  St.  296; 

26  Atl.   377;    35  Am.   St. 

Rep.  828 
Hibernia    Fire,    etc.    Co.    v. 

Commonwealth  ex  rel.  Har- 
rison. 93  Pa.  St.  264  569.  569 
Hichens  v.  Congreve,  4  Sim. 

420;  4  Russ.  562  319,  320 

Hicks  V.  Steel,  126  Mich.  408; 

85  N.  W.  1121  1299 
V.  Steel.  142  Mich.  292; 

105  N.  W.  7(i7  1272 

Iliggins  t'.    California   Petro- 
leum, etc.  Co.,  122  Cal.  373; 

55  Pac.  155  296 
V.  California  Petroleum, 

etc.  Co..  147  Cal.  363;    81 

Pac.  1070  296 
V.  Fidelity  Ins.,  etc.  Co., 

108  Fed.  475;    46  C.  C.  A. 

509  621,  807 


1448 


1367 


Higgins  V.  Hopkins,  3  Ex.  163 


306, 
310 


V.     Illinois    Trust,    etc. 

Bank,     193    111.    394;     61 

N.  E.  1024  648,  784 
V.  Lan-singh,  154  111.  301 ; 

40  N.  E.  362  439,  1295,  1342, 

1405 
Higgins  Co.,  Chas.  S.,  v.  Hig- 
gins Soap  Co.,    144  N.   Y. 

462;  39  N.  E.  490;  43  Am. 

St.  Rep.  769;  27  L.  R.  A. 

42  376,  387 

Higgins,  Ex  parte,  60  L.  T.  383   628 

,  Re,  27  Fed.  443        1620 

Higgs  V.  Northern  Assam  Tea 

Co.,  L.  R.  4  Ex.  387  1421 

High  Court  V.  Zak,    136  111. 

185;     26    N.    E.    593;     29 

Am.  St.  Rep.  318  917 

Highett  V.  Highett,  22  Vict. 

L.  R.  352  806 

Higliland    Turnpike    Co.     v. 

McKean,  10  Johns.  (N.  Y.) 

154;  6  Am.  Dec.  324        915,  923, 

923 
Hightower  v.   Ansley    (Ga.), 

54  S.  E.  939  422 

Highway  Advertisinc;  Co.  v. 

Ellis,  7  Ont.  L.  R.  504  322 

Hilder  v.  Dexter  (1902),  A.  C. 

474  354,  626 

Hildyard  v.  South  Sea  Co.,  2 

P.  Wms.  76  728,  738,  754,  757, 
758,  759 
Hiles  V.  Case,  9  Biss.  549;    14 

Fed.  141  1559,  1568 

Hill  V.  Atlantic,  etc.  R.  R.  Co. 

(N.  Car.),  55  S.  E.  854  107,  966, 
1005.  1006,  1008,  1060 
V.  Atoka  Coal,  etc.  Co. 

(Mo.),  21  S.  W.  508  713,  753, 

nil,  1116,  1130 

V.  Beach.  12  X.  J.  Eq.  31       254 

V.  Frazier.  22  Pa.  St.  320     1342 

V.  Gould.  129  Mo.   106; 

30  S.  W.  181  1305,  1313 
V.    Great    Western    Rv. 

Co.,  10  C.  B.  N.  s.  148  '  889 
V.  Jewett  Publishing  Co., 

154  Mass.    172:    28  N.   E. 

142;   26  Am.  St.  Rep.  230; 

13  L.  R.  A.  193  740 
V.       Mancl'.ester,       etc. 

Water  Works  Co.,  5  B.  & 

Ad.  866  400,  914 
V.  Newichawanick  Co.,  8 

Hun  459;   71  N.  Y.  593  806, 

1131,  1135 


TABLE    OF    CASES 
[The  references  are  to  pages] 


771 
1197 


1359 

44 

813 


1359 


1649 


441 


Hill  V.  Nisbet,  100  Ind.  341  76, 

604,  659,  966,  1312 

V.  Pine  River  Bank,  45 

N.  H.  300 
V.  Rich  Hill,  etc.  Co.,  119 

Mo.  9;  24  S.  W.  223 
V.  Weidinger,  110  N.  Y. 

App.  Div.  683;    97  N.  Y. 

Supp. 473 
Hill  Co.,  T.  E.,  148  Fed.  832; 

78  C.  C.  A.  522 
Hill's  Case,  20  Eq.  597 
Hilles  V.  Parrish,  14  N.  J.  Eq. 

380  1008,  1063,  1208,  1208 

Hilliard  v.  Lyman,  138  Fed. 

469 
Hilton    Bridge,    etc.    Co.    v. 

Foster,  26  N.  Y.  Misc.  338; 

57  N.  Y.  Supp.  140 
Hinchman  v.  Point  Defiance 

Ry.  Co.,  14  Wash.  349;   44 

Pac.  867  1509, 1538 

Hinckley  v.  Pfister,  83  Wise. 

64;  53  N.  W.  21  1130,  1402, 

1403 
V.    Schwartzschild,    etc. 

Co.,  45  N.  Y.  Misc.  176;  91 

N.  Y.  Supp.  893 
V.  Union  Pac.  R.  R.  Co., 

129  Mass.  52;  37  Am.  Rep. 

297  1461,  1463,  1463 

Hindley's  Case  (1896),  2  Ch. 

121  171,  171,  350,  352 

Hindman   v.   Great   Western 

Coal,  etc.  Co.  (Wash.),  92 

Pac.  139 
Hinds  V.  Buenos  Ayres  Tram- 
ways Co.  (1906),  2  Ch.  654 

1108,  1680 
Kingston      v.      Montgomery 

(Mo.),  97  S.  W.  202         595,  942, 
962,  1320 
Hinkley  v.  Sac  Oil,  etc.  Co. 

(Iowa),  107  N.  W.  629     177,  180, 

294 
Hiram     Maxim     Lamp     Co. 

(1903),   1  Ch.  70  612 
Hirsch  v.  Bums,  77  L.  T.  377      172, 
189,  197,  197 
V.  Jones,  115  N.  Y.  App. 

Div.  156  1242 
,  Re,  116  N.  Y.  App.  Div. 

367  1021, 1242 

Hirsche  v.  Sims  (1894),  A.  C. 

654  1266,  1269,  1326,  1339 

Hirth,  Re  (1899),  1  Q.  B.  612       886 
Hiscock   V.    Lacy,    9    N.    Y. 

Misc.  578;   30  N.  Y.  Supp. 

860  1112 


1585 
1104, 


838 
1665 


1665 


1381 


Hitchcock   V.   Galveston,   96 

U.  S.  342 
V.  Midland  R.  R.  Co.,  33 

N.  J.  Eq.  80 
V.  Midland  R.  R.  Co.,  37 

N.  J.  Eq.  549 
Hitchings  v.   St.   Louis,   etc. 

Transportation     Co.,     68 

Hun  (N.  Y.)  33;  22  N.  Y. 

Supp.  719 
Hite  V.  Hite,  93  Ky.  257;   20 

S.  W.  778;  40Am.  St.  Rep. 

189;  19  L.  R.  A.  173      502,  1092, 
1151,  1151,  1152,  1446 
Hix  V.  Edison  Electric  Co.,  10 

N.   Y.   App.   Div.   75;    41 

N.  Y.  Supp. 680 
Hoadley  v.  County  Comm'rs, 

105  Mass.  519 
Hoag  V.  Lamont,  16  Abb.  Pr. 

N.  s.  (N.  Y.)  91 
Hoagland  v.  Beall,  36  Barb. 

(N.  Y.)  57 
Hoare  &  Co.  (1904),  2  Ch.  208 

536,  1101,  1105,1106 
Hoare's  Case,  30  Beav.  225  832 
Hobbs  V.   Dane  Mfg.   Co.,  5 

Allen  (Mass.)  581 
Hobgood  V.  Ehlen  (N.  Car.), 

53  S.  E.  857 
Hoboken  Beef  Co.  v.  Hand, 

104  N.  Y.  App.  Div.  390; 

93  N.  Y.  Supp.  834 
Hodge  V.  U.  S.  Steel  Corp.,  64 

N.  J.  Eq.  807;  54  Atl.  1 ;  60 

L.  R.  A.  742      328,  578,  962,  965, 
969,  1296,  1309,  1311,  1312,  1313 
Hodge's  Excrs.  v.  First  Nat. 

Bank,  22  Gratt.  (Va.)  51         1371 
Hodgens    v.    United    Copper 

Co.  (N.  J.),  67  Atl.  756  898, 
903,  905 
,  Ex  parte  (1847),  11  Ir. 

Eq.  99  1141 

Hodges     V.     New     England 

Screw  Co.,  1  R.  L  312;    53 

Am.  Dec.  624;  3  R.  1.9   75,944, 
951,  1259,  1268 
V.   Planters'  Bank,  7  G. 

&  J.  (Md.)  306  771 
V.   Rutland,  etc.  R.  R. 

Co.,  29  Vt.  220      1247,  1248, 

1371 

V.  Schuler,  22  N.  Y.  1 14       1530 

Hodgson  V.  Duluth,  etc.  R.  R. 

Co.,     46    Minn.     4.54;      49 

N.  W.  197   941,  942,  1008,  1010 
Hodgson  V.   Powis,  12  Beav. 

392  73 


1033 
16 

287 

921 
435, 


985 
635 


1262 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Hodson  V.  Tea  Co.,  14  Ch.  D. 

859  1426,  1470, 1547 

Hoe  V.  Lee,  3  New  So.  Wales 

St.  Rep.  30  398 

Hoeft  V.  Kock,  123  Mich.  171 ; 

81  N.  W.  1070;  81  Am.  St. 

Rep.  159  492 

Hoenev.  Pollak,  118  Ala.  617; 

24  So.  349;  72  -Aju.  St.  Rep. 

189  1041,  1044 

Hoffman  v.  Reichert,  147  111. 

274;  35  N.  E.  527;  37  Am. 

St.  Rep.  219  1323,  1343 

Hoffman,  etc.  Co.  v.  Cumber- 
land, etc.  Co.,  16  Md.  456; 

77  Am.  Dec.  311  300,  886,  1295, 
1304,  1311,  1311,  1333 
Holbrookv.  Holbrook  (N.  H.), 

66  Atl.  124  503,  1150 
V.  New  Jersey  Zinc  Co., 

57  N.  Y.  616  683,  684,  733 

Holcomb  V.  Cable  Co.,  119  Ga. 

466;  46  S.  K.  671  383 

Holden  v.  Phelps,  135  Mass. 

61  1379 
V.  Trust  Co.,  100    U.    S. 

72  1441 

V.  Upton,  134  Mass.  177     1380 

Holden's  Case,  8  Eq.  444  612,1400 
Holder  v.  Lafayette,  etc.  Ry. 

Co.,   71    111.    106;    22  Am. 

Rep.  89  1247,  1321 

Holdsworth  v.  Davenport,  3 

Ch.  D.   185  1439 

Holladay  v.  Elliott,  8  Oreg.  84  176 
Holland  v.   Ball   (Mass.),   78 

N.  E.  772  790 

V.  Cruft,  3  Gray  162  304 

V.    Dickson,   37   Ch.    D. 

669  900,  901,  907 
V.  Lee,  71  Md.  338;    18 

Atl.  661  306,  1522,  1600 
V.  Lewiston  Falls  Bank, 

52  Me.  564  1237 

Hollingshead    v.    Woodward, 

35  Hun  (N.  Y.)  410  494 

Hollis  V.  Allan,  14  W.  R.  980  1141 
Hollister  v.  DeForest  Wire- 
less   Tel.    Co.,    47    N.    Y. 

Misc.  674;   ^4  x\.  Y.  Supp. 

504  692,  900 
V.   Stewart,    111    N.    Y. 

644;  19  N.  E.  782  1453,  1456, 
1486,  1488,  1560 
Holloway     &     McRaney     f. 

Brame,  83   Miss.   335;    36 

So.  1  300 

Hollywood  V.  First  Parish  in 

Brockton,  192  Mass.  269  71 


1329 


240 


1127 
1007 


402 


1528 


Holm  V.  Atlas  Nat.  Bank,  84 

Fed.  119;  28  C.  C.  A.  297 
Holmari  v.  State  ex  rel.  Gib- 
eon,  105  Ind.  569;   5  N.  E. 

702 
Holmes  v.  Gilliland,  41  Barb. 

(N.  Y.)  568  127,  248 

V.  Higgins,  1  B.  &  C.  74        274 

V.  Newcastle-upon-Tyne 

Abattoir  Co.,  45  L.  J.  Ch. 

N.  s.  383  512,  513 
V.  Newcastle-upon-Tyne 

Freehold    Abattoir   Co.,    1 

Cii.  D.  682 
V.    Royal    Loan    Ass'n 

(Mo.),  107  S.  W.  1005 
V.  Salamanca  Gold,  etc. 

Co.  (Cal.),  91  Pac.  160 
V.  Seashore  Electric  Ry. 

Co.,57N.J.  Lawl6;29Atl. 

419 
V.  Willard,  125  N.  Y.  75; 

25  N.  E.  1083;    11  L.  R.  A. 

170  86,  86,  1161,  1290,  1368 

Holmes,  Booth  &  Haydens  v. 

Holmes,  Booth  &  Atwood 

Mfg.  Co.,  37  Conn.  278;   9 

Am.  Rep.  324  372,  373 

Holmes,    etc.    Mfg.    Co.    v. 

Holmes,    etc.     Metal    Co., 

127  N.  Y.  252;    27  N.  E. 

831;  24  Am.  St.  Rep.  448        75, 
75,  846 
Holmes,    Ex    parte,    5    Cow. 

(N.  Y.)  426  526,  526,  977, 

1020,  1027 
Holomany  v.  Nat.    Slavonic 

Soc,  39  N.  Y.  App.  Div. 

573 ;   57  N.  Y.  Supp.  720  948 

Holophane  v.   Hesseltine,   13 

Times  L.  R.  7  364,  364 
Holt  V.  Dewell,  4  Hare  446  684 
V.    Winfield    Bank,    25 

Fed.  812  838,  839,  1354 

Holyford  Mining  Co.,  Ir.  R.  3 

Eq.  208 
Holyoke,  etc.  Ass'n  v.  Lewis, 

1  Colo.  App.  127;    27  Pac. 

872 
Holyoke  Envelope  Co.  v.  U.  S. 

Envelope    Co.,    182    Mass. 

171;  65  N.  E.  54  285,  286 

Home  Fire  Ins.  Co.  v.  Barber, 

67  Nebr.   644;    93  N.   W. 

1024:  60  L.  R.  A.  927;  108 

Am.  St.  Rep.  716  971,  971 

Home  Mixture  Guano  Co.  v. 

Tillman,   125  Ga.   172;    53 

S.  E.  1019  1245.  1247 


437 


584 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Home  Savings,  etc.  Bank  v. 

Peoria     Agricultural,     etc. 

Soc.,206111.  9;  69N.  E.  17; 

99  Am.  St.  Rep.  132  1235 

Home  Stock  Ins.  Co.  v.  Slier-  * 

wood,  72  Mo.  461  697 

Homer  Gold  Mines,  39  Ch.  D. 

546  1201 

HonejTnan   v.    Haughey    (N. 

J.),  66  Atl.  582  628,  635 

Hood  V.  Eden,  36  Can.  Sup. 

Ct.  476  635 

Hook  V.   Bosworth,   64  Fed. 

443;  12  C.  C.  A.  208  1517,  1608 
Hooke   V.    Financier   Co.,    99 

N.  Y.  App.  Div.   186;    90 

N.  Y.  Supp.  1012  1321 

Hooker  v.  Midland  Steel  Co., 

215  111.  444;    74  N.  E.  445; 

106  .\m.  St.  Rep.  170  1352 

Hoole  V.  Great  Western  Ry. 

Co.,  3  Ch.  262  497,  497,  972, 
977,  977,  1117 
V.  Speak  (1904),  2  Ch. 

732  1282 

Hooley,  Re  (1899),  2  Q.  B. 

579  190,  198,  199,  347,  624 

Hoojjer  v.  Central  Trust  Co., 

81  Md.  559;    32  Atl.  505; 

29  L.  R.  A.  262  1533,  1650 
V.  Herts  (1906),  1  Ch. 

549  760,  760 
V.  Kerr,  Stuart  &  Co.,  83 

L.  T.  729  997,  1001 

V.  Rossiter,  McCl.  527         1141 

Hoopes  V.  Basic  Co.  (N.  J.), 

61  Atl.  979  963,  1177 

Hoover  v.  Montclair,  etc.  Ry. 

Co.,  29  N.  J.  Eq.  4  1653 

Hopcroft  V.  Parker,  16  L.  T. 

N.  s.  123  306 

Hope  V.  Croydon  Tramways, 

34  Ch.  D.  730  1638 
V.  International  Finan- 
cial Soc,  4  Ch.  D.  327  516,  568, 
576,  657 
V.  Valley  City  Salt  Co., 

25  W.  Va.  789  1309,  1315 

Hopkins  v.  Gallatin  Turn- 
pike Co.,  4  Humph.  (Tenn.) 

403  399,  407 
V.   Roseclare   Lead  Co., 

72  111.  373  1078 
V.  Worcester,  etc.  Canal 

Proprietors,  6  Eq.  437  1464, 

1464,  1603 
Hopkins  County  v.  St.  Ber- 
nard Coal  Co.,  24  Kv.  Law 

Rep.  912;  70S.  W.  289  844 


1141 


409 


Hopkins'  Trust,  Re,   18  Eq, 

696 
Hopper  V.   Lovejoy,  21   Atl. 

298;   47  N.  J.  Eq.  573;    12 

L.  R.  A.  588 
V.     Sage,     112     N.     Y. 

530;   20  N.  E.  350;   8  Am. 

St.  Rep.  771  1132,  1135 

Hoppin  V.   Buffum,   9  R.    I. 

513;  11  Am.  Rep.  291  1020, 

1021,  1021,  1022,  1022 
Hopson  V.   Aetna  Axle,   etc. 

Co.,  50  Conn.  597  64,  1317 

Horbach  v.  Marsh,  37  Nebr. 

22 ;  55  N.  W.  286  1344 
V.  Tyrrell,  48  Nebr.  514; 

67  N.  W.  485  1366 

Horbury  Bridge  Co.,  1 1  Ch.  D. 

109  1013,  1013,  1034,  1036, 

1036,  1038,  1058 
Horn    Silver    Mining    Co.    v. 

Ryan,    42   Minn.    196;     44 

N.  W.  56  1286,  1286 

Hornblower  v.  Crandall,  7  Mo. 

App.  220;   78  Mo.  581        274,310 
Home  V.  Hellard,  29  Ch.  D. 

736  1548 

Home  &  Sons,  W.  C.  (1906), 

1  Ch.  271  1591,  1621,  1621 

Hornsby   v.    Eddy,    56    Fed. 

461 ;  5  C.  C.  A.  500  1619 

Horowitz  V.  Broads  Mfg.  Co., 

104  N.  Y.  Supp.  988  287,  300 

Horsey's  Claim,  5  Eq.  581  91 

Horst  V.  Lewis,  103  N.  W.  400 

(Nebr.);  98  N.  W.  1046  85 

Horton  v.  Morgan,   19  N.  Y. 

170;  75  Am.  Dec.  311       418,  807 
V.  Wilder,  48  Kans.  222; 

29  Pac.  566  1066 

Hoskins  v.   Seaside  Ice,  etc. 

Co.  (N.  J.),  59  Atl.  645      519, 1423 
Hotchkiss  V.  Brainerd  Quarry 

Co.,  58  Conn.  120;    19  Atl. 

521 
V.   National   Banks,   21 

Wall.  354 
V.  Norwood  Park  Bldg., 

etc.  Ass'n  (111.),  82  N.  E. 

257 
Hotchkiss,  etc.  Co.  v.  Union 

Nat.  Bank,  68  Fed.  76;    15 

C.  C.  A.  264  697,  774,  775 

Hotel  Co.  V.  Wade,  97  U.  S. 

13       1309,  1484,  1484,  1586,  1587 
Ho  Tung  V.  Manon  Insurance 

Co.  (1902),  A.  C.  232        554,  557 
Hough  V.  Cook  County  Land 

Co.,  73  111.  23  843,  Si7 


1144 
1435 


919 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Houghton  V.  Hubbell,  91  Fed. 

453;    33  C.  C.  A.  574  621 

Houldswortli  v.  City  of  Glas- 

covv  Bank,  5  A.  C.  317  183 

V.   Evans,   L.   R.   3    H. 

L.  263  622,  665,  789,  789 

House  of  Mercy  v.  Davidson, 

90  Tex.  529 ;  39  S.  W.  924  848 
Household,   etc.    Ins.   v.   Co. 

Grant,  4  Ex.  D.  216  167 

Houser  v.  Richardson,  90  Mo. 

App.  134  684,  684,  801,  1134 

Houston  V.  Thornton,  122  N. 

Car.  365;  29  S.  E.  827;   65 

Am.  St.  Rep.  699  1355 

Houston,  etc.  Ry.  Co.  v.  Bell 

(Tex.),  42  S.  W.  772  1634 
V.  Craw-f ord,  88  Tex.  277 ; 

aiS.W.  176;53Am.St.Rep. 

752;  28  L.  R.  A.  761  1633,  1634 
V.  Keller,  90  Tex.  214; 

37  S.  W.  1062  1666 
V.  Kelley,  35  S.  W.  Rep. 

878  (Tex.)  1633 

V.  McFadden,  91   Tex. 

194;     40   S.    W.    216;     42 

S.  W.  593  1633 
V.     Strycharski     (Tex.), 

35  S.  W.  851  1610,  1633 
V.  Van  Alstyne,  56  Tex. 

439  734,  735,  738 

Howard  v.  Glenn,  85  Ga.  238 ; 

11  S.  E.  610;    21  Am.  St. 

Rep.  156  177,  180,  180,  386 
V.    Hatch,    29    Barb. 

(N  Y.)  297  1379 
V.  Iron  &  Land  Co.,  62 

Minn.  298;  64  N.  W.  896  1499 
V.  Patent  Ivory  Co.,  38 

Ch.  D.  156  286 

V.  Sadler  (1893),    1   Q. 

B.   1  1177,  1177 

V.  Turner,   155  Pa.  St. 

349;    26  Atl.  753;    35  Am. 

St.  Rep.  883  180,  180 

Howard's  Case,  1  Ch.  561  1214 

Howbeach  Coal  Co.  v.  Teague, 

5  H.  &  N.  151  608,  1203,  1213, 
1213,  1226,  1232 
Howe  V.  Boston  Carpet  Co., 

16  Gray  (Mass.)  493  74 
V.    Freeman,    14   Gray 

(Mass.)  566  1551 
V.  Harding,  76  Tex.  17; 

13  S.  W.  41;    18  Am.  St. 

Rep.  17  1611,  1612 

V.  Keeler,  27  Conn.  538       400 

V.  Sanford  Fork  &  Tool 

Co.,  44  Fed.  231  1316 


Howe  Grain  &  Mercantile  Co. 

V.  Jones,  21  Tex.  Civ.  App. 

198;   51  S.  W.  24  517,  572 

Howe,  lie,  1  Paige  (N.  Y.)  214  54 
Howe  Scale  Co.  v.  Wyckoff, 

Seamans   &   Benedict,    198 

U.  S.  118;  25  Sup.  Ct.  609  377 
Howell  V.   Chicago,  etc.   Ry. 

Co.,  51  Barb.  (N.  Y.)  378  463, 
463,  473,  495,  497 
V.  Western  R.  R.  Co.,  94 

U.  S.  463  1409,  1465,  1466, 

1623,  1624 

Howell    Lithographic   Co.    v. 

Brethour,  30  Ont.  R.  204 


Hower  v.  Weiss,  etc.  Co.,  55 
Fed.  356;  5  C.  C.  A.  129 


138 


369, 
369 

786, 
811 


Howie    V.    Scarbrough, 

Ala.  148;   35  So.  113  1167 

Hoyle  V.  Plattsburgh,  etc.  R. 

R.  Co.,  54  N.  Y.  314      1300,  1323, 

1343 
Howling's  Trustees  v.  Smith, 

7  Frazer  (So.)  390  1011 

Hoyt  V.  Am.  Exchange  Bank, 

1  Duer  (N.  Y.)  652  890 

V.     Shenango     Valley 

Steel  Co.,  207  Pa.  208;    56 

Atl.  422  505 

V.  Thompson,  5  N.  Y. 

320  1372 

V.  Thompson's  Ex'r,  19 

N.  Y.  207  1203,  1214 

Hub     Construction     Co.      v. 
New     England     Breeders' 
Club  (N.  H.),  67  Atl.  574       891, 
899,  901,  905 

Hub  Publishing  Co.  v.  Rich- 
ardson. 13  N.  Y.  Supp.  665       306 

Hubbard  v.  Bank  of  U.  S.,  12 

Fed.  Cas.  777  694,  715,  751 

V.  International  Mer- 
cantile Agency  (N.  J.),  59 
Atl.  24  185 

V.  Manhattan  Trust  Co., 

87  Fed.  51;  30  C.  C.  A.  520       201, 
764,  801,  1418 

V.  New  York,  etc.  R.  R. 

Co.,  36  Barb.  (N.  Y.)  286       1432 

V.  New  York  Investment 

Co.,  14  Fed.  675  1262,  1299 

V.  Weare,  79  Iowa  678; 

44  N.  W.  915  1092,  1095 

Hubbard  &  Co.,  68  L.  J.  Ch. 

.^4  1524,  1546,  1548 

Hubbell   V.    Drexel,    11    Fed. 

115  418,418,807 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1601 

617 

424 
915 


244 


Hubbuck  V.  Helms,  56  L.  J. 

Ch.  536  1545,  1548 

Hubinger    v.    Central    Trust 

Co.,  94  Fed.  788;    36  C.  C. 

A.  494 
Hucldersfielci    Canal    Co.     v. 

Buckley,  7  T.  R.  36 
Huddleston  v.  Gouldsburj^  10 

Beav.  547 
Hudson  V.  Carman,  41  Me.  84 
V.  Green  Hill  Cemetery, 

113  111.  618 
V.  Parker  Machine  Co., 

173  Mass.  242;    53  N.  E. 

867  912,  1227 
V.  West,  189  Pa.  St.  491 ; 

42  Atl.  190  341,  342 

Hudson  Real  Estate  v.  Tower, 

161  Mass.  10;  36N.  E.  680; 

42  Am.  St.  Rep.  379;    156 

Mass.  82;  30  N.  E.  465;  32 

Am.  St.  Rep.  434       169,  209,  209, 

210 
Hudson    River,    etc.    Co.    v. 

Hanfield,    36   N.    Y.    App. 

Div.  605;    55  N.  Y.  Supp. 

877  1373, 1402 

Hudson  River,  etc.  R.  R.  Co. 

V.  Hay,  14  Abb.  Pr.  n.  s. 

(N.  Y.)  191  932,  1229,  1251 

Hudson    Valley    Ry.    Co.    v. 

O'Connor,  95  N.    Y.  App. 

Div.  6;  88  N.  Y.  Supp.  742 

358,  1458 
Huffaker    v.     Krieger's     As- 
signee,   107    Ky.    200;     53 

S.  W.  288;   46  L.  R.  A.  384         83 
Hughes  V.  Antietam  Mfg.  Co., 

34Md.  316  95,  100,  106,  131, 

202,  600,  603,  603,  604,  607 

V.  Chicago,  etc.  Ry.  Co., 

47  N.  Y.  Super.  Ct.  531 
V.   Drovers',  etc.    Bank, 

86  Md.  418;    38  Atl.  936 

t;.  Parker,  19  N.  H.  181 

V.  Parker,  20  N.  H.  58 

1035,  1250 
V.  Vermont  Copper  Min- 
ing Co.,  72  N.  Y.  207       1130,1131 
V.    Wisconsin,   etc.    Ins. 

Co.,  98  Wise.  292;  73  N.  W. 

1015 
Hughes  County  v.  Livingston, 

104  Fed.  .306;  43C.C.A.541 
Hughesdale  Mfg.  Co.  v.  Van- 

ner.  12  R.  1.  491 
Hucuenot    Mills    v.    Jempson 

&  Co.,  68  S.  Car.  363;    47 

S.  E.  687  844 


1493 

815 
1035 

998, 


559 

1460 

219 


Huguenot  Nat.  Bank  v.  Stud- 
well,  6  Daly  (N.  Y.)  13 


1185, 
1186 


Hukle  V.  Atchison,  etc.   Ry. 

Co.  (Kans.),  80  Pac.  603 
Hulett's    Case,    2    Johns.    & 

Hem.  306 
Hulitt  V.  Bell,  85  Fed.  98 
V.     Ohio     Valley     Nat. 

Bank,    137   Fed.    461;     69 

C.  C.  A.  609 
HuUman  v.  Honcomp,  5  Oh. 

St.  237 
Humaston  v.  Telegraph  Co., 

20  Wall.  20 
Humbert  v.  Trinity  Church, 

24  Wend.  (N.  Y.)  587 
Humble  v.  Langston,  7  M.  & 

W.  517 
Humboldt       Driving       Park 

Ass'n  V.  Stevens,  34  Nebr. 

528;  52N.  W.  568;  33  Am. 

St.  Rep.  654  487,  499,  1250 

Humboldt  Mining  Co.  v.  Am. 

Mfg.,  etc.  Co.,  62  Fed.  356; 

IOC.  C.  A.  415  84,838 

Humboldt  Township  v.  Long, 

92  U.  S.  642 
Hume  V.  Eagon,  83  Mo.  App. 

576 
Humphrey  v.  Patrons'  Mer- 
cantile Ass'n,  50  Iowa  607 


1634 

1421 
1191 


621 

1250 

163 

848 


782 


1220 
912 


110, 
139 

V.  Tatman,  198  U.  S.  91 ; 

25  Sup.  Ct.  567  1506 

Humphreys  v.  Allen,  100  111. 

511  1529 

V.  McKissock,  140  U.  S. 

304 ;  11  Sup.  Ct.  779       1073,  1510 

V.  Minnesota   Clay  Co., 

94  Minn.  469;    103  "S.  W. 

338  749 

V.  Mooney,  5  Colo.  282        101, 

113,  119,  120,  124,  126, 
252,  1009 

V.  Morton,  100  111.  592   1449, 

14.52,  1453,  1460 

V.  N.  Y.,  etc.  R.  R.  Co., 

121  N.  Y.  435;    24  N.  E. 
695  1541 

Hun  r.  Cary,  82  N.  Y.  65;  37 

Am.  Rep.  546       12.59,  1273,  1275, 
1284,  1286,  1289 
Hunt    V.    American    Grocery 

Co.,  81  Fed.  532  71 

V.   Bay  State   Iron  Co., 

97  Mass.  279  1537 

V.  Bullock,  23  111.  320        1396, 

1503 


TABLE   OF    CASES 
[The  references  are  to  pages] 


Hunt  V.  Hauser  Mult i rig  Co., 

90  Minn.  282;  96  N.  W.  85  846 
V.  Hauser  Maltino;  Co., 

95  Minn.  206;    103  X.  W. 

1032  846 
V.    Kansas,    etc.    Bridge 

Co.,  11  Ivans.  412       147,  148,  150, 

608 
V.  Laconia,  etc.  Ry.  Co., 

68  N.  H.  561;  39  Atl.  437  810 
V.  O'Shea,  69  N.  H.  600; 

45  Atl.  480  1121 
V.  Seeger,  91  Minn.  264; 

98  N.  W.  91  616,  695 

Hunt  &  Bro.  v.  Memphis,  etc. 

Co.,95Tenn.  136;  31  S.  W. 

1006  1405,  1564 

Hunter    v.    Burlington,    etc. 

Ry.  Co.,  76  Iowa  490;    41 

N.  W.  305  1632 

V.  Robbins,  117  Fed.  920       928 

V.  Roberts,  Throp  &  Co., 

83Mich.  63;  47N.  W.  131      1111, 

1112 
V.  Sun  Mutual  Ins.  Co., 

26  La.  Ann.  13  593,  593,  594, 
1276,  1364 
Huntington   v.    Palmer,    104 

U.  S.  482  950 

Huntington  Fuel  Co.  v.  Mc- 

Ilwaine    (Ind.),    82    N.    E. 

1001  1078,  1079,  1196,  1383 

Huntington  Mfg.  Co.  v.  Scho- 

field,  28  Ind.  App.  95;    62 

N.  E.  106  127 

Hurd  V.  Hotchkiss,  72  Conn. 

472;   45  Atl.  11  917 

Hurlburt  v.  Arthur,  140  Cal. 

103 ;    73  Pac.  734 ;    98  Am. 

St.  Rep.  17  616,  623 

Hurlbut  V.  Tayler,  62  Wise. 

607;    22  N.  W.  855  1128 

Hurt  V.  Salisbury,  55  Mo.  310  123, 
127,  242,  252,  306 
Hussey  v.  Gallagher,  61  Ga. 

86  580,  998,  1250 

■ V.    Manufacturers',    etc. 

Bank,  10  Pick.  (Mass.)  415       156, 

752 
V.   Norfolk,   etc.   R.  R. 

Co.,  98  N.  Car.  34;   3  S.  E. 

923;  2  Am.  St.  Rep.  312  869 

Hutchins  v.   Byrnes,  9  Gray 

(Mass.)  367  399,  400 
V.  State  Bank,  12  Met. 

(Mass.)  421  792 

Hutchinson       r.       American 

Palace  Car  Co.,    104    Fed. 

182  957 


Hutchinson  r-.Colorado  United 

Mining  Co.,  3  Times  L.  R. 

265  ^  722 
V.    Curtiss,    45    N.    Y. 

Misc.  484 ;   92  N.  Y.  Supp. 

70  1110,  1125,  1283 
V.  Green.  91  Mo.  367;    1 

S.  W.  853  1187 

V.   Simpson,   92  N.   Y. 

App.  Div.  382;    87  N.  Y. 
Supp.  369  325,  326,  330 

V.  Sutton  Mfg.  Co.,  57 

Fed.  998  1265 

V.  Western,  etc.  R.  R. 

Co.,  6  Heisk.  (Tenn.)  634 

869,  877 
Hutchinson's  Case  (1895),   1 

Ch.  226  1170,   1171,   1172, 

1172,1172,1172 
Huter    V.    Union    Trust    Co. 

(Ind.),  51  N.  E.  1071  852 

Hutter  V.  DeQ.  Bottle  Stop- 
per Co.,  128  Fed.  2S3  1356 
Hutton  V.   Bancroft  &  Sons 

Co.,  83  Fed.  17  950,  951 
V.     Scarborough     Hotel 

Co.,  2  Dr.  &  Sm.  521  431,440, 

441,  442,  583 

V.  Scarborough  Hotel  Co., 

4  De  G.  J.  &  S.  672 ;  2  Dr.  & 

Sm.  514 
V.  Thompson,  3  H.  L.  C. 

161 
V.  Upfill,  2  H.  L.  C.  674 

V.  West  Cork  Ry.  Co., 

23  Ch.  D.  654  82,  82,  1237 

Hutzler  v.  Lord,  64  Md.  534 ; 

3  Atl.  891  782,  782 

Huylar  v.  Cragin  Cattle  Co., 

40  N.  J.  Eq.  392 ;  2  Atl.  274 ; 

42  N.  J.   Eq.   139;    7  Atl. 

521  894.  898,  900 

Hyatt  r.  Allen,  56  N.  Y.  553; 

15  Am.  Rep.  449 
V.  Van  Riper,  105  Mo. 

App.  664  ;   78  S.  W.  1043 
Hyde  v.  Doe,  4  Sawy.  133 

r.    Holmes    (Mass.),   84 

N.  E.  318 

V.  Larkin,  35  Mo.  App. 

365  1381, 1382 

Hyderbad  Co.,  75  L.  T.  23  530, 
536,  537,  545,  546 
Hygeia    Water    Ice    Co.    v. 

New  York  Hvgeia  Ice  Co., 

140  N.  Y.  94 :'  35  N.  E.  417  373 
Hynes  v.   Illinois  Trust,  etc. 

Bank,  226  111.  95 :  SO  X.  E. 

753  1426 


440 

274 
275 


1135 

252 
126 

1146 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Hyslop  V.  Morrel  Bros.,  W. 

N. (1891)  19  175 

I 

I.  C.  Johnson  &  Co.  (1902),  2 

Ch.  101  1497,  1498,  1525 

Ide  V.  Bascomb,  72  Pac.  62  931 

Ijamsr.  Andrews,  151  Fed.  725  305 
Ikelheimer    v.     Consolidated 

Tobacco    Co.    (N.    J.),    59 

Atl.  363  1674,  1674 

Dfracombe   Permanent   Mut. 

Benefit  Bldg.  Soc.   (1901), 

1  Ch.  102  257 

nion  Bank  v.  Carver,  31  Barb. 

(N.  Y.)  230  1288 

Illingworth    v.    Houldsworth 

(1904),  A.  C.  355  1393,  1396, 

1547 
Illinois,  etc.  Bank  v.  Pacific 

Ry.  Co..  117  Cal.  332;    49 

Pac.  197  840,  861,  1402, 

1409,  1414,  1531 
Illinois  Central  R.  R.  Co.  v. 

Barrett,  23  Ky.  Law  Rep. 

1755;  66S.  W.  9  920 

Illinois  Linen  Co.  v.  Hough, 

91  111.  63  1238 

niinois     Stat?     Hospital     v. 

Higgins,  15  111.  185  381 

Illinois  Steel  Co.  v.  O'Donnell, 

156  111.  624;   41  N.  E.  185; 

47  Am.  St.  Rep.  245;  31  L. 

R.  A.  265  1317 

Illinois   Trust,    etc.    Bank   v. 

Doud,    105   Fed.    123;     44 

C.  C.  A.  389;    52  L.  R.  A. 

481  73,  1455,  1566 

V.  Minton,  120  Fed.  187 

1484,  1554 
V.  Seattle  El.  Ry.,  etc. 

Co.,  82  Fed.  936;    27  C.  C. 

A.  268  1495 

Illinois    Watch    Case    Co.    v. 

Pearson,   140  111.  423;    31 

N.  E.  400;   16L.  R.  A.  429 

125,  222,  372,  385 
Imperial  Gas  Co.  v.  Clarke,  7 

Bing.  95  890 

Imperial  Hydropathic  Hotel 

Co.    V.    Hampson,    23    Ch. 

D.  1  1162,  1183,  1183 
Imperial    Land    Corporation, 

16  W.  R.  1191  189 

Imperial   Land   Co.    of  Mar- 
seilles, 10  Eq.  298  1364 

,  11  Eq.  478  1420,  1422, 

1422,  1426,  1441 


Imperial  Mercantile  Ass'n  v. 
Coleman,  L.  R.  6  H.  L.  189 

1179,  1179,  1296,  1300,  1309, 
1331,  1333 
Imperial     Mercantile     Credit 
Ass'n  V.  London,  etc.  Ry. 
Co.,  15\Y.  R.  1187  65 

Imperial     Mercantile     Credit 

Co.,  5  Eq.  264  1266 

Imperial  Mfg.  Co.  v.  Schwartz, 

105  111.  App.  525        371,  373,  384 
Imperial  Starch  Co.,  10  Ont. 

L.  R.  22  571,  744 

Importing  &  Exporting  Co.  v. 

Locke,  50  Ala.  332  259,  261 

Ince  Hall,  etc.  Co.,  23  Ch.  D. 

545  n  628 

Ind's  Case,  7  Ch.  485  417 

Independent    Order    v.  Hag- 

gerty,  86  111.  App.  31  589 

Inderwick  v.  Snell,  2  Mac.  & 

G.  216  1184 

Indian  Mechanical  Gold  Ex- 
tracting Co.  (1891),  3  Ch. 
538  137 

Indian  Zoedone  Co.,  26  Ch. 

D.  70  1042,  1042,  1043,  1057, 

1058 
Indiana  Bermudez,  etc.  Co.  v. 
Robinson,  29  Ind.  App.  59; 
63  N.  E.  797  1212 

Indiana  Bond  Co.  v.  Ogle,  22 
Ind.  App.  593;    54  N.  E. 
407;   72  Am.  St.  Rep.  326         45, 
111,  238,  244 
Indiana,    etc.    R.    R.    Co.    v. 
Swannell,  157  111.  616;   41 
N.  E.  989;   30  L.  R.  A.  290 

1661,  1661,  1664 
Indianapolis,  etc.  Co.  v.  Her- 
kimer, 46  Ind.  142  127,  232, 
233,  242 
Indianapolis,  etc.  R.  R.  Co. 
V.    Morganstem,     103     111. 
149                                  .  407 
Indianapolis    Rolling  Mill  v. 
St.  Louis,  etc.  R.  R.  Co., 
120  U.  S.  256;    7  Sup.  Ct. 
542                                    1373,  1382 
Industrial      Land      Develop- 
ment Co.  V.  Post,  55  N.  J. 
Eq.  5.59;    37  Atl.  892               1468 
Industrial  Mutual  Deposit  Co. 
V.  Central  Mutual  Deposit 
Co.,  112  Ky.  937;  66  S.  W. 
1032  371 
Industrial,  etc.  Trust  v.  Tod, 

180N.  Y.  215;  73  N.  E.  7       1660, 
1662,  1663 


TAI5LE    OF    CASES 
[The  references  are  to  pages] 


Inglehart  v.  Thousand  Island 
Hotel  Co.,  109  i\.  Y.  454; 
17  X.  K.  358  1315 

Inglis  V.  Great  Northern  Ry. 
Co.,  1  Macq.  II.  L.  Cas.  112 

667,  667 

V.   Trustees   of  Sailors' 

Snug  Harbour,  3  Pot.  99  302 

Ingrahaiu  v.  National  Salt  Co., 

130  Fed.  676;    65  C.  C.  A. 

54  440,  440,  452 

Inhabitants  of  Anson,  85  Me. 

79;    26  Atl.  996  1493,  1493, 

i493,  1494,  1586 
Inman    v.    .\ckroyd    &    Best 

(1901),  1  K.  B.  613  1241 

Innes   &   Co.    (1903),    2   Ch. 

254  24,  330,  627,  629,  635, 

1290,  1340 
Inns  of  Court   Hotel  Co.,   6 

Ch.  82  1399 

Instone  v.    Frankfort   Bridge 

Co.,  2    Bibb  (Ky.)  576;    5 

Am.  Dec.  638  667 

Insurance   Bank  v.   Bank  of 

U.  S.,  4  Clark  (Pa.)  125     992, 

1193 
Insurance  Co.  v.   Connor,  17 

Pa.  St.  136  584 

Insurance  Press  v.   Montauk, 

etc.   Wire  Co.,    103  N.   Y. 

App.  Div.  472;    93  N.  Y. 

Supp.  134  324 

Interior    Woodwork    Co.    v. 

Prassar,  108  Wise.  557;   84 

N.  W.  833  85 

International  Bank  v.  Faber, 

86  Fed.  443;    30  C.  C.  A 

178  1182, 1367 

International    Boom    Co.    v. 

Rainy    Lake    River   Boom 

Co.,    97    Minn.    513;     107 

N.  W.  735  21,  39,  60 

International  Cable  Co.,  66  L. 

T.  253  1170,  1170,  1170 

International  Coal  Mining  Co. 

V.  Pennsylvania  R.  Co.,  152 

Fed.  557  891 

V.  Penn.svlvania  R.  Co., 

152  Fed.  55"l  1514 

International    Committee    Y. 

W.  C.  A.  V.  Y.  W.  C.  A.,  194 

111.  194;    62  N.  E.  551;    56 

L.  R.  A.  888  371 

International  Fair,  etc.  A.«;s'n 

V.   Walker.   83   Mich.   386; 

47  N.  W.  338  212.  601,  60S 

International   Life  Ass.  Soc, 

39  L.  J.  Ch.  271  1244 


International     Savings,     etc. 

Co.  V.  Stenger,  31  Pa.  Super. 

Ct.  294  140,  386 

International    Silver    Co.    v. 

Simeon,    etc.    Rogers    Co., 

1 10  Fed.  955  377 
V.  William  G.  Rogers  Co., 

113  Fed.  526  377 
International    Trust    Co.    v. 

Davis,    etc.    Mfg.    Co.,    70 
N.  H.  118;  46  Atl.  1054  110, 

859,  1497,  1498 

V.    Decker    Bros.,    152 

Fed.  78  1606,  1625,  1560 
V.  International  L.  &  T. 

Co.,     153    Mass.    271;     26 

N.  E.  693;    10  L.  R.  A.  758      375, 

377 
V.  Townsend  Brick,  etc. 

Co.,  95  Fed.  850;   37  C.  C. 

A.  396  1564,  1566 

International  Wrecking,  etc. 

Co.  V.  McMorran,  73  Mich. 

467;  41  N.  W.  510  1080 

International,  etc.  Ry.  Co.  v. 

Herndon,  11  Tex.  Civ.  App. 

465;   33  S.  W.  Rep.  377  1643 

V.    Went  worth,   8   Tex. 

Civ.  App.  5:  27  S.  W.  680  1643 
Interoceanic  Ry.  of  Mexico,  3 

Manson  162  1672 

Interstate  Hotel  Co.  v.  Wood- 
ward, etc.  Amusement  Co., 
103  Mo.  App.  198;  77S.  W. 

114  856 
Investment  Co.  v.  Eldridge,  2 

Pa.  Dist.  Rep.  394  895,  897 
V.  Ohio,  etc.  R.  R.  Co., 

36  Fed.  48  1649,  1649,  1650 
V.  Ohio,  etc.  R.  R.  Co., 

46  Fed.  696  1490,  1591 

Iowa   Lumber  Co.  v.   Foster, 

49  Iowa  25;    31  Am.  Rep. 

140  517 

Iowa    Nat.    Bank   v.    Cooper 

(Iowa),  107  N.  W.  625  810 

V.  Sherman,  17  S.  Dak. 

396;     97    N.    W.    12;     106 

Am.  St.  Rep.  778  1372 

Iowa,  etc.  R.  R.  Co.  v.  Per- 
kins, 28  Iowa  281  609 
Ipswich    Taylor's    Case,     11 

Coke  53  569 

Irelixnd  v.  Globe  Milling  Co., 

19  R.  I.  ISO;    32  Atl.  921; 
61   Am.  St.  Rep.   756;    29 

L.  R.  A.  429  567 
V.  Globe  Milling,  etc.  Co., 

20  R.  I.  190;  3S'Atl.  116  301 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Ireland  v.  Globe  Milling  Co.,  21 
R.  I.  9;  41  Atl.  258;  79 
Am.  St.  Rep.  769       567,  571,  573 

V.  Hart  (1902),  1  Ch.  522 

696,  710,  711,  718,747 
I'.  Palestine,  etc.  Turn- 
pike Co..  19  Oh.  St.  369  652 
Ireland  &  Co.,  David  (1905), 

1  Ir.  133  1264 

Iron  Clay  Brick  Mfg.  Co.,  19 

Ont.  113  1343 

Iron    Ship    Coating    Co.    v. 

Blunt,  L.  R.  3  C.  P.  484         1178, 

1179 
Irvine  Co.  v.  Bond,  74  Fed. 

849  266,  882,  884 

Irving  V.  Houstoun,  4  Paton 

Sc.  App.  521  1141,  1142 

Irving  Park  Ass'n  v.  Watson, 

41  Oreg.  95 ;  67  Pac.  945  803 

Irwin  V.  McKechnie,  58  Minn. 
145:  59N.  W.  987;  49  Am. 
St.  Rep.  495;  26  L.  R.  A. 
218  1617,  1618 

Isaac's  Case  (1892),  2  Ch.  158 

1172,  1175 
Isbell   V.    Graybill,    19    Colo. 

App.  508;   76  Pac.  550      716,  747 
Isbester  v.  Murphy  Mfg.  Co., 

95  111.  App.  105  579,  666 

Isham  V.  Bennington  Iron  Co., 

19  Vt.  230  409 

V.  Buckingham,  49  N.  Y. 

216  696 

Isle    of    Wight    Ry.    Co.    v. 

Tahourdin,  25  Ch.  D.  320        993, 

997,  997,  1062,  1062, 

1164,  1193 

Ismon   V.    Loder,    135    Mich. 

345;  97N.  W.  769  392,398, 

409,  912 


1355 

1396 

407 

1223 


J.    &  P.   Coats  V.   Crossland, 

20  Times  L.  R.  800 
Jackson  v.  Bassford  (1906),  2 

Ch.  467 

V.   Campbell,   5  Wend. 

(N.  Y.)  572 

V.     Cannon,     10     Brit. 

Columb.  73 

V.  Crown  Point  Mining 

Co.,  21  Utah  1  ;  81  Am.  St. 

Rep.  651 ;  59  Pac.  238        138,  140, 

1181,  1226,  1232 

V.   Dickinson    (1903),  1 

Ch.  947  813 

V.  Ludeling,  21  Wall.  616 

1344,  1590,  163G 


Jackson  v.  Munster  Bank,  13 

L.  R.  Ir.  118       82,  89,  954,  1004, 
1062,  1062 

V.    Munster    Bank,     15 

L.  R.  Ir.  356  1282,  1282 

V.  Myers,  43  Md.  452  398, 

403,  406 

V.  Newark  Plank  Road 

Co.,  31  N.  J.  Law  277  1120 

V.  N.  Y.  Central  R.  R. 

Co.,2Thomp.  &  C.  (N.  Y.) 

653;  58  N.  Y.  623  1246 

V.    Rainford    Coal    Co. 

(1896),  2  Ch.  340  66 

V.   South   Omaha  Live 

Stock  Exchange,  49  Nebr. 

687;   68  N.  W.  1051  580 

V.  Traer,  64  Iowa  469; 

20  N.  W.  764 ;  52  Am.  Rep. 

449  630,  631 

V.  Turquand,  L.  R.  4  H. 

L.  305        165,  170,  184,  501,  509, 
510,  510 

V.  Vicksburg,  etc.  R.  R. 

Co.,  2  Woods  141  1410,  1425 

V.  Y.  &  C.  R.  R.  Co.,  48 

Me.  147  1423,  1451 

Jackson  &  Co.  (1899),  1  Ch. 

348  640,  640,  642 

Jackson,  etc.  Co.  v.  Burling- 
ton, etc.  R.  Co.,  29  Fed.  474    1441, 
1592,  1624 
Jackson,     etc.     Ins.     Co.     v. 

Walle,105La.89;29So.503       613 
Jackson  Brewing  Co.  v.  Can- 
ton (La.),  43  So.  454  1372 
Jackson    ex    dem.    Ballou    v. 
Campbell,  5  Wend.  (N.  Y.) 
572                                    1379,  1380 
Jackson  ex  dem.   Donally  v. 

Walsh,3Johns.  (N.  Y.)226       399 
Jackson    ex    dem.    Lynch    v. 
Hartwell,  8  Johns.  (N.  Y.) 
422  55 

Jackson    ex    dem.    Martin    v. 

Pratt,  10  Johns  (N.  Y.)  381       404 
Jackson   ex   dem.   Walton   v. 
Leggett,  7  Wend.  (N.  Y.) 
377  228 

Jacksonville     Cigar     Co.     v. 

Dozier  (Fla.),  43  So.  523  1341 

Jacksonville,  etc.  Ry.  Co.  v. 
Hooper,  160  U.  S.  514;    16 
Sup.  Ct.  379        68,  397,  404,  406, 
'  1233 

Jacobs  V.  Mexican  Sugar  Re- 
fining Co.,  104  N.  Y.  App. 
Div.  242;  93  N.  Y.  Supp. 
776  975 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Jacobs  V.  Mexican  Sugar,  etc. 
Co.,  112  N.  Y.  App.  Div. 
655;  98  N.  Y.  Supp.  541  890 

V.   Mexican   Sufjar  Ref. 

Co.,   112  N.  Y.  App.  Div. 

657  393 

Jacobs     Pharmacy     Co.     v. 

Southern  Banking,  etc.  Co., 

97  Ga.  573;   25  8.  E.  171  862 

Jacobson  t'.  Brooklyn  Lumber 

Co.,    181    N.    Y.    152;     7G 

N.  E.  1075  942,  1322 

Jacques  V.  Chambers,  4  Eng. 

Ry.  &  Canal  Cas.  205  788 
V.  Chambers,  4  Eng.  Ry. 

&  Canal  Cas.  499  789 

Jamaica  Ry.  Co.  v.  .\tty.-Gen. 

of  Jamaica   (1893).'  A.   C. 

127  1679,  1679,  1679,  1681 

James  v.  Boj'lhorpe  Colliery 

Co.,  2  Megone  oo  1530 

V.  Buena  Ventura  Ni- 
trate  Syndicate   (1896),    1 

Ch.  456  501,  505,  788 

V.  Cowing,  82  N.  Y.  449       1487, 

1667,  1668 


V.  Eve,  L.  R.  6  H.  L.  335 


1106, 
1163 


V.  Railroad  Co.,  6  Wall. 

752  1636 
,  Re,  146  N.  Y.  78:    40 

N.  E.  876;  48  Am.  St.  Rep. 

774  1136,  1144,  1154, 1155 

James  Clark  Co.  v.  Colton,  91 

Md.  195;    46  Atl.  386;    49 

L.  R.  A.  698  1276,  1305 

James     Colmer,      Ltd.,      Re 

(1897),  1  Ch.  524  544 

Jameson  v.  Caldwell,  25  Oreg. 

199;  35  Pac.  245  1347 

Jamieson    &    McFarland    v. 

Heim  (Wash.),  86  Pac.  165  68 
Jarvis    v.    Manhattan    Beach 

Co.,  53  Hun  (X.  Y.)  362; 

6  N.    Y.   Supp.    703;     148 

N.  Y.  652;  43  N.  E.  68;  31 

L.  R.  A.  776;    51  Am.  St. 

Rep.  727  734,  740,  743, 

784,  784 

V.  Rogers,  13  Mass.  105        723 

V.  State  Bank,  22  Colo. 

309;  45  Pac.  505  1542 

Jarvis's   Case    (1899),    1    Ch. 

193  149,  205,  642 

Jasper    Land    Co.    r.    Wallis, 

123  .\la.  652;   26  So.  6.-)9  958 

Jay  Bridge  Co.  t\  Woodman, 

31  Me.  573  600 

Jaycox,  Re,  12  Blatchf.  209  864 


Jefferson  County  Sav.  Bank, 

115  Ala.  317;   23  So.  48  972 

Jegon,    Ex  parte,    12   Ch.    D. 

503  1106 

Jellenik  v.  Huron  Copper,  etc. 

Co.,  177  U.  S.  1;    20  Sup. 

Ct.  559  423 

Jemison     v.     Citizens'     Sav. 

Bank,   122  N.   Y.   135;    25 

N.  E.  264;   9  L.  R.  A.  708; 

19  Am.  St.  Rep.  482  854 

Jenkins  v.  Baxter,  160  Pa.  St. 

199;  28  Atl.  682  1250 
V.  John  Good  Cordage, 

etc.  Co.,  56  N.  Y.  App.  Div. 

573;  68  N.  Y.  Supp.  239  1416 
Jenner  Institute  of  Preven- 
tive Medicine,  15  Times  L. 

R.  394  999,  1000,  1001 

Jenner's  Case,  7  Ch.  D.  132  1171 
Jennings  v.  Bank  of  Califor- 
nia, 79  Cal.  323;    21   Pac. 

852;    12  Am.  St.  Rep.  145; 

5  L.  R.  A.  233  573,  573,  574, 
771,  775 
V.  Hammond,  9  Q.  B.  D. 

225  260 

,  i?e  (1851),  1  Ir.  Ch.  236      605. 

608,  609,  610,  623,  769,  915 
Jermain  v.   Lake  Shore,  etc. 

Ry.  Co.,  91  N.  Y.  483  1132,  1136 
Jerome   v.   Cogswell,  204    U. 

S.  1  540,  541,  543 

V.  McCarter,  94  U.  S.  734    1439 

Jersey  City  Gas  Co.  v.  Dwight, 

29  N.  J.  Eq.  242        148,  149,  222, 

245 
Jersey    City    Paper    Co.,    69 

N.  J.  Law  594 ;  55  Atl.  280  1066 
Jessup    V.    Bridge,    11    Iowa 

572;  79  Am.  Dec.  513  1503, 

1553,  1677 
Jesup  V.  City  Bank,  14  Wise. 

331  1405,  1409,  1466,  1638 
V.  Illinois  Central  R.  R. 

Co.,  43  Fed.  483  1306,  1306, 

1310 
Jewett  V.  Valley  Ry.  Co.,  34 

Oh.  St.  601  607,  607 
V.  West  Somerville,  etc. 

Bank,  173  Mass.  54;   54  N. 

E.  1085;    73  Am.  St.  Rep. 

259  1380 

J.  G.  Brill  Co.  V.  Norton,  etc. 

Street  Rv.  Co.,   189  Mass. 

431;  75  N.  E.  1090  84.  863 

J.    F.    White   Co.    v.    Carroll 

(N.  Car.).  59  S.  E.  678  1503 

Jhons  V.  People,  25  Mich,  499  126 
xi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1617 


407, 


J.    I.    Case    Plow    Works    v. 

Finks.    81    Fed.    529;     26 

C.  C.  A.  46 
Joel  T.  Bailey  &  Co.  v.  Snyder 

Bros.,  61  111.  App.  472 

1371,  1376,  1377 
Johannesburo:       Hotel       Co. 

(1891),  1  Ch.  119  643 

John  A.  Roebling's  Sons  Co. 

t'.  Barre,  etc.  Power  Co.,  76 

Vt.  131:  56  Atl.  530       1213,  1215 
John  Bridge  &  Co.  v.  Magrath, 

4  Xew  So.  Wales  State  Rep. 

441  85 

John  Hancock,  etc.  Ins.  Co.  v. 

Worcester,  etc.  R.  R.  Co., 

149  Mass.  214:  21  N.  E.  364     1476 
John  Morley  Bldg.  Co.  v.  Bar- 

ras  (1891),  2  Ch.  386     1201,  1212, 
1213,  1231 
John  V.  Farwell  Co.  v.  Wolf, 

96  Wise.  10:   70N.  W.  289; 

71  N.  W.  109:   37  L.  R.  A. 

138;  65  Am.  St.  Rep.  22 
Johns    V.    Johns,    1    Oh.    St. 

350 

V.   McLester,    137   Ala. 

283:    34  So.  174;    97  Am. 

St.  Rep.  27  931,  943 

Johnson  v.  Albany,  etc.  R.  R. 
Co.,  54  N.  Y.  416;  13  Am. 
Rep.  607  428,  428,  615 

V.  Amberson,    140  Ala. 

342;   37  So.  273 

V.  Bridgewater  Iron  Mfg. 

Co.,  14  Gray  (Mass.)  274 


844 
420 


798 


1132, 
1137 

—  V.  Bush,  3  Barb.  Ch.  207      405 

—  V.  Corser,  34  Minn.  355; 

25  N.  W.  799  252,  252,  254 

V.    Crawfordsville,    etc. 

R.  R.  Co.,  11  Ind.  280  229 

—  V.  Hume,  138  Ala.  564; 

36  So.  421  422,  678 

—  V.  Kessler,  76  Iowa  411; 

41  N.  W.  57  149,  160 

—  V.    Langdon,    135    Cal. 
624;  67  Pac.  1050;  87  Am. 

St.  Rep.  156  901,  906 

—  V.  Lyttle's  Iron  Agency, 

5  Ch.  D.  687       613,  657,  659,  663 

—  V.  Okerstrom,  70  Minn. 

303;  73  N.  W.  147  117,  124, 

229,  246,  247,  248,  917 

—  V.   Sage,   4   Idaho   758; 

44  Pac.  641  1371,  1376,  1377 

—  V.    SomerA'ille    Dyeing 
etc.  Co.,    15  Gray  (Mass.) 

216  616 


Johnson  v.  Stoughton  Wagon 
Co.,  118  Wise.  438;  95N.  W. 


109 


394 

V.    Stratton, 

App.  481 

V.  Underhill,  52  N, 

203 

V.  Wabash,  etc.  Co. 

Ind.  389 

Johnson  &  Co 
2  Ch.  101 


1278,  1279 
111. 

786 
Y. 

697,  782 
16 

211 
I.  C.  (1902), 

1497,  1498,  1525 


Johnston   v.    Allis,    71    Conn. 

207;  41  Atl.  816  176 
V.  Crawley,  25  Ga.  316; 

71  Am.  Dec.  173  398,  399 
V.  Elizabeth,  etc.  Ass'n, 

104  Pa.  St.  394  1378 

V.   E\\'ing  Female  Uni- 
versity, 35  111.  518  119 

V.  Grumble,  19  So.  Rep. 

100  (Miss.)  297 

V.  Jones,  23  N.  J.  Eq. 

216  996,  1000,  1210,  1212, 

1225,  1250 

V.  Laflin,  103  U.  S.  800      519, 

694,  701 

V.  Ronton,  9  Eq.  181  728, 

747,  754,  755,  755,  757 
John.ston      Foreign      Patents 

Co.  (1904),  2  Ch.  234  80 

Johnston    Harvester    Co.    v. 

Clark,  30  Minn.  308  233,  233 

Joint  Stock  Discount  Co.,  36 

L.  J.  Ch.  150  898 
V.  Brown,  3  Eq.  139;    8 

Eq.  381  75,  77,  97,  1265,  1280, 
1282,  1282,  1283,  1368 
Joliet     Electric     Light,     etc. 

Co.  V.  Ingalls,  23  111.  App. 

45  1371 

Joliet  Iron  Co.  v.  Scioto  Fire 

Brick  Co.,  82  111.  548  1439 

Jones  V.  Arkansas  Mech.,  etc. 

Co.,  38  Ark.  17  1276 
V.  Aspen  Hardware  Co., 

21  Colo.  263;   40  Pac.  457; 

52  Am.  St.  Rep.  220;    29 

L.  R.  A.  143  147,  238,  238, 

246,  247,  302 

V.  Atchison,  etc.  R.  R. 

Co.,    150    Mass.    304;     23 
N.     E.    43;    5    L.    R.    A. 

538  _  791 
V.  Bank  of  Leadville,  10 

Colo.  464;  17  Pac.  272  1188 
V.  Bonanza  Mining,  etc. 

Co.  (Utah),  91  Pac.  273  652, 

1166,  1226,  1227 

V.  P.rinley,  1  East  1  421 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Jones  V.  Central  Trust  Co.,  73 

Fed.  568;   19  C.  C.  A.  509       1490, 

1507 

V.  Cincinnati  Type  Foun- 
dry Co.,  14  Ind.  S9  232,  384 

V.  Concord  it  Montreal 

R.  R.  Co.,07N.  II.  119;  38 

Atl.  120  409,  473,  488,  499, 

503,  1039 

V.  Concord  it  Montreal 

R.  R.  Co.,  67  N.  H.  234; 
30  Atl.   014;    68  Am.   St. 

Rep.  650  469,  473,  488,  500, 

1004 
V.  Dana,  24  Barb.  (N.  Y.) 

395  222 
V.  Guaranty,  etc.  Co.  101 

U.  S.  622  65,  835 
V.  Habersham,  107  U.  S. 

174;   2  Sup.  Ct.  336 

V.   Hale,  32  Oreg.  405; 

52  Pac.  311 

V.  Hanna,  24  Tex.  Civ. 

App.  550:    60  S.  W.  279 

V.  Harrison,  2  Ex.  52 

V.  Hilldale  Cemetery  Soc. 

(Ky.),  65  S.  W.  838         998,  1069 

V.    Imperial    Bank,    23 

Grant  (Can.)  202  965,  968 

V.  Johnson,  86  Ky.  530; 

6  S.  W.  582 

V.  Milton,  etc.  Turnpike 

Co.,  7  Ind.  547 

V.  Missouri-Edison  Elec- 
tric Co.,  144  Fed.  765;    75 
C.  C.  A.  631  240,  245.  263, 
902.  979,  1083 

V.    Morrison,   31    Minn. 

140;  16N.  W.  854         81.496,499 

504,  509,  517,  1001,  1199, 

1299,  1319, 1322 

V.     Nassau     Suburban 

Home  Co.,  103  N.  Y.  Supp. 
1089;  53  N.  Y.  Misc.  63 

V.  Pearl  Mining  Co.,  20 

Colo.  417;    38  Pac.   700 

V.   Schlapback,  81  Fed. 

274  1010, 1617 

V.  Seligman,  81  N.  Y.  190 

1-582 
V.  Sisson,  6  Gray  (Mass.) 

288  604 
V.  Smith  (Tex.),  87  S.  W. 

210  289,  293 
V.  Terre  Haute,  etc.  R.R. 

Co.,  57  N.  Y.  190        497.  501,  746. 
1110,  1132.  1133.  1477 
V.  Vance  Shoe  Co.,  92  111. 

App.  158  593,  594,  1242,  1247 


837 

1317 

1328 
341 


1274 
1045 


1004 
940 


Jones  V.  Williams,  139  Mo.  1 ; 

39  S.  W.  480 ;  40  S.  W.  353 ; 

01   Am.  St.   Rep.   43();    37 

L.  R.  A.  082  880,  1078,  1213, 
1251,  1348,  1374 
,  Ex  parte   (1900;,  1  Ch. 

220  107 
,  Kx  parte,   27  L.  J.  Ch. 

000      417,  524,  525,  664,  702, 

702 
Jones,  Lloyd  &  Co.,  41  Ch.  D. 

159  042 

Jones's  Case,  0  Ch.  48  205 

Jordan    v.    Richmond    Home 

for  Ladies  (Va.),  50  S.  E. 

730  380,  380 

Jordan,  etc.  Co.  v.  Collins,  etc. 

Co.,  107  Ala.  572;    IS  So. 

137  1009,  1211 

Joseph  V.  Holroyd,  22  W.  R. 

014  783 
V.  Raff,  82  N.  Y.  App. 

Div.  47;    81  N.  Y.  Supp. 

540;     170  N.   Y.   Oil;    08 

N.E.I  118  519,521 

Joseph  Bancroft  &  Sons  Co.  v. 

Bloede,   100  Fed.  390;    45 

C.  C.  A.  354 ;  52  L.  R.  A.  734  76 
Josephs  V.  Prebber,  3  B.  &  C. 

039  7,  259 

Joshua  Stubbs,  Ltd.  (1891),  1 

Ch.  475  1581,  1598 

Joslyn  V.  St.  Paul  Distilling 

Co.,  44  Minn.  183 :  40  X.  W. 

337  093,  733.  733,  733 

Journal  Pub.  Club,  30  N.  Y. 

Misc.  320:   63  N.  Y.  Supp. 

465  1249 

Journalists  Fund  of  Phila- 
delphia, Re,  8  Piiila.  272  94 
Joy   V.    Jackson,    etc.    Plank 

Road  Co.,  11  Mich.  155  1521 

Judah  V.  American,  etc.  Ins. 

Co.,  4  Ind.  333       147,  175,  219, 

606 
Juker  V.  Com.  ex  rel.  Fisher,  20 

Pa.  St.  484  1008,  1011,  1249 

Julian   V.   Central  Trust  Co., 

193  U.  S.  93;    24  Sup.  Ct. 

399  1632 

Jullard  V.  Walker,  54  111.  App. 

517  1379 

Junction  R.  R.  Co.  v.  Bank  of 

Asliland,   12  Wall.  226 


V.  Cloneay,  13  Ind.  161 

1'.  Reove,  15  Ind.  230 

Jung  Brewing  Co.  v.  Comm. 
(Ky.),  96  S.  W.  476 


1400, 

1401 

1423 

211 

368 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Just  V.  State  Bank.  132  Mich. 

600;   94  X.  W.  200  572,  771 

J.    W.    Butler   Paper   Co.    v. 

Cleveland.  220  111.  12S:    77 

N.  E.  99;   llOAm.  St.  Rep. 

230  161 


852 
590 


1379 


1069 

1151 

484 


Kadish  v.   Garden  City,  etc. 

Bldg.   Ass'n,    151   III.   531; 

38  N.  E.  236;    42  Am.  St. 

Rep.  256 
Kaemrnerer    v.     Kaemmerer 

(III.),  83  N.  E.  133 
Kaeppler  v.  Redfield  Creamery 

Co..    12  S.   Dak.   483;    81 

N.  W.  907  287,  288 

Kahn  v.  Bank  of  St.  Joseph, 

70  Mo.  202  767 

Kain  v.  Smith,  80  N.  Y.  458         1615 
Kaiser  v.   Lawrence   Savings 

Bank,    56    Iowa     104;     8 

N.  W.  772;    41  Am.  Rep. 

85  31,  117,  118,  242,  246,  251 

Kalamazoo  Novelty  Mfg.  Co., 

36  Mich.  327 
Kalamazoo  Spring  etc.  Co.  v. 

Winans,  106  Mich.  193;   64 

N.  W.  23 
Kalbach  v.  Clark  (Iowa),  110 

N.  W.  599 
Kampman  v.  Tarver,  87  Tex. 

491;    29  S.  W.  768 
Kane  v.  Bloodgood,  7  Johns. 

Ch.  (N.  Y.)  90  1120,  1122 
,  Re,  64  N.  Y.  App.  Div. 

566;    72  N.  Y.  Supp.  333       1137, 

1157 
Kansas  City  v.  Vineyard,  128 

Mo.  75 ;  30  S.  W.  326  25 

Kansas  City  Hay  Press  Co.  v. 

Devol,  72  Fed.  717  592,  1210 

Kansas    City    Hotel    Co.    v. 

Harris,  51  Mo.  464 

V.  Hunt,  57  Mo.  126 

Kansas  City  Southern  Ry.  Co. 

V.  King  (Ark.),  85  S.W.  1131 
Kansas    Loan,    etc.    Co.    v. 

Electric  Ry.  etc.  Co.,   108 

Fed.  702 
Kansas  Pac.  Ry.  Co.  v.  Bayles, 

19  Colo.  348;  35  Pac.  744 

1014,  1616,  1644 

■ V.  Wood,  24  Kans.  619       1609 

Kansas  Valley  Nat.  Bank  v. 

Rowell,  2  Dillon  371  835,  859 

Kansas,     etc.     Ry.     Co.     v. 

Dorough,  72  Tex.  108;    10 

S.  W.   711  1609 


483 
492 

1634- 


1563 
1607, 


Kantzler    v.    Bensinger,    214 

111.  589;    73  N.  E.  874  1030 

Karberg's  Case  (1892), 3  Ch.  1        182, 
184,  187,  279 
Karn   v.    Rorer    Mining   Co., 

86  Va.  754;    11  S.  E.  431       1650 
Karnes     v.     Rochester,     etc. 

R.  R.  Co.,  4  Abb.  Pr.  n.  s. 

(N.  Y.)  107  1110,  1351 

Karsch  v.  Pottier,  etc.  Co.,  82 

N.  Y    App.   Div.  230;    81 

N.  Y   Supp.  782  1377 

Karuth's  Case,  20  Eq.  506       1170, 
1171,  1175 
Kassler  v.  Kyle,  28  Colo.  248; 

65  Pac.  34  540 

Katama  Land  Co.  v.  Jernegan, 

126  Mass.    155  600 

Katz  V.  H.  &  H.  Mfg.  Co.,  109 

N.    Y.   App.    Div.   49;    95 

N.Y.  Supp.  663;   183  N.  Y. 
^578  _  585 

Kaufman  v.   Charlottesville 

Woolen  Mills,  93  Va.  673; 

25  S.  E.  1003  1135,  1144 

Kavanaugh  v.  Commonwealth 

Trust  Co.,    181   N.  Y.  121; 

73  N.   E.  502;    103  N.  Y. 

App.   Div.  95;    92   N.   Y. 

Supp.  543         937,  943,  956,  978, 

979 
Kaye  v.  Croydon  Tramways 

Co.  (1898),  1  Ch.  358       82,  1004 
Kean  v.  Johnson,  9  N.  J.  Eq. 

401  52,  949 
V.  Union  Water  Co.,  52 

N.  J.  Eq.  813;   31  Atl.  282; 

46  Am.  St.  Rep.  538  1250, 

1250 
Keane  v.  Moffly  (Pa.),  66  Atl. 

319  1664 

Keans    v.    New    York,    etc. 

Ferry  Co.,  17  N.  Y.  Misc. 

272;   40  N.  Y.  Supp.  366         1296 
Keatinge    v.     Paringa    Con- 
solidated     Mines      (1902), 

W.  N.  15  354 

Keeler  v.  Atchison,  etc.  Ry. 

Co.,     92     Fed.     545;      34 

C.  C.  A.  523  1632 

Keen  v.  Whittington,  40  Md. 

489  •         235 

Keene  v.  Van  Reuth,  48  Md. 

184  234,  241 

Keene     Five     Cent     Savings 

Bank  v.  Lyon  County,  90 

Fed.  523  1432 

Keeney  v.  Converse,  99  Mich. 

316;    58  N.  W.  325        967,  1263 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Keller  v.    Eureka,   etc.    Mfg. 

Co.,  43  Mo.  App.  84;     11 

L.  R.  A.  472  427,  430 
,  Re,  116  N.  Y.  App.  Div. 

58  1001,  1006 

Kelierman  v.  Maier,  IIG  Cal. 

416;    48  Pac.  377  631,  1313 

Kelley  v.   Hiddle,    180  Mass. 

147;  61  N.  E.  821  80 

V.  Collier,  1 1  Tex.  Civ. 

App.  3.53;  32  S.  W.  428  1353 
Kelley,  Mans  &  Co.  v.  O'Brien 

Varni.shCo.,90111.  App.  287  84 
Kellock  V.  Enthoven,  L.  R.  9 

Q.  B.  241  783,  783 

Kellogg  V.  Stockwell,  75  111. 
/)8  697,782 

Kelly  V.  Browning,  113  Ala. 

420;  21  So.  928  1661 
V.  Calhoun.  95  U.  S.  710       409 

V.   Ning   Yung   Benev. 

Ass'n   (Cal.),  84  Pac.   321 

V.  Receiver,  10  Biss.  151 


—  V.  Trustees  of  Ala.,  etc. 
R.  R.  Co.,  58  Ala.,  489 


853 
1573, 
1573 


1603, 
1603 

278, 


Kelner  v.  Baxter,  2  C.  P.  174 

280,  280,  306,  307,  309 
Kelsey  v.  Nat.  Bank,  69  Pa. 

St.  426  1235 

V.  New  England  Street 

Ry.  Co.,  62  N.  J.  Eq.  742; 

48  Atl.  1001  1303,  1334 

V.    Sargent,    40     Hun 

(N.     Y.)     150  1298,  1321 

Kemble  v.  Milville,  69  N.  J. 

Law  637;  56  Atl.  311  108 
V.  Wilmington,  etc.  R.  R. 

Co.,  13  Phila.  469  1401 

Kemmerer  v.   Haggerty,   139 
^  Fed.  693  956,  970 

Kempson  v.  Saunders,  4  Bing. 
_5  784 

Kennebec,  etc.  R.  R.  Co.  v. 

Kendall,  31  Me.  470  600 

V.  Portland,  etc.  R.  R. 

Co.,  54  Me.  173  1627 

Kennedy  v.  Acadia  Pulp,  etc. 

Co.,  38  Nova  Scotia  29 1  185 
V.  California  Sav.  Bank, 

101  Cal.  495;  35  Pac.  1039; 

40  Am.  St.  Rep.  69  846 

V.  I.  C.  &  L.  R.  Co.,  3 

Fed.  97  1616 
V.  St.  Paul,  etc.  R.  R.  Co. 

2  Dill.  448  1604 
V.  St.  Paul,  etc.  R.  R.  Co., 

5  Dill.  519  1649,  1649 


Kennedy  v.  Thompson,  97  N. 
Y.  App.  Div.  296;  89  N.  Y. 
Su{jp.  963 
lie. 


786 


75  N.  Y.  App.  Div 

188;    77  N.  Y.  Supp.  714         895 
Kennettv.  \Voodworth-Ma.son 

Co.,  68  N.  H.  432;   39  Atl. 
^585  103 

Kent  V.  Freehold  Land  Co.,  3 

Ch.  493  178 
V.  Lake,  etc.  Co.,  144  U.  S. 

75;    12  Sup.  Ct.  650       1485,  1646 
V.    Quicksilver    Mining 

Co.,  78  N.  Y.  159         439,  439,  439, 
440,  441,  444,  445,  454, 
584,  966 
Kent  County  Agriculture  Soc. 

V.  Houseman,  81  Mich.  609; 

46  N.  W. 15  1185 

Kent  Tramways  Co.,  Re,  12 

Ch.  D.  312  295 

Kent's  Case,  39  Ch.  D.  2.59  643 

Kenton   Furnace,  etc.  Co.  v. 

McAlpin,  5  Fed.  737       999,  1005, 
1006,  1006,  1007,  1024,  1025, 
1123 
Kenton  Ins.  Co.  v.  Bowman, 

84  Ky.  430;  1  S.  W.  717  768, 

772,  772 
Kentucky  Mutual,  etc.  Co.  v. 

Schaefer,  27  Ky.  Law  Rep. 

657;   85  S.  W.  1098  180 

Kentucky  Tobacco  Ass'n  v. 

Ashby,  9  Ky.  Law  Rep.  109 

1373 
Kenyon  v.  Fowler,  155  Fed. 

107  618,  706 

Keokuk,    etc.    R.    R.    Co.    v. 

Missouri,  152  U.  S.  301;   14 

Sup.  Ct.  592  1552 

Ker's  Case,  4  A.  C.  549       705,  800 
Kern  v.  Arbeiter,  etc.  Verein, 

139  Mich.  233;    102  N.  W. 

746  935 
V.  Chicago,  etc.  Ass'n,  40 

111.     App.     3.56;      affirmed 

8.  c.  140  111.  371  228 
V.  Day,  45  La.  Ann.  71 ; 

12  So.  6  1174,1177 

Kern's    Estate,    176   Pa.    St. 

373;  35  Atl.  231        701,  719,  723. 

808 
Kernochan,  Re,  104  N.  Y.  618: 

11  N.  E.  149       502,   1137,   1137, 
1143,  11.50,  1156 
Kerr  v.  Urie,  86  Md.  72 :    37 

Atl.  789;    63  Am.  St.  Rep. 

493;    38  L.  R.  A.  119       (520,  708 
Kerridgev.  Hesse,9C.&P.200      307 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Kessler   v.    Ensley   Co.,    123 

Fed.  546  936,  938,  952,  967 

Kessler  «fc  Co.  v.  Ensley  Co., 

129  Fed.  397  938,  939,  967 
V.  Ensley  Co.,  141  Fed. 

130;    148  Fed.  1019  1302 

Ketchum  v.  Duncan,  96  U.  S. 

659  1343,  1451,  1452,  1452, 
1455,  1455,  1456,  1622,  1628 
r.  Mobile,  etc.  R.  R.  Co., 

2  Woods  532  1493 

V.  St.  Louis,  101  U.  S. 

306  1500,  1677 

Kettle  River  Mines  V.  Bleasdel, 

7  Brit.  Columb.  507  650 

Key  &  Son,  W.  (1902),  1  Ch. 

467  428,  771,  793 

Kej'stone  Nat.  Bank  v.  Palos 

Coal,  etc.  Co.  (Ala.),  43  So. 

570  1554 

Kharaskhoma      Syndicate 

(1897),  2  Ch.  451  640,640 

Kidd     V.     New     Hampshire 

Traction  Co.,  72  N.  H.  273; 

56  Atl.  465  974 
V.  New  Hampshire  Trac- 
tion Co.  (N.  H.),  66  Atl.  127 

1083, 1164,  1189,  1325 
Kidwelly  Co.  v.  Raby,  2  Price 

93  210 

Kiely  v.  Kiely,  3  Ont.  App. 

438  1164,  1165 

Killen  v.   Barnes,   106  Wise. 

546;   82  N.  W.  536       1274,  1285, 
1355,  1357 
Killingsworth     v.      Portland 

Trust  Co.,  18  Greg.  351 ;  23 

Pac.66;  7L.  R.  A.  638;  17 

Am.  St.  Rep.  737  53 

Kilpatrick    v.    Penrose,    etc. 

Co.,  49  Pa.  St.  118;  88  Am. 

Dec.  497  1237 

Kimball    v.    City    of    Cedar 

Rapids,  99  Fed.  130  970 
V.  Goodburn,  32  Mich. 

10  1378 

V.   New   England,    etc. 

Grate  Co.,  168  Mass.  32;  46 

N.  E.  432  1239 

V.  Union  Water  Co.,  44 

Cal.  173;    13  Am.  Rep.  157       751 
Kimbell   v.    Hydraulic    Press 
Brick  Co.,  119  Fed.  102;  55 
C.  C.  A.  162  967 

Kimber  v.  Gunnell  Gold,  etc. 
Co.,  126  Fed.  137;  61 
C.  C.  A.  203  1527 

Kincaid's  Case,  11  Eq.  192         1173, 

1175 


Iving  V.  Follet,  3  Vt.  385  1134, 

1156 
V.  Housatonic  R.  R.  Co., 

45  Conn.  226  1515 

V.  Marshall,  33  Beav.  565       66, 

1513,  1519 
V.  Ohio,  etc.  Ry.  Co.,  7 

Biss.  529  1620 
Paterson,  etc.  R.  R.  Co., 

29  N.  J.  Law  82;   29  N.  J. 

Law  504  1120,  1121,  1123 
V.  Tuscumbia  R.  R.  Co., 

7  Pa.  L.  J.   166;    14  Fed. 

Cas.  554  1499,  1589 

King's  Case,  6  Ch.  196  618,  621 

Kingsbury       Collieries      and 

Moore's  Contract  (1907),  2 

Ch.  259  35,  37,  60,  61,  70,  97 

Kingston  Cotton  Mills  (1896), 

1  Ch.  6  1363 

(No.  2),  (1897)  2  Ch.279     1363 

Kingstown  Yacht  Club  (1888), 

21  L.  R.  Jr.  199  425,  613,  768 

Kinnan  v.   Forty-second  St., 

etc.    Ry.    Co.,    140   N.    Y. 

183;  35  N.  E.  498  429,  430, 
430,  748 
V.  Sullivan  County  Club, 

26  N.  Y.  App.  Div.  213;  50 

N.  Y.  Supp.  95  571,  1031 

Kinney  v.  Crocker,  18  Wise.  74     1617 
ffinsman    v.    Fisk;    83    Hun 

(N.    Y.)    494;     31    N.     Y. 

Supp. 1045  1317 

Kinston,    etc.    R.    R.    Co.    v. 

Stroud,  132N.  Car.  413;43 

S.  E.  913  221 

Kipling  V.  Todd,  3  C.  P.  D. 

350  196,  1174 

Kirby's  Case,  46  L.  T.  682  641 

Kirk  V.  Bell,  16  Q.  B.  290  1205 

V.  Nowill,  1  T.  R.  118  580, 

581,  657 
Kirkcaldy     St  am     Laundry 

Co.,  6  Eraser  (Sc.)  778      _        137 
Kirkman  v.  Carlstadt  Chemi- 
cal Co.,  36  N.  Y.  Misc.  822; 

74  N.  Y.  Supp.  865       _  908 

Kirkpatrick       v.       American 

Alkali  Co.,  140  Fed.  186  449 
V.   Eastern  Milling,  etc. 

Co.  (1),  135  Fed.  144  408 
V.     Eastern     Milling     & 

Export  Co.,  137  Fed.  387; 

69  C.  C.  A.  579  366 

Kirkpatrick's    Will,    Re,    22 

N.  J.  Eq.  463  55 

Kirkstall  Brewery  Co.,  5  Ch. 

D.  535  532 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Kirwin  v.  Washington  Match 

Co.,  37  Wash.  285;   79  Pac. 

928  992 

Ivissel  V.  Cliicago,  etc.  R.  II. 

Co.,  44  N.  Y.  Misc.  156;  89 

N.  Y.  Supp.  796  1437 

Kisterbock's  Appeal,  127  Pa. 

St.  601;     18  Atl.  381;     14 

Am.  St.  Rep.  868    ^  683,  735 

Kitchens   v.    J.    H.    Teasdale 

Commission   Co.,    105    Mo. 

App.  463;  79  S.  W.  1177        1260, 
1302,  1328 
Kittel  V.  Augusta,  etc.  R.  R. 

Co.,     84     Fed.     386;      28 

C.  C.  A.  437  1323 

Klaus,  In  re,  67  Wise.  401 ;  29 

N.  W.  582  562,  571,  745 

Klein  v.   Funk,  82  Minn.  3; 

84  N.  W.  460  1314 
V.  Intlependent  Brewing 

Ass'n  (111.),  83  N.  E.  434         1312 
V.  Jewett,  26  N.  J.  Eq. 

474  1616, 1618 

Klopp  V.  Lebanon  Bank,  46 
^  Pa.  St.  88  769 

Knabe  v.  Ternot,  16  La.  Ann. 

13  1312 

Knapp  V.  Publishers,  etc.  Co., 

127  Mo.  53;    29  S.  W.  885       497 
V.  S.  Jarvis  Adams  Co., 

135  Fed.  1008;   70  C.  C.  A. 

536  1110, 1111 

Kneeland  v.  American  Loan, 

etc.  Co.,  136  U.  S.  89;    10 

Sup.  Ct.  950         1560,  1565,  1612, 

1612 
V.  Brass  Foundry,  etc. 

Works,  140  U.  S.  592;    11 

Sup.  Ct.  857  1640 

Knickerbocker    Importation 

Co.  V.  State  Board  of  As- 
sessors   (N.    J.),    65    Atl. 

913  518,  522 

Knickerbocker       Investment 

Co.  V.  Voorhees,  100  N.  Y. 

.\pp.  Div.  414;    91  N.  Y. 

Supp.  816  1054 

Knickerboker    Trust    Co.    v. 

Davis,  143  Fed.  587  348,  352, 

356 
V.  Myers,  133  Fed.  764; 

139  Fed.  Ill  618 
V.  Oneonta,  etc.  Ry.  Co., 

101  N.  Y.  Supp.  241       1595,  1626 
V.    Penacock    Mfg.    Co., 

100  Fed.  814  1495 

Knisht  V.  Barber,  16  .M.  ^t  W. 

66  423 


Knight  V.  Knight,  2  Giff.  616 

V.    Old    Nat.    Bank,    3 

Cliff.  429 
Knight's  Case,  2  Ch.  321 


424 


Knights,    etc.    of   America 
Weber,  101  111.  App.  488 


571,  572 

658,  667, 

911 

V. 

557, 
557 


Knights     of     Maccabees     v. 

Searle  (Nebr.),  106  N.  W. 

448  374,  379 

Knights  Templars',  etc.   Co. 

V.   Jarman,    104  Fed.  638; 

44  C.  C.  A.  93  587,590 

Knoop  V.  Bohmrich,  49  N.  J. 

Va].  82;  23  Atl.  118  944,  966 

Knowles  v.   Sandercock,   107 

Cal.  629;  40  Pac.  1047  74,  75, 
75,  77 
Knowles  Loom  Works  v.  Ryle, 

97     Fed.     730;     38    C.   C. 

A.  494  1537 

Knowlton     v.     Conrees,     etc. 

Spring  Co.,  57  N.  Y.  518  632 

Kno.\   V.    Childersburg   Land 

Co.,  86  Ala.  180;  5  So.  578  211, 
213  632 
V.  Eden  Musee,  148  N.  Y. 

441;  42N.  E.  988;  51  Am. 

St.  Rep.  700;    31  L.  R.  A. 

779  741 

Knox  County  v.  Aspinwall,  21 

How.  539  1220,  1448 

Koch    V.    Nat.    Union    Bldg. 

Ass'n,    35    111.    App.    465; 

s.  c,  137  111.  497;  27  N.  E. 

530  1372 
V.  North  Ave.  Ry.  Co., 

75  Md.  222;    23  Atl.  463; 

15  L.  R.  A.  377  232 

Kodak,  Ltd.  v.  Clark  (1903), 

1  K.  B.  505  879 

Koebel  v.  Landlords'  Pro- 
tective    Bureau,    210     111. 

176;   71  N.  E.  362  372 

Koehler      v.      Black     River, 

etc.  Co.,  2  Black  715         407,  408, 

1317 
Kolff  V.   St.    Paul    Fuel    E.x- 

change,  48  Minn.  215;    50 

N.  W.  1036  562,  566 

Koppel    V.    Mass.    Brick   Co., 

192  Mass.  223;    78  N.   E. 

128  283,  290 

Kostcr  t'.  Pain,  41  X.  Y.  App. 

Div.  443;    58  N.  Y.  Supp. 

865  319,  1347 

Kozminsky,  Re,  16  Vict.  L.  R. 

137  603 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Kraft  V.  Grififon  Co.,  82  N.  Y. 

App.   Div.   29;    81   N.   Y. 

Supp.  438  628,  630,  1404 
V.    West    Side    Brewery 

Co.,  219  111.  205;    76  N.  E. 

372  86 

Kraniger    v.    People's    Bldg. 

Soc,    60    Minn.     94;      61 

N.  W.  904  109,  142,  859,  1377 
Kreissl  v.   Distilling  Co.,   61 

N.  J.  Eq.  5;  47  Atl.  471  1050, 

1052,  1053,  1053 
Krisch  V.  Interstate  Fisheries 

Co.,39  Wash.  381;  81  Pac. 

855  .        524 

Kroegher  v.  Calivada  Coloni- 
zation Co.,   119  Fed.  641; 

56  C.  C.  A.  257  1245,  1318, 

1324,  1340,  1341,  1344 
Krop holler  v.   St.   Paul,  etc. 

Ry.  Co.,  2  Fed.  302  1628,  1660 
Krotz  V.  Louisiana  Const.  Co. 

(La.),  45  So.  276  1596 

Kuser  v.  Wright,  52  N.  J.  Eq. 

825;  31  Atl.  397  1222,  1225 

Kyle  V.  Wagner,  45  W.  Va. 

349;  32  S.  E.  213  974,  1188 

Kyshe    v.    Alturas    Gold,    4 

Times  L.  R.  331  1251 


Lacaff  V.  Dutch  Miller,  etc. 
Co.,31  Wash.  566;  72  Pac. 
112  428 

Lacaze  &  Reive  v.  Creditors, 

46  La.  Ann.  237 ;  14  So.  601     1375 
Lackawanna,     etc.     Co.     v. 
Farmers'  L.  &  T.  Co.,  176 
U.  S.  298;  20  Sup.  Ct.  363     1567, 

1571 
Lackey  v.  Richmond,  etc.  R. 

Co.,  17  B.  Monr.  (Ky.)  43        613, 

614 
La  Compagnie  de  Mayville  v. 

Whitley  (1896),  1  Ch.  788        932, 
932,  934,  1002,  1164,  1200, 
1201 
Ladies'   Dress  Ass'n  v.   Pul- 

brook  (1900),  2  Q.  B.  377        223, 
531,  667,  668 
Lady  Bryan  Mining  Co.,   14 
Fed.   Cas.    926;     1    Sawy. 
349;  2  Abb.  (U.  S.)  537  416 

Lady     Forrest     (Murchison) 

Gold  Mine  (1901),  1  Ch.  582      322, 
323,  329 
LadywoU      Mining      Co.      v. 

Brooks,  35  Ch.  D.  400  323 


LaFayette  Club,  21  Pa.  Co. 

Ct.  Rep.  243  94 

Lafayette   Co.   v.   Neely,   21 

Fed.  738  960,  960 

Lafferty's  Estate,  154  Pa.  St. 

430;  26  Atl.  388  1054 

Laflin,    etc.    Powder    Co.    v. 

Sinsheimer,  46  Md.  315;  24 

Am.  Rep.  522  221,  222 

Lagarde    v.    Anniston    Lime, 

etc.  Co.,  126  Ala.  496;    28 

So.  199  1340 

Lagrone  v.   Timmerman,    46 

S.  Car.  372;  24  S.  E.  290  79 

Lagunas  Nitrate  Co.   v.  La- 

gunas  Syndicate  (1899),  2 

Ch.  392  272,  274,  277,  316,  316, 
329,  330,  330,  334,  1259, 
1275,  1326 
V.  Schroeder  &  Co.,  85 

L.  T.  22  1121 

Lail  V.  Mt.  Sterling  Coal  Road 

Co.,  13  Bush  (Ky.)  32  609 
Laing  v.  Burley,  101  111.  591  696 
V.  Queen  City  Ry.  Co. 

(Tex.),  49  S.  W.  136  1639 

Laird  v.  Birkenhead  Ry.  Co., 

Johns  500  395 

Lake   Erie,   etc.    Ry.    Co.    v. 

Griffin,  92  Ind.  487  1632 

Lake    Ontario    Shore   R.    R. 

Co.  V.  Curtiss,  80  N.  Y.  219      208, 

209 
Lake  Ontario,  etc.  R.  R.  Co. 

V.  Mason,  16  N.  Y.  451  116, 

119,  202,  604,  604 
Lake  St.  El.  R.  Co.  v.  Ziegler, 

99  Fed.  114;    39  C.  C.  A. 

431  645,  1672 

Lake   Superior   Bldg.    Co.    v. 

Thompson,  32  Mich.  293  230 

Lake    Superior    Iron    Co.    v. 

Drexel,  90  N.  Y.  87  636 

Lake  Superior  Navigation  Co. 

V.   Morrison,   22   Up.   Can. 

C.  P.  217  158 

Lakewood  Gas  Co.  v.  Smith, 

62  N.  J.  Eq.  677;    51  Atl. 

152  754 

Lallande  v.    Ingram,    19   La. 

Ann.  364  804 

Lamar  Land,  etc.  Co.  v.  Bel- 
knap Sav.  Bank,  28  Colo. 

344;  64  Pac.  210  1503,  1650 

Lamb  &  Sons  v,  Dobson,  117 

Iowa  124;  90  N.  W.  607  138 

Lamb   Knit  Goods  v.   Lamb 

Glove   &   Mitten   Co.,    120 

Mich.  159;  78  N.  W.  1072        387 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1586 


1362 


Lambert    v.    Neuchatol    As- 

phalte  Co.,  51  L.  J.  Ch.  882     1099 
V.  Northern  Ry.,  18  W. 

R.  180  1238,  1240,  1243 

Lainbertville    Nat.    Jiank    r. 

McCready,  etc.  Co.  (N.  J.), 

15  Atl.  388 
Lamkin  v.  Baldwin,  etc.  Co., 

72  Conn.  57;    43  Atl.  593. 

1042;  44  L.  R.  A.  786       297,  299 
Lamm  v.  Port  Depo.sit  Co.,  49 

Md.    233;     33    Am.    Rep. 

246 
Lamonby  v.  Carter  (1903),  1 

Ch.  352 
Lamphear  v.  Buckingham,  33 

Conn.  237 
Lamson    v.    Hutchings,    118 

Fed.  321 
Lamson  Store  Service  Co.,  Re, 

1  Ch.  875 
Lanaux,  Succe.s.sion  of,  46  La. 

Ann.  1036;    15  So.  70S;   25 

L.  R.  A.  577 
Lancashire       Cottonspinning 

Co.  V.  Greatorex,  14  L.  T. 

N.  s.  290 
Lancaster  v.  Amsterdam  Imp. 

Co.,    140   N.    Y.    576;     35 

N.  E.  964;  24  L.  R.  A.  322 

848,  861 
Lancaster     Starch      Co.      v. 

Moore,  62  N.  H.  671  652 

Land  Credit  Co.  v.  Fermory, 

5  Ch.  763  1279,  1280 

Land,  Log  &  Lumber  Co.  v. 

Mclntyre,    100  Wise.  245; 

75  N.  W.  964  961,  984 

Land     Mortgage     Bank     of 

Florida,  3  Manson   164 
Land  Title,   etc.   Co.   v.   As- 
phalt Co.,  127  Fed.  1;    62 

C.  C.  A.  23 
Landers     v.     Frank     Street 

M.   E.  Church,   114  N.  Y. 

626;  21  N.  E.  420 
Landis   v.    Saxton,    105    Mo. 

486;   16S.  W.  912;  24  Am. 

St.  Rep.  403 
V.  Sea  Isle,  etc.  Co.,  53 

N.  J.  Eq.  654 ;  33  Atl.  964 


24 


1582 
619 


542 


804 


898 


244, 


1672 


984 


1035 


1288 


982, 
982 

V.  Western  Pa.  R.  R.  Co., 

133  Pa.  St.  579 ;   19  Atl.  556     1664 
Landman  v.  Entwistle,  7  Ex. 

632  306,  310 

Landowners',  etc.  Drainage 
Co.  V.  Ashford,  16  Ch.  D. 
411  64,  1221 


Land.s  Allotment  Co.  (1894), 

1  Ch.  616        74,  1265,  1280,  1282, 
1283,  1288 

Lane  v.   Brainard,  30  Conn. 

565  189,  192,  1201 

V.   Baughman,    17  Oh. 

St.  642;  93  Am.  Dec.  6.>j  1551 
V.  Macon,  etc.  Ry.  Co., 

96  Ga.  630;  24  S.  E.  157  1612 
Lang  V.  Lang,  57  N.  J.  Eq. 

325;  41  Atl.  705  1137,  1149, 
1149,  1149,  1149 
V.     Louisiana     Tanning 

Co.,  56  Fed.  675  960 
V.   Mayor,  etc.  of  Bay- 

onne  (N.  J.),  68  Atl.  90  244 

Langan     v.     Francklyn,     29 

Abb.   N.   C.    (N.   Y.)    102; 

20  N.  Y.  Supp.  404  976,  1000, 
1042,  1058,  1227 
Langdon   v.    Fogg,    14    Abb. 

N.  C.  (N.  Y.)  435n  969,1290 
V.  Vermont,  etc.  R.  R. 

Co.,  54  Vt.  593  1622,  1640,  1640 
Lange  v.  Reservation  Mining, 

etc.  Co.  (Wash.),  93  Pac. 

208  1188 

V.    Royal    Highlanders 

(Nebr.),  106  N.  W.  224  586 

Langham  v.  East  Rose  Wheal, 

etc.  Co.,  37  L.  J.  Ch.  253  186 

Langhorne  v.  Richmond  City 

Ry.   Co.,  91   Va.  364;    22 

S.  E.  357  380 

Langley  v.  Langley,  31  Ont. 

Rep.  254  1239 

Langolf  V.  Seiberlitch,  2  Pars. 

Eq.  Cas.  (Pa.)  64  949,  957, 

974,  1068 
Langston   v.    Greenville,   etc. 

Imp.  Co..  120  N.  Car.  132; 

26  S.  E.  644  1079 
V.  S.  Car.  R.  R.  Co.,  2 

S.  Car.  248  1423,  1441,  1449, 
1460,  1472 
Lanier  Lumber  Co.  v.   Rees, 

103  Ala.  622;  16  So.  637; 

49  Am.  St.  Rep.  57  775 

Lanigan    v.    North,    69   Ark. 

62;  63  S.  W.  62  788 

Lankershin  Ranch  Land,  etc. 

Co.    V.    Ilerberger,   82   Cal. 

600;  23  Pac.  134  768 

Laiitrv  V.  \\allace,  182  U.  S. 

536':  21  Sup.  Ct.  878  521 

Lapham  v.  Philadelphia,  etc. 

R.    R.    Co.,    4    Pennewill's 

Rep.    (Del.)   421;    56  Atl. 

366  381 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Lapsloy  v.  Merchants'  Bank, 

105  Mo.  App.  98;   78  S.  W. 

1005  1109 

Laredo  Imp.  Co.  v.  Stevenson, 

66  Fed.  633;    13  C.  C.  A. 

661  484 

Larimer    v.     Beardsley,     130 

Iowa  706;  107  N.  W.  935  712 
Larking,  Ex  parte,  4  Ch.  D. 

566  1263,  1276, 1343 

Larkworthy's  Case  (1903),  1 

Ch.  711  669 

Laroque     v.     Beauehemin 

(1897),  A.  C.  358  642,  645 

Larsen  v.  U.  S.  Mortgage,  etc. 

Co.  104N.  Y.  App.  Div.  76; 

93  N.  Y.  Supp.  610  1616 

Larwill    v.    Burke,    19    Ohio 

Circ.  Ct.  513  1122 

Lasell  V.  Thistle  Gold  Co.,  11 

Brit.  Columbia  466  1347 

Lassell  v.   Hannah,   37  Can. 

Sup.  Ct.  324  1347 

Lathom  v.  Greenwich  Ferry 

Co.,  72  L.  T.  790  1647,  1648, 

1655 
Lathrop     v.     Kneeland,     46 

Barb.  (N.  Y.)  432  483,  493 

Latimer    v.    Bard,    76    Fed. 

536  489,  492 

V.  Citizens'  State  Bank, 

102  Iowa  162;  71N.  W.  225         74 

V.  Herzog  Teleseme  Co., 

75N.  Y.  App.  Div.  522;  78 

N.  Y.  Supp.  314  894,  904 

La  Tosca  Club  v.  La  Tosca 

Club,  23  App.  p.  C.  96  371 

Laughland  v.  Miller,  Laugh- 
land  &  Co.,  6  Fraser  (Sc.) 
413  1348 

Laughlin    v.    U.    S.    Rolling 

Stock  Co.,  64  Fed.  25  1646 

Laugier    v.     Victorian,     etc. 

Power  Co.,  16  Vict.  L.  R.  64       160 

Lauman's  Appeal,  68  Pa.  St. 

88  _  811 

Laurel  Springs  Land  Co.  v. 
Fougeray,  50  N.  J.  Eq. 
756;   26  Atl.  886  1112 

Law  V.  Alley,  67  N.  H.  93;  29 

Atl.  636  502 

V.  Fuller  (Pa.),  66  Atl. 

754  942,  1318,  1344 

Law  Guarantee  Soc.  v.  Bank 

of  England,  24   Q.   B.    D. 

406  69,  796,  813,  814 

Law  Guarantee,  etc.  Soc.  v. 

Russian  Bank  (1905),  1  K. 

B.  815  1552 


Law  Guarantee  &  Trust  Soc. 

V.   Mitcliam,   etc.    Brewery 

Co.  (1906),  2  Ch.  98         1557,  1557 
Lawford   v.    Billericay  Rural 

Dist.  Council  (1903),   1   K. 

B.  772  391,395,826 

Lawrence  v.  Curtis,  191  Mass. 

240  947,  1353 

V.  Fox,  20  N.  Y.  268         1508 

V.  Maxwell,  53  N.  Y.  19        807 

r.  Stearns,  79  Fed.  878; 

83  Fed.  738 
Lawrence's  Case,  2  Ch.  412 


1288 
177, 
214 


Lawrie  v.  Silsby,  76  Vt.  240; 

56  Atl.  1106;    104  Am.  St. 

Rep.  927  117,  148 

Lawshe  v.  Royal  Baking  Pow- 
der Co.,  104  N.  Y.  Supp. 

361  901 

Lawson   v.    Black   Diamond, 

etc.   Co.   (Wash.),  86  Pac. 

1120  1078 

Lawton  v.  Hickman,  9  Q.  B. 

563  423 

Lawyers  Advertising,  etc.  Co. 

V.    Consolidated    Ry.,    etc. 

Co.,  187N.Y.395;  80N.E. 

199  89,  89,  90,  1000 

Laxon  &  Co.  (1892),  3  Ch.  555 

120,  223,  241 
Lazear  v.  Nat.  Union  Bank, 

52  Md.  78 ;  36  Am.  Rep.  355       844 
Lea  V.  Iron  Belt  Mercantile 

Co.  (Ala.),  42  So.  415        628,  880 
Leach    v.    Forbes,    11    Gray 

(Mass.)  506;    71  Am.  Dec. 

732  786 

Leader  Printing  Co.  v.  Lowry, 

9  Okl.  89;    59  Pac.  242  246 

Leahy  v.  Lobdell,  80  Fed.  665; 

26  C.  C.  A.  75  810 

Leary  v.  Blanchard,   48  Me. 

269  1377 
V.  Columbia  River,  etc. 

Co.,  82  Fed.  775  1111 
V.  Interstate  Nat.  Bank 

(Tex.),  63  S.  W.  Rep.  149        1203 
Leas  Hotel  Co.  (1902),  1  Ch. 

332  1520, 1606 

Leathers  v.   Janney,   41    La. 

Ann.  1120;  6  So.  884;   6  L. 

R.  A.  661  72 

Leavengood  v.  McGee  (Oreg.), 

91  Pac.  453  241 

Leavenworth  v.  Chicago,  etc. 

Ry.  Co.,  134  U.  S.  688;  10 

Sup.  Ct.  708     225,  225,  1324, 

1324 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Leavitt    v.    Fisher,    4    Duer 

(N.  Y.)  1  719,  721 

V.  Oxford,  etc.  Ry.  Co., 

3  Utah  265;    1  Pac.  SoO         651, 
1201,  1205,  1213, 1303 

Leazure  v.  Hillegas,  7  S.  &  R. 

(Pa.)  313  404,404,846 

Lelmnon,  etc.  Co.  v.  Adair,  85 

Ind.  244  1225,  1228 

Le  Blanc.  Re,  14  Hun  (N.  Y.) 

8;   75  N.  Y.  598  1121 

Le  Bosquet  v.    Myers    (Ind. 

Ty.),  103  S.  W.  770       1249 

Ledoux  V.  La  Bee,  83  Fed.  761 

1617 

Ledwich  v.  McKim,  53  N.  Y. 

307  1410, 1425 

Lee    V.    Neuchatel    Asphalte 

Co.,  41  Ch.  D.  1  1096,  1099, 

1100 

V.  Pennsylvania  Trac- 
tion Co.,   105  Fed.  405         1559, 

1563 

Lee  Mut.  Fire  Ins.  Co.  v.  State, 

60  Miss.  395  25 

Leeds  Banking  Co,  1  Ch.  231 

501,  622,  624,  790 

Leeds    Estate,    etc.    Co.    v. 

Shepherd,  36  Ch.  D.  787         1094, 

1241,  1241,  1264,  1265,  1267, 

1268,  1268,  1279,  1284 

Leeds  and   Hanley  Theatres 

(1902),  2  Ch.  809         322,  332,  334 

Leeds,  etc.  Ry.  Co.  v.  Fearn- 

ley,  4  Ex.  26  623 

Lees     Brook     Spinning     Co. 

(1906),  2  Ch.  394  542 

Leffingwell  v.  Elliott,  8  Pick. 
(Mass.)  455;  19  Am.  Dec. 
343  304 

Lefroy  v.  Gore,  1  Jo.  &  Lat. 

571  309,  337,  337,  337 

Legal  Aid  Society  v.  Co- 
operative Legal  Aid  Soci- 
ety. 41  N.  Y.  Misc.  127;  83 
N.  Y.  Supp.  926  372 

Legendre  &  Co.  v.  Brewing 
Ass'n,  45  La.  Ann.  669;  12 
So.  837;  40  Am.  St.  Rep. 
243  908,  908 

Legg    V.   Mathieson,    2    Giff. 

71  1546 

Legg  &  Co.  V.  Dewing,  25  R. 

I.  568  ;  57  Atl.  373         1360 

Leggett  V.  Bank  of  Sing  Sing. 

24  N.  Y.  283  774,  775 

V.  New  Jersey,  etc.  Bank- 
ing Co..  1  N.J.  Eq.  541;  23 
Am.  Dec.  728  407 


Legrand  v.  Manhattan  Mer- 
cantile Ass'n,  80  N.  Y.  638 

Lehigh  Coal,  etc.  Co.  v.  Cen- 
tral R.  R.  Co.,  34  N.  J.  Eq. 
88  1466, 

V.  Central  R.  R.  Co.,  35 

N.  J.  Eq.  349 

V.  Central  R.  R.  Co.,  42 

N.  J.  Eq.  591;   8  Atl.  648 

Lehigh    Valley   Coal   Co.   v. 
Hamblen,  23  Fed.  225 

Lehman  v.  Clark,  174  111. 
279;  51  N.  E.  222;  43  L. 
R.  A.  648 

Le  Hote  v.  Boyet,  85  Miss. 
636;  38  So.  1 

Leicester  v.  Yolland,  Husson 
&  Birkett  (1908),  1  Ch.  152 
1396, 

Leigh  V.  National  Hollow,  etc. 
Co.,  224  111.  76;  79  N.  E. 
318 

Leighty  v.  Pres.,  etc.  of  Turn- 
pike Co.,  14  Serg.  &  R.  (Pa.) 
434 

Leinster  Contract  Corp. 
(1902),  1  Ir.  349         627,  629 

Leitch  V.  Grand  Trunk  Ry. 

Co.,    13   Ont.   Pract.   Rep. 

369 

V.  Wells,  48  N.  Y.  585 

Leland  v.  Hay  den,  102  Mass. 

542  499,502.1143,1145, 

Le   Marchant   v.   Moore.    150 

N.  Y.  209;    44  N.  E.  770 
Lemars  Shoe  Co.  v.  Lemars 

Shoe  Mfg.  Co.,  89  111.  App. 

245  297,    1069, 

Lembeck  v.  Jarvis,  etc.  Stor- 
age Co.  (N.  J.),  64  Atl.  126 

Lenoir  v.  Linville   Imp.   Co., 

126  N.  Car.  922;   36  S.  E. 

185;    5  L.  R.  A. 146        1239, 
Leominster  Canal  Nav.  Co.  v. 

Shrewsbury,  etc.  Ry.  Co., 

3  K.  &  J.  654 
Leonard  v.  Draper.  187  Mass. 

536;    73  N.  E.  644 

V.  Lent.  43  Wise.  83 

Leonardsville  Bank  v.  Willard, 

25  N.  Y.  574 
Leonhardt  v.  Citizens  Bank, 

56Nebr.  38;   76  N.  W.  452 

Le  Roy  r.  Globe  Ins.  Co.  (N. 
Y.),  2  Edw.  Ch.  657 


227, 
278 


1678 
995 

1618 
379 

660 
1560 

1524 

1027 

645 

,635, 
639 

1364 
693 

1147 

810 

1210 

1402, 
1433 

1242 

281 

517 
1210 

126 

1297 
1121 


TABLE    OF    CASES 

[The  references  are  to  pages] 


1374 


1178 


1329 

748 


198 


Leroy,  etc.   Co.  v.  Sidell.  66 

Fed.  27;    13  C.  C.  A.  308 
Leslie,  /?«• ,  58  N.  J.  Law  609: 

33  Atl.  954  1176,  1177 

Lesseps  v.  Architects'  Co.,  4 

La.    Ann.    316  562,  657 

Lester  v.  Bemis  Lumber  Co., 

71  Ark.  379;    74  S.  W.  518        76, 

601,  636,  637 

V.  Howard  Bank,  33  Md. 

558;   3  Am.  Rep.  211 
Letheby  &  Christopher  ( 1904) , 

1  Ch.  815 
Level  Land  Co.  No.  3  v.  Hay- 
ward,  95  Wise.  109;   69  N. 

W.  567 
Levering    i\    Mayor,    etc.    of 

Memphis,      7      Humphr. 

(Tenn.)  553  402,  407 

Levisee  v.  Shreveport  City  R. 

R.  Co.,  27  La.  Ann.  641  1248 

Levita's  Case,  3  Ch.  36  167 

,  5  Ch.  489  166,  167,  175 

Levitt  V.  Hamblet  (1901),  2 

K.  B.  53  779 

Le^'y  v.  Abercorris  Slate  Co., 

37  Ch.  D.  260  1391,  1392 

Le  Warne  v.  Meyer,  38  Fed. 

191  262 

Lewey's  Island  R.  R.  Co.  v. 

Bolton,  48  Me.  451 ;  77  Am. 

Dec.  236  658,  659,  661 

Lewisi;.  Brainerd,  53Vt.  519        894, 


90 


V.  Eastern  Bank,  32  Me. 


908 
1187 


825 
1297 

1382 


1093, 


V.  Mayor,  etc.  of  Roch- 
ester, 9  C.  B.  N.  s.  401 

V.  Meier,  14  Fed.  311 

V.  Pulitzer  Pub.  Co.,  77 

Mo.  App.  434 

Lexington,  etc.  Co.  v.  Page, 
17  B.  Monr.  (Ky.)  412;  60 
Am.  Dec.  165  1079, 

1105,  1127,  1128,  1128,  1129 
1193 

Lexington,  etc.  R.  R.  Co.  v. 
Bridges,  7  B.  Monr.  (Ky.) 
5.56;  46  Am.  Dec.  528  1127, 

1266,  1288 

Liberator  Bldg.  Soc,  10 
Times  L.  R.  537 

Licausi  v.  Ashworth,  78  N.  Y. 
App.  Div.  486;  79  N.  Y. 
Supp.  631 

Licking  Valley  Bldg.  Ass'n 
v.Comm.(Ky.),89S.W.682 

Liebhardt  v.  \\ilson  (Colo.), 
88  Pac.  173 


13G4 


382 
140 


879 


Liebke  v.  Knapp,  79  Mo.  22; 

49  Am.  Rep.  212  634 

Life  Ass'n  v.  Levy,  33  La.  Ann. 

1203  87 

Life  &  Fire  Ins.  Co.  v.  Me- 
chanics   Fire    Ins,    Co.,    7 

Wend.  (N.  Y.)  31  87,  827,  1370 
Lighthall  Mfg.  Co.,  47  Hun 

(N.  Y.)  258  1041,  1060 

Lillard  v.  Oil  Paint  &  Drug 

Co.  (N.  J.),  56  Atl.  254  967, 
1113,  1320 
V.  Oil,  Paint,  etc.  Co  (N. 

J.),  58  Atl.  188  982 

Lime  City  Bldg.,  etc.   Ass'n 

V.  Black,  136  Ind.  544;   35 

N.  E.  829  662 

Limer  v.  Traders  Co.,  44  W. 

Va.  175;   28  S.  E.  730  1196 

Limited  Investment  Ass'n  v. 

Glendale  Investment  Ass'n, 

99  Wise.  54;  74  N.  W.  633        313, 

321 
Lincoln  v.  New  Orleans  Ex- 
press Co.,  45  La.  Ann.  729; 

12  So.  937  493,  784 

V.  State,  36  Ind.  1  ;i  1018, 

1018 
Lincoln  Bldg.,  etc.   Ass'n  v. 

Graham,  7  Nebr.  173  114,  258 
Lincoln  Park  Chapter  v.  Swa- 

tek,  204  111.  228;   68  N.  E. 

429  237,  253 

Lincoln    Shoe    Mfg.    Co.    v. 

Sheldon,  44  Xebr.  279;    62 

N. W.  480     •  163 

Lincoln  Tp.  v.  Kansas  City, 

etc.  R.  Co.  (Nebr.),  108  N. 

W.  140  1632 

Lindauer  v.   Delaware  .  Mut. 

Safety    Ins.    Co.,    13    Ark. 

461  .  394 

Lindemann  v.  Rusk,  125  Wise. 

210;  104  N.  W.  119  1285 
Linder  v.  Carpenter,  62  111.  309  1349 
V.  Hartwell  R.  R.  Co.,  73 

Fed.  320  1515,  1554,1595 

Lindsay  v.  Arlington  Co-op. 

Ass'n,   186  Mass.  371;    71 

N.  E.  797  192 

Lindsay,  etc.,  Co.  v.  Mullen, 

176  U.  S.  126;   20  Sup.  Ct. 

325  20,  47 

Lindsay    Petroleum     Co.    v. 

Hurd,  L.  R.  5  P.  C.  221  317 

Lindsay's  Estate,  210  Pa.  St. 

224;   59  Atl.  1074  573 

Lingke  v.  Wilkinson,  57  N.  Y. 

445  1307 


TABLE    OF    CASLS 
[The  references  are  to  pages] 


Linkauf  v.  Lombard,  137  N. 

Y.  417;    33  N.  E.  472;    33 

Am.  St.  Rep.  743;  20  L.  R. 

A.  48  822,  852,  1354 

Lintott,  Ex  parte,  4  Eq.  184  614 

Lionberper  v.  Broadway  Sav- 
ings liank,  10  Mo.  App.  499         66 
Lippencott  v.  Sliaw  Carriage 

Co.,  25  Fed.  577  1316 

Lippitt    V.    American    Wood 

Paper  Co.,  15  R.  I.  141;   23 

Atf.  Ill;    2  Am.  St.  Rep. 

886  694 

Lipscomb  v.  Condon,  56  W. 

Va.    416;     49    S.    E.    392; 

107  Am.  St.  Rep.  938;   67 

L.  R.  A.  670  422,  687, 

715,  891 
Liquidators    of    British    Na- 
tion   Life    Ass.    Ass'n,    Ex 

parte,  8  Ch.  D.  679  8,  76,  79, 

80  830 
Lishman's  Claim,  23  L.  T.  40  'l429 
Liskeard  &  Caradon  Ry.  Co. 

(1903),  2  Ch.  681  1545 

Lister    v.    Henry    Lister    & 

Sons,  62  L.  J.  Ch.  568  1473, 

1531,  1531 
Litchfield    Bank    v.    Church, 

29  Conn.  137  222 

Litchfield  Sav.  Soc.  v.  Dibble 

(Conn.),  67  Atl.  476  349 

Little  V.  Dusenbury,  46  N.  J. 

Law  614;  50  Am.  Rep.  445 

1616 
Little  Rock,  etc.  R.  R.  Co.  v. 

Perry,  37  Ark.  164  280,  281, 

284,  287 
Little  Rock,  etc.  Ry.  Co.  v. 

Page,  35  Ark.  304  1296,  1503, 

1507 
Littledale,  Ex  parte,  9  Ch.  257 

763,  766,  1325 
Littlewort  v.  Davis,  50  Miss. 

403  868 

Liverpool  Household  Stores, 

62  L.  T.  873         1215,  1261,  1261, 
1263,   1264,  1267,  1274,  1280 
Livesey  v.  Omaha  Hotel  Co., 

5  Nebr.  50  101,607 

Lloyd  V.  Chesapeake,  etc.  R. 

R.  Co. ,  65  Fed. 35 1  1 575,  1602 
V.  Preston,  146  U.  S.  630 ; 

13  Sup.  Ct.  131  620,  635 
V.   Supreme   Lodge.   98 

Fed.  66;  38  C.  C.  A.  654  578, 

590,  918 
Llovd   &  Co.,   George   E.    v. 

Matthews,  1 19  111.  App.  546 ; 


223  111.  477;  79N.  E.  172; 

7  L.  R.  A.  N.  s.  376  70,  1373 

Llovd  &  Co.,  David,  6  Ch.  D. 

339  1598 

Lloyd,  Ex  parte,  1  Sim.  N.  8. 

248  276,  308 

Loan  Ass'n  v.  Stonemetz,  29 

Pa.  St.  534  1237,  1319,  1322 

Lock  V.  Queensland  Land  Co. 

(1896),  A.  C.  461  433,  626, 

1108 
Locke  V.  Leonard  Silk  Co.,  37 

Mich.  479  231 

Lockhart  v.  Van  Alstyne,  31 

Mich.  76;  18  Am.  Rep.  156  444 
450,  451 
Lockwood  V.  Mechanics  Nat. 

Bank,  9  R.  I.  308:    11  Am. 

Rep.  253         557,  571,  1166,  1202, 

1205 
V.  Town  of  Weston,  61 

Conn.  211;  23  Atl.  9  413,415, 

420 
Loeffler  v.  Modern  Wood- 
men, 100  Wise.  79;    75  N. 

W.  1012  948 

Loewenstein      v.      Diamond 

Soda  Water,  etc.  Co.,  94  N. 

Y.  App.  Div.  383;  88  N.  Y. 

Supp.  313  946,  982,  1358 

Loewentlial  v.  Rubber  Re- 
claiming Co.,  52  N.  J.  Eq. 

440;  28  Atl.  454  34,134,585, 

992 
Logan  County  Nat.  Bank  v. 

Townsend,  139  U.  S.  67; 

llSup.  Ct.  496  841 

Logan,  Ex  parte,  9  Eq.  149  1242 
Londesborough  v.  Somerville, 

19  Beav.  295  1156 

London    i\    Bynum,    136   N. 

Car.  411;   48  S.  E.  764  299 

London   &   Birmingham  Ry. 

Co.  V.  Winter.  Cr.  &  Ph.  57  395 
London  &  Colonial   Finance 

Corp.,  77  L.  T.  146  162,  187 

London  &  County  Ass.  Co., 

30  L.  J.  Ch.  373  1404 

London     &     General     Bank 

(1895).  2  Ch.  166  1363 

,  72  L.  T.  N.  .s.  227  1095, 

1110,  1117 
London     &     Globe     Finance 

Corp.  (1903).  1  Ch.  728  19 

London  &  N.  Y.  Investment 

Co.  (1895),  2  Ch.  860       442,  536. 

536 
London  &  N.  W.  Ry.  Co.  v. 

Price,  11  Q.  B.  D.  485  91 


TABLE    OF    CASES 
[The  references  are  to  pages] 


London    &    Provincial    Coal 

Co.,  5  Ch.  D.  525  204 

London  &  Provincial  Starch 

Co.,  20  L.  T.  390  1346 

London  &  Provincial  Tel.  Co., 

9  Eq.  653  793 

London  &  Staffordshire  Fire 

Ins.  Co.,  24  Ch.  D.  149      177,  184 

London  &  Westminster  Sup- 
ply Ass'n  V.  Griffiths,  1 
Cababe  &  Ellis  15  763 

London,    Birmingham,     etc. 

Banking  Co.,  34  Beav.  332        774 

London  County  Council  v. 
Atty.-Gen.  (1902),  A.  C. 
165  824 

London    Financial    Ass'n    v. 

Kelk,  26  Ch.  D.  107       38,  39,  40, 
78,  97,  1161,  1290 

London    Founders'    Ass'n    v. 

Clarke,  20  Q.  B.  D.  576  779, 

781,  781 

London  Grand  Junction  Ry. 

Co.,  2  Man.  &  Gr.  606  925 

London  India  Rubber  Co.,  5 

Eq.  519  469 

London  Joint  Stock  Bank  v. 

Simmons  (1892),  A.  C.  201      1433 

London,  Paris  &  American 
Bank  v.  Aronstein,  117  Fed. 
601;  54  C.  C.  A.  663  771,  790 

London,  Paris  Financial,  etc. 

Corp.,  13  Times  L.  R.  569       346, 
352,  355,  355,  362 

London    Pressed    Hinge    Co. 

(1905),  1  Ch.  576  1393,  1505, 

1574,  1604 

London  Speaker  Printing  Co., 
Pearce's  Case,  16  Ont. 
App.  508  209 

London  Tobacco  Pipe-Mak- 
ers' Co.  V.  Woodruffe,  7 
B.  &C.  838  1012,  1166 

London    Trust    Co.    v.    Mac- 
kenzie, 62  L.  J.  Ch.  870  1129, 
1261,  1268,  1280,  1282, 
1290 

London,  etc.  Co.  v.  New  Ma- 
shonaland,  etc.  Co.,  W.  N. 
(1891)  165  1178 

London,  etc.  Ass.  Co.  v.  Red- 
grave, 4  C.  B.  N.  s.  524  608 

London,     etc.     Ry.     Co.    v. 

Fairclough,  2  M.  &  Gr.  674       602, 

605 

V.   M'Michael,   5  Exch. 

855  602 

London,  etc.  Society,  31  Ch. 

D.  223  1200,  1213,  1213 


Long    V.    Citizens'    Bank,    8 

Utah  104 ;  29  Pac.  878  280,  307 
V.  Georgia  Pac.  Ry.  Co., 

91  Ala.  519;  8  So.  706;   24 

Am.  St.  Rep.  931  843,  848 
V.  Guelph  Lumber  Co., 

31  Up.  Can.  C.  P.  129       192,  444, 

450 
Long  Dock  Co.  v.  Mallery,  12 

N.  J.  Eq.  431  1604 

Long  Island  Ferry  Co.  v.  Ter- 

bell,  48  N.  Y.  427  1239 

Long   Island   R.   R.   Co.,    19 

Wend.  (N.  Y.)  37;   32  Am. 

Dec.  429  657,  1001,  1017, 

1049,  1066 
Long  Island,  etc.  Trust  Co.  v. 

Columbus,  etc.  Ry.  Co.,  65 

Fed.  455  1411,  1436 

Longdendale,  etc.  Co.,  8  Ch. 

D.  150  1598,  1599 

Longman    v.    Bath    Electric 

Tramways  (1905),  1  Ch.  646     733, 

733 
Longmont  Supply  Co.  v.  Coff- 

man,  11  Colo.  551;   19  Pac. 

508  1210 

Loomis  V.  Chicago,  etc.  Ry. 

Co.,     102    Fed.    233;      42 

C.  C.  A.  290  1476 
V.  Davenport,  etc.  R.  R. 

Co.,  3  McCrary  489        1535,  1540, 

1632 
Lord  V.  Brooks,  52  N.  H.  72 


—  V.  Equitable  Life  Ass. 
Soc,  96  N.  Y.  Supp.  10; 
109  N.  Y.  App.  Div.  252 

—  V.  Equitable  Life  Ass. 
Soc,  108  N.  Y.  Supp.  67 


1150, 
1154 


133 

1050, 
1165 
V.  Essex  Bldg.  Ass'n,  37 

Md.  320  100,  229 
V.   Governor  &   Co.   of 

Copper  Miners,   2   Phillips 

Ch.  740  _  973,  977,  994 

Lord     Inchiquin,     Ex     parte 

(1891),  3  Ch.  28  1170,1172, 

1173,  1174 
Lord  Lurgan's  Case  (1902),  1 

Ch.  707  203,  204 

Lorillard  v.  Clyde,  86  N.  Y. 

384  339,  1107,  1163 

Loring  v.  Davis,  32  Ch.  D.  625      780, 


V.   Salisbury  Mills,    125 

Mass.  138 
Lothrop  Pub.  Co.  v.  Lathrop, 

etc.  Co.,  191  Mass.  353 


782 
797 
388 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Lothrop  Pub.  Co.  v.  Williams, 

191  Mass.  361  1513 

Loucheirn  v.  Clawson  Print- 
ing, etc.  Co.,  12  Pa.  Super. 
Ct.  55  1242 

Loubat  V.   Le  Roy,  40  Hun 

(N.  Y.)  54G  1207 

LouclonshiKcr    v.    Benton,    4 

Pliila.  :W2  1551 

V.    Woodbury    Heights 

Land  Co.,  58  N.  J.  Eq.  55(5; 

43  Atl.  671  322,  327,  1346 

Louis  Cook  Mfg.  Co.  v.  Ran- 
dall, 62  Iowa  244;  17 
N.  W.  507  297,  297 

Louisiana  Nat.  Bank  v.  Hen- 
derson, 116  La.  413;  40 
So.  779  238 

Louisiana  Navigation,  etc.  Co. 
V.  DouUut,  114  La.  906;  38 
So.  613  45 

Louisiana      Paper      Co.      v. 

Waples,  3  Woods  34  1195 

Louisville     Banking     Co.     v. 
Eisenman,  94    Ky.  83;    21 
S.W.  531,1049;  42  Am.  St. 
Rep.  335;   19  L.  R.  A.  684       872, 
873,  874,  881 

Louisville  Bridge  Co.  v. 
Dodd,  27  Ky.  Law  Rep. 
454 ;  85  S.  W.  683  982,  983 

Louisville     School     Board    v. 

King  (Ky.),  107  S.  W.  247        847 

Louisville  Tobacco  Ware- 
house Co.  V.  Stewart  (Ky.), 
70  S.  W.  285;  24  Ky.  Law 
Rep.  934  844 

Louisville  Trust  Co.  v.  Cin- 
cinnati Inclined-Plane  Ry. 
Co.,  91  Fed.  699  1507,  1520 

V.   Louisville,   etc.   Ry. 

Co.,    174    U.    S.    674;     19 

Sup.  Ct.  827  1636,  1636,  1659 

Louisville  Water  Co.  v.  Ful- 

lenlove,  12  Ky.  Law  Rep. 

556  1379 

Louisville,  etc.  R.  R.  Co.  v. 

Carson,    151    111.    444;     38 

N.  E.  140  1298,  1310 
V.  Central  Trust  Co.,  87 

Fed.  .WO;  31  C.  C.  A.  89  1568 
V.   Hart  Coimty,  25  Ky. 

Law  Rep.  395;  75  S.  W. 

288  495,  921 

V.     Herndon's     Adnir. 

(Ky.),  104  S.  ^V.  732  56 

V.    Memphis    Gaslight 

Co.,  125  Fed.  97;    60  C.  C. 

A.  141  1560 


Louisville,  etc.  R.  R.  Co.  v. 

Neal,  128  Ala.  149;  29  So. 

865  941,  942 
V.  Ohio  Valley  Imp.  Co., 

69  Fed.  431  1221, 1426 

V.   Schmidt   (Ky.),    107 

S.  W.  745  1484,  1490 
V.  Schmidt,  21  Ky.  Law- 
Rep.  556;  52  S.  W.  835  1452, 
1533,  1584,  1586 
Louisville,    etc.    Ry.    Co.    v. 
Flanagan,     113    Ind.    488; 
14  N.  E.  370;    3  Am.  St. 
Rep.  674                                38,  852 

V.  Louisville  Trust  Co., 

174  U.  S.  552;    19  Sup.  Ct. 

817  84,  876,  891,  1221,  1407, 

1437 
Love  V.  Holmes  (Miss.),  44  So. 

835  6 

Lovelace  v.  Anson  (1907),  2 

Ch.  424  503,  538,  542 

Lovell  V.  \\'estwood,  2  Dow. 

&  CI.  21  559,  560 

Loveman    v.     Henderson,     1 

Tenn.  Ch.  App.  749  686,715,805 
Loverin  v.   McLaughlin,    161 

111.  417;  44  N.  E.  99         126,  127, 
251,  252 
Lovett    V.    Steam    Saw    Mill 

Ass'n,  6  Paige  (N.  Y.)  54         393. 
405,  409 
Low   V.    Blackford,    87    Fed. 

392;  31  C.  C.  A.  15       1420,  1452, 
1629,  1630 

V.  Connecticut,  etc.  R. 

R.  Co.,  45  N.  H.  370  152,  278, 
281,293,295 
V.  Connecticut,  etc.  R.  R. 

Co.,  46  N.  H.  284  283 

Lowe    V.    Pioneer   Threshing 

Co.,  70  Fed.  646  519 
V.  Ring,  115  Wise.  575; 

92  N.  W.  238  1246 
V.  Ring.  123  Wise.  370; 

101  N.  W.  698  1247 

Lowene  v.  American  Fire  Ins. 

Co.,  6  Paige  (N.  Y.)  482  1121 

Lowenfeld,  Ex  parte,  70  L.  T. 

3  436,  437 

Lowndes     v.     Garnett     Gold 

Mining  Co.,   33   L.   J.   Ch. 

418  1245.  1245,  1297,  1298 

Lowry    t'.    Commercial,    etc. 

Bank,  Taney  310  756.  791. 
792,  797.  798,  799 
V.  Farmers'  L.  &  T.  Co., 

172  N.  Y.   137;    64  N.  E. 

796 ;  56  N.  Y.  App.  Div.  108     1 151 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Lowville,   etc.   R.   R.   Co.   v. 

Elliot,    101    N.    Y.    Supp. 

328  211,214 

Lozier  v.  Saratoga  Gas,  etc. 

Co.,   59   N.    Y.   App.   Div. 

390;  69  N.  Y.  Supp.  247  907, 

908 
Lozier  Motor  Co.  v.  Ball,  104 

N.  Y.  Supp.  771 ;   53  N.  Y. 

Misc.  375  1331 

Lubbock  V.  British  Bank  of 

South    America    (1892),    2 

Ch.  198  1092 

Lubroline  Oil  Co.  v.  Athens 

Sav.  Bank,  104  Ga.  376;  30 

S.  E.  409  1515 

Lucas  V.  Bank  of  Georgia,  2 

Stew.  (Ala.)  147  230,  233 

1\  Beach,  1  Man.  &Gr.  417   274 

V.  Coe,  86  Fed.  972       622 

V.  Fitzgerald,  20  Times 

L.  R.  16  1128,  1268,  1280, 

1280,  1283 

V.  Friant,  111  Mich.  426; 

69  N.  W.  735  1344 

V.  Milliken,  139  Fed.  816      787, 

1024,  1063,  1064 

V.  White  Line  Transfer 

Co.,  70  Iowa  541;  30  N.  W. 

771;  59  Am.  Rep.  449  851, 

861,  869 
Lucile  Dreyfus  Mining  Co.  v. 

Willard    (Wash.),    89   Pac. 

935  735,  741 

Lucky  Queen  Mining  Co.  v. 

Abraham,  26  Oreg.  282;  38 

Pac.  65  1231,  1382 

Ludington    v.    Thompson,    4 

N.  Y.  App.   Div.   117;    38 

N.  Y.  Supp.  768    _  1378 

Ludlow  V.  Clinton  Line  R.  R. 

Co.,  1  Flip.  25  1397,  1629 

. V.  Hurd,  1  Disn.  (Oh.) 

552  1551,  1553 

Luetzke  v.   Roberts   (Wise), 

109N.  W.  949  183 

Luling  V.  Atlantic  Mut.  Ins. 

Co.,  45  Barb.  (N.  Y.)  510; 

30How.  Pr.  69  1116 

Lum   V.   McEwen,    56  Minn. 

278;   57  N.  W.  662  1347 

Lumbard  v.  Aldrich,  8  N.  H. 

31;  28  Am.  Dec.  381  918 

Lumsden's  Case,  4  Ch.  31  708,  708 
Lund  V.  Blanshard,  4  Hare  9      939, 

976 
V.  Wheaton  Roller  Mill 

Co.,  50  Minn.  36;   52  N.  W. 

268;  36  Am.  St.  Rep.  623         715 


Lundy  Granite  Co..  20  W.  R. 

519;  26  L.  T.  673  1240 

Lungren  v.  Pennell,  10  W.  N. 

C.  (Pa.)  297  336 

Lurgan's  Case,  Lord  (1902), 

1  Ch.  707  203,  204 

Luse  V.  Isthmus  Transit  Co., 

6  Oreg.  125;  25  Am.  Rep. 

506  1381 

Lusk  V.  Riggs,  70  Nebr.  713; 

97  N.  W.  1033  124,  127,  239, 

246 
Luther  v.   C.  J.  Luther  Co., 

118  Wise.   112;    94  N.  W. 

69;  99  Am.  St.  Rep.  977  510, 
1063,  1319 
Lydnev,  etc.  Co.  v.  Bird,  33 

Ch.  b.  85  272,  272,  293,  313, 

319,  320,  320,  321, 
353 
Lyman   v.   Central    Vermont 

R.  R.  Co.,  59  Vt.  167;    10 

Atl.  346  1617 
V.  Hilliard,  154  Fed.  339      1359 

V.  Kansas  City,  etc.  R. 

Co.,  101  Fed.  636  1671 

V.  Pratt,  183  Mass.  58; 

66  N.  E.  423  497,  1147 

V.  State  Bank  of  Ran- 
dolph, 81  N.  Y.  App.  Div. 
367;  80  N.  Y.  Supp.  901; 
179  N.  Y.  577;    72  N.  E. 

1145  114 

Lynde  v.  Anglo-Italian,  etc. 
Spinning  Co.  (1896),  1  Ch. 
178  187 

Lyndon  Mill  Co.  v.  Lyndon 
Institution,  63  Vt.  581, 
585;  25  Am.  St.  Rep.  783; 
22  Atl.  575  1370 

Lyndon  Sav.  Bank  v.  Inter- 
national Co.,  75  Vt.  224; 
54  Atl.  191  591 

Lynn  v.  Freemansburg,  etc. 
Ass'n,  117  Pa.  St.  1;  11 
Atl.  537;  2  Am.  St.  Rep. 
639  581,  582 

Lyon  V.  Am.  Screw  Co.,   16 

R.  I.  472;    17  Atl.  61      893,  894, 

900 

1?.  Bower,  30  N.  J.  Eq.  340     1259 

V.  Citizens'  Loan  Ass'n, 

30  N.  J.  Eq.  732  1259 

V.  First  Nat    Bank,  85 

Fed.  120;  29  C.  C.  A.  45      86,  838 

V.  James,  97  N.  Y.  App. 

Div.  385;  90  N.  Y  Supp. 
28;  181  N.  Y.  512;  73 
N.  E.  1126  1350,  1355 


CXXVl 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Lyon  Potter  &  Co.  v.  First 
Nat.  Bank,  85  Ved.  120;  29 
C.  C.  A.  45  838 

Lyon's  Case,  35  Beav.  646  1203 

Lysaght  v.  St.  Louis  Opera- 
tive, etc.  Ass'n,  55  Mo. 
App.  538  580 

Lysaght,  Re  (1898),  1  Ch.  115  24 

Lyster's  Case,  4  Eq.  233      667,  1202 

M 

McAfee   v.   Zettler,    103    Ga. 

579;  30  S.  E.  2(58  972 

McAleer  v.  McMurray,  58  Pa. 

St.  126  928 

McAlester  Mfg.  Co.  v.  Flor- 
ence Cotton,  etc.  Co.,   128 

Ala.  240 ;  30  So.  632  78 

McAlien  v.  Woodcock,  60  Mo. 

174  1343 

McAllister  v.  Plant,  54  Miss. 

100  1584 

McAlpin  V.  Universal  Tobacco 

Co.  (N.  J.),  57  Atl.  418  974 

McArthur  v.  Times  Printing 

Co.,    48    Minn.    319;      51 

N.  W.     216;  31     Am.     St. 

Rep.  653  283.  287,  290,  290 

McAvity  V.  Lincoln,  etc.  Co., 

82  Me.  504;   20  Atl.  82  1247 

McBryan  v.  Universal  Ele- 
vator Co.,   130  Mich.   Ill; 

89  N.  W.  683;    97  Am.  St. 

Rep.  453  619 

McCabe  v.   Father  Matthew, 

etc.  Soc,  24  Hun  (N.  Y.) 

149  1010 

McCall  V.  Byram  Mfg.  Co.,  6 

Conn.  428  1167,  1185,  1208, 

1208,  1229 
McCalla  v.  Clark,  55  Ga.  53  812 

McCallum  v.  Pursell  Mfg.  Co., 

1  N.  Y.  Supp.  428  279,  300 

McCampbell      v.       Fountain 

Head  R.  R.  Co.,  Ill  Tenn. 

55;    77  S.   W.    1070;     102 

Am.  St.  Rep.  731       966,  969,  969 
McCandless    v.    Inland    Acid 

Co.,  112  Ga.  291;   37  S.  E. 

419  303,  304 
V.  Inland  Acid  Co.,  115 

Ga.  068;  42  S.  E.  449  303 

McCann  v.   First  Nat.  Bank, 

112  Ind.  354;  14  N.  E.  251        540, 
541    543 
V.  First  Nat.  Bank,  131 

Ind.  95;  30  N.  E.  893  540, 

541,  543 


McCartee  v.  Orphan  Asylum 
Soc,  9  Cow.  (N.  Y.)  437; 
18  Am.  Dec.  516  68 

McCarter     v.     Ketcham,     72 

N.  J.  Law  247;   62  Atl.  693      203 

V.  Ketcham  (N.  J.),  67 

Atl.  610  204 

McCliesny  v.  Batman  (Ky.), 

89  S.  W.  198  104,  125 

McChmahan  v.  Ivanhoe  Land, 

etc.   Co.,   96   Va.    124;     30 

S.  K.  4.50  182,  183 

McClelland   v.    McKane,    154 

Fed.  164  975 

V.     Norfolk     Southern 

R.  R.  Co.,  110  N.  Y.  469; 
18  N.  E.  237;    6  Am.  St. 

Rep.  397;  1  L.  R.  A.  299  1425, 
1448,  1451,  1675 
M'Clelland    v.    Whiteley,    15 

Fed.  322  175 

McClintock  v.  Central  Bank, 

120    Mo.    127;     24    S.    W. 

1052  717 

McCloskey  v.   Snowden,   212 

Pa.  249;    61  Atl.  796;    108 

Am.  St.  Rep.  867  938 

McClure  v.  Central  Trust  Co., 

165  N.  Y.   108;    58  N.  E. 

777;  53  L.  R.  A.  153  784 
V.  Central  Trust  Co.,  28 

N.  Y.  App.  Div.  433;  53 

N.  Y.  Supp.  188  782 

V.   Law,  161  N.  Y.  78; 

55  N.  E.  388;  76  Am.  St. 

Rep.  262  1337 
V.  Trask,  161  N.  Y.  82; 

55  N.  E.  407  1338 

McConey  v.   Belton  Gas,  etc. 

Co.,    97    Minn.    190;     106 

N.  W.  900  619 

McConnell  v.  Camors-McCon- 

nell  Co.,  152  Fed.  321  262 

V.  Combination  Mining, 

etc.  Co.,  30  Mont.  239;  76 
Pac.  194;  104  Am.  St. 
Rep.   703;    31  Mont.  563; 

79  Pac.  248  924,  983,  1208, 

1247,  1322 
McConnell's  Claim   (1901).   1 

Ch.  728  1180,  1180,  1238, 

1241,  1243 
McCord  V.  Ohio.  etc.   R.   R. 

Co.,  13  Ind.  220  493 

McCord-CoUins  Co.  v.  Pritch- 

ard  (Tex.),  84  S.  W.  3SS  380 

McCormick  v.   Market   Hank, 

165  U.  S.  538;    17  Sup.  Ct. 

433  838 


TABLE    OF    CASES 
[The  references  are  to  pages] 


McCornack  v.  Salem  Ry.  Co., 
34  Oreg.  543;  56  Pac.  518, 
1022  1567 

McCoiirt  V.  Singers-Bigger, 
145  Fed.  103;  76  C.  C.  A. 
73  300,  983,  983,  1341 

McCoy  V.  Washington 
County,  3  Wall.  Jr.  C.  C. 
381  1451 

V.    World's    Columbian 

Exposition,    186    111.    356; 
57  X.  E.  1043;    78  Am.  St. 

Rep.  288  601,  607,  613 

McCracken    v.    Halsey    Fire- 

Engine  Co.,  57  Mich.  361; 

24  N.  W.  104  1240 
V.  Robison,  57  Fed.  375; 

6  C.  C.  A.  400  1314 

McCrea   v.   McClenahan,    114 

N.  Y.  App.  Div.  70  972,  978, 

979,  982 
McCreary  v.  Chandler,  58  Me. 

537  8 

McCuUough  V.  Annapolis,  etc. 

R.  R.  Co.,  4  Gill  (Md.)  58  1207 
V.  Moss,  5  Denio  (N.  Y.) 

567  992,  1193 
V.  Sutherland,  153  Fed. 

418  1086 

V.   Talledega    Ins.    Co., 

46  Ala.  376  236 

McCutchen    v.    Dittman,    23 

N.  Y.  App.  Div.  285;    48 

N.  Y.  Supp.  360  808 

McCutcheon  v.  Merz  Capsule 

Co.,  71  Fed.  787;    19  C.  C. 

A.  108;    31  L.  R.  A.  415        834, 

843 
McDaniels   v.    Flower   Brook 

Co.,  22  Vt.  274  999,  1005,1008 
McDermott  Mining  Co.  v.  Mc- 

Dermott,  27  Mont.  143;  69 

Pac.  715  1341 

McDonald   v.   Chisholm,    131 

111.  273;  23  N.  E.  596  408 
V.  Dewey,  134  Fed.  528; 

67  C.  C.  A.  408  618 
V.  Dewey,  202  U.  S.  510; 

26  Sup.  Ct.  731  619,  619 
V.  Houghton,  70  N.  Car. 

393  1342 

V.  Ross-Lewin,  29  Hun 

(N.  Y.)  87  660 

V.    Williams,    174     U. 

S.  397;   19  Sup.  Ct.  743 


McDonnell  v.  Ontario,  etc.  R. 
R.  Co.,  11  Up.  Can.  Q.  B. 
267 


1128, 
1128 


McDonough  v.  Bank  of  Hous- 
ton, 34  Tex.  309 

V.  Hennepin,  etc.  Ass'n, 

62  Minn.  122;  64  N.  W.  106 

McDowall  V.  Sheehan,  129  N. 
Y.  200;    29  N.  E.  299 


286 

590 

1175, 
1318 


553 


McDowell    V.    Bank   of   Wil- 
mington, 1  Harr.  (Del.)  27 

511,  572 
V.  Chicago  Steel  Works, 

124  111.  491;    16  N.  E.  854; 

7  Am.  St.  Rep.  381  809 
V.  Lindsay,  213  Pa.  591 ; 

63  Atl.  130  631,  646 

McElhenny's  Appeal,  61  Pa. 

St.  188  317 

McElrath  v.  Pittsburg,  etc.  R. 

R.  Co.,  68  Pa.  St.  37  1484, 

1485 
McElroy  v.  Minn.  Percheron 

Horse  Co.,   96  Wise.  317; 

71  N.  W.  652  852,  880 

McElwee  Mfg.   Co.  v.  Trow- 
bridge, 62  Hun  471;    17  N. 

Y.  Supp.  3  300 

McEuen  v.  London  Wharves 

Co.,  6  Ch.  655  201,  688 

McEwan  v.  Campbell,  2  Macq. 

H.  L.  499  276,  307 

McEwen   v.    Harriman   Land 

Co.,  138  Fed.  797;   71  C.  C. 

A.  163  1667 

McFadden  v.  Mays  Landing, 

etc.  R.  R.  Co.,  49  N.  J.  Eq. 

176;  22  Atl.  932    1465,  1584, 
1589,  1623 
McFall  V.  Buckeye,  etc.  Ass'n, 

122  Cal.  468;  55  Pac.  253; 

68  Am.  St.  Rep.  47  700,  717 
V.  McKeesport,  etc.  Co., 

123  Pa.  St.  259;   16  Atl.  478     280, 

307 
McFarlan  v.  Triton  Ins.  Co., 

4  Denio  (N.  Y.)  392  915 

McFarlin  v.  First  Nat.  Bank, 

68  Fed.  868;    16  C.  C.  A. 

46  492,  493 

McFell  Electric  &  Tel.  Co.  v. 

McFell    Electric    Co.,    110 

111.  App.  182  377 

McGannon   v.    Central    Bldg. 

Ass'n,  19  W.  Va.  726  582 

M'George  v.  Big  Stone  Gap 

Imp.  Co.,  57  Fed.  262  1595 

McGourkey    v.    Toledo,    etc. 

Ry.  Co.,  146  U.  S.  536;    13 

Sup.  Ct.  170  1358,  1536,  1538, 
1538,  1538 


TABLE    OF    CASES 
[The  references  are  to  pages] 


McGraw  v.  Memphis,  etc.  R. 

R.   Co.,   5  Coldw.    (Term.) 

434  1306,  1515 
,Re,  111  N.  Y.  66;    19  N. 

E.  233 ;  2  L.  R.  A.  3S7  848,  849 
McGroKor  v.  Home  Ins.  Co., 

33  N.  J.  Eq.   181  469,  469 

McGre^v-  v.  City  Produce  Ex- 

clianKC,  85  Tenn.  572;   4  S. 

W.  38;  4  Am.  St.  Rep.  771  261 
McGue  V.  Rommell  (Cal.),  83 

Pac.  1000  781 

McHenry  v.  New  York,  etc. 

R.  R.  Co.,  22  Fed.  130  963, 

964,  965,  970 
Mcllhenny  v.  Binz,  80  Tex.  1 ; 

13  S.  W.  055;    26  Am.  St. 

Rep.  705  918 

Mcllquham  v.  Taylor  (1895), 

1  Ch.  53  779,  779 

Mcllrath  v.  Snure,  22  Minn. 

391  1608 

Mclhvraith  v.   Dublin  Trunk 

Ry.  Co.,  7  Ch.  134  200,  200 

Mclntyre     v.     Ajax     Mining 

Co.  (Utah),  77  Pac.  613  1342 

V.    E.    Bement's    Sons 

(Mich.),  109  N.  W.  45         192,  527 

McKain  and  Canadian  Bir- 
beck,  etc.  Co.,  7  Ont.  L.  R. 
241  555,  572,  574,  574 

McKay's  Case,  2  Ch.  D.  1  329 

(1896),  2  Ch.  757  649 

McKee  v.  Cunningham  (Cal.), 

84  Pac.  260  408 

V.    Grand   Rapids,   etc. 

Ry.  Co.,  41   Mich.  274;     1 

N.  W.  873 ;   50  N.  W.  469       1542 

V.  Home  Savings  &  Trust 

Co.,  122  Iowa  731;    98  N. 

W.  609  1040.  1040,  1045 

McKeen  v.  County  of  North- 
ampton, 49  Pa.  St.  519;  88 
Am.  Dec.  515  420 

McKeen's  Appeal,  42  Pa.  St. 

479  1149 

McKees    Rocks,    etc.    Relief 

Ass'n,  6  Pa.  Dist.  Rep.  477  96 

McKenney  i'.  Diamond  State 
Loan  Ass'n,  8  Houst.  (Del.) 
557;    18  Atl.  905  589,  593 

Mclvim  V.  Glenn,  66  Md.  479; 

8  Atl.  130  620 

V.  King,  58  Md.  502;   42 

Am.  Rep.  340  1461 

V.  Odom,  3  Bland  Ch. 

(Md.)  407  -  3 

McKinley  v.  Mineral  Hill,  etc. 

Co.  (Wash.),  89  Pac.  495        1374 


McLane  v.  Placerville,  etc.  R. 

R.  Co.,  66  Cal.  600;   6  Pac. 

748  1436,  1495,  1000,  1003, 

1000,  1023,  1040 
McLaran  v.  Crescent  Planing 

Mill  Co.,  117  Mo.  App.  40; 

93S.  W.  819  1110,1121 

V.     Eisken,    28    Grant 

(Can.)  352  1198,  1204 

McLaughlin  v.  Bank  of  Victo- 
ria, 20  Vict.  L.  R.  433^      774,  796 

V.  Daily  Telegraph  News- 
paper,    1     Comm.     L.     R. 
(Australia)   243  709,  754,  758 
774,  796 

M'Laughlin    v.    Detroit,    etc. 

Ry.  Co.,  8  Mich.  100         450,  456, 
463,  466,  1113 

McLean  v.  Lafayette  Bank,  3 

McLean  587  772,  865,  868 

V.     Medicine    Co.,    96 

Mich.  479;    56  N.  W.  68        695, 

753 
V.  Pittsburgh  Plate  Glass 

Co.,  159  Pa.   112;    28  Atl. 

211  464 

McLean-Bowman     Co.,     138 

Fed.  181  191 

McLean's  Case,  55  L.  J.  Ch. 

30  1336, 1338 

McLeary  v.  Dawson,  87  Tex. 

524;  29  S.  W.  1044  304 

V.   Erie  Telegraph,  etc. 

Co.,  38  N.  Y.  Misc.  3;    76 

N.  Y.  Supp.  712  ^         1076 

McLellan     v.      Detroit     File 

Works,  56  Mich.  579;    23 

N.  W.  321  297,298,822,1381 

McLennan  v.  Hopkins,  2  Kans. 

App.  260;   41  Pac.  1001  246, 

251 
McLeod   V.    Lincoln    Medical 

College,  69  Nebr.  550 ;  98  N. 

W.  072  23,  1083,  1306 

McLoutli  V.  Hunt,  154  N.  Y. 

179;    48  N.  E.  548;    39  L. 

A.  230  1150,  1445 

McMahon  v.  Macy,  51  N.  Y. 

155  '  622,  812 
V.  North  Kent  Ironworks 

Co.  (1891),  2  Ch.  148  1604 

r.   Supreme  Tent,   151 

Mo.  522;  52  S.  W.  384        576,589 

,  Re  (1900),  1  Ch.  173  623, 

624,  624 
McMicliael  v.  Brennan,  31  N. 

.1.    Eq.    496  911,  912,  918 

McMillan   v.   Le   Roi   Mining 

Co.  (1903),  1  Ch.  331        1038,  1038 


TABLE    OF    CASES 
[The  references  are  to  pages] 


McMurray  v.  Moran,  134  U. 

S.  150;    10  Sup.  Ct.  427         1526, 

1526 
V.  St.  Louis  Oil  iMfg.  Co., 

33  Mo.  377  1371 

McMurrich  v.  Bond  Head  Har- 
bor Co.,  9  Up.  Can.  Q.  B. 

333  4,  692,  753,  753 

McMurtry     i'.     Montgomery 

Masonic  Temple  Co.,  86  Ky. 

206;    5  S.  W.  570  1324,  1344 

McNab  V.   McNab  &  Harlin 

Co.,  62  Hun    (N.  Y.)    18; 

16N.  Y.  Supp.  448;   133  N. 

Y.  687;    31  N.  E.  627  966, 

1299,  1300 
McNeely  v.  Woodruff,  13  N. 

J.  Law  352  1027,    1065 

McNeil  V.  Boston  Chamber  of 

Commerce,  154  Mass.  277; 

28  N.  E.  245;    13  L.  R.  A. 

559  1215 
V.  Fultz,  38  Can.  Super. 

a.  198  337 
V.  Tenth  Nat.  Bank,  46 

N.  Y.  325;  7  Am.  Rep. 

341  694,  723,  808 

McNulta  V.  Com  Belt  Bank, 

164  111.  427;   45  N.  E.  954; 

56  Am.  St.  Rep.  203  494,  571, 
852,  854,  858,  1190,  1239 
V.   Lochridge,  141  U.  S. 

327;  12Sup.Ct.  11        1615,  1615, 

1617 
McRae  v.  Corbett,  6  Mani- 
toba 426  396 
McRee  v.  Mexican  Gulf  Oil, 

etc.  Co.  (Ga.),56S.  E.  451  1287 
McShane  v.  Howard  Bank,  73 

Md.  135;  20  Atl.  776  1368,  1368 
M'Tighe  v.  Keystone  Coal  Co., 

99  Fed.   134;    39  C.  C.  A. 

447  1453,  1453 

McVicker  v.   Cone,  21   Oreg. 

353;  28  Pac.  76  148,  148,  278 

McVity  V.  Albro  Co.,  90  N.  Y. 

App.  Div.   109;    86  N.  Y. 

Supp.  144;    180  N.  Y.  554; 

73  N.  E.  1126  450,  451,  451 

Maas  V.  Missouri,  etc.  Ry.  Co., 

83  N.  Y.  223  1411 

Macalester's  Admr.  v.  Mary- 
land, 114  U.  S.  598;  5  Sup. 

Ct.  1065  1515,  1677 

Macauly  v.  Robinson,  18  La. 

Ann.  619  667 

Macbeth  v.  Vanfield,  78  Pac. 

693;     45   Oreg.    553;     106 

Am.  St.  Rep.  670  636,  636 


MacDonald,      Sons 
(1894),  1  Ch.  89 


&     Co. 

155,  155,  632, 
639,  702 
10 

994,  995 
D. 


MacDougall  v.   Gardiner 
Ch.  606 

V.    Gardiner,  1   Ch. 

13 

V.    Jersey,    etc.    Hotel 

Co.,  2  Hem.  &  Mill.  528 


943^  1060 


160, 
1108 


965 


828 


Macey  Co.,   Fred,  v.   Macey, 

143  Mich.  138;    106  N.  W. 

722  315,  316,  331 

MacGinness    v.    Boston,    etc. 

Mining  Co.,  29  Mont.  428; 

75  Pac.  89 
Macgregor  v.  Official  Manager 

of  the  Deal,  etc.  Ry.  Co. 

(1852),  22  L.  J.  Q.  B.  69 
Machinists'     Nat.     Bank     v. 

Field,  126  Mass.  345  730,  737 

Mack   V.  DeBardeleben,    etc. 

Co.,  90  Ala.  396;  8  So.  150; 

9  L.  R.  A.  650  941,  942,  1014 
V.  Latta,  178  N.  Y.  525; 

71  N.  E.  97;    67  L.  R.  A. 

126  182,  183 

Mack's  Claim,  W.  N.  (1900) 

114 
Mackay  v.  Commercial  Bank 

of  New  Brunswick,  L.  R.  5 

P.  C.  394 
V.  St.  Mary's  Church,  15 

R.  L  121;    23  Atl.  108;    2 

Am.  St.  Rep.  881 
Mackenzie,  Ex  parte,  7  Eq.  240 
Mackey   v.    Burns,    16   Colo. 

App.  6;  64  Pac.  485         968,  1069, 
1310,  1340 
Mackie  v.  Clough,  17  Vict.  L. 

R.  493  .  1126, 1358, 1368 

Mackintosh  v.  Flint,  etc.  R. 

R.  Co.,  32  Fed.  350  443 
V.  Flint,  etc.  R.  R.  Co., 

34  Fed.  582  76,  464,  466,  468, 

1083,  1092,  1099,  1101,  1103, 

1105 

Mackley's  Case,  1  Ch.  D.  247         204 

Maclagan's  Case,  51  L.  J.  Ch. 

841  1215 

Maclaren  v.  Stainton,  3  DeG. 

F.  &J.  202  1141,1156 

Macon,    etc.    R.    R.    Co.    v. 

Georgia  R.  R.  Co.,  03  Ga. 

103       849,  1493,  1583, 1583 
V.  Shailer,  141  Fed.  585; 

72  C.  C.  A.  631  979 
V.  Vason,  57  Ga.  314     603, 

634,  661,  1226,  1227 


1180 


1362 


403 
1426 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Macoun  v.  Erskine,  Oxenanl, 
etc.  Co.  (1901),  2  K.  B.  493 

MacVeaKli     ''•     nciiver    City 
Waterworks  Co.,  107  Fed. 
17;   4()  C.  C.  A.  118 

MacVeigh  v.  Wild,  95  P>d.  84 


809 


962 

1359 
Madden  v.  Dimond,  12  Brit. 

Cohimh.  80  1270 

Madtiick  r.  .Marsliall,  17  C.  B. 

N.  s.  829;    16  C.  B.  n.  s. 

387  276,  308 

Madison  Ave.  Baptist  Church 

V.  Baptist  Church,  5  Rob. 

(N.  Y.)  649  1011 

Madison  Ins.  Co.  v.  Griffin,  3 

Ind.  277  1381 
Madison,  etc.  Co.  v.  Water- 
town,  etc.  Co.,  5  Wise.  173  87 
V.  Watertown,  etc.  Co., 

7  Wise.  59  84,  849 

Madison,   etc.    R.    R.    Co.   v. 

Norwich  Sav.  Soc,  24  Ind. 

457  1433 

Madrid  Bank  v.  Pelly,  7  Eq. 

442  1334 

Maeder  v.  Buffalo  Bill's  Wild 

West  Co.,  132  Fed.  280  890, 

907,  969,  1112 
M.   A.    Furbush,   etc.   Co.   v. 

Liberty   Woolen   Mills,   81 

Fed.  425  1473 

Magdalena  Steam  Nav.  Co., 

Johnson  690  832 

Magowan  r.  Groneweg,  16  S. 

Dak.  29;   91  N.  W.  335  1211 

Magruder  v.  Colston,  44  Md. 

349;   22  Am.  Rep.  47  619 

Mahanev  r.  Walsh,  16  N.  Y. 

App. 'Div.  601;    44  N.  Y. 

Supp.  969  687,  694,  714,  791 

Maher,   Re,    18    Vict.    L.   R. 

519  380 

Mahoney  v.  Butte  Hardware 

Co.,  27  Mont.  463;   71  Pac. 

674  91 

Mahony  v.  East  Holyf ord  Min- 
ing Co.,  L.  R.  7  H.  L.  869  554, 
1224,  1230 
Main  v.  Mills,  6  Biss.  98  1 128, 

1129 
Maine  v.  Midland  Invest- 
ment Co.    (Iowa),    109   N. 

\y.  801  181,  181,  185 

Maine  Mat.,  etc.  Ins.  Co.  v. 

Neal,  50  Me.  301  1189 

Maine  Products  Co.  v.  Alex- 
ander, 115  N.  Y.  App.  Div. 

475  962,  1064,  1065 


Majors  v.   Taussig,   20  Colo. 

44;  36  Pac.  816  984,  985 

Malam  v.  Hitcheri.s  (1894),  3 

Ch.  578  498,  502,  1140,  1147 

Malle.son     v.     National     In.s. 

Corp.   (1894),    1   Cli.  200  586 

Mallett  V.  Simpson,  94  N.  Car. 

37;   55  Am.  Rep.  594  68,  848 

Mallory  v.  Hanaur  Oil  Works, 

86  Tenn.  598;  8  S.  W.  396         79, 
854,  854 
V.  Mallory  Wheeler  Co., 

61  Conn.  131;    23  Atl.  708 

1311,  1321,  1322 

V.  Maryland  Glass  Co., 

131  Fed.  Ill  1511 
V.  West  Shore,  etc.  R.  R. 

Co. .  35  N.  Y.  SuDer.  Ct.  1 74  1467 
Mallory's  Case,  3  Ont.  L.  Rep. 

552  166 

Maltby  v.  Northwestern  Va. 

R.  R.  Co.,  16  Md.  422;    10 

Cyc.  496  603 

Man  V.  Boykin  (S.  Car.),  60  S. 

E.  17  492,  695,  782 

Manahan  v.  Varnum,  11  Gray 

405  304 

Manchester    Brewery    Co.    v. 

North  Cheshire  &  Man- 
chester Brewery  Co.  (1898), 

1  Ch.  539  373 

Manchester  Locomotive 

Works    V.     Truesdale,     44 

Minn.  115;   46  N.  W.  301; 

9  L.  R.  A.  140  1567 

Manchester    St.    Ry.    Co.    v. 

Williams,    71    N.    H.    312; 

52  Atl.  461  156 

Manchester,  etc.  R.  R.  Co.  v. 

Concord  R.   R.,  66  N.   H. 

100;   20  Atl.  383;   49  Am. 

St.  Rep.  582;    9  L.  R.  A. 

689  856 

Mandel     v.     Fidelity     Trust 

Co.,  107  S.  W.  775  (Ky.)         1375 

V.  Swan  Land,  etc.  Co., 

154  111.  177;  40  N.  E.  462; 
45  Am.  St.  Rep.  124;  27  L. 

R.  A.  313  608,  667 

Mandelbaum  v.  North  Amer- 
ican Mining  Co.,  4  Mich.  465       734 

Manderson      v.      Commercial 

Bank,  28  Pa.  St.  379  951 

Mandeville  v.  Court  right,  142 

Fed.  97;   73  C.  C.  A.  321  252 

Manliattan     Beach     Co.     v. 

Harned,  27  Fed.  484  737 

Manhattan  Brass  Co.  v.  Web- 
ster, 37  Mo.  App.  145  1192 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Manhattan  Hardware  Co.  v. 
Phalen.  12S  Pa.  St.  110; 
18  Atl.  42S  1221 

V.  Roland,  128  Pa.  St. 

119;   IS  Atl.  429  919,  1221 

Manhattan    Life    Ins.    Co.    i\ 

Forty-second    St.,    etc.    R. 

R.  Co.,  139  N.  Y.  146;   34 

N.  E.  776  740 

Manhattan  Sav.  Inst.  v.  Nat. 

p:xchange  Bank,  42  N.  Y. 

App.  Div.  147  1432 

Manhattan    Trust    Co.    v. 

Seattle  Coal  Co.,  16  Wash. 

499;    48  Pac.  333,  737  1396, 

1496,  1533,  1560 

V.  Seattle  Coal  &  Iron 

Co.,     19    Wash.    493;     53 

Pac.  951  1560 
V.  Sioux  City  Cable  Ry. 

Co.,  76  Fed.  658  1539,  1565, 

1570 
V.  Sioux  City,  etc.  R.  R. 

Co.,  81  Fed.  50  1633 

V.  Sioux  City,  etc.  Ry. 

Co.,  102  Fed.  710  1569 

Manhattan  Web  Co.  v.  Aquid- 

neck  Nat.  Bank,  133  Fed. 

76  _  1328 

Manice  v.  Hudson  River  R.  R. 

Co.,  3  Duer  (N.  Y.)  426  456 

Manisty's    Case,    17    Sol.    J. 

745  ^  664 

Manley  v.   Mayer,   68   Kans. 

377;  75  Pac.  550  1323 

Mann  v.   Anderson,    106  Ga. 

818;  32  S.  E.  870  1114,  1137 

V.  Cooke,  20  Conn.  178         191 

V.   Edinburgh  Northern 

Tramways  Co.  (1893),  A.  C. 

69  295,  332,  1280 

■ V.   Pentz,  2  Sandf.   Ch. 

(N.  Y.)  257  404,  406,  520 

Mann's  Case,  3  Ch.  459  n  708 

Manners  v.  St.  Davids  Gold, 

etc.  Co.  (1904),  2  Ch.  593  72, 

654 
Manning  v.  Berdan,  135  Fed. 

159  182,  890 
V.  Norfolk  Southern  R. 

Co.,  29  Fed.  838  1449,  1528 
V.     Quicksilver     Mining 

Co.,  24  Hun  (N.  Y.)  360 


Manns    v.     Brookville     Nat. 

Bank,  73  Ind.  243 
Manton  v.  Ray,  18  R.  I.  672; 

29  Atl.   998;    49  Am.   St. 

Rep.  811 


1132, 
1136 

803 


786 


Manufacturers',  etc.   Bank  v. 

Big    Muddy    Iron    Co.,    97 

Mo.  38;  10  S.  W.  865  969,  1272 
Manufacturers'        Exhibition 

Bldg.   Co.   V.   Landay,  219 

111.  168;  76  N.  E.  146  559,  560, 
585,  993,  1200 
Manufacturers'  Land,  etc.  Co. 

V.  Cleary,  89  S.  W.  248  1076 

Manufacturers'   Paper  Co.   v. 

Allen  Higgins  Co.,  154  Fed. 

906  444,  444,  492 

Manufacturing  Co.  v.  Bradley, 

105  U.  S.  175  1299,  1301,  1317 
Manville  v.  Belden  Mining  Co., 

17  Fed.  425  841 
Mapes  V.  Scott,  94  111.  379  833,  833 
Mapleton  Bank  v.  Standrod, 

8  Idaho  740;    71  Pac.  119; 
67  L.  R.  A.  656  715 

Marble    Co.    v.    Harvey,    92 
Tenn.  115;    20  S.  W.  427; 

18  L.  R.  A.  252;    36  Am. 

St.  Rep.  71  76,  844,  851 

Marbury    v.    Ehlen,    72    Md. 

206;    19  Atl.  648;    20  Am. 

St.  Rep.  467  792,  797,  798, 
_  798,  799 
V.       Kentucky      Union 

Land  Co.,  62  Fed.  335;  10 

C.  C.  A.  393  92,  876,  876,  1433 
March  v.  Eastern  R.  R.  Co., 

43  N.  H.  515  1134,  1134,  1275 
V.  Fairmount  Creamery 

Co.,  32  Pa.  Super.  Ct.  517 


t;.  Romare,  114  Fed.  200 


582, 
657 
1673, 
1675 


Marchand  v.  Loan  &  Pledge 

Ass'n,  26  La.  Ann.  389  293 

Mare   v.   Anglo-Indian   S.    S. 

Co.,  3  Times  L.  R.  142  191 

Marine  Bank  v.  Biays,  4  H.  & 

J.  (Md.)  338  812 
V.    Clements,    3    Bosw. 

(N.  Y.)  600  1372 

V.  Ogden,  29  HI.  248         79,  80 

Marine  Construction,  etc.  Co., 

130  Fed.  446;  64  C.  C.  A. 

648  43 
,  144  Fed.  649;    75  C.  C. 

A.  451  1505,  1553 

Marine  Ins.  Co.  v.  Young,  1 

Cranch  332  402 

Marine  Mansions  Co.,   4  Eq. 

601  1188,  1513,  1514,  1599 

Marine  Products  Co.  v.  Alex- 
ander, 115  N.  Y.  App.  Div. 

475  1064 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Marino's  Case,  2  Ch.  o9G      557,  707, 

707 
Marion      Savings      Bank     v. 

Dvinkin,  54  Ala.  471  237 

Marion  Trust  Co.  v.  Bennett 

(Ind.),  82  N.  E.  782  484,  484 
V.  Blish  (Ind.),  79  N.  E. 

415  180 
V.    Crescent    Loan,    etc. 

Co.,  27  Ind.  App.  451;    61 

N.  E.  G8S  862 

Market  Street  Ry.  v.  Hellman, 

109  Cal.  571 ;  42  Pac.  225  57, 

1011,  1017,  1020,  1020, 
1024,  1020,  1032,  1040,  1044 
Markham  v.  Jandon,  41  N.  Y. 

235  808,809,811 

Markham    &    Darter's    Case 

(1899),  2  Ch.  480  640,  640 

Marlboroujjh  Ass'n  v.  Peters, 

179    Mass.    01;     60   N.    E. 

396  1186 

Marlborough    Branch    R.    R. 

Co.     V.     Arnold,     9     Gray 

(Mass.)    159;    69  Am.  Dec. 

279  921 

Marlborough     Mfg.     Co.     v. 

Smith,  2  Conn.  579         699,  700, 

1189 
Maroney  v.  Cole,   103  X.  Y. 

Supp.  560;    52  N.  Y.  Misc. 

451  1379 

Marquand    v.    Federal    Steel 

Co.,  95  Fed.  725  114,  449,  1115 
Marr  v.  Marr  (N.  J.),  66  Atl. 

182  1323,  1344 

Marriage,    Neave,     etc.     Co. 

(1896),  2  Ch.  663  1542 

Marseilles  Extension  Ry.  Co., 

7  Ch.  161-  1234 

Marsh   v.    Mathias.    19   Utah 

350;  56  Pac.  1074  557,  1032 

Marshall  v.   Columbia  Street 

Ry.  Co.,  73  S.  Car.  241 ;  53 

S.  E.  417  1374 
V.         Corporation         of 

Queensborough,    1    Sim.   & 

Stu.  520  395 
V.  Industrial  Federation, 

14  N.   Y.   Ann.   Cas.    100: 

84  N.  Y.  Supp.  866  1215,  1319 
V.  Keach  (111.),  81  N.  E. 

29  784 
V.   Rogers,  etc.  Co.,    14 

Times  L.R.  217  1519 
V.  Savings  Bank,  85  Va. 

676;  8  S.  E.  586;    17  .\m. 

St.  Rep.  84;    2  L.   R.   A. 

534  1267,  1278 


Marshall  v.  South  Staffordshire 

Tramways  Co.  (1895),  2  Ch. 

36  1590,  1606 

Marshall  Nat.  Bank  v.  O'Neal, 

11  Te.x.  Civ.  App.  640;    34 

S.  W.  344  867 

Marson  v.  Deither,  49  Minn. 

423;    52  N.  \V.  38  1.14,  198 

Marsters    v.    rmp<iua   Valley 

Oil  Co.  (Oreg.),  90  Pac.  151      1315 
Marten  v.  Burns  Wine  Co.,  99 

Cal.  355;  33  Pac.  1107  181, 

181,  182 
Martin  v.  Deetz,  102  Cal.  55; 

36  Pac.   368;    41   Am.   St. 

Rep.  151  127,  148,  247 
V.    Eagle   Development 

Co.,  41  Oreg.  448;   69  Pac 

216 
V.  Fewell,  79  Mo.  401 


1012 
251, 
306 


V.  Martin  &  Brown  Co., 

27  App.  D.  C.  59  393 
V.  Nashville  Bldg.  Ass'n, 

2  Coldw.  (Tenn.)  418  553,  563 
v.   New  Trinidad   Lake 

A.sphalt  Co.,  87  N.  Y.  App. 

Div.  472;84N.Y.  Supp.711  890 
V.   Niagara   Falls   Paper 

Co.,    122    N.    Y.    165;     25 

N.  E.  303  857 
V.  Remington-Martin 

Co.,95N.  Y.  App.  Div.  18; 

88  N.  Y.  Supp.  573  282,  495 
V.  Santa  Cruz,  etc.  Co., 

4  Ariz.  171;  36  Pac.  36  1310, 
1310,  1322 
V.    Zellerbach,    38    Cal. 

300;  99  Am.  Dec.  365  416 

Martin    &    Merryweather    v. 

Mobile,  etc.  R.   R.  Co.,  7 

Bush  (Ky.)   116  1527 

Martin,   Re,  62  Hun  (N.  Y.) 

557 ;  1 7  N.  Y.  Supp.  133  904, 907 
Martindale  v.  Wilson-Cass  Co., 

134  Pa.   St.  348:     19  Atl. 

680;   19  Am.  St.  Rep.  706 


Martino  v.  Commerce  Fire  Ins. 

Co.,  47  N.  Y.  Super.  Ct.  Rep. 

520 
Marvin     v.     Anderson,      111 

Wise.  387;  87  N.  W.  226 


1237, 
1238 


588 

517, 
1221 


Marx  V.  Raley  &  Co.  (Cal.), 

92  Pac.  519  232 

Maryland  Agricultural  Col- 
leger. Baltimore,  etc.  R.  R. 
Co.,  43  Md.  434  670,  670 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Man'land  Fire  Ins.  Co.  v. 
Daln'mple.  25  Md.  242;  89 
Am.  Dec.  779  808 

Maryland  Hospital  v.  Fore- 
man, 29  Md.  524  849,  856 

Maryland  Steel  Co.  v.  Gettys- 
burg Electric  Ry.  Co.,  99 
Fed.  150  1566 

Marj'land  Trust  Co.  v.  Nat. 
Mechanics  Bank,  102  Md. 
G08;  63  Atl.  70  192,  516,  866, 

1214 

Maryland  Tube  Works  v. 
West  End  Imp.  Co.,  87  Md. 
207;  39  Atl.  620;  39  L.  R. 
A.  810  147,  227,  232,  241,  247 

Maryland,  etc.  Iron  Co.  v. 
Wingert,  8  Gill.  (Md.)  170 

Marysville,  etc.  Co.  v.  Johnson, 
93  Cal.  538;  29  Pac.  126; 
27  Am.  St.  Rep.  215 

Marzett's  Case,  28  W.  R. 
541 

Marzetti's  Case,  42  L.  T.  206 

Maskelyne  British  Typewriter 
(1898),  1  Ch.  133 

Mason  v.  Davol  Mills,  132 
Mass.  76 

V.  Equitable  League,  77 

Md.  483;    27  Atl.  171;    39 
Am.  St.  Rep.  433 

V.  Harris,  11  Ch.  D.  97 


393 


208 

1265 
1280 

1581 

508 


—  V.  Henry,  152  N.  Y. 
46  N.  E.  837         1259 

—  V.  Moore,  73  Oh.  St. 
76  N.  E.  932 

—  V.    Motor 


958 
935, 
940,  996 
529; 

1285,  1288 
275; 
1276,  1278,  1355 
Traction    Co. 
(1905),  1  Ch.  419  78,  1062 

V.  York  &  Cumberland 

R.  R.  Co.,  52  Me.  82     1413,  1583, 
1586,  1625 
Masonic     Temple     Ass'n     v. 
Channell,    43     Minn.    353, 
354;   45  N.  W.  716  161,  608 

Masonic,  etc.  A.ss'n  v.  Sever- 
son,  71  Conn.  719;  43  Atl. 
192  557,  912 

Massachusetts  Const.   Co.   v. 

Kidd,  142  Fed.  285  933,  1164 

Massachusetts  Iron  Co.  v. 
Hooper,  7  Cush.  (Mass.) 
183  154,  157,  768 

Massey       &      Giffin's      Case 

(1907),  1  Ch.  582       618,  621,  709 
Massev    Mfg.    Co.,    13    Ont. 

App.  446  486 

Mast  Buggy  Co.  v.  Litchfield 

Imp.  Co.,  55  111.  App.  98         1210 


Master  &  Company  of  Frame- 
workers  V.  Green,  1  Ld. 
Raym'd  113  569,  582 

Master,  etc.  of  Feltmakers,  1 

B.  &  P.  98  583,  596 
Master,  etc.  of  Gunmakers  v. 

Fell,  Willes  384 
Masury     v.     Arkansas     Nat. 
Bank,    93    Fed.    C03;     35 

C.  C.  A.  476 
Mather  Humane,  etc.  Co.  v. 

Anderson,  76  Fed.  164;   22 

C.  C.  A.  109  1.568, 

Mathias    v.    White    Sulphur 

Springs    Ass'n,     19    Mont. 

359 ;  48  Pac.  624 
Mathiason    Mfg.    Co.,    P.    B. 

(Mo.),  99  S.  W.  502       1006, 
1015,  1016,  1037, 

1040,  1046,  1060 
Mathis  V.  Morgan,  72  Ga.  517; 

53  Am.  Rep.  847 
V.  Pridham,  1  Tex.  Civ. 

App.  58;  20  S.  W.  1015 
Matteson  v.  Dent,  176  U.  S. 

521;  20  Sup.  Ct.  419         788,  791 
Matthews  v.  Associated  Press, 

136  N.  Y.  .333;    32  N.  E. 

981;  32  Am.  St.  Rep.  741        570, 

580 
V.  Columbia  Nat.  Bank, 

79  Fed.  558  995,  1006 
V.   Great  Northern  Ry. 

Co.,  28  L.  J.  Ch.  375        459,  467 
V.   Hoagland,   48  N.   J. 

Eq.  455;  21  Atl.  1054        695,  712 
V.    Massachusetts    Nat. 

Bank,  16  Fed.  Cas.  1113  784 

Mattingly  v.  Roach,  84  Cal. 

207  420,  423 

Mattox  V.  State,  115  Ga.  212; 

41  S.  E.  709 
Maude,  Ex  parte,  6  Ch.  51 


570 


715 


1569 


1371 

1013, 
1039, 


873 
631 


383 
435, 
436 


Maugham  v.  Sharpe,  17  C.  B. 

N.  s.  443 
Maund     v.      Monmouthshire 

Canal  Co.,   4  Man.   &  Gr. 

452 
Maunsell  v.  Midland,  etc.  Ry. 

Co.,  1  Hem.  &  Miller  130 
Maury  v.  Chesapeake,  etc.  R. 

R.  Co.,  27  Gratt.  (Va.)  698 

Mausert  v.  Christian  Feigen- 
span  (N.  J.),  63  Atl.  610 

Mauthey  v.  Wyoming,  etc. 
Ins.  Co.,76N.  Y.  App.  Div. 
579;  78  N.  Y.  Supp.  596 


254 


869 

88 

1492, 
1493 

1371 


890 


TABLE    OF    CASES 
[The  references  are  to  paBes] 


Maux  Ferry,  etc.  Co.  v.  Brane- 
gan, 40  Intl.  301  1237,  1319 

Mawliinney  v.  Converse,  102 

N.  Y.  Supp.  279  1661,  1661 

Maxwell  v.  Akin,  89  Fed.  178  47, 

235,  838 

V.  Dulwich     College,     7 

Sim.  222/1 

V.  Nat.  Bank  of  Green- 
ville, 70  S.  Car.  532 ;  50  S. 
E.  195 

V.  Port  Tennant  Co.,  24 

Beav.  495 

V.    Wilmington    Dental 

Mfg.  Co.,  77  Fed.  938 

1520,  1520 

Maxwell  Cattle  Co.  v.  Hender- 
son, 12  Colo.  App.  425;  56 
Pac.  67 

Maxwell's  Case,  20  En.  585 

May  V.  Cleland,  117  Mich.  45; 
75  N.  W.  129;  44  L.  R.  A. 
163 

V.  Genessee  County  Sav- 
ings Bank,  120  Mich  330: 
79  N.  W.  630  623,  691,  812 

Mayer  v.  Denver,  etc.  R.  Co., 
38  Fed.  197 

Maynard  v.  Consolidated 
Kent  Collieries  Corp. 
(1903),  2  K.  B.   121 

V.  Eaton,  9  Ch.  414 

Maynard's  Case,  9  Ch.  60 

206,  206 

Maynards,  Re  (1898),   1  Ch. 

515  640,  640,  641,  642 

Mayo  V.  Knowlton,  134  N.  Y. 
250;  31  N.  E.  985 

Mayor  of  Lynn  v.  Denton,  1 
T.  R.    89 

Mayor,  etc.  of  Baltimore  v.  B. 
&0.  R^R.  Co.,21  Md.  50 

V.  Ketchiim,  57  Mil.  23 

V.  Norman,  4  Md.  3.52 

V.  United  Rys.,  etc.  Co. 

(Md.),  69  Atl.  436 

Mayor,  etc.  of  Boonton  v. 
Boonton  Water  Co.  (N.  J.), 
61  Atl.  390 

Mayor,  etc.  of  Jersey  City  v. 
North  Jersey,  etc.  Ry.  Co. 
(N.  J.),  63  Atl.  906 

Mayor,  etc.  of  Merchants  of 
Staple  I'.  Bank  of  Ensrland. 
21  Q.  B.  D.  160         401,  401,  407, 
728,  1010 

Mayor,  etc.  of  Newcastle- 
upon-Tyne  I'.  Atty.-Gen., 
12  CI.  &  Fin.  402  121 


395 


811 

313 

1507, 


1669 
651 


716 


962 


744 

783 
205, 


418 

889 

91 
756 
756 

1485 


1632 


107 


Mayor,    etc.    of    Norwich    v. 

Norfolk  Ry.  Co.,  4  E.  &  B. 

397  403,  403,  861 

Mayor,    etc.     of    Salford     v. 

Lever  (1891),  1  Q.  B.  168  320 
Mayor,  etc.  of  Southampton 

V.  Graves,  8  T.  R.  590  889 

Mead    v.    Keeler,    24    Barb. 

(N.  Y.)  20  &3.  66,  104 

Means  v.  Cincinnati,  etc.   R. 

R.    Co.,    2    Disney     (Oh.) 

465  1413 

Meara's  Admr.  v.   Holbrook, 

20    Oh.    St.    137;     5    Am. 

Rep.  633  1615,  1617 
Mears  v.  Moulton,  30  Md.  142  304 
V.  Western  Canada  Pulp. 

Co.  (1905),  2  Ch.  353  160,  644 
Mechanics   Bank  v.   Earp,   4 

Rawie  (Pa.)  384  767,  768,  776 
V.  Merchants   Bank,  45 

Mo.  513;  100  Am.  Dec.  388  770 
V.  N.  Y.,  etc.  R.  R.  Co., 

13  N.  Y.  599  424,  731,  740 

V.  Seton,  1  Pet.  299      751,  751, 

774,  787,  1235 

,  Re,  2  Barb.  (N.  Y.)  446       1493 

Mechanics'  Banking  Ass'n  v. 

Mariposa  Co.,  3  Rob.  (N.  Y.) 

395  700,  705 
V.  New  York,  etc.  Lead 

Co.,  35  N.  Y.  505  862 

Mechanics  Bldg.,  etc.  Ass'n  v. 

Conover,  14  N.  J.  Eq.  219  803 
V.  King,  83  Cal.  440;  23 

Pac.  376  776 

Mechanics,     etc.      Ass'n     v. 

Dorsey,  15  S.  Car.  462  563 

Mechanics,     etc.      Bank     v. 

Smith,  19Johns.(N.Y.)  115  594 
V.  Stetheimer,  101  N.  Y. 

Supp.  513;    116  N.  Y.  App. 

Div.  198  1355 

M.  E.  Church  v.  Picketts,  19 

N.  Y.  482  229 

Meckles    v.    Rochester    City 

Bank,  11  Paige  (N.  Y.)  118; 

42  Am.  Dec.  103  1079 

Medical  College  of  Phila- 
delphia. 3  Whart.  (Pa.)  445  113 
Medill  V.  Collier,   16  Oh.  St. 

599  252 

Medway  Cotton  Manufactory 

V.  Adams,  10  Mass.  360  380 

Meeker  r.  Winthrop  Iron  Co., 

17  Fed.  48  983.  1083,  1312 

Meen  v.  Pioneer  Pasteurizing 

Co.,  90  Minn.  501 ;  97  N.  W. 

140  43 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Meily  Co.  v.  London,  etc.  Fire 
Ins.  Co..  148  Fed.  683;  79 
C.  C.  A.  454 

Melbourne  Banking  Corp.  v. 
Brougham.  4  A.  C.  15G 

Melbourne  Brewery  &  Dis- 
tillery (1901),  rCh.  453 

Melbourne  Locomotive,  etc. 
Works,  21  Vict.  L.  R.  442 


875 

395 

1468, 
1470 

524, 
1190 
Melendy  v.   Barbour,   78  Va. 

544  1615,  1616 

Melhado     v.     Hamilton,     28 

L.  T.  N.  s.  578;  29  L.  T. 

N.  s.  304  442 
V.  Porto  Allegre  Ry.  Co., 

9  C.  P.  503  293,  294 

Meloy  V.  Central  Nat.  Bank,  7 

Mack.  (D.  C.)  69  1372 

Melvin  v.  Lamar  Ins.  Co.,  80 

111.  446;  22  Am.  Rep.  199  191 
Memphis,  etc.  Plank  Road  Co. 

V.  Rives,  21  Ark.  302  230 

Memphis,  etc.   R.   R.   Co.  v. 

Dow,  120  U.  S.  287;   7  Sup. 

Ct.  482        1400,  1401,  1402,  1490, 

1491 
V.  Glover,  78  Miss.  467; 

29  So.  89  1618 
V.  Grayson,  88  Ala.  572 ; 

7  So.  122;   16  Am.  St.  Rep. 

69  851,  952,  966,  980 

V.    Hoechner,    67    Fed. 

456;    14C.  C.  A.  469  1609 

V.  Railroad  Commis- 
sioners,  112  U.  S.  609;    5 

Sup.  Ct.  299         1521,  1522,  1522, 

1522 

V.Woods,  88  Ala.  630;  7 

So.  108;    16  Am.  St.  Rep. 
81;    7  L.  R.  A.  605  941,  955, 

1026,  1026,  1063 

V.  Stringfellow,  44  Ark. 

322;   51  Am.  Rep.  598  1609 

Menasha  v.  Milwaukee,  etc, 
R.  R.  Co.,  52  Wise.  414;  9 
N.  W.  396  1632 

Mendel  v.  Boyd,  3  Nebr.  (Un- 
official) 473;  91N.  W.  860       1328 

Mendenhall  v.  West  Chester, 
etc.  R.  R.  Co.,  36  Pa.  St. 
145  n,  150  n.  1584 

Menier      v.      Hooper's      Tel. 

Works,  9  Ch.  3.50  935 

Mercantile  Investment,  etc. 
Co.  V.  International  Co. 
(1893),  1  Ch.  484  1672,  1673, 

1673,  1674, 1674,  1G74 


Mercantile    Investment,  etc. 

Co.  V.  River  Plate  Trust  Co. 

(1894).  1  Ch.  578  1674 

Mercantile  Library   Hall  Co. 

V.  Pittsburg  Library  Ass'n, 

173Pa.  St.  30;  33Atl.  744  1188, 
1200,  1201,  1305 
Mercantile     Nat.     Bank     v. 

Parsons,  54  Minn.  56;  55  N. 

W.  825 ;  40  Am.  St.  Rep.  299  300 
Mercantile  Statement  Co.  v. 

Kneal,   51   Minn.  263;    53 

N.  W.  632  133,  134 

Mercantile  Trust  Co.  v.  Balti- 
more,  etc.   R.   R.   Co.,   79 

Fed.  389  1566,  1608 
V.  Baltimore,  etc.  R.  R. 

Co.,  82  Fed.  360  449,  450,  450 
V.  Baltimore,  etc.  R.  R. 

Co.,  89  Fed.  606  1466 
V.  Baltimore,  etc.  R.  R. 

Co.,  94  Fed.  722  1529,  1585 
V.  Chicago,  etc.  Ry.  Co., 

61  Fed.  372  1593 
V.  Kanawha,  etc.  Ry.  Co., 

58  Fed.  6;  7  C.  C.  A.  3  1634, 
1635,  1646,  16.53,  1653 
V.  Kings  County,  etc.  Ry. 

Co.,40N.  Y.  App.  Div.  141; 

57  N.  Y.  Supp.  892  1561 
V.  Lamoille  Valley  R.  R. 

Co.,  16  Blatchf.  324  1587 

V.    Missouri,    etc.    Ry. 

Co.,  36  Fed.  221  1593,  1593,  1603 
V.  Missouri,  etc.  Ry.  Co., 

41  Fed.  8  1567,  1607,  1647 
V.  Pittsburgh,  etc.  R.  R. 

Co.,  29  Fed.  732  1535,  1543 

V.  Portland,  etc.  R.  R. 

Co.,  10  Fed.  604  1586 

V.    Southern    Iron    Car 

Line,  113  Ala.  543;   21  So. 

373  1643,  1644 
V.  St.  Louis,  etc.  Ry.  Co., 

71  Fed.  601  1611 
V.  Texas,  etc.  Ry.  Co.,  51 

Fed.  529  1554 

V.  United  States  Ship- 
building Co.,  130  Fed.  725       1585 

Mercantile  Trust,  etc.  Co.  v. 
Low,  87  Fed.  241;  30 
C.  C.  A.  621  1666 

Mercer  v.  Buchanan,  132  Fed. 

501  1138.  1151,  1151,  1154 

Mercer  County  v.  Hackett,  1 

Wall.  83  1403,  1423,  1424 

Mercer  County  Court  v. 
Springfield,  ct*:*.  Turnpike 
Co.,  10  Bush.  (Kv.)  254  423 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Merchant  Banking  Co.  of 
London  v.  Mercluints  Joint- 
Stock  liank,  y  Cli.  I).  Sm        373 

Merchants'  Ad.-SiRn  Co.  v. 
Sterling,  124  Cal.  429;  57 
Pac.  468;  71  Am.  St.  Rep. 
94;   4()  L.  R.  A.  142  421 

Mercliants'  Hank  v.  Living- 
ston, 74  N.  Y.  223  723 

V.  Moore,  106  Ala.  646; 

17  So.  70.5  1560 

V.  Shouse,   102  Pa.  St. 

488  768,  773 

V.  State  Bank,  10  Wall. 

604  870 

Merchants  Hldg.,  etc.  Co.  v. 
Chicago  Excliange  Bldg. 
Co.,  106  111.  App.  17;  210 
111.  26;  71  N.  E.  22;  102 
Am.  St.  Rep.  145  81 

Merchants'  Nat.  Bank  v. 
Citizens  Gas  Light  Co.,  159 
Mass.  505;  34  N.  E.  1083; 
38  Am.  St.  Rep.  453  1380 

V.    Glendon    Co.,     120 

Mass.  97  221,  227 

v.Goddin,  76  Va.  503       1374, 

1525 

V.  Hanson,  33  Minn.  40; 

53  Am.  Rep.  5  833,  844 

V.   Minnesota  Thresher 

Mfg.  Co.,    Receivership   of, 

90  Minn.  144 ;  95  N.  W.  767  35, 
39,  43 
V.  Nichols  &  Shepard  Co., 

223  111.  41;   79  N.  E.  38;   7 

L.  R.  A.  N.  s.  752  1362 
V.  Wehrmann,  202  U.  S. 

295;  26  Sup.  Ct.  613  74,  80, 
834,  835,  839 
Merchants',  etc.  Co.  v.  Chicago 

Rys.  Co.,  158  Fed.  923  1649 

Merchants',       etc.       Line    v. 

Waganer,  71  Ala.  581  250 

Meredith  v.  New  Jersey  Zinc 

&IronCo.,55N.  J.  Eg.  211; 

37  Atl.  539;    56  N.  J.  Eq. 

454;  41  Atl.  1116  499,  500, 
501,  507 
V.  New  Jersey  Zinc,  etc. 

Co.,  59  N.  J.  Eq.  257;    44 

Atl.  55  134,  138 

Meredith      Village      Savings 

Bank  v.  Marshall,  68  N.  H. 

417;    44  Atl.  526  806 

Merrick  v.   Consumers  Heat, 

etc.  Co.,  HI  111.  App.  153,210 

• V.  Peru  Coal  Co.,  61  111. 

472  1247 


Merrick  v.  Reynolds  Engine, 

etc.  Co.,  101  Mass.  381       123,  219, 

247 
V.  Trustees,  etc.  of  Bank 

of   the    Metropolis,    8    Gill 

(Md.)  59 
Merrill  v.  Farmers'  L.  &  T.  Co., 

24  Hun  (N.  Y.)  297 
V.  Hurley,  6  S.  Dak.  592 ; 

62  N.  W.  958;    55  Am.  St. 

Rep.  859 
V.  Montgomery,  25  Mich. 

73 
V.  Suffa  (Colo.),  93  Pac. 

1099 
Merrimac      Mining      Co.      v. 

Bagley,   14  Mich.  501       667,  668 
Merryweather    v.     Ni.\an,    8 

T.  R.  186 
Mersey  Ry.  Co.,  64  L.  J.  Ch. 

623 

(1895),  2  Ch.  287 

Messchaert    v.     Kennedy,    4 

McCrary  133 ;  13  Fed.  242 


381 
1487 


1381 
409 


906 


1349 

1645 
1531 


1588, 
1589,  1636 
Messer      v.      Grand      Lodge 

United       Workmen,      180 

Mass.  321 ;   62  N.  E.  252  583 

Metcalf   V.    American   School 

Furniture  Co.,  108  Fed.  909       979 
V.     American     School 

Furniture  Co.,  122  Fed.  115 

72,  951,  1303,  1312 
Methodist    Episcopal    Soc.  v. 

Lake,  51  Vt.  353  230 

Meton  &  Sons,  Thomas  F.,  v. 

Isham  Wagon  Co.,  4  N.  Y. 

Supp.  215  1364 

Metropole  Bath  Co.  v.  Garden 

City  FanCo.,  50  111.  App.  681       591 
Metropolitan    Ace.    Ass'n    v. 

Froiland,    161    111.   30;    43 

N.  E.  766;  52  Am.  St.  Rep. 

359  589 
V.  Windover,  137  III.  4 1 7 ; 

27  N.  E.  538  662 

Metropolitan  Bank  v.  Heiron, 

5Ch.  D.  319  1346 

Metropolitan  Coal,  etc.  Ass'n 

V.     Scrimgeour     (1895),     2 

Q.  B.  604  354 

Metropolitan  Lead  &  Zinc  Co. 

V.  Webster,  193  Mo.  351 ;  92 

S.  W.  79  204 

Metropolitan  Life  Ins.  Co.  v. 

Anderson,  79  Md.  375;    29 

Atl.  606  403,  406 
V.  Dempsey,  72  Md.  288; 

19  Atl.  642  232 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Metropolitan   Rubber  Co.   v. 

Place,    147    Fed.    90;     77 

C.  C.  A.  262  1238 

Metropolitan    Sav.    Bank    v. 

Mavor,  etc.   of  Baltimore, 

G3  'Md.  6  736 

Metropolitan  Stock  Exch.  v. 

Lvnilonville  Nat.  Bank,  76 

Vt.  303;   57  Atl.  101         851,  870 
Metropolitan     Tel.     Co.     v. 

Domestic  Tel.  Co.,  44  N.  J. 

Eq.  568;   14  Atl.  907      1215,  1305 
Metropolitan    Trust    Co.     v. 

Columbus,  etc.  R.  R.  Co., 

93  Fed.  702  1401 
V.  Dolgeville  Electric  Co., 

35N.Y.  Misc.  467;  71  N.  Y. 

Supp.  1055  1502,  1505 
V.  Tonawanda,  etc.  R.  R. 

Co.,  103N.  Y.  245;  8  N.  E. 

488  1559,  1640,  1643,  1649 

Metropolitan,     etc.     Co.     v. 

Hawkins,  4  H.  &.  N.  146  889 

Metropolitan,  etc.  R.  R.  Co.  v. 

Manhattan,  etc.  R.  R.  Co., 

11  Daly  (N.  Y.)  373      1186,1188, 
1298,  1305,  1305 
Metropolitan,  etc.  Ry.  Co.  v. 

Kneeland,  120  N.  Y.  134; 

24  N.  E.  381;    17  Am.  St. 

Rep.  619;   8  L.  R.  A.  253       1263, 

1280 
Metz  V.  Buffalo,  etc.  Co.,  58 

N.  Y.  61;  17  Am.  Rep.  201 

1522,  1632 
Mexican,  etc.  Co.,  4  De  G.  &  J. 

544  7 

Meyer  v.  Blair,  109  N.  Y.  600; 

17  N.  E.  228;    4  Am.  St. 

Rep.  500  778 
V.  Bristol  Hotel  Co.,  163 

Mo.  59;    63  S.  W.  96       984,  985 

V.  Hornby,  101  U.  S.  728     1543 

V.  Johnston,  53  Ala.  237; 

64  Ala.  603   1204,  1204,  1509, 

1522,  1522,  1536,  1566,  1606, 

1629,  1646,  1647,  1649,  1649, 

1649,  1655 

V.  Page,  112  N.  Y.  App. 

Div.  625  960 
V.   Richards,  163  U.  S. 

385;  16  Sup.  Ct.  1148      1440 
V.  Ruby  Trust,  etc.  Co., 

192  Mo.  162;  90  S.  W.  821 


V.   Utah,  etc.  Rv.  Co.,  3 

Utah  280:  3  Pac.  393 

Meyers  v.  New  York,  etc. 
R.  R.  Co.,  43  Me.  232 


628, 
635 

1637 

1451 


Meysenberg  v.  People,  88  111. 

App.  328  902 

M.  Groh's  Sons  v.  Groh,  SO 

N.   Y.   App.   Div.   85;     80 

N.  Y.  Supp.  438  1069 

Michel  V.  Betz,  108  N.  Y.  App. 

Div.  241;    95  N.  Y.  Supp. 

844  1323, 1324 

Michigan  Trust  Co.  r.  Lansing 

Lumber  Co.,  103  Mich.  392 ; 

61  N.  W.  668  1581 
V.  State  Bank,  111  Mich. 

306;    69  N.  W.  645  767,  774, 

775 
Mickey  v.  Stratton,  5  Sawy. 

475  396,  407 

Mickles    v.     Rochester    City 

Bank,  11  Paige  (N.  Y.)  118; 

42  Am.  Dec.  103  1251 

Middlecoff  Hotel  Co.  v.  Yeo- 

mans,  89  111.  App.  170  213 

Middleton  v.  Arastraville  Min- 
ing Co.,   146  Cal.  219;    79 

Pac.  889  147,  152,  918,  1080 

Middletown    v.    Boston,    etc. 

R.  R.  Co.,  53  Conn.  351 ;   5 

Atl.  706  475,  1107 

Midland  Counties  Dist.  Bank 

V.  Attwood  (1905)  1  Ch.  357     1242 
Midland  Electric,  etc.  Co.,  37 

W.  R.  471  627,  628 

Midland  Railway  Co.  v.  At- 
torney-General (1902),  A.  C. 

171  481 

Midland  Steel  Co.  v.  Citizens 

Nat.  Bank,    34    Ind.    App. 

107;  72  N.  E.  290  379 

Midland,     etc.     Ry.     Co.     v 

Gordon,  16  M.  &.  W.  804 

201,  214,  610 
Migotti's  Case,  4  Eq.  238  206, 207 
Milbank  v.   New   York,   etc. 

R.  R.  Co.,     64     How.     Pr. 

(N.  Y.)  20  76,  846,  846,  1026 

Milborne    v.    Royal    Benefit 

Soc,   14  N.  Y.  App.  Div. 

406;   43  N.  Y.  Supp.  1026         852 
Milburn   v.   Wilson,   31   Can. 

Sup.  Ct.  481  310,311 

Miles  V.  Bough,  3  G.  &  D.  119       603, 

604,  915 

v.  Roberts,  76  Fed.  919       1411, 

1411 
V.  Vivian,  79  Fed.  848 ;  25 

C.  C.  A.  208  1487 

Miles'  Case,  4  De  G.  J.  &  S. 

471  169,  169 

Mill  Dam  Foundry  v.  Howey, 

21  Pick.  (Mass.)  417  397,  406 


200, 


cxxxvni 


TABLE    OF    CASES 

[The  references  are  to  pages] 


591 


1371 
183 


975 


1222 


1659 
557 


MilkHlf^eville    Water    Co.    v. 

Edwards,  121  Ga.  555;    49 

S.  E.  G21 
Millen  v.  Guerrard,  67  Ga.  284  ; 

44  Am.  Rcf).  720  1143,  1145 

Miller    v.     Hank    of     Hritisli 

Columbia,  2  Orep;.  291 

V.  Harbor,  f>6  N.  Y.  558 

V.  Harlow,  78  N.  Y.  App. 

Div.  331;    79  N.  Y.  Supp. 

964 
V.  Bradish,  69  Iowa  278; 

28  N.  W.  594         425,  1098,  1109, 

1117 

V.  Chance,  3  Edvv.  Ch. 

(N.  Y.)  399 

V.    Dodge,    28    N.    Y. 

Misc.  640;    59  N.  Y.  Supp. 
1070 

V.  Eschbach,  43  Md.  1 

V.  Ewer,  27  Me.  509;   46 

Am.  Dec.  619  161,  1008,  1009 
V.  Farmers'  Milling,  etc. 

Co.    (Nebr.),    110    N.    W. 

995  571,  571,  679 

V.     Flcmingsburg,  etc. 

Turnpike  Co.,  22  Ky.  Law 
Rep.  1039;  59  S.  W.  512 

V.  Grand  Lodge,  72  Mo. 

App.  499 
V.  Higginbotham  (Ky.), 

93  S.  W.  655 
V.  Houston  City,  etc.  Ry. 

Co.,  55  Fed.  360;  5  C.  C.  A. 

134  753,  807 
V.  Houston  City  Ry.  Co., 

69  Fed.  63:  16  C.  C.  A.  128  735 
V.  Illinois  Central  R.  R. 

Co.,  24  Barb.  (N.  Y.)  312       500, 
501,  509 

V.    Insurance     Co.,    92 

Tenn.  167;  21S.  W.  39;  20 

L.  R.  A.  765  142,  851,  855 
V.  Kitchen  (Nebr.),  103 

N.  W.  297  957 
V.  Matthews,  87  Md.  464; 

40Atl.  176  1073,  1233 
V.  Oregon  City,  etc.  Mfg. 

Co.,  3  Oreg.  24  1323,  1373 
V.  Murray,  17  Colo.  408; 

30  Pac.  46  943,  971 
V.  Pittsburgh,  etc.  R.  R. 

Co.,  40  Pa.  St.  237;  80  Am. 

Dec.  570  456 
V.  Rattcrman,  47  Oh.  St. 

141;  24  N.  E.  496  449,  450, 
450.  451,  451,  451,  1028 
V.   Rutland,  etc.  R.  R. 

Co.,  30  Vt.  452       1486,  1639 


847 


664 


635 


Miller  V.  Rutland,  etc.  R.  R. 

Co.,  40  Vt.  399;    94  Am. 

Dec.  413   1452, 1456, 1472, 1666 

V.  State,  15  Wall.  478  33 

V.   Tod,   95  Texas  404; 

67S.  W.  483  45,113 
V.  Wild  Cat  Gravel  Road 

Co.,  52  Iiid.  51  104 
V.  Wild  Cat  Gravel  Road 

Co.,  57  Ind.  241  205 

Miller's  Dale  Co.,  31  Ch.  D. 

211  492 

Millhiser,  etc.  Co.  v.  Gallego 

Mills  Co.,  101  Va.  579;    44 

S.  E.  760 
MiUiken  v.  Steiner,  56  Ga.  251 


1413 
1185, 
1226 


1201 


Mills  V.  Boyle  Mining  Co.,  132 
Cal.  95;   64  Pac.  122 

V.  Hritton,  64  Conn.   4; 

29  Atl.  231;    24  L.  R.  A. 

536  1143,  1144,  1145 

V.   City  of  Chicago,  143 

Fed.  430  970 

V.   Hendershot    (N.   J.), 

62   Atl.   542        1128,    1129,    1129, 
1240,  1241,  1284,  1288 

V.  Northern  Ry.  of  Bue- 
nos Ay  res  Co.,  5  Ch.  621  961, 
962,  1103,  1103,  1103,  1104,  1117 

V.  Potter,  189  Mass.  238; 

75  N.  E.  627 

V.  State,  23  Tex.  295 

V.  Stewart,  41  N.  Y.  384 

Mills  Countv  Nat.  Bank  v. 
Perry,  72  Iowa  15 ;  33  N.  W. 
341;   2  Am.  St.  Rep.  228 

Millsaps  V.  Chapman,  76  Miss. 
942;  26  So.  369;  71  Am.  St. 
Rep.  547  1262,  1316 

Millville  Traction  Co.  v.  Good- 
win, 53  N.  J.  Eq.  448;  32 
Atl.  263  1371 

Millward-Cliffe  Cracker  Co.'s 
Estate,  161  Pa.  St.  157;  28 
Atl.  1072  592.  1378,  1379 

Milroy  v.  Lord,  4  De  G.  F.  & 

J.  264  713 

Miltenberger  v.  Logansport 
Ry.  Co.,  106  U.  S.  286:  1 
Sup.  Ct.  140  1559,  1567,  1646 

Milward  v.  Avill.  4  Manson  403     1648 

Milwaukee  Coki  Storage  Co. 
V.  Dexter,  99  Wise.  214; 
74  N.  W.  976:  40  L.  R.  A. 
837      322.  323.  325,  327,  353,  354 

Milwaukee  Light,  Heat  & 
Traction  Co.  (Wise),  112 
N.  W.  663  95,  305 


1662 
25 

667 


866 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Milwaukee,  etc.  R.  R.  Co.  v. 

Field,  12  Wise.  340 
V.  Soutter,  2  Wall.  510 


456 
1602, 
1626 


Milwaukee,    etc.    Ry.    Co.    v. 

Brooks  Locomotive  Works, 

121   U.  S.  430;  7  Sup.  Ct. 

1094  1515 
I".  Milwaukee  &  Western 

R.  R.  Co.,  20  Wise.  174;  88 

Am.  Dec.  740  1631 

Miner  v.  Belle  Isle  Ice  Co.,  93 

Mich.  97;    53  N.  W.  218; 

17  L.  R.  A.  412       935,  940,  1082, 

1269 
Mineral    Water    Bottle,    etc. 

Soe.  V.  Booth,  36  Ch.  D.  465      568, 

570 
Miners'   Ditch  Co.  v.  Zeller- 

bach,  37  Cal.  543;   99  Am. 

Dec.  300  407,  861 

Mining  Co.   v.   Anglo-Califor- 

nian  Bank,  104  U.  S.  192  1220, 
1224,  1225,  1233 
Minneapolis  Threshing  Co.  v. 

Davis,   40   Minn.    110;     41 

N.  W.  1026;  3L.  R.  A.  796; 

12  Am.  St.  Rep.  701  209 
MinneapoUs     Trust     Co.     v. 

Clark,    47   Minn.    108;     49 
N.  W.  386  297 

Minneapolis,    etc.    Suburban 
Ry.  Co.  (Minn.),  112  N.  W. 

13  60,  383 
Minnehaha      Driving      Park 

Ass'n  V.  Legg,  50  Minn.  333 ; 

52  N.  W.  898  657,  661 

Minnesota  Loan  &  Trust  Co. 

V.    Beebe,  40  Minn.  7;    41 

N.  W.  232;  2  L.  R.  A.  418  56 
Minor  v.  Mechanics  Bank  of 

Alexandria,  1  Pet.  46       148,  1368, 

1368 
Minot  V.  Mastin,  95  Fed.  734; 

37  C.  C.  A.  234  1617 
V.  Paine,  99  Mass.  101; 

96  Am.  Dec.  705  1144 

Mirage  Irrigation  Co.  (Nebr.), 

108  X.  W.  977  651 

Mi.ser  Gold,  etc.  Co.  v.  Moody 

(Colo.),  86  Pac.  335  282 

Mississippi     Valley     Co.     v. 

Chicago,  etc.  Co.,  58  Miss. 

896;  38  Am.  Rep.  348  1502,  1512 
Mis.sissippi  Valley,  etc.  Ry.  Co. 

V.  U.  S.  Express  Co.,  81  111. 

534  1515,  1515,  1551 

Mississippi,  etc.  R.  R.  Co.  v. 

Gaster,  20  Ark.  455  601,  604 


Missouri  Lead,  etc.  Co.  v. 
Reinhard,  114  Mo.  218;  21 
S.  W.  488;  35Am.  St.  Rep. 
746  1009 

Missouri  Pac.  Ry.  Co.  v.  Sidell 
67  Fed.  464;  14  C.  C.  A. 
477  1374 

V.  Texas  Pac.  Ry.  Co., 

30  Fed.  2  1619 

V.  Texas,  etc.  Ry.  Co., 

33  Fed.  701  82,  1575,  1608, 

1642 

V.  Texas,  etc.  Ry.  Co.,  41 

Fed.  319  1575,1642 

Missouri  River  R.  R.  Co.  v. 

Richards,  8  Kans.  101  1238, 

1246,  1247 
Missouri,     etc.     Ry.     Co.     v. 
Faulkner,  88  Tex.  649;   32 
S.  W.  883  1374 

V.    Lacy,    13   Tex,    Civ. 

App.  391;    35  S.  W.  Rep. 
505  1633 

— —  V.  Union  Trust  Co.,  156 

N.  Y.  592;   51  N.  E.  309        1471, 
1472,  1474 

V.  Wood  (Tex.),  52  S.  W. 

93  1609,  1610 

V.  Wylie  (Tex.),  33  S.  W. 

Rep.  771  1610,  1620 

Mitcalfe's    Case,    13    Ch.    D. 

169  1339, 1339 

Mitchell,  N.,  v.  City  of  Glas- 

cow  Bank,  4  A.  C.  624  746 

Mitchell  V.  Colorado  Fuel,  etc. 

Co.,  117  Fed.  723  1018 

V.   Lycoming  Mut.   Ins. 

Co.,  51  Pa.  St.  402  593 

V.  Rome  R.  R.  Co.,  17 

Ga.  574  175,  667,  668 

V.    Rubber    Reclaiming 

Co.  (N.  J.),  24  Atl.  407      898,  904 

V.     St.     Andrew's    Bay 

Land  Co.,  4  Fla.  200  398 

V.    United    Box    Board, 

etc.  Co.  (N.  J.),  66  Atl.  938     1305, 

1313 
V.  Vermont  Copper  Min- 
ing Co.,  40  N.  Y.  Super.  Ct. 
406;  67  N.  Y.  280      558,  660,  662, 
662,  1373 
Mitchell's  Case,  9  Eq.  363      620,  620 

A.,  4  A.  C.  548       746,  800,  800 

Mitchell,  Ex  parte,  12  S.  Car. 

83  1646 

Re,  6  Ch.  D.  6.55  1439 

Mix  V.  Nat.  Bank  of  Bloom- 
ington,  91  111.  20;  33  Am. 
Rep.  44  221,  227 


cxl 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Mobile  Land,  etc.  Co.  v.  Gass, 

142  Ala.  520;   39  So.  229       1296, 

1310 
Mobile  Mut.  In.s.  Co.  v.  Cul- 

lom,  49  .\la.  .5.58  767,  776 

Mobile,    etc.    II.    R.    Co.    v. 

Davis,  62  Mi.ss.  271  1610,  1619 
V.  Nicholas,  98  Ala.  92 ; 

12  So.  723  1031,  1048,  1052, 
10.53,  1054 
V.  Tennessee,  1.53  U.  S. 

486;   14  Sup.  Ct.  968     1091, 1104, 

1104 
V.      Yandal,      5     Sneed 

(Tenn.)  294  428 

Mobile,  etc.  Ry.  Co.  v.  Steiner, 

01  Ala.  559  1.523,  1633 

Mock  V.  Supreme  Council,  106 

N.  Y.  Supp.  155  586 

Modern  Woodmen  v.  Deters, 

65  111.  App.  368  ^  580 
V.    Jameson,    48    Kans. 

718;  .30  Pac.  460  663 
V.  Wieland,  109  111.  App. 

340  578,  590 

Modstock  Mining  Co.  v.  Har- 
ris, 40  Nova  Scotia  336  1225, 
1227,  1228 
Moench  &  Sons  Co.,  130  Fed. 

685  1187 

Moffat  V.  Farquahar,  7  Ch.  D. 

591  765,  1014 
V.  Smith,  101  Fed.  771; 

41  C.  C.  A.  671  875 

Mogridge,  Re,  57    L.  J.   Ch. 

932  193 

Mohawk  &  Hudson  Ry.  Co., 

19  Wend.  (N.  Y.)  135  998,  1020, 
1021,  1059 
Mohawk  Nat.  Bank  v.  Sche- 
nectady    Bank,     78     Hun 

(N.  Y.)90;  28  N.  Y.  Supp. 

1100  111,574 

Moises  V.  Thornton,  8  T.  R. 

303  404,  406 

Mokelumne   Hill   Mining  Co. 

V.  Woodbury,  14  Cal.  424; 

73  .\m.  Dec.  658  126,  220 

Molineaux    v.    London,    etc. 

Ins.  Co.  (1902),  2  K.  B.  589  1168, 
1170,  1171,  1172 
MoUer  v.  Fibre  Co.,   187  Pa. 

St.  553;  41  .Vtl.  478  1217,  1218 
Moller  V.  Maclean,  1  Megone 

274  1.52,  1162 

Monarch  Co.,  M.  V.,  i\  Fann- 
ers',   etc.     Bank,    20    Kv. 

Law  Rep.   1351;    49  S.  W. 

317  84 


Monmouth  Investment  Co.  v. 
Means,  151  Fed.  159;  80 
C.  C.  A.  527  1322 

Moiunouth,   etc.    Ins.   Co.   v. 

Lowell.  59  Me.  .504  1214 

Moiiongahela  Bridge  Co.  v. 
Pittsburgh,  etc.  Traction 
Co.,  40Atl.  99:  196  Pa.  25; 
79  Am.  St.  Rep.  685        873,  877 

Monroe  Mercantile  Co.  v.  Ar- 
nold, 108  Ga.  449;  34  S.  E. 
176  1196,  1211 

Monroe  Republican  Club,  6 

Pa.  Dist.  Rep.  515  94,  116 

Montclair  v.  N.  Y.  &  Green- 
wood Lake  Ry.  Co.,  45 
N.  J.  Eq.  436;    18  Atl.  242  6 

Montclair  Military  Academy 
V.  State  Board  of  Assessors, 
65  N.  J.  Law  516;  47  Atl. 
5.58  59 

Monterey,  etc.  R.  R.  Co.  v. 

Hildreth,  .53  Cal.   123  212 

Moiitgomerie's    Brewery   Co. 

i;.  Blyth,  27  Vict.  L.  R.  175     1279, 

1288 

Montgomery  v.    Forbes,    148 

Mass.  249;    19  S.  E.  342  103, 

240,  240,  245,  266,  881 

V.   Petersburg,  etc.   Ins. 

Co.,  70  Fed.  746;    17  C.  C. 

A.  360  1621,  1621 

V.  Seaboard  Air  Line  Ry. 

Co.,73S.  Car.  503;  53  S.  E. 
987 

V.  Whitehead  (Colo.),  90 

Pac.  509 

Montgomery  Iron  Works  v. 
Roman  (Ala.),  41  So.  811 

Montgomery  Light  Co.  v. 
Lahev.  121  Ala.  131;  25 
So.  1006  943,  968,  968 

Montgomery  Traction  Co.  v. 
Harmon,  140  Ala.  505;  37 
So.  371  942,  977,  1083 

Montreal,  etc.   Power  Co.   v. 

Robert  (1906),  A.  C.  196  591, 

591,  1222 

Monument  Nat.  Bank  v. 
Globe  Works.  101  Mass. 
57;   3  Am.  Rep.  322  862 

Moore  v.  Bank  of  Commerce, 

52  Mo.  377  771,  772 

V.  En.slev,  112  Ala.  228; 

20  So.  744  " 

V.  Mai-shalltown  Opera- 
House  Co.,  81  Iowa  45;  46 
N.  W .  750 

V.  Moore,  18  Eq.  474 

xli 


22r 


1127 
1404 


104C 


600 
713 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Moore  v.  New  Jersey  Lighter- 
age Co.,  57  N.  Y.  Super.  Ct. 
1;  oN.  Y.  Supp.  192  650 
V.  New  Jersey  Lighterage 

Co.,  25  Jones  &  S.  (N.  Y.) 

1  666 
V.  North  Western  Bank 

(1891),  2  Ch.  599       695,  695,  710, 

711 
V.  Order  of  Railway  Con- 
ductors, 90  Iowa  721;    57 

N.  W.  623  663 

V.  Peruvian  Corp.  (1908), 

1  Ch.  604     .  1529,  1547 
V.  Rawlins,  6  C.  B.  n.  s. 

289  98,  660 
V.  Silver  Valley  Mining 

Co.,   104  N.  Car.  534;    10 

S.  E.  679  967,  971 
V.  Wheal  Byjerkerno  Tin 

Mining  Co.,  17  Vict.  L.  R. 

680  604,  661,  668 

Moore,  etc.  Hardware  Co.  v. 

Towers  Hardware  Co.,  87 

Ala.  206;  6  So.  41;   13  Am. 

St.  Rep.  23  296,  297 

Moores  v.  Citizens'  Nat.  Bank, 

lllU.S.  156;  4Sup.Ct.345       735 
Moosbrugger    v.    Walsh,    89 

Hun  564;    35  N.  Y.  Supp. 

550  487 

Moran  v.  Pittsburgh,  etc.  Ry. 

Co.,  32  Fed.  878  1508 
V.  Strauss,  6  Ben  249;  17 

Fed.  Cas.  123  1187 

Morelock    v.    Westminster 

Water  Co.  (Md.),  4  Atl.  404     1078 
Moray  v.   Fish  Bros.  Wagon 

Co.,    108    Wise.    520;     84 

N.  W.  862  1112 

Morgan  v.   Donovan,  58  Ala. 

241  1510 
V.   Hedstrom,  164  N.  Y. 

224;  58  N.  E.  26        1390 
V.  Howland,  89  Me.  484 ; 

36  Atl.  990  647 
V.    Independent  Order, 

etc.  of  Jacob  (Miss.),  44  So. 

791  565 
V.  Kansas  Pac.  Ry.  Co., 

15  Fed.  55  1586,  1586 
V.   King,   27  Colo.   539; 

63  Pac.  416  967,  1288,  1295, 

1312 
V.   Lehigh    Valley  Coal 

Co.  (Pac),  64  Atl.  633  924 
V.  Lewis,  46  Oh.  St.  1 ; 

17  N.  E.  558  525,  525 
V.  Louisiana,  93  La.  217      1521 


Morgan  v.  Morgan,  16  Abb.  Pr. 

N.  s.  (N.  Y.)  291  889 
V.  Struthers,   131   U.  S. 

246;  9  Sup.  Ct.  720  778 
V.  Union  Pacific  Ry.  Co., 

11  Fed.  692  1679 
V.    United    States,    113 

U.  S.  476;  5  Sup.  Ct.  588  1435, 
1436,  1436 
Morgan's    Case,    28    Ch.    D. 

620  898 

Morgan  County  v.  Thomas,  76 

111.  120  1510,  1514,  1522,  1523 
Morgans',  etc.  Co.  v.  Farmers' 

L.  &  T.  Co.,  79  Fed.  210; 

24  C.  C.  A.  495  1567 
V.   Moran,   91    Fed.   22; 

33  C.  C.  A.  313  1633 
V.    Texas    Central    Ry. 

Co.,  137  U.  S.  171;  11  Sup. 

Ct.  61  1467,  1562,  1570,  1593 

Morisette  v.  Howard,  62  Kans. 

463;    63  Pac.  756  1217,  1222 

Morley    Bldg.    Co.,    John,    v. 

Barras  (1891),  2  Ch.  386  1201, 
1212,  1213,  1231 
Morrice  v.  Aylmer,  L.  R.   7 

H.  L.  717  414,  414 

Morrill    v.    Little    Falls   Mfg. 

Co.,  53  Minn.  371;    55  N. 

W.  547;  21  L.  R.  A.  174  1010, 
1011,  1017 
V.   Noyes,   56  Me.   458; 

96  Am.  Dec.  486  1502 

Morris  v.  Cheney,  51  111.  451      66,  66, 

1514 
V.  Elyton  Land  Co.,  125 

Ala.  263;  28  So.  513  952,  959 
V.  Griffitli  &  Wedge  Co., 

69  Fed.  131  1375 

V.  Keil,  20  Minn.  531  400 

V.  Metalline  Land  Co., 

104  Pa.   St.   326;    30  Atl. 

240;    44  Am.  St.  Rep.  614; 

27  L.  R.  A.  305  604,  604,  658, 
658,  600 
V.  Stevens,   178  Pa.  St. 

563;  30  Atl.  151  499,  508,  509 
V.  Third  Nat.  Bank,  142 

Fed.  25;  73C.  C.  A.  211  53 
V.  Union  Bank,  31  Can. 

Sup.  Ct.  594  645 

Morris     Canal,    etc.    Co.    v. 

Fisher,  9  N.  J.  Eq.  677;  64 

Am.  Dec.  423  1423 
V.  Lewis,   12  N.  J.  Eq. 

323  1423,  1439 

Morris,    etc.    R.    R.    Co.    v. 

Ayres,  29  N.  J.  Law  393  569 


cxlii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Morrison  v.  Dorsey,  48  Md.  461     557, 
562,  633 
V.  Eaton,  etc.  R.  R.  Co., 

14  Ind.  110  1401 
V.  Forman,  177  ill.  41*7; 

53  N.  E.  73  250,  1607 
V.  Grand  Trunk  Ry.  Co., 

5  Ont.  L.  R.  38 
V.  Indianapolis,  etc.  Ry. 

Co.  (Ind.),  76  N.  E.  961 

V.  Savage,  56  Md.  142 

V.  Snow,  26  Utah  247; 

72  Pac.  924 
V.  Trustees,  etc.  Corp., 

79  L.  T.  605 
V.  Wilder  Gas  Co.,  91  Me. 

492;    40  Atl.  542;    64  Am. 

St.  Rep.  257 

V.  VVisconsin  Odd  Fel- 
lows, etc.  Ins.  Co.,  59 
Wise.  162;   18  N.  W.  13    584,  589 

,  Re,  10  N.  B.  R.  105  769 

Morrison- Wentworth  Bank  v. 

Kirdolff,  75  Mo.  App.  297  574 

Morrow  v.  Nashville   Iron  & 

SteelCo.,87Tenn.  262;    10 

S.  W.  495;   10  Am.  St.  Rep. 

658;  3  L.  R.  A.  37  193,  627, 

1404 

V.  Peterborough  Water 

Co.,  4  Ont.  L.  R.  324  433,  471 

Morse  v.  Bay  State  Gas  Co., 

91  Fed.  938 
V.  Bay  State  Gas  Co.,  91 

Fed.  944 

V.  Chicago,  etc.   R.   R. 

Co.,   84   N.    Y.    App.    Div. 
406;    82  N.  Y.  Supp.  698 

V.  Pacific  Ry.  Co.,  93  111. 

App.  33  620,  623 

Morshead  v.  Soutliern  Pac. 
Co.,  123  Fed.  350 

Mortgage  Ins.  Corp.  v.  Cana- 
dian Agricultural,  etc.  Co. 
(1901),  2  Ch.  377 

Mortimer  v.  Potter,  213  111. 
178;   72  N.  E.  817 

Morton  v.  Cowan,  25  Ont.  529 


1364 

250 
614 

1352 

668 


1196 


1679 
979 


1557 


974 


1591 


679 
423, 
715 


V.  Hamilton  College,  100 

Ky.  281;    38  S.  W.  1;    35 

L.  R.  A.  275  293 

V.  New  Orleans,  etc.  Ry. 

Co.,  79  Ala.  590  1436,  1436, 

1591 

Morton  Boarding  Stables,  108 

Fed.  791  44 

Morton  Gravel   Road  Co.   v. 

Wysong,  51  Ind.  4  558,  561 


Morton   Trust   Co.    v.    Home 

Tel.  Co.,  66  xN.  J.  Eq.  106; 

57  Atl.  1020  14.32,  1455,  1456, 

1456 
Morville  v.   Am.  Tract  Soc, 

123  Mass.  129;  25  Am.  Rep. 

40  855 

Moseley   v.    Cressey's   Co.,    1 

Eq.  405  342,  343 
V.     Koffyfontein     Mines 

(1904),  2  Ch.  108  1404 

Moses  V.  Ocoee  Bank,  1  Lea 

(Tenn.)  398  494,  614,  1240, 
1265,  1273,  1342,  1345 
V.  Scott,  84  Ala.  608;   4 

So.  742  1029,  1030 
V.  Tompkins,  84  Ala. 613 ; 

4  So.  763       948,  1035,  1164,  1226, 

1250 
Moshannon  Land,  etc.  Co.  v. 

Sloan,   109  Pa.  St.  532  1376 

Moslier  v.  Sinnott,  79  Pac.  742 

(Colo.)      630,  979,  979, 1187,  1300, 

1318 
Moss  V.  Averill,  10  N.  Y.  449  912 
V.  Geddes,  28  N.  Y.  Misc. 

291 ;    59  N.  Y.  Supp.  867       1637 

V.  Syers,  32  L.  J.  Ch.  71 1       442 

Moss  Tie  Co.,  T.  J.,  v.  Com- 
monwealth (Ky.),  105  S.  W. 

163  368 

Moss's  Appeal,  83  Pa.  St.  264; 

24  Am.  Rep.  164  502 

Mostyn  v.  Calcott  Hall  Min- 
ing Co.,  1  Fos.  &  Fin.  334  233 
Mott's  Case,  23  W.  R.  405  1011 

Mottu  V.  Primrose,  23  Md.  482  955, 
996,  1163,  1194,  1326 
Mount    Carmel    Tel.    Co.    v. 

Mt.  Carmel  &  Flemingsburg 

Tel.  Co.  (Ky.),  84  S.  W.  515      274, 

302 
Mount  Holly,  etc.  Co.  v.  Ferree, 

17  N.  J.  Eq.  117  723,752,754 
Mount     Holly     Paper     Co.'s 

Appeal,  99  Pa.  St.  513       731,  731, 

775 
Mount  Morgan  Gold  Mine,  3 

Times  L.  R.  556  181,  182 

Mount  Sterling,  etc.  R.  R.  Co. 

V.   Looney,    1   Mete.    (Ky.) 

550  1370 

Mount    Sterling  Carload  Co. 

V.    Little,    14    Bush    (Ky.) 

429  198 

Mount  Washington  Hotel  Co. 

V.  Marsh,  63  N.  H.  230  1310 

Mount  Vernon  Bank  r. Porter, 

148  Mo.  176;  49  S.  W.  982       1345 


cxliii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Mousseaux  v.    Urquhart,    19 

La.  Ann.  482         1017,  1021,  1027 
1043,  1047,  1047 
Mowatt  V.  Castle  Steel,  etc. 

Co.,  34  Ch.  D.  58  402,  1410, 

1524 
V.    Londesborough,     4 

E.  &  B.  1  342 

Mowbray  v.  Antrim,  123  Ind. 

24;   23  N.  E.  858  1367 

Mowry  v.  Farmers'  L.  &  T. 

Co.,  76  Fed.  38;  22  C.  C.  A. 

52  1402,  1669 

Moxham  v.  Grant  (1900),   1 

Q.  B.  88  1127,  1265 

Moxie    Nerve    Food    Co.    v. 

Baumbach,  32  Fed  205  120 

Moyer  v.  East  Shore  Terminal 

Co.,    41    S.    Car.  300;     19 

S.  E.  651;  44  Am.  St.  Rep. 

709 ;  25  L.  R.  A.  48       591,593,594 
Moyle   V.    Landers   (Cal.),  21 

Pac.  1133  964,  978 

Mozley  v.  Alston,   1   Phillips 

Ch.  790  931,  972 

Mudgett  V.  Horrell,  33  Cal.  25       921 
Mueller  r.  Madison  Bldg.,  etc. 

Ass'n,   11  S.  Dak.  43;    75 

N.  W.  277  _  657,  661 

Muhlenberg   v.    Philadelphia, 

etc.  R.  R.  Co.,  47  Pa.  St.  10     1476 
Muir    V.    City    of    Glascow 

Bank,  4  A.  C.  337  795 

Muirhead      v.      Forth,      etc. 

Mutual  Ins.  Ass'n   (1894), 

A.  C.  72  557,  561,  562 

Mulheran    v.    Gebhardt,    93 

N.   Y.   App.   Div.   98;    86 

N.  Y.  Supp. 941  978 

Mulhollaud     v.     Washington 

Match  Co.,  35  Wash.  315; 

77  Pac.  497  177,  181 

Mullanphy     Sav.     Bank     v. 

Schott,    135    111.    655;     26 

N.  E.  640;  25  Am.  St.  Rep. 

401  407,  917,  1315 

Mulvihill   V.    Vicksburg   Ry., 

etc.  Co.  (Miss.),  40  So.  647       963 
Mumford  v.  Ecuador  Develop- 
ment Co.,  Ill  Fed.  639 


V.    Hawkins,   5    Denio 

(N.  Y.)  355 
Muncy  Traction  Engine  Co.  v. 

Green,  143  Pa.  St.  269;    13 

Atl.  747 
Municipal  Freehold  Land  Co. 

V.  Pollington,  63  L.  T.  238 


976, 
1082 

1382 


202 
1182, 


1189,  1265,  1288 


Munson     v.     Syracuse,     etc. 

R.  R.  Co.,  103  N.  Y.  58;   8 

N.  E.  355         280,  282,  290,  1297, 
1298,  1298 
Munster  v.  Cammell  Co.,  21 

Ch.  D.  183  1164,  1164,  1164, 

1182,  1193,  1251 
Munt  V.  Shrewsbury,  etc.  Ry. 

Co.,13Beav.  1  88 

Murdoch  v.  Strange,  99  Md. 

89;    57  Atl.  628  1032,  1206 

Murdock  v.  Woodson,  2  Dill. 

188 
Murphy  v.  Arkansas,  etc.  Imp. 

Co.,  97  Fed.  723 
V.  Pacific  Bank,  130  Cal. 

542;    62  Pac.  1059 

V.  Patapsco  Ins.  Co.,  6 

Md.  99 

V.  Penniman  (Md.),  66 

Atl.  282       1259,  1280,  1284,  1287 

V.    Wheatley,    102   Md. 

501;  63  Atl.  62 

,  Ex  parte,  7  Cow.  (N.  Y.) 

153 
,   Re,   51   Wise.    519;     8 

N. W.  419 
Murray  v.  Beal,  23  Utah  548; 

65  Pac.  726 

V.  Bush,  L.  R.  6  H.  L.  37 

1095,  1178,  1230,  1230,  1230, 
1325 
V.  Dayo,  10  Hun  (N.  Y.) 

3  1515 
V.   Farmville,  etc.  R.  R. 

Co.,  101  Va.  262;  43  S.  E. 

553  1510,  1523 
V.  Lardner,  2  Wall.  110      1434 

V.  Nelson  Lumber  Co., 

143    Mass.    250;    9    N.    E. 
634 

V.  Stevens,  110  Mass.  95 

Murray's  Executors'  Case,  5 

De  G.  M.  &  G.  746 
Musgrave  v.  Morrison,  54  Md. 

161  609,  613,  626 

Muskingum  Valley  Turnpike 

Co.  t;.  Ward,  13  Oh.  120;  42 

Am.  Dec.  191  605,  619,  709 

Mustard  v.  Union  Nat.  Bank, 

86  Me.  177;    29  Atl.  977  541, 

1122 
Muth  V.  Dolfield,  43  Md.  466       398, 
403,  406 
Mutoscope      and      Biograph 

Syndicates    (1899),    f   Ch. 

896  437 

Mutter  V.   Eastern,  etc.   Ry. 

Co.,  38  Ch.  D.  92  902,  903 


1484 

84 

587 


661 


219 

1065 

716 

912 
707, 


1277 
751 

1310 


cxliv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Mutual  Accident,  etc.  Ass'n  v. 

Kayser     (Pa.),    14     Wkly. 

Notes  Cas.  86  578 

Mutual     Aid,     etc.     Soc.     ?;. 

Monti,  59  N.    J.  Law  311; 

30  Atl.  (UiG  585 

Mutual    Hldg.    Fund   v.    lios- 

seiux,  3   Fed.   817  1259,  1291 

Mutual  Fire  ins.  Co.  v.  Far- 

quliar,  86  Md.  668;  39  Atl. 

527  557,  991, 1194 

Mutual  Life  Ins.  Co.  v.  Forty- 
second  St.,  etc.  R.  R.  Co., 

74   Hun    505;     26    N.    Y. 

Supp.  545  740,  743 

V.  McCurdy,  103  N.  Y. 

Supp.  829  1227,  1287 

V.  McCurdy,  103  N.  Y. 

Supp.  840  1287 

V.  McSherry,  68  Md.  41; 

II  Atl.  577  593 
V.  Wilcox,  8  Biss.  203          838, 

844,  868 
Mutual    Mercantile    Agency, 

III  Fed.  152  44 
Mutual  Savings,  etc.  Ass'n  v. 

Meriden    Agency    Co.,    24 

Conn. 159  77 

M.      V.      Monarch      Co.      v. 

Farnners',  etc.  Bank,  20  Ky. 

Law  Rep.  1351;    49  S.  W. 

317  84 

Myar  v.  Poe  (Ark.),  95  S.  W. 

1005  557,  1375 

Myer  v.  Car  Co.,  102  U.  S.  1   1536, 

1539,  1540,  1612 

N 

Nabring  v.  Bank  of  Mobile,  58 

Ala.  204  808,  811 

Naglee  v.  Pac.  Wharf  Co.,  20 

Cal.  529  716,  716 

Nankivell    v.    Benjamin,     18 

Vict.  L.  R.  543  939,  976 

Nanney  v.  Morgan,  37  Ch.  D. 

346  421,  677,  695,  800 

Nantasket  Beach,  etc.  Co.  v. 

Shea,    182   Mass.    147;     65 

N.  E.  57  847 

Nant-y-Glo,  etc.   Iron  Works 

Co.  V.  Grave,  12  Ch.  D.  738  273, 
1261,  1289,  1338,  1338,  1339 
Narragansett  Bank  v.  Atlantic 

Silk  Co.,  3  Mete.  (Mass.)  282 


Nashua  Savings  Bank  v. 
Anglo-American  Co.,  189 
U.S.  221;  23Sup.  Ct.  517 


i 


230, 
1380 


601, 
607 


cxlv 


Nashua  Savings  Bank  v.  Bur- 
lington Kl.  Light  Co.,  99 
Fed.  14  1588 

Nashville  Bank  v.  Petway,  3 

Humph.  (Tenn.)  522       1185,  1185 

Nassau    Bank    v.    Jones,    95 

N.  Y.  115;   47  Am.  Rep.  14       74, 
76,  858,  859 

Nassau  Phosphate  Co.,  2  Cli. 

D.  610  120,  223 

Nassau  Steam  Press  v.  Tyler, 

70  L.  T.  376  369 

Natal  Investment  Co.,  3  Ch. 

355  1421 

Natal  Land,  etc.  Co.  v.  Pauline 
Colliery,  etc.  Syndicate 
(1904),  A.  C.  120        282,  283,  284 

Nathan  v.  Thompkins,  82  Ala. 

437;    2   So.    747       935,  939,  940, 
1167,  1183,  1250 

V.  X'hlmann,  101  N.  Y. 

App.  Div.  388;     92   N.    Y. 
Supp.  13;    184  N.  Y.  606       1355 

Nation's  Case,  3  Eq.  77  746,  766 
National  Bank  v.  Case,  99  U. 

S.  628         74,74,618,623,812,834 

V.  Graham,  100  U.  S.  699       870 

V.  John.son,  104  U.  S.  271       869 

V.  Lake  Shore,  etc.  Ry. 

Co.,  21  Oh.  St.  221  747 
V.  Matthews,  98  U.  S.  621       835 

V.    Watsontown    Bank, 

105  U.  S.  217     698,  699,  701, 
771,  772 

V.  Whitney,  103  U.  S.  99   835, 

867 

National  Bank  of  Augusta  v. 
Carolina,  etc.  R.  R.  Co,  63 
Fed.  25  1568 

National  Bank  of  Brunswick 
V.  Sixth  Nat.  Bank,  212 
Pa.  St.  238;  61  Atl.  889  84 

National  Bank  of  Commerce 
V.  Allen,  90  Fed.  545;  33 
C.  C.  A.  169  86,  1023,  1085 

V.  Shumway,  49  Kans. 

224;   30  Pac.  411  1199,  1199 

V.  Wade,  84  Fed.   10       1259, 

1266,  1267 
National  Bank  of  Jefferson  v. 
Te.xas   Investment  Co.,   74 
Tex.  421;   12  S.  W.  101      47,  148, 

1356 
National  Bank  of  New  Lon- 
don V.  Lake  Shore,  etc.  Ry. 
Co.,  21  Oh.  St.  221  426 

National  Bank  of  Newport  v. 
H.  P.  Snvder  .Mfg.  Co.,  102 
N.  Y.  Supp.  478  84 


TABLE    OF    CASES 
[The  references  are  to  pages] 


National     Bank     of     North 

America     v.     Kirby,     lOS 

Mass.  497  1436 

National  Bank  of  the  Republic 
r.  Rochester  Tumbler  Co., 

172   Pa.   St.   614;    33   Atl. 

748  767,  773 
V.  Young,  41  N.  J.  Eq. 

531  862 

National      Bank     of     Wales 

(1899),  2Ch.  629  769,  1101, 

1262 
National   Bank   of   Xenia   v. 

Stewart,  107  U.  S.  676;  2 

Sup.  Ct.  778  522,  835 

National  Bldg.  Soc,  5  Ch.  309       830, 
831,  832 
National     Boiler     Ins.      Co. 

(1892),  1  Ch.  306  136,  137 

National  Bolivan  Nav.  Co.  v. 

^Vilson,  5  A.  C.  176  1555 

National  Commercial  Bank  v. 

McDonnell,  92  Ala.  387;   9 

So.  149  176 

National  Conduit  Co.  v.  Con- 
necticut Pipe  Mfg.  Co.,  73 

Fed.  Rep.  491  300 

National  Debenture,  etc.  Corp. 

(1891),  2  Ch.  505        223,  236,  241 
National    Docks    Ry.    Co.    v. 

Central  R.  R.  Co.,  32  N.  J. 

Eq.  755  245,  245,  250 

National    Dwellings    Soc.    v. 

Sykes  (1894),  3  Ch.  159  1055, 

1056,  1056 
National  Endowment  Co.,  142 

Pa.  St.  450;   21  Atl.  879  222 

National   Exchange   Bank  v. 

Hartford,  etc.  R.  R.  Co.,  8 

R.  I.  375;     91    Am.    Dec. 

237;    5  Am.  Rep.  582  1448. 

1449,  1449,  1449,  1451 
National  Express,  etc.  Co.  v. 

Morris,   15  App.  D.  C.  262       921 
National  Financial  Co.,  3  Ch. 

791  1244 

National    Fire    Ins.    Co.    v. 

Yeomans,  8  R.   I.  25;    86 

Am.  Dec.  610  230 

National  Funds  Ass.  Co.,  10 

Ch.  D.  118  1108,  1265,  1268, 

1268,  1284,  1290 
National  Gross  Loge  v.  Jung, 

65  111.  App.  313  588 

National  Hollow,  etc.  Co.  v. 

Chicago  Ry.,  etc.  Co.,  226 

111.  28;    80  N.  E.  556  1073 

National  Home  Bldg.  Ass'n  v. 

Home  Sav.  Bank,   181   111. 


35;  54  N.  E.  619;  64  L.  R. 
A.  399;  72  Am.  St.  Rep. 
245  851,  861 

National  Ins.  Co.  v.  Egleson, 

29  Grant  (Can.)  406  159,  417, 

604,  605,  606,  1231 

National  Ins.,  etc.  Ass'n,  4  De 

G.  F.  &  J.  78  187 

National  Lead  Co.  v.  Dickin- 
son, 70  N.  J.  Law  596;  57 
Atl.  138;  affirmed  62  Atl. 
1135  107,  137 

National   Literary  Ass'n,   30 

Pa.  St.  150  96 

National  Loan,  etc.  Co.  v. 
Rockland  Co.,  94  Fed.  335; 
36  C.  C.  A.  370        83,  1238,  1248, 

1321 

National  Mechanical  Direc- 
tory Co.,  121  Fed.  742;  58 
C.  C.  A.  24  39 

National  Mutual  Life  Ass'n, 

26  Vict.  L.  R.  490  136 

National  Park  Bank  v.  Ger- 
man-American, etc.  Co., 
116  N.  Y.  281;  22  N.  E. 
567;  5  L.  R.  A.  673  863 

National  Pemberton  Bank  v. 
Porter,  125  Mass.  333:  28 
Am.  Rep.  235  844 

National  Salt  Co.  v.  Ingra- 
ham,  143  Fed.  805;  74  C.  C. 
A.  479  57,  1485 

National  State  Bank  v.  Sand- 
ford  Fork,  etc.  Co.,  157 
Ind.  10;  60  N.  E.  699 


V.    Vigo    County    Nat. 

Bank,    141    Ind.    352;     50 

Am.  St.  Rep.  330;  40  N.  E. 

799 
National   Trustees,   etc.    Co., 

21  Vict.  L.  R.  75 
National  Waterworks  Co.  v. 

Kansas  City,  78  Fed.  428 


1211, 
1381 


1370 

813 

1486, 
1488 


National,    etc.    Trust   Co.    v. 

Gray,  12  D.  C.  App.  Cas. 

276  683,  723 

Native    Iron   Co.,   2   Ch.    D. 

345  1396 

Natoma   Water,    etc.    Co.    v. 

Clarkin,  14  Cal.  544  847 

Navajo,  etc.  Co.  v.  Curry,  147 

Cal.  581;   82  Pac.  247;    109 

Am.  St.  Rep.  176  1006 

Neafie's    Appeal     (Pa.    Sup. 

Ct.),  12  Atl.  271  1648,  1650 

Neale  v.  Turton,  4  Bing.  149      1377 


cxlvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Neall  V.  Hill,  Ifi  Cal.  145;    76 

Am.  Dec.  508  935,  958,  1179 

Neath  iMdg.  Soc.  v.  Luce,  43 

Ch.  D.  158  831,  832,  832,  832 

Nebraska  Chicory  Co.  v.  Led- 

nicky  (Nebr.),   113    N.    W. 

245  174,  210,  212 

Nebraska  Nat.  Bank  v.  Fer- 
guson,  49   Nebr.,    109;   68 

N.  W.  370;  59Am.  St.  Rep. 

522  253 

Nebraska  Shirt  Co.  v.  Horton, 

3    Nebr.    (Unofficial)    888; 

93  N.  W.  225  77,  858 

Neff  V.  Wolf  River  Boom  Co., 

50  Wise.  585;  7  N.  W.  553  1632 
Negley   v.    Hagerstown    Mfg. 

Co.,  86  Md.  692;    39  Atl. 

506  182 

Neiler  v.   Kelley,  69  Pa.  St. 

403  809 

Neilson  v.  James,  9  Q.  B.  D. 

546  780 

Nelson     v.     Anglo-American 

Land  Co.  (1897),  1  Ch.  130       903 

V.     Bank  of  Fergus 

County,  157  Fed.  161      1359 

V.   Gibson,  92  111.  App. 

595  584 

V.  Hubbard,  96  Ala.  238; 

11  So.  428;  17  L.  R.  A.  375   488, 

1005,  1007, 1399,  1402, 

1403,  1486,  1581,  1581, 

1600,  1671 

V.    Keith-O'Brien    Co., 

(Utah),  91  Pac.  30  111,  131 

V.  Owen,  113  Ala.  372; 

21  So.  75  723,  811 
V.  Spence  (Ga.),  58  S.  E. 

697  407,  408 
u.  U.S.,  201  U.S.  92;  26 

Sup.  Ct.  358  890 

Nelson  Coke  Co.  v.  Pellatt,  4 

Ont.  L.  R.  481  169,  439 

Nelson,    Edward    &    Co.    v. 

Faber    &    Co.     (1903),    2 

K.  B.  367  1545,  1548 

Nemaha  Coal   Co.   v.   Settle, 

54  Kans.  424 ;  38  Pac.  483  213 
Nesbit  V.  North  Georgia  Elec- 
tric Co.,  156  Fed.  979  1371 
Nesmith  v.  Washington  Bank, 

6  Pick.  (Mass.)  324  769,  774 

Nesne   v.    Sundet,    93    Minn. 

299;   101  N.  W.  490  373 

Nether  Providence  Ass'n,   12 

Pa.  Co.  Ct.  666  368 

Nettles  V.   McConnell  (Ala.), 

43  So.  838  899 

cxl 


Nettles  V.  Marco,  33  S.  Car.  47 ; 

lis.  E.  595  494 

Neubert  v.  Armstrong  Water 

Co.,  211   Pa.  St.   582;    61 

Atl.  123  894,  905 

New    Albany    v.    Burke,    1 1 

Wall.  96  525,  625 

New     Albany,     etc.     Co.     v. 

Smith,  23  Ind.  353  1423 

New  Albany,  etc.  R.  R.  Co.  v. 

Fielils,  10  Ind.  187  194 
V.   McCormick,    10   Ind. 

499;  71  Am.  Dec.  337  166,  188 
New   Albany   Waterworks  v. 

Louisville     Banking     Co., 

122  Fed.  776  957,  970,  972 

New     Balkis     Eerstelling     v. 

Randt    Gold    Mining    Co. 

(1904),  A.  C.  165  668,668 

New  Boston  Fire  Ins.  Co.  v. 

Upton,  67  N.  H.  469;    36 

Atl.  366  1196 

New  Brighton,  etc.  R.  R.  Co. 

V.  Pittsburgh,    etc.    R.    R. 

Co.,  105  Pa.  St.  13  305 

New   Brunswick,   etc.   Co.   v. 

Muggeridge,    1    Dr.   &  Sm. 

363  184 

New  Brunswick,  etc.  Ry.  Co. 

V.  Muggeridge,  4  H.  &  N. 

580  174,  615 

New  Castle,  etc.  Ry.  Co.  v. 

Simpson,  21  Fed.  533  840,  842, 
1402,  1402 
New  Chile  Gold  Mining  Co., 

38  Ch.  D.  475  537 

.  45  Ch.  D.  598  666,  666 

,  68  L.  T.  15  647 

New   Clydach    Sheet    &    Bar 

Iron   Co.,    6   Eq.    514  1507, 

1519 
New  Eberhardt  Co.  v.  Men- 

zies.  43  Ch.  D.  118  632,  640 

New  England  Fire  Ins.  Co.  v. 

Haynes,    71    Vt.    306;     45 

Atl.  221;    76  Am.  St.  Rep. 

771  614 

New  England  Fire,  etc.  Ins. 

Co.   V.   Robinson,   25    Ind. 

536  394 

New    England    Marine     Ins. 

Co.    r'.     DeWolf,    8    Pick. 

(Mass.)  56  13 78 

New  England,  etc.  Ins.  Co.  v. 

Phillips,   141   Mass.  535;  6 

N.  E.  .)34  1250 

New    England     Iron    Co.     r. 

New  York  Loan.  etc.  Co., 

55  How.  Pr.  (N.  Y.)  315  890 


TABLE    OF    CASES 
[The  references  are  to  pages] 


New  England  R.  Co.  v.  Car- 
negie Steel  Co.,  75  Fed.  54; 

21  C.  C.  A.  219  1517,  1560, 

1564,  1570 
New   England   Trust    Co.    v. 

Abbott.  162  Mass.  148;   38 

N.  E.  432;  27  L.  R.  A.  271      517, 

573 
V.  Eaton,  140  Mass.  532; 

4  N.  E.  69;    54  Am.  Rep. 

493  1446, 1446, 1446 

New   Hampshire   Central  R. 

R.  V.   Johnison,   30  N.    H. 

390;  64  Am.  Dec.  300       601,  607, 

609 
New   Hampshire   Sav.    Bank 

V.   Richey,    121   Fed.   956; 

58C.  C.  A.  294  1128 

New    Haven    Trust    Co.    v. 

Doherty,  74  Conn.  353;   50 

Atl.  887  1368 
V.  Gaffney,  73  Conn.  480; 

47  Atl.  760  627 
V.  Nelson,  73  Conn.  477; 

47  Atl.  753        _  528 

New     Jersey     Midland     Ry. 

Co.  V.  Strait,  35  N.  J.  Law 

322  1415 

New  Lambton  Land,  etc.  Co. 

V.  London  Bank,  1  Comm. 

L.  R.  (Australia)  524  765,  765, 
765,  766 
New  London  Bank  v.  Brockle- 

bank,  21  Ch.  D.  302  774,  796 

New  Mashonaland  Co.  (1892), 

3  Ch.  577  1261,  1263,  1274 

New  Memphis  Gas  Light  Co. 

Cases,   105  Tenn.  268;    60 

S.W.  206;  80Am.  St.  Rep. 

880  1304,  1317,  1324,  1344 

New    Orleans    Bldg.    Co.    v. 

Lawson,  11  La.  34  1210,  1371 

New  Orleans  Debenture,  etc. 

Co.  V.  Louisiana,  180  U.  S. 

320;  21  Sup.  Ct.  378  46,  59, 

241,  258,  258 
New   Orleans   Nat.    Banking 

Ass'n  V.  Wiltz,  10  Fed.  330      114, 

571 
New  Orleans  Pac.  Ry.  Co.  v. 

Parker,   143  U.  S.  42;     12 

Sup.  Ct.  364  1510,  1529,  1589, 
1590,  1592 
New    Orleans,     etc.     Co.    v. 

Brown,  36  La.  Ann.    138; 

51  Am.  Rep.  5  1246 

New  Orleans,  etc.  R.  R.  Co.  v. 

Frank,   39   La.   Ann.   707; 

2  So.  310  101 


New  Orleans,  etc.  S.  S.  Co.  v. 

Ocean  Dry  Dock  Co..   28 

La.  Ann.  173;  26  Am.  Rep. 

90  42,  76,  77 

New  Transvaal  Co.  (1896),  2 

Ch.  750  437 

New  York  Automobile  Co.  v. 

Franklin,  49  N.  Y.  Misc.  8; 

97  N.  Y.  Supp.  781  1263,  1341 
New  York  Cable  Co.  v.  New 

York,    104    N.    Y.    1;     10 

N.  E.  332  249 

New  York  Cable  Ry.  Co.,  109 

N.  Y.  32;  15  N.  E.  882  131 

New    York    Car    Oil    Co.    v. 

Richmond,  6  Bosw.  213  229 

New  York  Car  Wheel  Works, 

141  Fed.  430  876 

New  York  Central  Ins.  Co.  v. 

Nat.  Protection  Ins.  Co.,  14 

N.  Y.  85  1296 

New  York  Commercial  Co.  v. 

Francis,  83  Fed.   769;    28 

C.  C.  A.  199  715,  717 

New  York  Economical  Print- 
ing Co.,  110  Fed.  514;    49 

C.  C.  A.  133  1221,  1397 

New  York  Electrical  Workers' 

Union  v.  Sullivan,  107  N.  Y. 

Supp.  886  998,  1011 

New  York  Firemen  Ins.  Co. 

V.    Eley    (1825),    5    Conn. 

560;  13  Am.  Dec.  100  827 
V.  Eley  (1824),  2  Cow. 

678  826 

New  York  Grape  Sugar  Co.  v. 

Buffalo   Grape   Sugar  Co., 

24  Fed.  604  1263 

New  York  Guaranty,  etc.  Co. 

V.  Tacoma  Ry.  Co.,  83  Fed. 

365;  27  C.  C.  A.  550  1563,  1572 
New  York,  Lackawanna,  etc. 

Ry.  Co.,  99  N.  Y.   12;    1 

N.  E.  27  122,  229 

New   York,    Lake   Erie,   etc. 

Ry.  Co.  V.  Haring,  47  N.  J. 

Law    137;     54    Am.    Rep. 

123  870 

New  York  Life,   etc.   Co.   v. 

Kane,  17  N.  Y.  App.  Div. 

542;  45  N.  Y.  Supp.  543        1446, 

1446 
New  York  Security,  etc.  Co. 

V.   Louisville,  etc.   R.   Co., 

102  Fed.  382  1509,  1641,  1669 
V.  Saratoga  Gas  Co.,  88 

Hun  569;    34  N.  Y.  Supp. 

890;     157  N.   Y.   689;    51 

N.  E.  1092  1505,  1553 


cxlviii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


New  York  Security,  etc.  Co. 
V.  Sanitof^a  (jus,  etc.  Co., 
159  N.  Y.  137;  45  L.  R.  A. 
1.32;  53N.  E.  758  1518,  1519 

New  York,  etc.  Bank  v.  Crow- 
ell,  177  Pa.  St.  313;  35 
.\tl.  013  252 

New  York,  etc.  Canal  Co.  v. 
Fulton  Bank,  7  Wend. 
(N.  Y.)412  79,80 

New  York,  etc.  Ice  Lines,  Re, 
147  Fed.  214;  77  C.  C.  A. 
440  44 

New  York,  etc.  R.  R.  Co.  v. 

Davies,  38  Ilun  (N.  Y.)  477       807 

V.  Dixon,  114  N.  Y.  80; 

21  N.  E.  110  1310, 1378 

V.   Ketchum,  27  Conn. 

170  294 

V.  New  York,  etc.  R.  R. 

Co.,  58  Fed.  2G8  1568,  1611, 

1611,  1612 

V.   Nickals,    119   U.    S. 

296;  7  Sup.  Ct.  209  464,  465, 

1100,  1101 

V.   O'Brien,   106  N.   Y. 

Supp. 909  95 

V.  Offield,  78  Conn.  1 ;  60 

Atl.  740  917 

v.  Schuyler,  34  N.  Y.  30      681, 

711,  714,  731,  739,  1324 

V.  State,  50  N.  J.  Law 

303;   13  Atl.  1  1633 

New  York,  etc.  Trust  Co.  v. 

Capital   Ry.   Co.,    77   Fed. 

529 
V.  Helraer,  77  N.  Y.  64 


1537 
845, 
865 


V.  Louisville,  etc.  R.  R. 

Co.,  79  Fed.  386  1567,  1568 

New  York,  etc.  Water  Co.,  98 

Fed.  711  22,44 

New  Zealand  Gold,  etc.  Co. 

V.  Peacock  (1894),  1  Q.  B. 

622  58,  605 

New    Zealand    Midland    Ry. 

Co.  (1901),  2  Ch.  357  1591 

New  Zealand  Trust  &  Loan 

Co.  (1903),  1  Ch.  403  414 

Newberry  v.  Detroit,  etc.  Iron 

Co.,  17  Mich.  141  715,  752,  781 
Newbigj!;in-hy-t  he-Sea       Gas 

Co.   V.   Armstrong,    13   Ch. 

D.  310  933 

Newbold  v.  Peoria,  etc.  R.  R. 

Co.,  5  111.  App.  367  1455,  1651 
Newbv     V.     Oregon     Central 

R.  R.  Co.,  1  Sawy.  63      373,  961, 

1554 


Newbv  V.  Oregon  Central  Ry. 

Co.,'  Deady  609  373,  961 

Newcastle,   etc.    Co.    v.    Bell, 

8  Blackf.  (Ind.)  584  160,  1250 

Newcomb  v.  Reed,   12  Allen 

(Mass.)  362  219,  1227 
V.  He,  42  N.  Y.  St.  Rep. 

442;  18  N.  Y.  Supp.  16 
Newell  V.  Smith,  49  Vt.  255 


1225 
1616, 
1618 


V.  Williston,   138  Mass. 

240  690,691,098,699 

Newgass  v.  Atlantic,  etc.  Ry. 

Co.,  56  Fed.  676  1540,  1542 
V.  Atlantic,  etc.  Ry.  Co., 

72  Fed.  712  1574 

Newhavcn    Local    Board    v. 

Newhavon    School    Board, 

30  Ch.  D.  350  1164 

Newland  Hotel  Co.  v.  Lowe 

Furniture  Co.,  73  Mo.  App. 

135  76 

Newlands  v.  National  Em- 
ployers, etc.  Ass'n,  54  L.  J. 

Q.  B.  428  186,  1377 

Newman      &     Co.,      George 

(1895),  1  Ch.  674  83,  1069, 

1283,  1321 
Newport  News  Sliipbuilding, 

etc.  Co.  V.  Jones  (Va.),  54 

S.  E.  314  _  62 

Newport,  etc.  Bridge  Co.  v. 

Douglas,    12    Bush.    (Ky.) 

673  1455, 1469 

Newry,     etc.     Ry.     Co.     v. 

Coombe,  3  Ex.  565  173,  173, 

601 
Newton  v.  Anglo-Australian, 

etc.,  Co.  (1895),  A.  C.  244  66 
V.  Belcher,  12  Q.  B.  921       309 

V.    Birmingham    Small 

Arms  Co.  (1906),  2  Ch.  378      909, 

909 

V.  Fay,  10  AJIen  (Mass.) 

505  811,812 

V.   Liddiard,   12   Q.   B. 

925  309 

V.    Wooley,    105    Fed. 

541  786 

Ne\Ai;on  Mfg.  Co.  v.  White,  42 

Ga.  148  873,  874 

Newi:on  Nat.  Bank  v.  New- 

begin.    74    Fed.    135;     20 

C.  C.  A.  339;    33  L.  R.  A. 

727  177,  ISO,  ISO 

Neyens        v.        Worthington 

(Mich.),  114  N.  W.  404  865 

Ni.igara  Shoe  Co.  v.  Tobey, 

71  111.  App.  250  534 


cxlix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Nichols    V.    Burlington,    etc. 
Co.,  4  G.  Greene  (Iowa)  42 

V.  Mase,  94  N.  Y.  160 


160, 

608 

1496, 

1503 


Nicholson    v.    Nicholson,    30 

L.  J.  Ch.  617  1141 

V.  Rhodesia  Trading  Co. 

(1897),  1  Ch.  434  1115 

Nicholson- Watson,  etc.  Co.  v. 
Urqiihart,  32  Tex.  Civ. 
App.  527;  75S.  W.  45  666 

Nicholstone  City  Co.  v.  Smal- 
ley,  21  Tex.  Civ.  App.  210; 
51  S.  W.  527  1068 

Nickalls   v.    Merry,   L.   R.    7 

H.  L.  530  779,  782 

Nickals  v.  New  York,  etc.  Ry. 

Co.,  15  Fed.  575  466 

Nickerson  v.  Atchison,  etc.  R. 

Co.,  17  Fed.  408  1549 

V.    English,    142   Mass. 

267;  8N.  E.  45  632 

Nickiim  v.  Burckhardt,  30 
Oreg.  464;  47  Pac.  788; 
48  Pac.  474;  60  Am.  St. 
Rep.  822  156,  161,  215,  234 

Nicol's  Case,  3  De  G.   &  J. 

387  521,  706,  764 

Nicoll  V.  Clark,  13  N.  Y.  Misc. 

128;   34  N.  Y.  Supp.  159  230 

V.  New  York,  etc.  R.  R. 

Co.,  12  N.  Y.  121  107 

Nicollet  Nat.  Bank  v.  City 
Bank,  38  Minn.  85;  35 
N.  W.  577;  8  Am.  St. 
Rep.  643  572,  716,  752 

V.  Frisk-Turner  Co.,  71 

Minn.  413;    74  N.  W.  160; 
70  Am.  St.  Rep.  334  22,  43 

Nicolls  V.  Reid,  109  Cal.  630; 

42  Pac.  298  712,  781 

Niemeyer  v.  Little  Rock  Junc- 
tion Ry.  Co.,  43  Ark.  Ill         121, 
240,  245 
Nightingal     v.     Devisme,     5 

Burr.  2589  421 

Niles  V.  Edwards,  90  Cal.  10; 

27  Pac.  159  810 

V.  New  York,  etc.  R.  R. 

Co.,  176  N.  Y.  119;   68  N. 
E.  142  928,  947,  1350 

Niles  Tool  Works  v.  Louis- 
ville, etc.  Ry.  Co.,  112  Fed. 
561;  50  C.  C.  A.  390  1567 

Nimmo  v.  Jackson,  21  111.  App. 

607  1211 

Ninneman  v.  Fox  (Wash.),  86 

Pac.  213  928,  929 


Nippenose  Mfg.  Co.  v.  Stadon, 

68  Pa.  St.  256 
Nisbit  V.  Macon  Bank,  etc.  Co., 

12  Fed.  686  804,  805 

Niven     v.     Spickerman,     12 

Johns.  (N.  Y.)  401  8 

Nixon  V.  Brownlow,  3  H.  &  N. 

686 
V.  Clear  Creek  Lumber  Co. 

(Ala.),  43  So.  805 
V.   Goodwin    (Cal.),   85 

Pac.  169  917,  925,  1262 

Nixon's   Navigation   Co.,   Re 

(1897),  1  Ch.  872 
N.  Mitchell  v.  City  of  Glascow 

Bank,  4  A.  C.  624 
Noah    V.     German-American 

Bldg.  Ass'n,  31  Ind.  App. 

504;    68  N.  E.  615 
Noakes    v.     Noakes    &    Co. 

(1907),  1  Ch.  64  1557,  1558 

Noble  V.  Euler.  20  N.  Y.  App. 

Div.  548;    47  N.  Y.  Supp. 

302 
V.  Garden,  146  Cal.  225; 

79  Pac.  883 

V.    Learned    (Cal.),    87 

Pac.  402 

V.  Turner,  69  Md.  519; 

16  Atl.  124  694,  716 

Nockells  V.  Crosby,  3  B.  &  C. 

814 
Noel  V.  Drake,  28  Kans.  265; 

42  Am.  Rep.  162 
Noller  V.  Wright,   138  Mich. 

416;    lOlN.  W.  553 
Norbury's  Case,  3  De  G.   & 

Sm.  423 
Norfolk,    etc.    R.    R.    Co.    v. 

Pendleton,  86  Va.  1004;   11 

S.  E.  1062 
Norman   v.    Loomis-Manning 

Filter  Co.,  108  N.  Y.  Supp. 

261 
V.  Mitchell,  5  De  G.  M.  & 

G.  648 
Normandy  v.  Ind,  Coope  &  Co. 

(1908),  1  Ch.  84    937,  946,  953, 

954,  1003,  1004,  1161,  1243, 

1319,  1321,  1364 

Norris  v.  Cottle,  2  H.  L.  C. 

647 
North  V.  Forest,  15  Conn.  400 
North  &  South  Rolling  Stock 

Co.  V.  People,  147  111.  234; 

35  N.  E.  608;   24  L.  R.  A. 

462 
North  American,   etc.   Trust 

Co.  V.  Colonial,  etc.  Mort- 


625 


214 
393 


542 
746 


853 


1182 
713 
713 


341 
1347 
1018 

337 


1633 


1373 
1175 


276 
422 


1167 


i\ 


el 


TABLE    OF    CASES 
[The  references  are  to  pages] 


gage  Co.,  83  Fed.  796;   28 

C.  C.  A.  88  297 

North    British    Ins.    Co.    v. 

Hallet,  7  Jur.  N.  s.  12G3  1235 
North  CaroHna  R.  R.  Co.  v. 

Drew,  3  Woods  691  1517 

V.  Moore,  7  N.  Car.  6  87 

North  Charterland  Explora- 
tion   Co.    V.    Riordan,     13 

Times  L.  R.  80,  281  350,  351 
North    Eastern    Ry.    Co.    v. 

Jackson,  19  W.  R.  198  1246 

Nortli  of  England  S.  S.  Co. 

(1905),  2Ch.  15  1002 

North    Hudson    Bldg.,    etc. 

Ass'n  V.   Childs,   82   Wise. 

460;  52N.  W.  600;  33  .\m. 

St.  Rep.  57         1228,   1259,   1286, 

1369 
North  Milwaukee  Town  Site 

Co.   V.    Bishop,    103   Wise. 

492;     79  N.    W.   785;    45 

L.  R.  A.  174  556,  558,  558,  560 
603,  605 
North  Missouri  R.  R.  Co.  v. 

Miller,  31  Mo.  19  193 

North  Pa.  R.  R.  Co.  v.  Adams, 

54  Pa.  St.  94;   93  Am.  Dec. 

677  1459,  1460 

North     River     Ins.     Co.     v. 

Lawrence  (1830),  3  Wend. 

(N.  Y.)  482  827 

North      River      Meadow     v. 

Shrewsbury-  Church,  22  N. 

J.  Law  424;   53  Am.  Dee. 

258  613,  914 

North  Shore,  etc.  Ferry  Co., 

63  Barb.  556  1020,  1024 

North  Stafford  Steel,  etc.  Co. 

V.  Ward,  L.  R.  3  Ex.  172       608, 

609 
North    Sydney    Investment, 

etc.  Co.  V.  Higgins  (1899), 

A.  C.  263  285,  642 

North    West   Argentine    Ry. 

Co.  (1900),  2  Ch.  882  469 

North-West    Electric    Co.    v. 

Walsh,  29  Can.  Sup.  Ct.  33  579, 
627,  629 
North    Western    Ry.    Co.    v. 

M'Michael,  5  Ex.  114       173,  173, 

174 
Northage,  Re  (1891),  60  L.  J. 

Ch.  488  1140 

Northampton  Bank  v.  Pepoon. 

11  Mass.  288  1186,  1213 

Northern    Ala.    Ry.    Co.    i\ 

Hopkins,  87  Fed.  505;    31 

C.  C.  A.  94  1642 


Northern  Assam  Tea  Co.,  10 

En.  458 
Northern  Central  Mich.  R.  R. 

Co.  V.  Eslow,  40  Mich.  222 
Northern  Central  Ry.  Co.  v. 

Keighler,  29  Md.  572 


1421 

169 

1492, 
1600 
1364 
1544 


V.   Rider,  45  Md.  24 

V.  State,  17  Md.  8 

V.  Walworth,  193  Pa.  St. 

207;  44  Atl.  253;  74  /Vm. 

St.  Rep.  683  786 

Northern  Electric  Wire,  etc. 

Co.,  2  Megone  288  172 

Northern  Nav.  Co.  v.  Long,  11 

Ont.  L.  R.  230  1126,  1126 

Northern  Pacific  Ry.  Co.  v. 

Am.   Trading  Co.,   195  U. 

S.  439;   25  Sup.  Ct.  84  1618, 

1644 
V.  Heflin,  83  Fed.  93;  27 

C.  C.  A.  460  1613 

Northern     Pac.     R.     Co.     v. 

Lamont,  69    Fed.    23;     16 

C.  C.  A.  364  1566,  1570,  1572 

Northern    Securities    Co.    v. 

U.  S.,   193  U.  S.   197;    24 

Sup.  Ct.  436  57,  264 

Northern  Trust  Co.  v.  Snyder, 

113  Wise.  516;    89  N.  W. 

460;  90  Am.  St.  Rep.  867 


Northrop     v. 
Conn.  498 


949, 
951 

Bushnell,     38 

177,  525,  528 
699, 
700 


V.  Curtis,  5  Conn.  246 


V.  Newtown,  etc.  Turn- 
pike Co. .  3  Conn.  544  699 

Northside  Ry.  Co.  v.  Worth- 
ington,  88  Tex.  562;  30 
S.  W.  1055;  53  Am.  St. 
Rep.  778  1403 

Northumberland  Ave.   Hotel 

Co.,  Re,  33  Ch.  D.  16       285,  286, 

1314 

Northumberland  &  Durham 
Dist.  Banking  Co.,  2  De  G. 
&  J.  357  224 

Northwestern,  etc.  Ass'n  v. 
Schauss,  148  111.  304;  35 
N.  E.  747  660 

V.  Wanner,  24  111.  App. 

358  584 

Nortliwestern  Land  Ass'n  v. 
Gradv.  137  Ala.  219;  33 
So.  874  1259 

Northwestern  Life  Ins.  Co.  v. 
Erlenkoetter,  90  111.  App.  99 

582, 592 


:li 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Northwestern  Mut.  Life  Ins. 

Co.  V.   Cotton  Exch.,   etc. 

Co.,  46  Fed.  22  628,  635 
V.  Cotton  Exch.,  etc.  Co., 

70  Fed.  155  628 

Northwestern  Packing  Co.  v. 

Whitney    (Cal.),    89    Pac. 

981  592 

Northwestern  Transportation 

Co.  V.  Beatty,  12  A.  C.  589       1080, 
1297,  1311,  1312 
Northwestern   Union   Packet 

Co.  V.  Shaw,  37  Wise.  655; 

19  Am.  Rep.  781         849,  855,  858 
Northwood  Union  Shoe  Co.  v. 

Pray,  67  N.  H.  435;  32  Atl. 

770  625 

Norton     v.     Alabama     Nat. 

Bank,  102  Ala.  420;   14  So. 

872  1372 
V.    Derby  Nat.  Bank, 

61  N.  H.  589;  60  Am.  Rep. 

334  851,  855 

V.  State,  74  Ind.  337       230,  383 

V.  Yates  (1906),  1  K.  B. 

112  1546 

Norwich,   etc.   Navigation  v. 

Theobald,   1  Moody  &  M. 

151  608 

Norwich    Pharmacal    Co.    v. 

Abaly  (Wise),  113  N.  W. 

963  393 

Norwich  Yam  Co.,  22  Beav. 

143  394,  395 

Nourse  v.  Prime,  4  Johns.  Ch. 

(N.  Y.)  490;    8  Am.   Dec. 

606;    7  Johns.  Ch.  69;    11, 

Am.  Dec.  403 
Noyes  v.  Marsh,  123  Mass.  286 


V.  Rich,  52  Me.  115 

V.  Spaulding,  27  Vt.  420 

Noyes  Bros.,   136  Fed.   977 


418 

786 

1029 

1515 

781 

698, 

810 

Nugent    V.     Supervisors,     19 

Wall.  241  162,  173 

Nute  V.  Hamilton  Mut.  Fire 
Ins.  Co.,  6  Gray  (Mass.) 
174  577,  594 

Nutter  V.  Lexington,  etc. 
R.  R.  Co.,  6  Gray  (Mass.) 
85  490 

Nye  V.  Storer,  168  Mass.  53; 

46  N.  E.  402  1309,  1312 

O 

Oak  Grove,  etc.  Cattle  Co.  v. 
Foster,  7  New  Mex.  650;  41 
Pac.  522  1379 


Oakbank  Oil  Co.  v.  Crum,  8 
A.  C.  65 

Oakes  v.  Cattaraugus  Water 
Co.,  143  N.  Y.  430;  38 
N.  E.  461 ;  20  L.  R.  A.  544 


433 


290, 
1381 
414 


V.  Oakes,  9  Hare  6G6 

V.   Turquand,    L.   R.    2 

H.  L.  325  178,  184,  186,  223 

Oakford    v.    Fischer,    75    III. 

App.  544  912 

Oakland  Bank  v.  Wilcox,  60 

Cal.  126  1264 

Oakland,  etc.  Bank  v.  State 

Bank,    113  Mich.   284;     71 

N.  W.  453;  67  Am.  St.  Rep. 

463  _  772 

Oakley     v.     Working     Men's 

Union  Benev.  Soc,  2  Hilton 

(N.  Y.)  487  1382 

Oban   &    Aultmore-Glenlivet 

Distilleries,  5  Eraser  (Sc.) 

1140  111,547 

O'Beirne    v.    Allegheny,    etc. 

R.  R.  Co..  151  N.  Y.  372; 

45  N.  E.  873  1587 
O'Brien  v.   Blaut,   17  N.   Y. 

App.  Div.  288;    45  N.  Y. 
Supp.  217  1285 

V.  Champlain  Construc- 
tion Co.,  107  Fed.  338  1354 

V.    Cummings,    13    Mo. 

App.  197  111,  114,  571 

V.   Fulkerson,  75  Mich. 

554;    42  N.  W.  979  204 

Occidental  Bldg.  etc.,  Ass'n  v. 

Sullivan,  62  Cal.  394  590 

O'Connor     v.     International 

Silver  Co.   (N.  J.),  59  Atl. 

321;    62  Atl.  408       878,936,962, 

1027 
V.  Virginia  Pass.,  etc. Co., 

184  N.   Y.   46;    76  N.   E. 

1082  942,  942,  944,  978 
V.  Virginia  Pass,  etc.  Co., 

46  N.    Y.    Misc.-  530;     92 

N.  Y.  Supp.  525  971 

O'Connor,    etc.    Mfg.    Co.    v. 

Coosa  Furnace  Co.,  95  Ala. 

614;    10  So.  290;    36  Am. 

St.  Rep.  251  1306,  1315 

Odessa  Tramways  v.  Mendel, 

8  Ch.  D.  235  199,  602,  606,  632 
Odessa       Waterworks       Co. 

(1901),  2  Ch.  190  n  471 

Odessa       Waterworks       Co., 

W.  N.  (1897)  166  469 

O'Donnell  v.  Johns,  76  Tex. 

362  387 


clii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


O'Duffy  V.  Jaffe  (1901),  2  Ir. 

27  2G7 

O'Dvvyer  v.  Verdon,  115  N.  Y. 

App.  Div.  37  757,  757 

Oelberinaim  v.  New  York,  etc. 

Ry.   Co.,   77   Iliin   (N.   Y.) 

332;    29  N.  Y.  Supp.  515         70, 
102G,  10G3 
Off  V.  Jack,  204  111.  79;    08 

N.  E.  427  1323, 1323 

0[;(lensburgh,  etc.  R.  R.  Co. 

V.  Frost,  21  Barb.  541       121,  001 
Ofjilvie  V.  Kno.x:  Ins.  Co.,  22 

How.  380  177,  180,  181 

OrIc  v.  Knipe,  8  Eq.  434       424,  424 
Oplesby  v.  Attrill,  105  U.  S. 

(305  981 

O'Herron  v.  Gray,  108  Mass. 

573;  47  N.  E.  429;  GO  Am. 

St.  Rep.  411;    40  L.  R.  A. 

498  083,  720 

Ohio  V.  Frank,  103  U.  S.  097       1441 
Ohio    Central    R.    R.    Co.    v. 

Central  Trust  Co.,  133  U.  S. 

83;    10  Sup.  Ct.  235      1453,  1405, 
1522,  1023 
Ohio  Coal  Co.  v.  Whitcomb, 

123  Fed.  359  1020,  1029 

Ohio  College  v.  Rosenthal,  45 

Oh.  St.  183;    12  N.  E.  005       450, 

451 
Ohio  Ins.  Co.  v.  Nunemacher, 

15lnd.  294;   10  Ind.  234  499, 

500 
Oliio    Valley    Nat.    Bank    v. 

Hulitt,  204  U.  S.  102       017,  021 
V.  Walton  Arcliitectural 

Iron   Co.,    30    Wkly.    Law 

Bull.  (Oh.)  382  1034,  1203, 

1217 
Ohio,     etc.     R.     R.     Co.     v. 

McPherson,  35  Mo.  13;    80 

Am.  Dec.  128       1009,  1208,  1224, 

1227 
Ohio,  etc.  Ry.  Co.  v.  Russell, 

115  111.  52;  3N.  E.  501  1009 

Oil    City    Land,    etc.    Co.    v. 

Porter,    99    Ky.    254;     35 

S.  W.  043  180 

Oil  Creek,  etc.  R.  R.  Co.  v. 

Pa.  Transportation  Co.,  83 

Pa.  St.  100  852,  854 

Olathe  Silver  Mining  Co.,  27 

Ch.  D.  278  1529 

Old       Bushmills       Distillery 

(1S97),    1    Ir.   R.   489  1547 

Old  Colony  Trust  Co.  v.  City 

of  Wichita,   123  Fed.  702       248, 
833,  1484 


Old  Colony  Tru.st  Co.  v.  Du- 

bu<)ue,    etc.   Traction   Co., 

89  Fed.  794  909 
V.  Standard  Beet  Sugar 

Co.,  150  Fed.  077  1504,  1.520, 

1550 
Old  Dominion  Copper  Co.  v. 

Lewi.sohn,    130    Fed.    915; 

affirmed  148  Fed.  1020  331 

Old    Dominion    Copper   Min- 
ing, etc.  Co.  V.  Bigelow,  188 

Mass.  315;    74  N.   E.  053; 

108  Am.  St.  Rep.  479       312,  314, 
315,  327,  331,  334,  335 
Oldham  Corporation  v.  Bank 

of   England   (1904),   2   Ch. 

710  794 

Oldknow    V.    Wainwright,     1 

Wm.  Bl.  289;  2  Burr.  1017     1200 
Oldtown,   etc.    R.  R.   Co.    v. 

Veazie,  39  Me.  571  009,  010 

Oler  V.  Baltimore,  etc.  R.  R. 

Co.,  41  Md.  583         154,  195,  198, 

221 
Oliphant  v.  Bank  of  Commerce 

00  Ark.  198;   29  S.  W.  460       770 
Oliver  v.  Oliver,  118  Ga.  302; 

45  S.  E.  232  1352 
V.  Rahway  Ice  Co.,  04 

N.  J.  Eq.  590;  54  Atl.  400       1310, 

1310 
Oliver's   Estate,  130   Pa.  St. 

43;  20  Atl.  527;  20  Am. 

St.  Rep.  894;  9  L.  R.  A. 

421  1092,  1148 

Olmstead  v.   Vance,  etc.  Co., 

190  111.230;  03  N.  E.  034    191, 

192,  518,  520 

Olney  v.  Chadsey,  7  R.  I.  224       914, 

920,  1240,  1248,  1372 

Olsen  V.  Homestead  Land  Co., 

87  Tex.  308;   28  S.  W.  944       542, 
1091, 1119 
Olson  V.  State  Bank,  67  Minn. 

207;  09N.  W.  904  492 

Olympia,   Ltd.   (1898)  2  Ch. 

153  324,  324,  328 

Olympia  Mining  Co.  v.  Kerns 

(Idalio),  91  Pac.  92  214 

Olyphant  v.  St.  Louis,  etc.  Co., 

23  Fed.  405  1629 
V.  St.  Louis,  etc.  Co.,  28 

Fed.  729  1011 

Omaha  Law  Library  Ass'n  v. 

Connell,  55  Nebr.  390;    75 

N.  W.  837  050,  651 

Omaha  Water  Co.  v.  City  of 

Omaha,    147    Fed.    1;     77 

C.  C.  A.  267  1521 


cliii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


O'Mara  v.  Newcomb  (Colo.). 

88  Pac.  167  723,  808 

Omnium  Investment  Co.,  Re, 

(1895),  2  Ch.  127  537 

O'Neal  V.  F.  A.  Neider  Co.,  25 

Ky.    Law   Rep.   2279;     80 

S.  W.  451  1183,  1183 

Oneida     Bank     v.     Ontario 

Bank,  21  N.  Y.  490 
O'Neile  v.  Ternes,  32  Wash. 

528;    73  Pac.  692 
O'Neill  V.  Webb,  78  Mo.  App. 

1 
,  Re,  47  N.  Y.  Misc.  495; 

95  N.  Y.  Supp.  964 
Onslow's  Case,  3  Times  L.  R. 

551 
Ontario     Ladies     College     v. 

Kendry,  10  Ont.  L.  R.  324 
Ontario  Salt  Co.  v.  Merchants 

Salt    Co.,     18    Grant    Ch. 

(Up.  Can.)  540 
Ooregum  Gold  Mining  Co.  v. 

Roper  (1892),  A.  C.  125 

627,  639 
Opdyke  v.  Marble,  44  Barb. 

(N.  Y.)  64 
Opera,  Ltd.  (1891),  3  Ch.  260 
Ophir    Consol.  Mines    Co.    v. 

Brynteson,    143   Fed.   829; 

74  C.  C.  A.  625 
Opinion  of  Atty.-Gen.,  18  Pa. 

Co.  Ct.  492 
Oppenheimer     v.      Boatman 

(1907),  1  Ch.  399 
Order   of   Chosen    Friends   v. 

Austeriitz,  75  111.  App.  75 
Oregon  Ry.  Co.  v.  Oregonian 

Ry.  Co.,  130  U.S.  1;  9  Sup. 

Ct.  409  36,  52,  836 

Oregon     Trust     &     Savings 

Bank,  156  Fed.  319 
Oregon,     etc.     Nav.     Co.     v. 

Balfour,  90  Fed.  295;    33 

C.  C.  A.  57 
Orearon    &    Transcontinental 

Co.  V.  Kilmers,  20  Fed.  717 
O'Reiley  v.  Kankakee  Valley 

Draining  Co.,  32  Ind.  169 
Oriental,    etc.    Steam   Co.    v. 

Briggs,  4  De  G.  F.  &  J.  191 
Ormerod's  Case,  25  W.  R.  765 

(1894),  2  Ch.  474 

,  5  Eq.  110 

Ormsby  v.   Vermont  Copper 

Mining  Co.,  56  N.  Y.  623 

1008,  1208 
Ornamental  Pyrograpiiic  Co. 

V.  Brown,  2  H.  &  C.  63  608 


866 

1351 

786 

894 

1171 


166 


80 
627, 


890 
1546 


526 

120 

1157 

662 


20 


300 

808 

94 

165 

1337 

363 

200 

665, 


Oroville,    etc.    R.    R.    Co.    v. 

Palmas  County,  37  Cal.  354       232 
Orr  V.   South   Ambov  Terra 

Cotta  Co.,  113  N.  Y.  App. 

Div.  103  1302,  1328 

Orrick  School  Dist.  v.  Dorton, 

125    Mo.    439;     28    S.    W. 

765  249 

Ortigosa  v.  Brown,  38  L.  T. 

145  686,  707,  707,  718,  762 

Osborn  v.  Gilliams,  33  N.  Y. 

Misc.  312;    68  N.  Y.  Supp. 

470 
Osborne  v.   Tunis,   25  N.   J. 

Law  633 
Osborne  Park  Land  &  Invest- 
ment Co.,  18  Vict.  L.  R.  515 
Oscar     Bonner    Oil     Co.     v. 

Pennsylvania        Oil        Co. 

(Cal.),  89  Pac.  613 
Osceola  Tribe  v.  Schmidt,  57 

Md.  98 
Osgood  V.  Iving,  42  Iowa  478 
Ossipee,     etc.     Mfg.     Co.     v. 

Canney,  54  N.  H.  295        109,  1 17, 

652,  868,  1408,  1409 

Otis  V.  Cullum,  92  U.  S.  447         1440 

V.  Gardner,  105  111.  436         723 

Ottawa  Dairy  Co.  v.  Sorley, 

34  Can.  Sup.  Ct.  508 
Ottawa   Union  Bldg.  Soc.  v. 

Scott,  24  Up.  Can.  Q.  B.  341 


1262 
398 


215 


1377 

577 
528 


211 


Ottawa,    etc.    R.    R.    Co.    v. 

Black,  79  111.  262 
Otter  V.  Brevoort  Petroleum 

Co.,  50  Barb.  (N.  Y.)  247 


583, 
590 

163 

163, 
649 


Otter  View  Land  Co.'s  Re- 
ceiver V.  Bowling's  Extx., 
24  Ky.  Law  Rep.  1157;  70 
S.  W.  834  614 

Otto     Electrical     Mfg.     Co. 

(1906),  2  Ch.  390  293 

Ottoman  Cahvey  Co.  v.  Dane, 

95  111.  203  379 

Ottos  Kopje  Diamond  Mines 

(1893),  1  Ch.  618       730,  731,  747, 
749,  752 

Ottumwa  Screen  Co.  v.  Stodg- 
hill,  103  Iowa  437;  72 
N.  W.  669  716 

Oudin,  etc.  Mfg.  Co.  v. 
Conlan,  34  Wash.  216;  75 
Pac.  798  1167 

Overend  &  Gurney  Co.  v.  Gibb, 

L.  R.  5  H.  L.  480  1273,  1274 

Overton  v.  Men^phis,  etc.  R.R. 

Co.,  10  Fed.  866  957 


cliv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Ovid  Elevator  Co.  v.  Secretary 
of  State,  90  Mich.  466;  51 
N.  W.  536  134 

Owen  V.  Sliepard,  59  Fed.  746; 

8C.  C.  A.  244  231,231,251 

Owen    &    Asliworth's    Claim 

(1901),  1  Cli.  115  1205,  1222, 

1259,  1343 

Owen  &  Co.  v.  Cronk  (1895), 

1  Q.  B.  265  1580 

Owens  V.  Atlanta  Trust,  etc. 

Co.,122Ga.521;50S.E.379       770 

Oxford  Bldg.  Society,  35  Ch. 

D.  502         1109,  1110,  1241,  1284, 

1333 

Oxford  Turnpike  Co.  v.  Bun- 
nell, 6  Conn.  552  716 


Pabst    V.    Goodrich    (Wise), 

113N.  W.  398  522,1145 

Pacific    Bank   v.    Stone,    121 

Cal.  202 ;  53  Pac.  634  1372 

Pacific  Fruit  Co.  v.  Coon,  107 

Cal.  447;    40  Pac.  542  524 

Pacific    Mill    Co.    v.    Inman, 

Poulsen  &  Co.  (Oreg.),  90 

Pac.  1099  491,  493 

Pacific  Nat.  Bank  v.  Eaton, 

141  U.  S.  227;    11  Sup.  Ct. 

984  154,  490 

Pacific  Northwest  Packing  Co. 

V.  Allen,  116  Fed.  312;    54 

C.  C.  A.  648  1627,  1630 

Pacific  R.  R.  Co.  v.  Ketchum, 

101  U.  S.  289  1636 
V.  Missouri  Pac.  Ry.  Co., 

Ill  U.  S.  505;    4  Sup.  Ct. 

583  968,  987, 1636 

V.  Seeby,  45  Mo.  212; 

100  Am.  Dec.  369  862,  864 

V.  Wade,  91  Cal.  449; 

27  Pac.  768;    13  L.  R.  A. 

754;  25  Am.  St.  Rep.  201  1616 
Pacific  Trust  Co.  v.   Dorsey, 

72  Cal.  55;    12  Pac.  49  645 

Pacific  Vinegar,  etc.  Works  v. 

Smith,  93  Pac.  (Cal.)  85       1276, 

1277 
V.  Smith.  145  Cal.  352 ; 

78  Pac.  550;    104  Am.  St. 

Rep.  42  1296,  1310,  1311 

Packard  v.  Old  Colonv  R.  R. 

Co.,  168  Mass.  92;  46  N.  E. 

433  161,  230 

Padstow  Total  Loss  &  Colli- 
sion Ass.  Ass'n,  20  Ch.  D. 

137  258 


Paducah    Land,    etc.    Co.    v. 

Hayes,    15  Ky.   Law  Rep. 

517;   24  S.  W.  237        1334,  1338, 

1339 
Paducah,  etc.   R.   R.   Co.  v. 

Parks,  86  Tenn.  554;  8  S. 

842  193,  633 

Page  V.  Austin,  10  Can.  Sup. 

Ct.  132  483,  483 

V.    International,    etc. 

Trust,  62  L.  J.  Ch.  610  1514 

Page    Belting   Co.    v.    Prince 

(N.  H.),  67  Atl.  401  806,  810, 

1130 
Pagin  and  Gill's  Case,  6  Ch. 

D.  681  643 

Paige  V.  Smith,  99  Mass.  395  1617 
Pain     V.     Soci^t^     St.     Jean 

Baptiste,    172    Mass.    319; 

52  N.  E.  502;    70  Am.  St. 

Rep.  287  586 

Paine  v.  Hutchison,  3  Ch.  388       782, 

785,  787,  787 

V.  Lake  Erie,  etc.  R.  R. 

Co.,  31    Ind.   283  1335 

Painesville,  etc.  R.  R.  Co.  v. 

King,  17  Oh.  St.  534  451,  1108 
Pakenham  Pork  Packing  Co., 

6  Ont.  L.  R.  582  178 

,  12  Ont.  L.  R.  100  1214 

Palliser  v.   Home  Telephone 

Co.  (Ala.),  44  So.  575  488,  488 
Palmer  v.  Bank  of  Zumbrota, 

72  Minn.  266;  75N.  W.380  480 
483,  486 

V.  Forbes,  23  111.  301         1496, 

1502,  1606 

V.  Hawes,  73  Wise.  46; 

40  N.  W.  676  1350,  1353 

V.  Pinkham,  33  Me.  32  25 

V.  Ring,  113  N.  Y.  App. 

Div.  643  1071 

Palmer's  Decoration,  etc   Co. 

(1904),  2  Ch.  743  1429 

Palysr.Jewett,32N.J.Eq.302  1616 
Panama,  etc.  Mail  Co.,  5  Ch. 

318  1393,  1395, 1519 

Pancoast r. Travelers'  Ins. Co., 

79  Ind.  172  852 

Panhandle     Nat.      Bank     v. 

Emerv,    78  Tex.   498;     15 

S.  W.'  23  86 

Panmure,  Ex  parte,  24  Ch.  D. 

367  175 

Pannebaker      v.      Tuscarora 

Valley  R.  Co.  (Pa.),  67  Atl. 

923  853 

Pant  on  and  the  Cramp  Steel 

Co.,  9  Ont.  L.  R.  3  746 


civ 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Panzl  V.  Battle   Island,  etc. 

Co.,  132  Fed.  607;  138  Fed. 

48  1356 

Parbury's  Case  (1896),  1  Ch. 

100  650,  650 

Pardee  v.  Aldridge,  189  U.  S. 

429;   23  Sup.  Ct.  514  1510 

Paris  V.  Paris,  10  Ves.  185         1141, 
1145,  1148 
Parish  V.  Wheeler,  22  N.  Y. 

494  844,  1510 

Park    V.    Grant    Locomotive 

Works,  40  N.  J.  Eq.  1 14 ;  3 

Atl.  162  1110,  1186,  1188 
V.  Modern  Woodmen  of 

America,   181   111.  214;    54 

N.  E.  932  282 
V.  New  York,  etc.  R.  Co., 

57  Fed.  799  1612, 1612 
V.  New  York,  etc.  R.  R. 

Co.,  64  Fed.  190 
V.  Zwart,  92  Iowa  37;  60 

N.  W.  220 
Park  Hotel  Co.  v.  Fourth  Nat. 

Bank,  86  Fed.  742;  30  C.  C. 

A.  409 
Parker  v.   Bethel  Hotel  Co., 

96  Tenn.  252 ;  34  S.  W.  209 ; 

31  L.  R.  A.  706  694,  1072 
V.  Dupree,  28  Tex.  Civ. 

App.  341;    67  S.  W.  185 

V.  Mason,  8  R.  I.  427 

V.  McKenna,  10  Ch.  96 

V.  New  Orleans  R.  R.  Co., 

33  Fed.  693  1502,  1511,  1520 

V.  Nickerson,  112  Mass. 

195  1306,  1331,  1332,  1332 

V.     Northern     Central 

Mich.  R.  R.  Co.,  33  Mich. 

23  169 
V.  River  Dam  Nav.  Co., 

1  De  G.  &  Sm.  192  976 
V.  Thomas,  19  Ind.  213; 

81  Am.  Dec.  385  185,  193 
V.  U.  S.  Bldg.,  etc.  Ass'n, 

19  W.  Va.  744  595 

,  Ex  parte,  2  Ch.  685  744 

Parkhurst    v.    Mexican,    etc. 

R.  R.  Co.,  102  111.  App.  507     172 

V.     Northern     Central 

R.  R.  Co.,  19  Md.  472;    81 

Am.  Dec.  648  1515,  1551 

Parkin  v.  Fry,  2  C.  &  P.  311  309 

Parkinson  v.  West  End  Street 

Ry.  Co.,  173  Mass.  446;  53 

N.  E.  891  1475, 1476 

Parks  V.  Gates,  84  N.  Y.  App. 

Div.  534;    82  N.  Y.  Supp. 

1070  337 


1574 
108 


84 


1619 

543 

1335 


Parmelee  v.  Associated  Physi- 
cians, etc.,  9  N.  Y.  Misc. 
458;    30  N.  Y.  Supp.  250 

Parmelee  Library,  120  Fed. 
235;   56  C.  C.  A.  583 

Parrott  v.  Byers,  40  Cal.  614 


1379 

44 
962, 
964 


Parsons   v.    Hayes,    14   Abb. 

N.  C.  419(N.  Y.)       331,969,1290 

V.  Jackson,  99  U.  S. 434       1410, 

1424,  1434,  1436 
V.  Little,  28  App.  D.  C. 

218  1585 
V.  Tacoma  Smelting,  etc. 

Co.,  25  Wash.  492;  65  Pac. 

765  57,  71,  1026,  1203,  1305, 

1312 
Partridge  v.  Badger,  25  Barb. 

(N.   Y.)    146  63,  917 

Patent  File  Co. ,  6  Ch.  83  65 

Patent  Invert  Sugar  Co.,  31 

Ch.  D.  166  487 

Patent  Ventilating  Co.,  Re,  12 

Ch.  D.  254  534 

Paton  V.  Northern  R.  R.  Co., 

85  Fed.  838 
Paton's  Case,  5  Ont.  L.  R.  392 


1659 
83, 
705 


Patrick  v.  Reynolds,  1  C.  B. 

N.  s.  727  308 

Pattberg  v.   Pattberg   Bros., 

55  N.  J.  Eq.  604;    38  Atl. 

205  1639 

Patterson  v.  Arnold,  45  Pa.  St. 

410  222,  240,  245,  245,  252, 

261 

V.  Robinson,  116  N.  Y. 

193;  22  N.  E.  372  ,  1373 

V.  Smelting  Works,  35 

Oreg.  96;   56  Pac.  407  1214, 

1215,  1296,  1317,  1344 

V.  Turner,  3  Ont.  L.  Rep. 

373  215 

Pattison  v.  Albany  Bldg.,  etc. 

Ass'n,  63  Ga.  373  222 

Paul  Boyer,  Ltd.,v.  Edwardes, 

17  Times  L.  R.  16  355,  356 

Paulino  v.  Portuguese  Bene- 
ficial Ass'n,  18  R.  I.  165; 
26  Atl.  36;  20  L.  R.  A.  272      374 

Pauly  V.  Coronada  Beach  Co., 

56  Fed.  428  76,  77 
V.  Pauly,  107  Cal.  8;   40 

Pac.  29;    48  Am.  St.  Rep. 
98       855,  1210,  1303,  1307,  1316, 

1377 

V.  State  Loan,  etc.  Co., 

165  U.  S.  606;    17  Sup.  Ct. 

465  622,  623,  810 


clvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Pawle's  Case,  4  Ch.  497  179 

Paxton  V.  Bacon  Mill,  etc.  Co., 

2  Nev.  257  280,  282 
V.  Heron  (Colo.),  92  Pac. 

15  918,  1203,  1322 

Paxton    Cattle    Co.    v.    First 

Nat.  Hiink,  21   Nebr.   02 1; 

33  N.  W.  271;    59  Am.  St. 

Rep.  852  288,  290 

Payn  v.  Mutual  Relief  Soc,  17 

.\bl).  N.  C.  (X.  Y.)  53  659 

Payne  v.  Bullanl,  23  Miss.  88; 

55  Am.  Dec.  74  518,  524 
V.  New  South  Coal  Co., 

10  Ex.  2S3  280 

Payne  &  Co.,  David  (1904),  2 

Ch.  60S  861,  1235,  1235,  1407 

Payne's  Case.  9  Eq.  223        763,  766 
Payson  v.  Stoever,  2   Dillon 

427  486,  1074,  1189 

V.  Withers,  5  Biss.  269        492, 

1189 
P.    B.    Mathiason    Mfg.    Co. 

(Mo.),    99    S.    W.    502  1006, 

1013,  1015,  1016,  1037,  1039, 
1040,  1046,  1060 
Peabody  v.  Flint,  6  Allen  52 

(Mass.)  935,  967 

Pearce  v.  Madison,  etc.  R.  R. 

Co.,  21  How.  441  838 

Pearly  v.  Smith,  3  Atk.  260     1442 
Pearson    v.    Concord    R.    R. 

Corp.,  62  N.  H.  537;  13  Am. 

St.  Rep.  590   57,  58,  75,  76,  944. 
9.59.  1082,  1306,  1312,  1326 
V.    London  &  Croydon 

Ry.  Co.,  14  Sim.  541  504 

V.  Tower,  55  N.  H.  215        1378 

Pearson's  Case,  3  De  G.  M.  & 

G.  241  309 

,  5  Ch.  D.  336       1337, 1338, 1339 

Peat  V.  Clayton  (1906),  1  Ch. 

659  713.  714,  714 

Peatman  v.  Centreville  Light, 

etc.  Co.,  100  Iowa  245;    69 

N.  W.  541  1408 

Peck  V.  Elliott.  79  Fed.  10;  24 

C.  C.  A.  425:    38  L.  R.  A. 

616  481.492.529.631 
V.  New  London  Mut.  Ins. 

Co.,  22  Conn.  575  1378 
V.  New  York.  etc.  Ry.  Co. , 

85  N.  Y.  246  1637 
V.  Peck,  33  Colo.  421 ;  80 

Pac.  1063  974,  982 

Peck  Bros.  &  Co.  v.  Peck 
Bros.  Co..  113  Fed.  291; 
51  C.  C.  A.  251         377,  377,  378. 

388 


Pcckham  v.  Dutchess  Co.  R.  R. 

Co.,    145    N.    Y.    385;     40 

N.  E.  15  1613 

V.  Mason,  8  R.  I.  427        1144 

V.  Newton,  15  R.  I.  321 ; 

4  Atl.  758  ^  380 
V.  Van  Wagenen,  83  N.  Y. 

40;    38  Am.  Rep.  392  1116 

Pedlar  v.    Road    Block   Gold 

Mines  (1905),  2  Ch.  427 


Peel  V.  London  &  N.  W. 

Co.  (1907),  1  Ch.  5 
Peel's  Case,  2  Ch.  074 


98,  99, 
99 

Ry- 

89.  89 
130.  177, 
214,  223 
Pegge  V.   Neath,  etc.  Tram- 
ways (1898),  1  Ch.  183  1416 
Peirce  v.  Burroughs,  58  N.  H. 

302  502 
V.  Com.,  104  Pa.  St.  150       1016 

V.    Monse-Oliver    BKlg. 

Co.,  47  Atl.  914  1196,1210 

V.    New   Orleans    Bldg. 

Co.,  9  La.  397;  29  Am.  Dec. 

448  1010,  1068 

V.  Van  Dusen,  78  Fed 


693 
Pell's  Case,  5  Ch.  11 


1618,  1619 
205.  206, 
634,  634 
191,  634 

490       294 


Pellatt's  Case,  2  Ch.  527 

Pelly,  Ex  parte,  21  Ch.  D. 

Peltoii  V.  Spider  Lake  Saw- 
mill, etc.  Co.  (Wise),  112 
N.  W.  29  1379,  1379 

Pender  v.  Lushington,  6  Ch. 

D.  70  933.  943,  947.  1014, 

1020.  1080,  1192 

Pendergast  v.  Bank  of  Stock- 
ton. 2  Sawy.  108  572 

Penderv  v.  Carleton,  87  Fed. 

41:   30  C.  C.  A.  510  199 

Pendleton  v.  Harris-Emery 
Co.,  124  Iowa  361;  100 
N.  W.  117  447 

Penfold  V.  Charlevoix  Sav. 
Bank,  140  Mich.  126;  103 
N.  W.  572  749 

Peninsular  Iron  Co.  ?'.  Eells, 

68  Fed.  24 ;  15  C.  C.  A.  189       1497 

Peninsular  Ry.  Co.  v.  Duncan, 

28  Mich.   130  208,  211,  212. 

213 

Penn  v.  Calhoun.   121   U.  S. 

251;  7Sup.  Ct.  906  1570 

Penn  Match  Co.  v.  Hapgood. 

141  Mass.  145;  7  N.  E.  22         284, 
285,  301 

Pennell  v.  Lathrop,  191  Mass. 

357  282,  283,  284 


clvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Penney  v.  Br^'^ant,  70  Nebr. 

127;    96  N.  W.  1033  1356 

Pennington  v.  Gittings,  2  Gill 

&  J.  (Md.)  208  713 

Pennock  v.  Coe,  23  How.  117       1502 
1527,  1556 

Pennsylvania  Co.  v.  Jackson- 
ville, etc.  Ry.  Co.,  55  Fed. 
131;   5C.  C.  A.  53  1598 

V.  Jacksonville,  etc.  Ry. 

Co.,  93  Fed.  60;  35  C.  C.  A. 

202  1641,  1642 

V.     Philadelphia,     etc. 

R.  R.  Co.,  36  Wkly.  Notes 

Cas.  (Pa.)  534  1461,  1596 

Pennsylvania  Co.  for  Ins.  v. 

Bauerle;   33  N.  E.  166  70 

Pennsylvania  Iron  Works  v. 

Mackenzie,  76  N.  E.  228  1126 
Pennsylvania    R.    R.    Co.    v. 

Allegheny  Valley  R.  R.  Co., 

42  Fed.  82  1625 
V.  Allegheny,  etc.  R.  R. 

Co.,  48  Fed.  139  1457,  1623 
V.  Jones,  155  U.  S.  333; 

15  Sup.  Ct.  136  1583 

V.  Pennsylvania  Co.  for 

Ins.,  etc.,  205  Pa.  St.  219; 

54  Atl.  783  1021,  1022 
V.  St.  Louis,  etc.  R.  R. 

Co.,  118  U.  S.  290;    6  Sup. 

Ct.  1094  838,  839,  841 

Pennsylvania     R.     R.     Co.'s 

Appeal,  86  Pa.  St.  80         720,  727, 

757 
Pennsylvania        Transporta- 
tion Company's  Appeal,  101 

Pa.  St.  576  1632,  1659 

Pennsylvania,  etc.  Navigation 

Co.  V.  Dandridge,  8  G.  &  J. 

(Md.)  248;  29  Am.  Dec.  543 

822,  826 
Penny,  Ex  parte,  8  Ch.  446       764, 
764,  764,  764,  764,  765 
Penobscot     R.     R.     Co.     v. 

Dummer,  40  Me.   172;    63 

Am.  Dec.  654  608,  610,  921 
V.  White,  41  Me.  512;  66 

Am.  Dec.  257  606,  608,  921, 

1213 
Penobscot,  etc.  R.  R.  Co.  v. 

Dunn,  39  Me.  587     600,  611,  1038, 
1201,  1224 
Penrose  v.  Martyr,  E.  B.  &  E. 

499  369 
Pentelow's  Case,  4  Ch.  178  165 
People  V.  Ah  Sam.  41  Cal.  645  230 
V.  Albany  Hospital,  61 

Barb.  (N.  Y!)  397  996 


People  V.  Albany  Medical  Col- 
lege, 26  Hun  348;  89  N.  Y. 
635  1200 

V.  Albany,  etc.  R.  R.  Co., 

55  Barb.  (N.  Y.)  344        998,  998, 
998,  1055,  1055,  1059 

V.  Am.  Bell  Tel.  Co.,  117 

N.  Y.  241;   22  N.  E.  1057 

V.  Am.  Ice  Co.,  104  N.  Y. 

Supp.  858 

V.    American    Inst.,    44 

How.  Pr.  468 

V.  Ballard,  134  N.  Y.  269; 

32  N.  E.  54;    17  L.  R.  A. 

737  51,  71 

V.  Batchelor,  22  N.  Y. 

128 

V.  Burnham,  104  N.  Y. 

Supp.  725;   106N.  Y.  Supp. 

57 
V.  Carter,  122  Mich.  668; 

81  N.  W.  924 

V.    Cataract    Bank,    5 

N.  Y.  Misc.   14;    25  N.  Y. 
Supp.  129 

V.    Chicago    Board    of 

Trade,  45  111-112 

V.     Commissioners     of 

Taxes,  23  N.  Y.  192 

V.  Conklin,  7  Hun  (N.  Y.) 

188 
V.  Crossley,  69  111.  195 


878 

890 

1034 


998 


920 
250 


897 
566 
416 


433 


V.  Cummings,  72  N.  Y. 


1206 
1040, 
1057 


996 
1024 


—  V.  Devin,  17  111.  84 

—  V.  Dole,  122  Cal.  486;  55 
Pac.  581 ;  68  Am.  St.  Rep. 
50 

—  V.  Duffy-Mclnnery  Co., 
106  N.  Y.  Supp.  878 

—  V.  Elmore,  35  Cal.  653 

—  V.  Equitable  Life  Ass. 
Soc,  109  N.  Y.  Supp.  453 

1285,  1287 

—  V.  Globe  Mut.  Life  Ins. 
Co.,  91  N.  Y.  174 

—  V.  Kjp,  4  Cow.  (N.  Y.) 
382  n. 

—  V.  La  Rue,  67  Cal.  526 


230 

163 
716 

1280, 


1242 


1031 
249, 
250 


—  V.  Lyon,  104  N.  Y.  Supp. 

319  1184,  1184 

—  V.  Milk  Exchange,  77 
Him  (N.  Y.)436;  29  N.  Y. 
Supp.  259  263 

—  V.  Montecito  Water  Co., 
97  Cal.  276;  32  Pac.  236; 
33Am.St.Rep.  172      118,119,219 


clviii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


People  V.  North  River  Sugar 

Refinery,    121   N.   Y.   582; 

24  N.  E.  834;  16  Am.  St. 

Rep.  84:3;  9  L.  R.  A.  33 
V.     Oakland  County 

Bank,  1  Doug.  (Mich.)  282 


79 

914, 
916 


V.  Peck,  11  Wend.  (N.  Y.) 

604;  27  Am.  Dec.  104   999,  1000 

V.     Phillips,     1     Denio 

(N.  Y.)  389  1066 
V.  Rose,  188  111.  268;  59 

N.  E.  432  23,  113 
V.  Rose,  219  111.  46;  76 

N.  E.  42         114,  374,  387 

V.    Runkle,    9    Johns. 

(N.  Y.)  147  1035,  1185,  1231 

V.  Self  ridge,  52  Cal.  331       104 

V.  Sterling  Mfg.  Co.,  82 

111.  457  559,  992,  993,  1232 

V.  Stockton,  etc.  R.  R. 

Co.,  45  Cal.  306;    13  Am. 

Rep.  178  219,  645 

V.    Throop,    12    Wend. 

(N.  Y.)  183  579,  906,  1251 

V.     Tibbets,     4     Cow. 

(N.  Y.)  358  1022,  1024,  1031, 

1249    1249 

V.  Tuthill,  31  N.  Y.  550    '  1065 

V.    Twaddell,    18    Hun 

(N.  Y.)  427  994,  998,  1010, 

1012,  1040,  1185 

V.  White,   11  Abb.   Pr. 

(N.  Y.)  168  1037 

People    ex    rel.    Althause    v. 

Giroux  Consol.  Mines  Co., 

107  N.  Y.  Supp.  188         899,  901, 

904 
People     ex    rel.     Barney    v. 

Whalen,  104  N.  Y.  Supp. 

555  53,  114,  114 

V.   Whalen,   106  N.  Y. 

Supp.  434  53,  114 

People    ex    rel.    Belknap    v. 
Beach,  19  Hun  (N.  Y.)  259         46, 
46,  47,  95,  103 

People  ex  rel.  Bernard  v. 
Cheeseman,  7  Colo.  376;  3 
Pac.  716  106,  119,  219 

People     ex     fel.     Bishop     v. 

Walker,  9  Mich.  328  894,  907 

People    ex    rel.    Blossom    v. 

Nelson,  46  N.  Y.  477  114,125 

People  ex  rel.  Board  of  Chari- 
ties V.  N.  Y.  Soc.  for  Pre- 
vention, etc.,  161  N.  Y.233; 
55  X.  E.  1063  22 

People  ex  rel.  Bosqui  v.  Crock- 
ett, 9  Cal.  112  578,744 


People  ex  rel.  Brooklyn  Gaa 
Co.  V.  Morgan,  114  N.  Y. 
App.  Div.  266  1103 

People  ex  rel.  Callanan  v. 
Keeseville,  etc.  R.  R.  Co., 
106  N.  Y.  App.  Div.  349; 
94  N.  Y.  Supp.  555  895,  901 

People  ex  rel.  Cantrell  v.  St. 
Louis,  etc.  R.  R.  Co..  176 
111.  512;  52  N.  E.  292;  35 
L.  R.  A.  656  449 

People  ex  rel.  Clason  v.  Nassau 
Kerry  Co.,  86  Hun  (N.  Y.) 
128;   33  N.  Y.  Supp.  244  903 

People  ex  rel.  Columbia 
Chemical  Co.  v.  O'Brien, 
101  N.  Y.  App.  Div.  296; 
91  N.  Y.  Supp.  649  373,  374, 

375 

People  ex  rel.  Copland  v. 
Minong  Min.  Co.,  33 
Mich.  2  1184 

People  ex  rel.  Davenport  v. 
Rice,  68  Hun  (N.  Y.)  24; 
22  N.  Y.  Supp.  631  125,  128, 

221 

People  ex  rel.  Deverell  v. 
Musical,  etc.  Union,  118 
N.  Y.  101 ;  23  N.  E.  129  580 

People  ex  rel.  Dodson  v.  Board 
of  Trade,  79  N.  E.  611;  224 
111.  370  580 

People  ex  rel.  Doyle  v.  N.  Y. 
Benevolent  Soc,  3  Hun  361 
(N.  Y.)  427,  580 

People  ex  rel.  Elliott  v.  N.  Y. 
Cotton  P'xchange,  8  Hun 
216  (N.  Y.)  576 

People  ex  rel.  Erie  R.  R.  Co.  v. 
Board  of  R.  R.  Comm'rs, 
105  N.  Y.  App.  Div.  273; 
93  N.  Y.  Supp.  584  119 

People  ex  rel.  Farnum  v.  San 
P'rancisco  Sav.  Co.,  72  Cal. 
199;     13  Pac.  498         1105,  1109 

People  ex  rel.  Felter  v.  Rose, 

225  111.  496;   SON.  E.  293       125, 

374 

People  ex  rel.  Gales  v.  Mc- 
Donough.  28  N.  Y.  Misc. 
652;   60  N.  Y.  Supp.  45  105 

People  ex  rel.  Harriman  v. 
Paton,  20  Abb.  N.  C.  (N.  Y.) 
172  901,902 

People  ex  rel.  Harriman  v. 
Paton,  20  Abb.  N.  C. 
(N.   Y.)    195  901,  906 

People  ex  rel.  Hart  r.  Phillips, 

1  Denio  (X.  Y.)  389  1031 


clix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


People  ex  rel.  Hatch  v.  Lake 
Shore,  etc.  R.  R.  Co.,  11 
Hun  (N.  Y.)  1  893,  894,  903, 

906 

People  ex  rcl.  Home  Life  Ins. 
Co.  V.  Home  Life  Ass.  Co., 
Ill  Mich.  405;  69  N.  W. 
653  379 

People  ex  rel.  Hunter  v.  Nat. 
Park  Bank,  107  N.  Y.  Supp. 
369  901 

People  ex  rel.  Jenkins  v. 
Parker,  etc.  Coal  Co.,  10 
How.  Pr.  (N.  Y.)  543  483 

People  ex  rel.  Leach  v.  Central 
Fish  Co.,  101  N.  Y.  Supp. 
1108  897,  897 

People  ex  rel.  Long  Island 
R.  R.  Co.  V.  Board  of  R.  R. 
Comm'rs,  75  N.  Y.  App. 
Div.  106;  77  N.  Y.  Supp. 
380  118 

People  ex  rel.  Lorge  v.  Con- 
solidated Nat.  Bank,  105 
N.  Y.  App.  Div.  409;  94 
N.  Y.  Supp.  173        899,  901,  903, 

904 

People  ex  rel.  Loy  v.  Mount 
Sliasta  Mfg.  Co.,  107  Cal. 
256;    40  Pac.  391  49,  50,  99 

People  ex  rel.  McDonald  v. 
LTnited  States  Mercantile 
Rep.  Co.  20  Abb.  N.  C. 
(N.  Y.)  192  901,  904,  906 

People  ex  rel.  Mcllhany  v. 
Chicago  Live  Stock  Exch., 
170  111.556;  48  N.  E.  1062; 
62  Am.  St.  Rep.  404;  39 
L.  R.  A.  373  570 

People  ex  rel.  Mclnnes  v. 
Columbia  Bag  Co..  103 
N.  Y.  App.  Div.  208;  92 
N.  Y.  Supp.  1084  896,  904, 

905 

People  ex  rel.  Meads  v.  Alplia 
Lodge,  13  N.  Y.  Misc.  677; 
35  N.  Y.  Supp.  214  .580,  1003 

People  ex  rel.  Moloney  v.  Pull- 
man Car  Co.,  175  111.  125; 
51  N.  E.  664;  64  L.  R.  A. 
366  76,  91 

People  ex  rel.  Mulr  v.  Throop, 

12  Wend.  (N.  Y.)  183       896,  906 

People  ex  rel.  New  York,  etc. 
R.  R.  Co.  V.  Public  Service 
Commission,  106  N.  Y. 
Supp.  968  645 

People  ex  rel.  N.  Y.,  etc.  R.  R. 
Co.  V.  R.    R.  Comm'rs,  81 


N.  Y.  App.  Div.  242;  81 
N.  Y.  Supp.  20;  175  N.  Y. 
516;  67N.  E.  1088  137,645 

People  ex  rel.   Onderdonk  v. 

Mott,  1  How.  Pr.  247  897 

People  ex  rel.  Peabody  v. 
Chicago  Gas  Trust  Co.,  130 
111.  268;  22  N.  E.  798;  17 
Am.  St.  Rep.  319;  8  L.  R. 
A.  497  47,  49,  57,  57,  75,  76,  76, 
114,  258,  263 

People  ex  rel.  Piatt  v.  Oak- 
land Co.  Bank,  1  Doug. 
(Mich.)  282  905 

People  ex  rel.  Plumas  County 

V.  Chambers,  42  Cal.  201  645 

People  ex  rel.  Probert  v. 
Robinson,  64  Cal.  373;  1 
Pac.  156  1010,  1017,  1023 

People  ex  rel.  Richmond  v. 
Pac.  Mail  S.  S.  Co.,  50 
Barb.  280  900 

People  ex  rel.  Schmitt  v. 
St.  Franciscus  Benev.  Soc, 
24  How.   Pr.   (N.  Y.)   216 

566,  580 

People  ex  rel.  Sclmrtz  v.  Cook, 
110  N.  Y.  443;  18  N.  E. 
1 13  1523 

People  ex  rel.  S.  Cohn  &  Co.  v. 
Miller,  180  N.  Y.  16;  72 
N.  E.  525  448 

People  ex  rel.  Stephens  v. 
Greenwood  Lake  Ass'n,  18 
N.  Y.  Supp.  491  1200 

People  ex  rel.  Stewart  v. 
Young  Men's,  etc.  Soc,  41 
Mich.    67  579 

People  ex  rel.  Stobo  v.  Eadie, 
63  Hun  320;  18  N.  Y. 
Supp.  53;  133  N.  Y.  573; 
30  N.  E.  1147  893,903 

People  ex  rel.  Thacher  v.  N.  Y. 
Commercial  Ass'n,  18  Abb. 
Pr.  (N.  Y.)  271  566,  580 

People  ex  rel.  Traders'  Fire 
Ins.  Co.  V.  Van  Cleave,  183 
111.  330;  55  N.  E.  698;  47 
L.  R.  A.  795  379 

People  ex  rel.  L^^nion  Trust  Co. 
V.  Coleman,  126  N.  Y.  433; 
27  N.  E.  818;  12  L.  R.  A. 
762  416 

People  ex  rel.  U.  S.  Grand 
Lodge  V.  Payn,  161  N.  Y. 
229;    55  N.  E.  849  125,  370 

People  ex  rel.  Van  Norman  v. 
Central  Car,  etc.  Co.,  41 
Mich.  166;  49  N.  W.  925         1120 


clx 


TABLE    OF    CASES 

[The  references  are  to  pages] 


People  ex  rel.  Venner  v.  N.  Y. 

Life   Ins.   Co.,    HI    N.    Y. 

App.   Div.   183;    97  N.  Y. 

Supp.  463  893 

People    ex     rel.     Wallace     v. 

Sterling    Mfg.   Co.,  82    111. 

457  562 

People  ex  rel.  Ward  v.  Green, 

116  Mich.  505;    74  N.  W. 

714  134,  138 

People  ex  rel.   Weatherly  v. 

Golden    Gate    Lodge,     128 

Cal.  257;   60  Pac.  865  117 

People's  Bank  v.  Gridley,  91 

111.  457  716 
V.  Kurtz,  99  Pa.  St.  344; 

44  Am.  Rep.  112  784 

V.  National   Bank,    101 

U.  S.  181  70 

V.  St.  Anthony's  Church, 

109  N.  Y.  512;  17  N.  E. 
408      1210,  1371,  1376,  1377, 

1379 

V.  Superior  Court,   104 

Cal.  649 ;      38     Pac.     452 ; 
43  Am.  St.  Rep.   147;    29 

L.  R.  A.  844  1041 

People's  Bank  of  Talbotton  v. 

Exchange    Bank,    116   Ga. 

820;   43  S.  E.  269;  94  Am. 

St.  Rep.  144  775,  775 

People's     Bldg.,     etc.    Ass'n 

V.  Purdy   (Colo.),  78    Pac. 

465  593 

People's  Home  Sav.  Bank  v. 

Rauer  (Cal.),  84  Pac.  329  622 

People's  Home  Savings  Bank 

V.   Rickard,    139  Cal.   285; 

73  Pac.  858  619,  763,  763 

People's  Home  Sav.  Bank  v. 

Sadler  (Cal.),  81  Pac.  1029       567, 
601,  625 
V.  Stadtmuller  (Cal.),  88 

Pac.  280  616,  782,  791 

People's  Inv.  Co.  v.  Crawford 

(Tex.),  45  S.  W.  738  957,  958 
People's   Mutual   Ins.   Co.   v. 

Westcott,  14  Gray  (Mass.) 

440  1003 

People's  Trust  Co.  v.  Brook- 
lyn,   etc.    R.    R.    Co.,    106 

N.  Y.  Supp.  782 ; 

App.  Div.  604 
People's  Trust  Co. 
113  N.  Y.  App. 

98  N.  Y.  Supp. 
V.  Schcnck.    106    N.   Y. 

Supp.  7S2;  121  N.Y.  App. 

Div.  604  1503, 1510 


1226 


121  N.Y. 

1503,  1510 

V.  Papst, 
Div.  375; 
1045  1329 


Peoria  Star  Co.   v.  Cutright, 

115  111.  App.  492  853 

Peoria,    etc.     R.    R.    Co.    v. 

Thompson,  103  111.  187  1403, 

1437,  1496,  1627 
Peoria,  etc.  Ry.  Co.  v.  ('oster, 

97  Fed.  519  1006 

Pepe  V.  City,  etc.  Bldg.  Soc. 

(1893),  2  Ch.  311  578,586 

Pepper  v.  Addicks,  153  Fed. 

383  1331 

V.  Chambers,  7  Ex.  226        889 

Percival  v.  Wright  (1902),  2 

Ch.  421  1351,  1351,  1352 

Percy  v.  Millaudon,  3  La.  568      516, 

519,  1286 

V.    Millaudon,    8    Martin 

N.  s.  (La.)  68  1274 

Pere  Marquette  R.  R.  Co.  v. 
Graliam,  136  Mich.  444; 
99  N.  W.  408  1503 

Perkins  v.  Bradley,  24  Vt.  66      1379 

V.  Hatch,  4  Hun  (N.  Y;) 

137  250 

V.  Lyons,  111  Iowa  192; 

82  N.  W.  486       695,  698,  699,  699, 

716 

V.    Northern    Pac.    Ry. 

Co.,  155  Fed.  445  937,  969 

V.  Rouss,  78  Miss.  343 ; 

29  So.  92  306 

V.    Trinity    Realty    Co. 

(N.  J.  Ch.),  61  Atl.  167  857 

Perkins  Co.  v.  Shewmake,  119 

Ga.  617;    46  S.  E.  832  383 

Perkins,  Re,  24  Q.  B.  D.  613        775, 

795,  796,  797 

Perrett,  Ex  -parte,  15  Eq.  250       171, 

385 
Perris    Irrigation    District   v. 

Thompson.  116  Fed.  832         1343 
Perry  v.  Barnet,  15  Q.  B.  D. 

388  780 

V.    Council    Bluffs,    etc. 

Co..  67  Hun  (N.  Y.)  456; 

22  N.  Y.  Supp.  151  591 

V.  House  of  Refuge,  63 

Md.  20:    52  Am.  Rep.  495        869 

V.  Little  Rock,  etc.  Ry. 

Co.,  44  Ark.  3S3  293 

V.    Oriental    Hotels,    12 

Eq.  127  1599 

V.  Oriental  Hotels,  5  Ch. 

420  1598 

V.  Tuskaloosa.  etc.  Co., 

93  Ala.  364;  9  So.  217     1040, 

1206.  1250,  1331 

Perr\''s  Case,  34  L.  T.  716    1279, 

1280,  1336 


rlxi 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Person  &  Riegel  Co.  v.  Lipps 

(Pa.),  67  Atl.  1081      416,  486,  489 
Perth       Electric     Tramways 

(1906),   2   Ch.   216       1410,    1418, 
1432,  1473,  1473 
Peru  Plow,  etc.  Co.  v.  Harker, 

144  Fed.  673;    75  C.  C.  A. 

475 
Peruvian  Guano  Co.   (1894), 

3  Ch.  690 
Peruvian  Ry.  Co.,  19  L.  T.  803 

1215,  1370 
Peruvian  Rys.  Co.  v.  Thames, 

2  Ch.  617  97,  1187 

Peshtigo  Co.  v.  Great  West- 
ern Tel.  Co.,  50   111.  App. 

624 
Peter  v.  Union  Mfg.  Co.,  56 

Oh.  St.  181 ;   46  N.  E.  894 
Peterborough    R.    R.    Co.    v. 

Nashua,  etc.  R.  R.  Co.,  59 

N.  H. 385 
Peters  v.  Union  Biscuit  Co., 

120  Fed.  679 
Petersburg,   etc.    Ins.    Co.   v. 

Dellatorre,  70  Fed.  643;   17 

C.  C.  A.  310 
V.     Lumsden,    75    Va. 

327  769,  770,  771 

Peterson  v.  Chicago,  etc.  Ry. 

Co.,  205  U.  S.  364 
Petty  V.   Hayden,   115   Iowa 

212;   88  N.  W.  339 
Peveril    Gold    Mines    (1898), 

1  Ch    122 
Pew  V.  First  Nat.  Bank,  130 

Mass.  391 
Pfeiffer  v.   Landsberg  Brake 

Co.,  44  Mo.  App.  59       1247,  1248 
Pfister  V.   Gerwig,    122    Ind. 

567;    23  N.  E.   1041       560,  561, 
571,  593 
V.   Milwaukee,  etc.   Ry. 

Co.,  83  Wise.  86;  53  N.  W. 

27 
Phelan  v.  Hazard,  5  Dillon  45 
Phelps  V.  Farmers',  etc.  Bank, 

26  Conn.  269  1133,  1156 

V.  Lyle,  10  A.  &  E.  113       1180 

V.  Town  of  Lewiston,  15 

Blatchf.  131 
Philadelphia  Construction  Co. 

V.  Cramp,  138  Fed.  999;   71 

C.  C.  A.  253 
Philadelphia     Loan     Co.     v. 

Towner,  13  Conn.  249 
Philadelphia  Lying-in  Charity 

V.   Maternity  Hospital,  29 

Pa.  Super.  Ct.  420 


833 

1241 
76, 


77 
627 


629 
1356 


1655 


878 
228 
563 


1248 


1402 
634 


1460 


352 
865 


129 


Philadelphia    Nat.    Bank    v. 

Smith,  195  Pa.  St.  38;    45 

Atl.  655  730 

Philadelphia  Trust,  etc.   Co. 

V.   Philadelphia  Trust  Co., 

123  P^ed.  534  369,  372,  379,  387 
Philadelphia  Trust,  etc.  Co.'s 

Appeal  (Pa.),  16  Atl.  734  1147 
Philadelphia,   etc.    Ferry  Co. 

V.  Intercity  Link  R.  R.  Co. 

(N.  J.),  62  Atl.  184  140 

Philadelphia,  etc.  R.  R.  Co. 

V.  Co  well,  28  Pa.  St.  329; 

70  Am.  Dec.  128  1122,  1351 
V.  Fidelity  Ins.  Co.,  105 

Pa.  St.  216  1447 
V.  Hickman,  28  Pa.  St. 

318  188,  525,  634,  921 
V.  Johnson,  54  Pa.   St. 

127  1459. 1528 
V.   Knight,   124  Pa.  St. 

58;  16  Atl.  492  1449,1450,1460 
V.  Lewis,  33  Pa.  St.  33; 

75  Am.  Dec.  574  1409 

V.  Smith,  105  Pa.  St.  195  1449, 

1450,  1451,  1460 
V.  Woelpper,  64  Pa.  St. 

366;  3  Am.  Rep.  596   1503, 1527, 

1551 
Philadelphia,  etc.  R.  R.  Co.'s 

Appeal,  4  Am.  &  Eng.  R.  R. 

Cases  118  (Pa.)  68,  1398 

Philadelphia,  etc.  Ry.  Co.  v. 

Quigley,  21  How.  202  869 

Phillips  V.  Coffee,  17  111.  154; 

63  Am.  Dec.  357  '  406 
V.  Eastern  R.  R.  Co.,  138 

Mass.  122  451,  1107 
V.  Melbourne,  etc.  Candle 

Co.,  16  Vict.  L.  R.  Ill  1095, 
1098,  1101 
V.  Providence  Steam  En- 
gine Co.,  21  R.  I.  302;    43 

Atl.  598 ;  45  L.  R.  A.  560  72, 1076 
V.  Southern  Division,  etc. 

R.  R.  Co.,  22  Ky.  Law  Rep. 

1530;  60  S.  W.  941  1594 
V.    Wickham,     1    Paige 

(N.  Y.)  590  1040,  1066 
V.  Winslow,  18  B.  Monr. 

(Ky.)   431;     68  Am.    Dec. 

729  1503,  1520,  1551 

Phillips  Academy  v.  King,  12 

Mass.  546  54 

Phinizy  v.  Augusta,  etc.  R.  R. 

Co.,  62  Fed.  678  1187 
V.  Augusta,  etc.  R.  R. 

Co.,  62  Fed.   771         1575,    1641, 

1642 


clxii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Phinizy  v.  Augusta,  etc.  R.  R. 

Co.,  63  Fed.  922  1543 
V.  Aufjusta,  etc.  R.  Co., 

98  Ved.  770  1490,  1492 

Phoenix  JJessemer  Co.,  44  L.  J. 

Cli.  G83  66 

Phcenix  Electric  Light  Co.,  31 

W.  R.  398  1039 

Phoenix  Iron  Co.  v.  Com.,  113 

Pa.  St.  563;    6  Atl.  75      894,  895, 

904 
Phoenix  Iron  \Vork.s  v.  New 

York    Security,    etc.    Co., 

83  Fed.  757;    28  C.   C.  A. 

76  1537 

Phoenix  Life  Ass.  Co.,  2  Johns. 

&  H.  441  830,  862 

PhcEnix  Warehousing  Co.  v. 

Badger,  67  N.  Y.  294     600,  609, 

633 
Phosphate    of    Lime    Co.    v. 

Green,  L.  R.  7  C.  P.  43  526 

Phosphate     Sewage     Co.     v. 

Hartmont.  5  Ch.  D.  394  315,315 
Picard  v.  East  Tennessee,  etc. 

R.  R.  Co.,  130  U.  S.  637;  9 

Sup.  Ct.  640  1521 

Picard  v.  Hughev,  59  Oh.  St. 

577;  51  N.  E.'l33  133,  141,  141 
Pickens  Tp.  v.  Post,  99  Fed. 

659  1434,  1435 

Pickering  v.   Stephenson,   14 

Eq.  322  1267 

Pickering  v.   Townsend,    118 

Ala.  351;    23  So.  703  1566 

Pierce  v.  Emery,  32  N.  H.  484  1520, 
1537,  1549,  1550,  1550 
Pierce  v.  Old  Dominion,  etc. 

Smelting  Co.,  67  N.  J.  Eq. 

399;    58  Atl.  319  1305 

Pierson  v.  Morgan,  17  N.  Y. 

av.    Proc.    Rep.     124;     4 

N.  Y.  Supp.  898  1284,  1285 
V.  Morgan,  20  Abb.  n.  c. 

(N.  Y.)  428  ^_  1288 

Pietsch  V.  Krause,  116  Wise. 

344;  93  N.  W.  9  154,979 
V.  Milbrath,  101  N.  W. 

388;    102  N.  W.  342;    123 

Wise.  647:  107  Am.  St.  Rep. 

1017  274,322,327,330,331, 

981 
Pike  V.  Bangor,  etc.  R.  R.  Co., 

68  Me.  445  602.  602,  1214 

Pike  Co.  V.  Rowland,  94  Pa. 

St.  238  1210 

Pilbrow  V.  Pilbrows  Atmos- 
pheric,   etc.    Co.,  5  C.   B. 

440  235,  240 

cl 


Pillsbury  v.  Consolidated,  etc. 

Ry.  Co.,  69  Me.  394  1493 

Pinchback  v.  Bessemer  Min- 
ing, etc.  Co.,    137  N.  Car. 

171;   49  S.  E.  106  918 

Pine  V.   Western  Nat.   Bank, 

63  Kans.  462;  65  Pac.  (390  700 
Pine  Beacli,  etc.  Corp.  v.  Co- 
lumbia     Amusement      Co. 

(Va.),  56  S.  E.  822  591 

Piiiet  et  Cie  v.  Maison  Louis 

Pinet  (1898),  1  Ch.  179  378 

Pinkerton  v.  Manchester,  etc. 

R.  R.  Co.,  42  N.  H.  424     423,  699, 

717 
V.    Pa.    Traction    Co., 

193  Pa.   St.  229;    44  Atl. 

284  123,  123 

Pinkett  v.  Wright,  2  Hare  120  765 
Pinkney  &  Sons  S.  S.  Co.,  Re 

(1892),  3  Ch.  125  544 

Pinkus  V.  Minneapolis  Linen 

Mills,  65  Minn.  40;  67  N.  W. 

643  966 

Pinney  v.  Nelson,  183  U.  S. 

144;   22  Sup.  Ct.  52  103 

Pioneer  Paper  Co.,  36  How. 

Pr.  (N.  Y.)  Ill  1025,  1027 
V.   36  How.  Pr.  (N.  Y.) 

105  1055,  1055,  1056 

Piper  V.  Chappell,  14  M.  &  W. 

624  582 

V.  Rhodes.  30  Ind.  309        107 

Pitcher  v.  Lone  Pine-Surprise, 

etc.  Co.,  39  Wash.  608;   81 

Pac.  1047  968 

Pitchford  v.   Davis,  5  M.   & 

W.  2  608 

Pitot  V.  Johnson,  33  La.  Ann. 

1286  684,  715,  770 

Pitts  V.  Steele  Mercantile  Co., 

75Mo.  App.  221  271,287,289 
Pittsburgh  Const.  Co.  v.  West 

Side   Belt  R.   R.   Co.,   154 

Fed.  929  865 

Pittsburg    Mining    Co.    v. 

Spooner,  74  Wise.  307;    42 

N.  W.  259;  17Am.  St.  Rep. 

149  326,  326 

Pittsburg  Sheet  Mfg.  Co.  v. 

Beale.  204  Pa.  St.  85;    53 

Atl.  540  253 

Pittsburgh,    etc.    Mining   Co. 

V.  Quintrell.  91  Tenn.  693; 

20  S.  W.  248  280,  284,  287, 

287 
Pittsburgh,  etc.  R.  R.  Co.  r. 

Applegate.  21  W.  Va.  172  921 
V.  Biggar,  34  Pa.  St.  455      191 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Pittsburgh  r.  Clarke,  29  Pa.  St. 

140  GOO,  G20,  707,  774,  912, 
912,  917 
1'.  County  of  Allegheny, 

03   Pa.   St.    120         450,  450,  457, 

1108 
Pittsburg,    etc.    Ry.    Co.    v. 

Dodd,   72  S.   W.   822;    74 

S.  W.  1090:    115  Ky.  170; 

24  Ky.  Law  Rep.  2057;   25 

Ky.  Law  Rep.  255         938,  1082, 

1300 
Pittsburgh,    etc.    Ry.   Co.   v. 

Fierst.  90  Pa.  St.  144  1523,  1034 
Pitt-sburgh  Ry.  Co.  v.  Keokuk, 

etc.  Bridge  Co.,  131  U.  S. 

371 ;   9  Sup.  Ct.  770  1233 

Pittsburgh,   etc.    Ry.   Co.   v. 

Lightheiser(Ind.),78N.  E. 

1033  220 
V.     Long     Island,     etc. 

Trust  Co.,  172U.  S.  493;  19 

Sup.  Ct.  238  1497 
V.  Lynde,  55  Oh.  St.  23; 

44  N.  E.  590  1410,  1424,  1430, 
1437,  1530 
V.  Plummer,  37  Pa.  St. 

413  014 

Pittston  Engine,  etc.  Co.,  11 

Pa.  Co.  Ct.  182  124 

Pi.xley  V.  Western  Pac.  R.  R. 

Co.,  33  Cal.   183;    91  Am. 

Dec.  023  807 

Place  V.  People,  87  111.  App. 

527  1208 

Plank  Road  Co.  v.  Young,  12 

Md.  470  228 

Plankinton  v.  Hildebrand,  89 

Wise.  209 ;  01 N.  W.  839  083,  809 
Plant     Seed     Co.     v.     Michel 

Plant  &  Seed  Co.,  37  Mo. 

App.  313  371 

Planters',  etc.  Bank  v.  Pad- 
gett, 09  Ga.  159  237,  252 
Planters',    etc.     Ins.    Co.    v. 

Selma  Sav.  Bank,  03  Ala. 

585  775 

Pla^iuemines,  etc.  Co.  v.  Buck, 

52  N.  J.  Eq.  219;    27  Atl. 

1094  319,  322 

Plnskynaston    Tube    Co.,    23 

Ch.  D.  542  028 

Piatt  V.  Birmingham  Axle  Co., 

41  Conn.  2.55  051,  775 
V.  New  York,  etc.  Ry. 

Co.,03N.  Y.  App.  Div.  401; 

71  N.  Y.  Supp.  913  1515,  1599 
V.  Philadelphia,  etc.  R. 

R.  Co.,  05  Fed.  000  1021 


1000 


237 
155 

010, 


Piatt    V.     Philadelphia,    etc. 

R.  R.  Co.,  05  Fed.  872 
V.  Philadelphia,  etc.  R. 

R.   Co.,   84  Fed.   535;    28 

C.  C.  A.  488  1012,  1012 

Platte  Valley  Bank  v.  Hard- 
ing, 1  Nebr.  401 
PlimsoU's  Case,  24  L.  T.  053 
Plumb  V.  Bank  of  Enterprise, 

48  Kans.  484;   29  Pac.  099 

018,  093,  098,  099 
Plumbe  V.  Neild,  29  L.  J.  Ch. 

GIS  1141,  1141 

Plymouth  Bank  v.   Bank  of 

Norfolk,    10   Pick.    (Mass.) 

454  690,  700 

Pneumatic  Gas  Co.  v.  Berry, 

113  U.  S.  322;    5  Sup.  Ct. 

525  1267,  1301,  1340 

Poclielu  V.    Kemper,    14   La. 

Ann.  308;   74  Am.  Dec.  433 
Pocono    Spring,    etc.    Co.    v. 

Am.  Ice  Co.,  214  Pa.  040; 

64  Atl.  398 
Pokrefky  v.  Firemen's  Fund 

Ass'n,    121   Mich.   450;    80 

N.  W.  240 
Poland  V.   Lamoiville  Valley 

R.  R.  Co.,  52  Vt.  144      1517,  1542, 
1559,  1669 
Polhemus  v.  Fitchburg  R.  R. 

Co.,    123    N.    Y.    502;     26 

N.  E.  31  1509 

V.    Holland    Trust  Co., 

61  N.  J.   Eq.  654,  47  Atl. 

417  1412,  1412 
V.  Polhemus,  114  N.  Y. 

App.  Div.  781 ;    100  N.  Y. 

Supp.  263  936,  941,  1271,  1287 
Polish  Nat.  Catholic  Church, 

31  Pa.  Super.  Ct.  87  129,  129 
Pollitz  V.   Farmers'   L.   &  T. 

Co.,  53  Fed.  210  1486 

Pollock  V.  National  Bank,  7 

N.  Y.  274;  57Am.  Dec.  520  754, 
755   755 

V.  Pollock,  18  Eq.  329        1157 

Pond  V.  Nat.  Mtge  &  Deben- 
ture Co.,  6  Kans.  App.  718; 

50  Pac.  973 

V.  Vermont,  etc.  R.  R. 

Co.,  Fed.  Cas.  No.  11,  204 

(p.  975)  998,  1250 

V.  Vermont,  etc.  R.  R. 

Co.,  19  Fed.  Cas.  908  1326 

Pontet  V.   Basingstoke  Canal 

Co.,  3  Bing.  N.  c.  433  1528 

Poock     V.     Lafayette     Bldg. 

Ass'n,  71  Ind.  357  852 


234 


43 


584 


1375 


cl-xiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Pool's  Case,  35  Cli.  D.  579  G41 

Poole  V.  Middleton,  29  Heav. 

646  _  767,  785,  7S7,  787 

V.    Xatiorial    Bank    of 

China  (1907).  A.  C.  229      530,  530, 

532,  533,  535,  536,  537, 
539 
r.  West  Point,  etc.  A.ss'n, 

30  Fe<!.  513         108,  109,  492,  838 
Pooley  Hall  Colliery  Co.,   IS 

W.  R.  201  1244 

Poor  V.  Iowa  Central  Ry.  Co., 

155  Fed.  226  938,  969 

Pope  V.  Merchants'  Trust  Co. 

(Tenn.),  103  S.  W.  792       140,  490. 

492 
Pope's  Case,  30  Fed.  169       1618, 

1619 
Porch  V.   Agnew  Co.    (N.   J. 

Ch.),  61  Atl.  721  293,  1497 

Porstewart      Tramway      Co. 

(1896),  1  I.  R.  265  1601 

Port  V.  Russell,  36  Ind.  60; 

10  Am.  Rep.  5  1295 

Port  Edwards,  etc.  Ry.  Co.  v. 

Arpin,    80   Wise.    214;     49 

N.  W.  828  138 

Port  Huron,  etc.  Rv.  Co.  v. 

Jud?e,  31  Mich.  4o6  958 

Port  Townsend  Nat.  Bank  v. 

Port   Townsend    Gas,    etc. 

Co.,  6  Wash.  597;    34  Pac. 

155  715 

Portage,  etc.  Ins.  Co.  v.  Wet- 
more,    17    Oh.    Rep.    330       1378 
Portal  V.  Emmons,  1  C.  P.  D. 

664  1173,  1175 

Porter  v.  Androscoggin,  etc. 

R.  R.  Co.,  37  Me.  349        397,  402 

V.  Lassen,  etc.  Co.,  127 

Cal.  261 ;    59  Pac.  563  1203, 

1205,  1205,  1217,  1298 

V.    Pittsburg    Bessemer 

Steel  Co..  120  U.  S.  649;    7 

Sup.  Ct.  741  1084,  1566 

t;.  Plymouth  Gold  Min- 
ing Co..  29  Mont.  347;  74 
Pac.  938;   101  Am.  St.  Rep. 

569  191,  517 

V.    Robinson,    30    Hun 

(N.  Y.)  209  1199 

V.  Sabin,  36  Fed.  475      960 

V.  Sabin.  149  U.  S.  473; 

13  Sup.  Ct.  1008  960,  960 

Portland,  etc.  Turnpike  Co.  v. 

Bobb,88Ky.  226;   10  S.  W. 

794  126 

Portsmouth    Tramways    Co. 

(1892),  2  Ch.  362  159S 


Portuguese     Consolidated 

Mines,  42  CIi.  D.  160       1 175,  1 198, 
1206.  1230 
Portuguese        Consolidated 

Copper  Mines,  45  Ch.  D.  16     1218 
Posner  v.  Southern  Exhaust, 

etc.  Co.,  109   La.    658;    33 

So.  641  425,1110 

Possell  V.   Smith   (Colo.),  88 

Pac.  1064  288,  1235 

Post  V.   Beacon,  etc.  Co.,  84 

Fed.  371;  28  C.  C.  A.  431  72, 

966 
Postage     Stamp,     etc.     Co. 

(1892),  3  Ch.  566  1336,  1339 

Potomac  Mfg.  Co.  v.  Evans, 

84  Va.  717;    6  S.  E.  2  1461 

Pott  V.   Schmucker,   84   Md. 

535;    36  Atl.  592;    57  Am. 

St.  Rep.  415;    35  L.  R.  A. 

392  882,  884 

Potter  V.  N.  Y.  Infant  Asylum, 

44  Hun  (N.  Y.)  367  1373 

Potts  V.  Rose  Valley  Mills,  167 

Pa.  St.  310;    31  Atl.  655       1185, 

1239 
V.  "Wallace,  146  U.  S.  689; 

13  Sup.  Ct.  196 

V.  Wallace,  32  Fed.  272 

Pottsville  Bank  v.  Minersville 

Water  Co.,  211  Pa.  566;  61 

Atl.  119 
Poughkeepsie,     etc.     Co.     v. 

Griffin,  24  N.   Y.    150       209,  212 
Poultney     v.     Bachman,     31 

Hun  (N.  Y.)  49         586,  586,  948 
Pound,     Son     &     Hutchins, 

Henry,  42  Ch.  D.  402 
Powell  V   Blair,   133  Pa.  St. 

550;    19  Atl.  559 
V.  Georgia,  etc.  Ry.  Co., 

121  Ga.  803;  49  S.  E.759 
V.  London  &  Provincial 

Bank  (1893),  2  Ch.  555 

761,  762 
V.  Murray,  3  N.  Y.  App. 

Div.  273;    38  N.  Y.  Supp. 

233  43 
V.  Murray,  157  N.  Y.  717; 

53  N.  E.  1130  43 

Powers  V.  Blue  Grass  Bldg., 

etc.  Ass'n,  86  Fed.  705      958,  959. 
1183,  1188 
V.  Schlicht  Heat,  etc.  Co., 

23  N.  Y.  App.  Div.  380;  48 

N.Y.  Supp.  237;   165  N.  Y 

662;  59  N.  E.  1129 
Powis  V.  Harding,  1  C.  B.  N.  s 

533 


526 
430 


32 


1581 
629 
277 
685, 


591 


925 


clxv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


C.  B.  16         1235 
Smith,    58 

113,  852 
J.  Eq.  479       723, 
725,  798 
Pratt  V.   American  Bell  Tel. 
Co.,  141  Mass.  225;  5  N.  E. 
337;   55  Am.  St.  Rep.  465 


Powlcs  V.  Page,  3 
Prairie   Lodge   v. 

Miss.  301 
Prall  V.  Tilt,  28  N. 


—  V.  Douglas,  38  N.  J.  Eq. 
516 

—  V.  Eaton,  79  N.  Y.  449 

—  V.  >Ierriden  Cutlery  Co., 
35  Conn.  36 

—  V.  Oshkosh  Match  Co.,  89 
Wise.  406;  62  N.  W.  84 


501, 
1477 

1149 

87 

905 

285, 
290 


V.  Pratt,  Read  &  Co.,  33 

Conn.  446  1110,  1111 
V.  Taunton  Copper  Co., 

123  Mass.  110;  25  Am.  Rep. 

37  754,  757 
V.  Short,  79  N.  Y.  437; 

35  Am.  Rep.  531  87,  865 
Pray  v.  Mitchell,  60  Me.  430  422 
V.  Todd,  71  N.  Y.  App. 

Div.  391 ;   75  N.  Y.  Supp. 

947  692,  695 

Prefontaine  v.  Grenier  (1907), 

A.  C.  101  1273,  1278 

Prendergast  v.  Turton,  1  Y.  & 

C.  Ch.  98  665 

Prentiss  Tool  &  Supply  Co.  v. 

Godchaux,  66Fed.  234;   13 

C.  C.  A.  420  917,  918 

Presbyterian  Congregation  v. 

Carlisle  Bank,  5  Pa.  St.  345  813 
Prescott  Nat.  Bank  v.  Butler, 

157  Mass.  548;     32    N.    E. 

909  845,  851 

Preservation  Syndicate  (1895), 

2  Ch.  768  644 

President,  etc.  of  Georgetown 

College  V.  Browne,  34  Md. 

450  55 

President,    etc.    of    Hanover 

Saxnngs   Fund  v.   Suter,   1 

Md.  502  381 

Preston  v.  Grand  Collier  Dock 

Co.,  11  Sim.  327  176,  620 
V.  Liverpool,  etc.  Ry.  Co., 

5  H.  L.  C.  605  281,  281 

V.    Loughran,   58    Hun 

(N.  Y.)210;  12N.Y.  Supp. 

313  1318,  1324,  1344 
V.  Melville,  16  Sim.  163       1141 

V.  Northwestern  Cereal 

Co.,  67Nebr.  45;  93  N.  W. 

136  84 


Preston  Nat.  Bank  v.  Smith, 
etc.  Purifier  Co.,  84  Mich. 
364;   47  N.  W.  502  1381 

Price   V.    Anderson,    15   Sim. 

473  1141 

V.  Cover,  40  Md.  102   418,  807 

V.    Grand  Rapids,  etc. 

R.  R.  Co.,  13  Ind.  58      1202, 

1217 

V.  Holcomb,  89  Iowa  123; 

56  N.  W.  407  1018 

V.  Morning  Star  Mining 

Co.,  83  Mo.  App.  470       514,  1130, 
1131,  1134,  1507 

V.  Price,  6  Dana  (Ky.) 

107 

Price's  Appeal,  106  Pa.  St.  421 


420 
653, 
653 


V.   Citizens  Mut.   Fire 
Co.,   3   Allen    (Mass.) 


Priest 

Ins. 

602  589 
V.  Glenn,  51  Fed.  400;  2 

C.  C.  A.  305  386 

Prince  Investment  Co.  v.  St. 

Paul,    etc.    Land    Co.,    68 

Minn.  121;   70  N.  W.  1079       697, 
774,  775 
Prince  of  Wales  Co.  v.  Hard- 
ing, E.  B.  &  E.  183  395,  1221 
Printing  Telegraph  News  Co. 

V  .  Brantingham,  77  N.  Y. 

App.  Div.  280;    79  N.  Y. 

Supp.  190  714,  733 

Pritchard's  Case,  8  Ch.  956         640, 
641,  641 
Pritchett  v.   Nashville  Triist 

Co.,96Tenn.  472;  36  S.  W. 

1064;  33L.  R.  A.  856  1150 

Proctor  Coal  Co.  v  Finley,  98 

Ky.  405;  33  S.  W.  188       998,  998, 
1013,  1015,  1015,  1039 
Produce  Exchange  Trust  Co. 
V.  Bieberbach,   176  Mass. 

577;  58N.  E.  162  592 

Pronick  v.  Metropolitan  Trust 

Co.,67N.  Y.  App.  Div.  616; 

74  N.  Y.  Supp.  577  1487 
V.    Spirits    Distributing 

Co.,   58  N.  J.  Eq.  97;    42 

Atl.  586  134,  138,  446 

Proprietors    of    Cabot,    etc. 

Bridge  v.  Chapin,  6  Cush. 

(Mass.)  50  607 

Proprietors  of  City  Hotel  v. 

Dickinson,  6  Gray  (Mass.) 

586  610 

Proprietors     of     Stourbridge 

Canal  v.  Wheeley,  2  B.  & 

Ad.  792  35 


clxvi 


TABLE   OF    CASES 

[The  references  are  to  pages] 


Prospect  Worsted  Mills,   126 

Fed.  1011  84 

Protection    Life    Ins.    Co.    v. 

(Jsgood,  93   111.  69  753 

Prouty  V.  Michigan,  etc.  R.R. 

Co.,"  1  Hun  (N.  Y.)  655       443,  460, 
467,  475 

Provident  Bldg.  &  Loan  Ass'n, 
Re,  62  N.  J.  Law  590;  41 
Atl.  952  1025 

Provident  Institution  v.  Burn- 
ham,  128  Mass.  458  230,  233 

Provident,  etc.  Trust  Co.  v. 
Saxon,  116  La.  408;  40  So. 
778  238 

Provincial  Grocers,   Ltd.,   10 

Ont.  L.  R.  705  169 

Provision  Merchants  Co.,  26 

L.  T.  862  435 

Provost  V.  Morgan's,  etc.  R.  R. 
Co.,  42  La.  Ann.  809;  8  So. 
584  254 

Pudsey  Coal  Gas  Co.  v.  Corpo- 
ration of  Bradford,  15Eq.  167      961 

Pueblo  Sav.  Bank  v.  Richard- 
son (Colo.),  89  Pac.  799  693, 
697,  752 

Pugh  and  Sharman's  Case,  13 

Eq.  566  176,  621 

Pulbrook  1'.  Richmond  Con- 
solidated Min.  Co.,  9  Ch.  D. 
610  1167,  1177,  1251 

Pulford    V.    Fire    Dept.,    31 

Mich.  458  565,  578,  657,  658 

PuUan  V.  Cincinnati,  etc.  R.  R. 
Co.,  4  Biss.  35       1495,  1512,  1523, 
1555,  1603 

Pullis  V.  Pullis,  157  Mo.  565; 

57  S.  W.  1095  392 

Pullman  v.  Upton,  96  U.  S. 

328  483,  492,  620,  622 

Pullman's,  etc.  Co.  v.  Ameri- 
can, etc.  Co.,  84  Fed.  18;  28 
C.  C.  A.  263  1568 

V.  Central  Transporta- 
tion Co.,  171  U.  S.  138;  18 
Sup.  Ct.  808  837,  840,  841 

Pulsford  V.  Richards,  17  Beav. 

87  184,  184 

Punt  V.  Symons  &  Co.  (1903), 

2  Ch.  506  584,  584,  585,  587, 

1019,  1062 

Purcell's  Case,  29  W.  R.  170       1171 

Purdy  V.  Bankers'  Life  Ass'n, 
lOi  Mo.  App.  91;  74  S.  W. 
4S6  5S0,  657 

Pusey  V.  New  Jersey,  etc. 
R.  R.  Co.,  14  Abb.  Pr.  N.  s. 
(N.  Y.)  434  1474 


Putnam  v.  Jacksonville,  etc. 

Ry.  Co.,  61  Fed.  440  1573 
V.  Sweet,  1  Chand.  (Wise.) 

286;  2  Pinn.  (Wise.)  302  972, 
974,  1250 
PyleWorksCo..44Ch.iD.  534  1514 
Pyle  Works  (No.  2)  (1891),  1 

Ch.  173  1371,  1397 

Q 

Quackenboss    v.    Globe,    etc. 

Ins.  Co.,  177  N.  Y.  71;    69 

N.  E.  223  408 

Quebrada  Ry.  Co.,  40  Ch.  D. 

363  536 

Quee  Drug  Co.  v.  Plaut,  55 

N.   Y.    App.    Div.   87;    67 

N.  Y.  Supp.  10  297 

Queen  Anne's  Ferry,  etc.  Co. 

V.  Queen  Anne's  R.  R.  Co., 

148  Fed.  41  1568,  1573,  1582 

Queen  City  Furniture,  etc.  Co. 

V.  Crawford,   127  Mo.  356; 

30  S.  W.  163  274,  283,  306 

Queen's  Hotel  Co.   (1900),  1 

Ch.  792  1591 

Queensland  Land  &  Coal  Co. 

(1894),  3Ch.  181  1417 

Quentell  v.  N.  Y.  Cotton  Ex- 
change,   106  N.   Y.   Supp. 

228  948 

Quimby  Freight  Forwarding 

Co.,   121   Fed.   139  22,  44 

Quin  V.  Havenor,   118  Wise. 

53 ;   94  N.  W.  642  950 

Quin's  Case,  2  Megone  360  1419 
Quinby    v.    Consumers'    Gas 

Trust  Co.,  140  Fed.  362  838 

Quincy  v.  Steel,  120  U.  S.  241 ; 

7  Sup.  Ct.  520  969 

Quincy  Granite  Quarries  Co., 

147  Fed.  279  44 

Quincy,    etc.    R.    R.    Co.    v. 

Humphreys,  145  U.  S.  82; 

12  Sup.  Ct.  787  1564,  1611, 

1611.  1612,  1612 
Quinn  v.  Madigan,  65  N.  H.  8; 

17  Atl.  976  1150 
V.  Safe  Deposit,  etc.  Co., 

93  Md.  285;    48  Atl.  835; 

53  L.  R.  A.  169  1150,  1152 

Quintance  v.   Farmers'  Mut. 

Aid    Ass'n,    25    Kv.    Law 

Rep.  1379;   77  S.  W.  1121       1319 

R 

Rabe  v.  Dunlap,  51  N.  J.  Eq. 

40;  25  Atl.  959  967 


clxvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Racine  County  Nat.  Bank  v. 

Avers,  12  Wise.  512  66,  189, 

1109 
Racine,    etc.    R.    R.    Co.    v. 

Farmers'L.  »feT.  Co.,49Ill. 

331;  95  Am.  Dec.  595  1487, 

1624,  1626 
Radebaugh  v.  Tacoma,  etc.  R. 

R.  Co..  8  Wash.  570;    36 

Pac.  460  1396 

RalYerty  v.  Donelly,  197  Pa. 

St.  423;   47  Atl.  202  982,  1351 

Raht  V.  Attrill,  106  N.  Y.  423; 

13  N.  E.  282 ;  60  -Im.  Rep. 

456  1646,  1649 
V.  Sevier  Mining,  etc.  Co., 

18  Utah  290;   54  Pac.  889 


658, 
665 

440 

483. 
493 

1610 


Railroad     v.    Knoxville,    98 

Tenn.  1 ;  37  S.  W.  8S3 
V.  Sneed,  99  Tenn.  1 ;  41 

S.  W.  364;   47  S.  W.  89 

Railroad    Co.    v.    Brown,    17 
Wall.  445 

V.  EUerman,  105  U.  S.  166 

961 

V.  Howard,  7  Wall.  392   1659 

V.  Orr,  18  Wall.  471  1590 

V.  Smith,  48  Oh.  St.  219; 

31  N.E.  743  419 
V.    Soutter,      13     Wall. 

517.  1637 

Railro'ad  Cos.  v.  Schutte,  103 

U.  S.  118  1434 

Railroad  Gazette  v.  Wherry, 

58  Mo.  App.  423  308 

Railway  Co.  v.   Allerton,    18 

Wall.  233  487,1189,1189 

V.  Ailing,  99  U.  S.  463  932 

V.  Iron  Co.,  46  Oh.  St. 

44;   18  N.  E.  486;  1  L.  R. 

A.   412;  843,  857 

V.  Sprague,  103  U.  S.  756 

1343,  1420,  1436,  1436, 
1436,  1467 
V.  State,  49  Oh.  St.  668; 

32  N.  E.  933  1052,  1163 
Railway  Equipment,  etc.  Co. 

V.   Lincoln  Nat.   Bank,  82 

Hun  (N.  Y.)  8;  31  N.  Y. 

Supp.  44  592 

Railway  Time  Tables  Co.,  62 

L.  J.  Ch.  935  1404 

Railway  Timetables  Co.,  42 

Ch.  D.  98  171,  628 

Railways    Company    General 

V.  Newtown  El.  St.  Ry.,  32 

Pa.  Co.  Ct.  3S  1528,  152S 

clx 


Rainford  v.   James   Keith   & 

Blackman  Co.  a905),  1  Ch. 

296  733 
V.  James  Keith  &  Black- 
man  Co.  (1905),  2  Ch.  147 

81,  87 
Raleigh  v.  Fitzpatrick,  43  N. 

J.  Eq.  501;    11  Atl.  1  1343 

Raley  v.  Victor  Co.,  86  Minn. 

438;    90  N.  W.  973  1239 

Ralph   V.    Wisner,    100  Mich. 

164;    58  N.  W.  837  1604 

Ralston  v.  Bank  of  California, 

112  Cal.  208;   44  Pac.  476        526, 
753,  1122 
V.  Washington,  etc.  Ry. 

Co.,  65  Fed.  557  1602 

Ramsdell  v.  Citizens  El.,  etc. 

Co.,  103  Mich.  89;  61  N.  W. 

275  1396 

Ramsey  v.  Erie  Ry.  Co.,  38 

How.  Pr.  (N.  Y.)  193  485 
V.  Gould,   57  Barb.   (N. 

Y.)  398  422,  968 

V.  Peoria,  etc.  Ins.  Co., 

55  111.311  232,233,248 

V.  Thompson  Mfg.  Co., 

116  Mo.  313;   22  S.  W.  719 

180,  180,182 
V.  Tod,  95  Tex.  614;   69 

S.  W.  133 ;  93  Am.  St.  Rep. 

875  _        _  45,  47 

Ramsgate  Victoria  Hotel  Co. 

V.  Montefiore,  L.  R.  1  Ex. 

109  168 

Ramskill  v.  Edwards,  31  Ch. 

D.   100  1282, 1283, 1285, 

1289,  1349,  1349,  1350,  1350 
Ramwell's  Case,  50  L.  J.  Ch. 

827  630,  642,  642,  668 

Ranee's  Case,  L.  R.  6  Ch.  104      1093, 

1265 
Rand  v.  Columbia  Nat.  Bank, 

94  Fed.  349;    36  C.  C.  A. 

292  165 
V.    Hubbell,    115    Mass. 

461;  15  Am.  Rep.  121  497,1146 
Randall  v.  Van  Vechten,   19 

Johns.  (N.  Y.)  60;    10  Am. 

Dec.  193  398 

Randall   Co.    v.    Glendenning 

(Okl.),  92  Pac.  158  406 

Randall,  H.  E.,  Ltd.,  v.  Brit- 
ish &  American  Shoe  Co. 

(1902),  2  Ch.  3.34  387,  387 

Randolph  v.  Middleton,  26  N. 

J.  Eq.  543  1623 
V.  New  Jersey,  etc.  R. 

-?..  Co.,  23  N.  J.  Eq.  49  1639 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Randolph  v.  Wilmington,  etc. 

R. R.  Co.,  1 1  Phila. 502 (U.S. 

C.  C.)  1509 

Randt      Gold      Mining     Co. 

(l'J04),  2  Cli.  408  669 
V.  New  Balkis  Eerstell- 

ing.  85  L.  T.  780;    (190;i)  1 

K.B.  401;  (1904)  A.  C.  165  668 
V.  Wainwright  (1901),  1 

Ch.  184  669,  1018 

Ranger  v.  Champion  Cotton- 
Press  Co.,  51  Fed.  61  890. 
894,  896,  907 
Rankin  v.   Bush,   108  N.   Y. 

App.  Div.  295;    95  N.  Y. 

Supp.  718  1368 

V.  Cooper.  149  Fed.  1010    1262, 

1262,  1276,  1278,  1281,  1288 
V.  Fidelity  Trust  Co.,  189 

U.  S.  242 ;    23  Sup.  Ct.  553 


V.   Hop,  etc.    Exchange 

Co.,  20  L.  T.  207 
■ V.  McCullough,  12  Barb. 

(N.  Y.)  103 

V.  Southwestern  Brew- 
ery, etc.  Co.  (N.  Mex.),  73 
Pac.  612 

V.  Southwestern  Brew- 
ery, etc.  Co.  (N.  Mex.),  73 
Pac.  614 

Rannels  v.   Rowe,    145   Fed. 

296;    74  C.  C.  A.  376 
Ransom   v.    Stonington   Sav. 

Bank,  2  Beasl.  (N.  J.)  212 
Raphael  v.  Rio  Grande  West- 
ern Ry.  Co.,  132  Fed.  12; 

65  C.  C.  A.  632 
Rapid  Transit  Ferry  Co.,  43 

N.  Y.  Supp.  538;    19  N.  Y. 

Misc.  409 
,  Re,  15  N.  Y.  App.  Div. 

530;  44  N.  Y.  Supp.  539 


699, 
807 

193 

808 


952 


971 
237 
393 


1637 


1011 

1011, 
1032 


Rascover  v.  American  Lin- 
seed Co.,  135  Fed.  341;  68 
C.  C.  A.  1 1  88,  89 

Rassbeck  v.  Desterreicher,  55 

How.  Pr.  (N.  Y.)  516  126 

Rathbone  v.  Ayer,  105  N.  Y. 

Supp.  1041  203,  205,  636 

V.    Tioga   Nav.    Co.,    2 

Watts  &  Serg.  (Pa.)  74        278, 302 

Rathbun  v.  Snow,  123  N.  Y. 
343;  25  N.  E.  379;  10  L. 
R.  A.  355 

Rau  V.  Seidenberg,  53  N.  Y. 
Misc.  386;  104  N.  Y.  Supp. 
798 


91 


Rau  V.  Union  Paper  Mill  Co., 

95  (ia.  208;   22  S.  E.  146  304 

Raul)  V.  Blairstown  Creamery 

Ass'n,  50  N.  J.  Law  262; 

28  Atl.  384  408,  1371 

Ravenswood,  etc.  Ry.  Co.  v. 

Woodyard,  46  W.  Va.  558; 

33  S.  E.  285  1259,  1298 

Raymond  v.  Clark,  46  Conn. 

129  1510,  1512 
V.  Farmers',  etc.  Ins.  Co., 

114   Midi.  386;   72  N.  W. 

254  577 

Raynerv.Rayner(1904),  iCh. 

176  424 

Raynolds   v.    Diamond    Mills 

Paper  Co.  (N.  J.),  GO  Atl. 

941       979,  1112,  1113,  1321, 

1322 
R.  Bolton  &  Co.  (1894),  3 

Ch.  356  1172,1173 

Read  v.  Buffum,  79  Cal.  77; 

21   Pac.  555;    12  Am.  St. 

Rep.  131  1376 
V.  Head,  6  Allen  (Mass.) 

174  1091,  1155 
V.  Joannon,  25  Q.  B.  D. 

300  1395 
V.  Memphis  Gayoso  Gas 

Co.,  9  Heisk.  (Tenn.)  545  490, 
491,  1197 
Reading  Trust  Co.  v.  Reading 

Iron    Works,    137    Pa.    St. 

282;  21  Atl.  169,  170  507,508 

Ready  v.  Smith,  170  Mo.  163; 

70  S.  W.  484  1315 

Reagan  v.  First  Nat.  Bank, 

157  Ind.  623:  61  N.  E.  575  452 
Real    Estate   Trust    Co.    v. 

Bird,  90  Md.  229;    44  Atl. 

1048  499,  501,  504,  505,  505, 
507,  695,  751 
V.  Perry  County  R.  R. 

Co.,    213  Pa.   57;    62  Atl. 

25  1628 
V.  Union  Trust  Co.,  102 

Md.  41;    61  Atl.  228  1452 

Receivership    of    (Merchants 

Nat.    Bank    r.)    Minne*;ota 

Thresher  Mfg.  Co.,  90  Minn. 

144;    95  N.  W.  767 


7S6 


Rector  V.  Hartford  Deposit  Co. 

190  111.  380;   60  N.  E.  528 
Redfield  v.  Baltimore,  etc.  R. 

K.  Co..  124  Fed.  929 
Redhead  v.  Iowa  Nat.  Bank, 

123   Iowa  336;    98  N.   W. 

806 


35, 
39,  43 

845 

975 


1116 


cl.xix 


p 


TABLE    OF    CASES 
[The  references  are  to  pages] 


31 
1371 
1047 


444 


712 
408 


452 
1063 


1665 
230 

154 


297 


Redhead  v.  Iowa  Nat.  Bank, 

127  Iowa  572:    103  N.  W. 

796       1110,1116,1116,1122,1123, 

1135 
Redkey  Citizens,  etc.  Co.  v. 

Ott'27  Ind.  App.  1 ;   60  N. 

E.  716  650,  651 

Red     Men's     Mutual     Relief 

Ass'n,    10   Phila.   546 
Red  River  Line,  115  La.  867; 

40  So.  250 
Reed  v.  Bank  of  Newburgh, 

6  Paige  (N.  Y.)  337 

V.  Boston  Machine  Co., 

141  Mass.  454;  5  N.  E.  852 

V.    Copeland,    50   Conn. 

472;   47  Am.  Rep.  663 
V.  Fleming,  102  111.  App. 

668 

V.  Helois  Carbide,  etc. 

Co.,  64  N.  J.  Eq.  231;    53 
Atl.  1057 

V.  Jones,  6  Wise.  680 

V.  Richmond  Street  R. 

R.  Co.,  50  Ind.  342  104,  105 
V.  Schmidt,  24  Ky.  Law 

Rep.  1889;   72  S.  W.  367 

V.  State,  15  Oh.  Rep.  217 

Reed  &  McCormick  v.  Gold, 

102  Va.  37 ;   45  S.  E.  868 
Reed  Bros.  Co.  v.  First  Nat. 

Bank,  46  Nebr.  168;  64  N. 

W.  701 
Reed's  Appeal,    122  Pa.   St. 

565;    16  Atl.  100  1408,  1497 

Reeder  v.  Lewis  &  Mason,  etc. 

Co.,  7  Ky.  Law  Rep.  363         1370 
Reese  v.  Bank  of  Commerce, 

14  Md.  271;    74  Am.  Dec. 

536  770,  773,  775,  776 
V.  Bank  of  Montgomery 

County,  31  Pa.  St.  78;    72 

Am.  Dec.  726  503,  507,  510 

Reese   River  Mining  Co.    v. 

Smith,  L.  R.  4  H.  L.  64       178,  184 
Reeve  v.  Harris  (Tenn.),  50 

S.  W.  Rep.  658  1238,  1247 

Regent's     Canal     Ironworks 

Co.,  3  Ch.  D.  43  1400,  1405, 

1524,  1526 

3  Ch.  D.  411  1599,  1646 

Regents  of  Univ.   of  Md.  v. 

Calvary  M.  E.  Church,  104 

Md.  635  849 
V.  Williams,  9  G.  &   J. 

(Md.)    365;    31   Am.    Dec. 

72  1179,  1182 

Regester  v.  Medcalf,  71  Md. 

528;  18  Atl.  966  307 


Regina  v.  Aldham,  15  Jur 
1035 

V.  Arnaud,  9  Q.  B.  806 

V.  Government  Stock  In- 
vestment Co.,  3  Q.  B.  D. 
442  1039,  1045,  1249 

V.  Grand  Canal  Co.,  1  Ir. 

L.  R.  337 

V.  Langton,  2  Q.  B.  D. 

296 

V.    Liverpool,  etc.  Ry. 

Co.,  21  L.  J.  Q.  B.  284 

V.    London,    etc.    Docks 

Co.,  44  L.  J.  Q.  B.  4  901,  906 

V.  Mariquita,  etc.  Min- 
ing Co.,  1  E.  &  E.  289         895,  899 

V.  Saddlers'  Co.,  10  H.  L. 

Cas.  404 
V.  Staples,  19  Vict.  L.  R. 

47 
V.  Tankard  (1894),  1  Q. 

B.  548 
V.  Wilts,  etc.  Navigation, 

29  L.  T.  922 
Regina   ex   rel.  Blackborn  v. 

Midland'Counties,  etc.  Ry., 

15  Ir.  Com.  L.  514     708,  708,  708 
Regina  ex  rel.  Crea  v.  Midland 

Counties,  etc.  Ry.,    15   Ir. 

Com.  L.  525 
Regina  ex  rel.  May  v.  Darling- 
ton Free  Grammar  School, 

14  L.  J.  Q.  B.  67 
Rehbein  v.  Rahr,   109  Wise. 

136;   85  N.  W.  315  39,  120, 

121,  203 
Rehberg   v.    Tontine   Surety 

Co.,  131  Mich.  135;    91  N. 

W.  132 
Reichwald    v.    Commercial 

Hotel  Co.,  106  111.  439 

286,  1187,  1208 
Reid  V.  Bank  of  Mobile,  70 

Ala.  199  1423, 1433 
V.  DeJarnette,  123  Ga. 

787;  51  S.  E.  770 

—  V.  Detroit  Ideal  Paint 
Co.,  132  Mich.  528;  94  N. 
W.  3 

—  V.  Eatonton  Mfg.  Co.,  40 
Ga.  98;  2  Am.  Rep.  563 


996 
419 


902 
230 
751 


1167 
915 
260 
902 


745 


565 


853 

286, 


617 


494 


650, 
1129 


V.  Explosives  Co.,  19  Q. 

B.  D.  264  1242,  1609,  1613, 

1614 

V.  Silke,  31  Vict.  L.  R. 

641  1142 

Reilly  v.  Oglebay,  25  W.  Va. 

36  1000,  1006,  1083 


clxx 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Reilly  v.  Union  Protestant  In- 
firmary,  87   Md.   664;     40 

All.  .S'J4  380 

Reinacli  v.  Meyer,  55  How. 

Pr.  (N.  Y.)  283  1672,  1673 

Reinhanl    v.    Virginia    Lead 

Mining  Co.,   1U7  Mo.  616; 

18  S.  VV.  17  254 

Reinliardt  v.    Interstate  Tel. 

Co.  (N.  J.),  63  Atl.  1097  1529, 

1593,  1594,  1596 
Reinehart  V.  Augusta, etc.  Co., 

94  Fed.  901;    36  C.  C.  A. 

541  1573 

Relender  v.  Riggs  (Colo.),  79 

Pac.  328  1323,  1344 

Remington  Automobile  & 

Motor  Co.,    139  Fed.   766; 

153  Fed.  345  631,  636,  647, 

649 
Remington  Paper  Co.  v.  Lon- 
don .\ss.  Co.,  12  N.  Y.  App. 

Div.  218;    43  N.  Y.  Supp. 

431  1196, 1381 

Rendall  v.  Crystal  Palace  Co., 

4  K.  &  J.  326  825 

Renn   v.    United  States    Ce- 
ment Co.  (Ind.),  73  N.  E. 

269  105,  111 

Rennie  v.  Clarke,  5  Ex.  292  308 

Reno  Oil  Co.  v.  Culver,  60  N. 

Y.  App.  Div.  129;  69  N.  Y. 

Supp.  969  735,  1263 

Reno  Water  Co.  v.  Leete,  17 

Nevada,  203 ;    30  Pac.  702 

1373,  1382 
Rennsalaer,  etc.  Co.  v.  Barton, 

16  N.  Y.  457  601 

Renssellaer,  etc.  R.  R.  Co.  v. 

Miller,  47  Vt.  146  1490 

Republic    Life    Ins.    Co.    v. 

Swigert,    135   111.    150;    25 

N.  E.  680;  12  L.  R.  A.  328       517 
Reuss  V.  Bos,  L.  R.  5  H.  L. 

176  120,  262,  688 

Reversionary     Interest     Soc. 

(1892),  1  Ch.  615  136 

Rex  V.  Amerv,  1  T.  R.  575         1011 

V.  Ashwell,  12  East  22  569, 

569,  583 

V.  Babb,  3  T.  R.  579  889 

V.  Bank  of  England,  2  B. 

&  Aid.  020  894,  1113 
V.  Bank  of  England,  2 

Doug.  525  749 
V.  Bumstead,  2  B.  &  Ad. 

699  565 

V.  Capper,  5  Price  217         423 

V.  Clear,  4  B.  &  C.  899         901 


Rex  V.  College  of  Physicians, 

5  Burr.  2740  562 

V.  Company  of  Fisher- 
men, 8  T.  R.  352  561,  561, 

570,  580,  580 

V.  Cutbush,  4  Burr.  2204      1031 

V.  Dodd,  9  East  516  7 

V.  Merchant  Tailors'  Co., 

2  B.  &  Ad.  115  892,  894 
V.  Registrar  Joint  Stock 

Cos.  (1904),  2  Ir.  634  59,  114, 

267,  370,  370 

V.  Theodorick,   8   East 

543  1212 

V.  Wardens  of  Coopers' 

Co.,  7  T.  R.  543  570 

V.  Webb,  14  East  406  7 

V.  Windham,  Cowp.  377       1376 

V.  Wilts,  etc.  Navigation, 

3  Ad.  &  El.  477  907,  907,  908 
Reyburn   v.   Consumers'   Gas 

Co.,  29  Fed.  561  1560,  1566 

Reynal  v.  Thebaud,  3  N.  Y. 

Misc.  187;    23  N.  Y.  Supp. 

615  1446 

Reynell  v.  Lewis,  15  M.  &  W. 

517  274,  275.  276,  308,  308 

Reynolds  v.  Bank  of  Mt.  Ver- 
non, 6  N.  Y.  App.  Div.  62; 

39  N.  Y.  Supp.  623:   158  N. 

Y.  740;  53  N.  E.  1131  574,  745, 
1111,  1331 

V.  Bridenthal,  57  Nebr. 

280;  77N.  W.658  1017,1022, 

1250 

V.  Georgia  State  Bldg., 

etc.  Ass'n,  102  Ga.  126;  29 

S.  E.  187  562 
V.  Supreme  Council,  192 

Mass.  150;   78  N.  E.  129;  7 

L.  R.  A.  N.  s.  1154  586 
V.  Touzalin  Imp.  Co.,  62 

Nebr.  236;   87  N.  W.  24  754 

Reynolds,  etc.  Co.  v.  Eacock, 

27  Ind.  App.  459;  61  N.  E. 

732  _  1560 

Rhawn  v.  Edge  Hill  Furnace 

Co..  201  Pa.  637;    51  Atl. 

360  875,  1453 

Rhev  r.  Ebensburg,  etc.  Co., 

27  Pa.  St.  261  198 

Rhinelander  v.  Farmers'  L.  & 

T.  Co.,   172  N.  Y.  519;  65 

N.  E.  499  1488,  1489 

Rhoads       i\       Hoernerstown 

Bldg.,  etc.  Ass'n,  82  Pa.  St. 

180  117 

Rliode     Island     Locomotive 

Works  V.  Continental  Trust 


clxxi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Co.,  108  Fed.  5;  47  C.  C.  A. 

147  1564,  1567 

Rhodes  V.  Piper,  40  Ind.  369  107 
Ribon    V.    Railroad    Cos.,    16 

Wall.  446  977,  1660 

Rice  V.  Gilbert.  173  111.  348; 

50  N.  E.  1087  803 

V.   National   Bank,    126 

Mass.  300  222 

V.  Rockefeller,  134  N.  Y. 

174:  31  N.  E.  907;  30  Am. 
St.  Rep.  658;  17  L.  R.  A. 
237  745,  745,  751,  801 

V.   Shealey,   71   S.   Car. 

161;  50  S.  E.  868  1449 

V.  St.  Paul,  etc.  R.  R. 

Co.,  24  Minn.  464  1584,  1602 

Rice's  Appeal,  79  Pa.  St.  168      315, 

1416 
Rich  V.  Boyce,  39  Md.  314  807 

Richard  Smith  &  Co.  (1901), 

1  Ir.  73  1430 

Richards      v.      Attleborough 

Nat.  Bank,  148  Mass.  187; 

19  N.  E.  353;    1  L.  R.  A. 

781  1176,  1298 
V.  Chesapeake,  etc.  R.  R. 

Co.,  1  Hughes  28  1587 
V.  Dover,  61  N.  J.  Law 

400;  39  Atl.  705  59 

V.     Home     Assurance 

Ass'n,  L.  R.  6  C.  P.  591      167,  168 

V.  Merrimack,  etc.  R.  R. 

Co.,  44  N.  H.  127  1496 
V.  Minnesota  Sav.  Bank, 

75  Minn.    196;    77  N.   W. 

822  132,  387 

V.  Overseers  of  Kidder- 
minster (1896),  2  Ch.  212        1395 

Richardson  v.  Buhl,  77  Mich. 

632;     43   N.    W.    1102;     6 

L.  R.  A.  457  263 
V.  Delaware  Loan  Co.,  9 

Houst.  (Del.)  354;   32  Atl. 

980  427,  742 
V.  Devine  (Mass.),  79  N. 

E.  771  571,  593 

V.    Emmett,   61    N.    Y. 

App.  Div.  205;  70  N.  Y. 
Supp.  546  690,  713 

V.  Green,  133  U.  S.  30; 

10  Sup.  Ct.  280  1317,  1405, 

1413 

V.     Longmont    Supply 

Ditch  Co.,    19   Colo.    App. 

483 ;  76  Pac.  546  687,  750,  803 
V.  Pitts,  71  Mo.  128  254 

V.    Ricliardson,   75   Me. 

570;   46  Am.  Rep.  428  1143 


Richards  v.   St.  Joseph  Iron 

Co.,  5   Blackf.  (Ind.)  146; 

33  Am.  Dec.  460  912 
V.  Treasure  Hill,  etc.  Co., 

23  Utah  366;  65  Pac.  74  635 
V.  Union  Congregational 

Soc,  58  N.  H.  187  585 

V.  Vermont,  etc.  R.  R. 

Co.,  44  Vt.  613  433,  457,  465, 

466,  1003,  1008 

Riche  V.   Ashbury  Ry.,   etc. 

Co.,  L.  R.  9  Ex.  224  824 

Richelieu  Hotel  Co.  v.  Inter- 
national, etc.  Encamp- 
ment Co.,  140  111.  248;  29 
N.  E.  1044;  33  Am.  St. 
Rep.  234  81,  166,  167,  209 

Richie  v.  Cralle,  108  Ky.  483; 

56  S.  W.  963  1424 

Richmond  v.  Irons,  121  U.  S. 

27;  7  Sup.  Ct.  788     696,  746 

V.  Richmond,  108  N.  Y. 

Supp.  298  503,  1150 

Richmond   Factory   Ass'n   v. 

Clarke,  61  Me.  351  128,  215 

Richmond  Guano  Co.  v. 
Farmers'  Cotton,  etc.  Co., 
126Fed.  712;  16C.C.  A.  630      840 

Richmond  Street  R.  R.  Co.  v. 

Reed,  83  Ind.  9  215 

Richmond,  etc.  R.  R.  Co.  v. 

Snead,  19  Gratt.  (Va.)  354     1373 

Richmond's  Case,  4  K.  &  J. 

305  492,  663 

Richmondville    Mfg.    Co.    v. 

Prall,  9  Conn.  487  588,  700 

Richter  v.  Jerome,  123  U.  S. 

233;  8  Sup.  Ct.  106  1485 

Ricker  v.  American  L.  &  T. 
Co.,  140  Mass.  346;  5  N.  E. 
284  1541 

t;.  Hall,  69N.  H.  592;  45 

Atl.  556  1279 

V.  Larkin,  27  111.  App. 

625  123 

Rickerson  Roller  Mill  Co.  v. 

Farrell,   etc.   Co.,    75   Fed. 

554;  23  C.  C.  A.  302         627,  628, 

630 
Rickert  v.  White,  105  N.  Y. 

Supp.  653  1333 

Rickett  V.  Sharpe,  45  Ch.  D. 

286  24 

Riddle  v.  County  of  Bedford, 

7  S.  &  R.  (Pa.)  386  1228 

Rider  v.  Alton,  etc.  R.  R.  Co., 

13  111.516  1116 

V.  Morrison,  54  Md.  429       528, 

619 


clxxii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Rider  v.  Union   Rubber   Coe, 

5  BosNV.  (N.  Y.)  85  1244 

Ridgefiel.l.  etc.   R.  R.  Co.  v. 

Reynolds,  46  Conn.  37.5  189 

Kiilgely  v.  Riciiard,  130  Fed. 

3S7  890 

Kidgway    v.    Fanners'    Bank, 

12Serg.  &R.  (Pa.)  256;    14 

Am.  Dec.  (iSl  913,  917 

Ridley  v.   Plymouth  Baking 

Co.,  2  E.x.  711         395,  860,  1213, 

1222 
Rielle  v.  Reid,  26  Ont.  App. 

54  882,  887 

Rieger,    Kapner   &   Altmark, 

157  Fed.  609  1085,  1086 

Riemann     v.     Tyroler,     etc. 

Verein,  104  111.  App.  413  380, 

381 
Riesterer  v.  Horton  Land,  etc. 

Co.,  160  Mo.  141;  61  S.  W. 

238  1006,  1069 

Rigg  V.  Reading,  etc.  Ry.  Co., 

191    Pa.    St.    298;  43   Atl. 

212  786 

Riggs  V.  Cragg,  26  Hun  (N. 

Y.)  89  1150,  1151 

V.  Pennsylvania  R.  R. 

Co.,  16  Fed.  804  MOO,  1499 

Riker  v.  Leo,  133  N.  Y.  519; 

30  N.  E.  598  35 

Riley     v.     Hampshire,     etc. 

Bank,    164  Mass.   482;    41 

N.  E.  679  810 

V.    Loma   Vista   Ranch 

Co.  (Cal.),  82  Pac.  686  1310 

V.  Packington,  2  C.   P. 

536  308 

Rio     Grande     Cattle     Co.     v. 

Burns,  82  Tex.  50;  17S.  W. 

1043  753,  753 

Ripley  v.  Paper  Bottle  Co.,  57 

L.  J.  Ch.  327  662 

Rislev    V.    Indianapolis,    etc. 

R.  R.  Co.,  62  N.   Y.  240      1342, 

1307 
Ritchie  v.  McMullen,  79  Fed. 

522;  25  C.  C.  A.  50  1350,  1353 
V.  Vermillion  Mining  Co., 

t  Ont.  L.  R.  588  71,  1080 


Ritso's  Case,  4  Ch.  D.  774 

Rivanna  Nav.  Co.  v.  Daw- 
sons,  3  Gratt.  (Va.)  19 

Riverhead,  etc.  R.  R.  Co.,  36 
N.  Y.  App.  Div.  514;  55 
N.  Y.  Supp.  938 

Rives  I'.  Montgomery  South 
Plank-Road  Co.,  30  Ala.  92 


169 


524 


134 

994. 
1195 


1634 
783 


394 


Roanoke   Street   Ry.   Co.    v. 

lUcka,    96    Va.     510;      32 

S.  E.  295  393,  1557 

Robbins  v.   Bangor  Ry.,  etc. 

Co.,  100  Me.  496;  62  Atl. 

136;    1  L.  R.  A.  n.  s.  963  284 

Robert  Watson  &  Co.  (1899), 

2  Ch.  509  640,  640 

Roberts  v.  Central  Trust  Co., 

128  Fed.  882;    63  C.  C.  A. 

220 

V.  Crowe,  L.  R.  7  C.  P.  629 

V.  Deming  Woodworking 

Co.,    Ill   N.   Car.   432;     16 

S.  E.  415 
V.  Denver,  etc.  R.  R.  Co., 

8  Colo.  App.  504;    46  Pac. 

880  1515, 1528,  1528,  1551, 

1551 

V.    Roberts- Wicks   Co., 

102  N.  Y.  App.  Div.   118; 

92  x\.  Y.  Supp.  387  541,  546 

V.    Roberts- Wicks   Co., 

184N.  Y.  257;  77  N.  E.  13; 

112  Am.  St.  Rep.  607       439,  469, 
537,  543,  546,  1092 

V.  Stanton  Co.,  94  Pac. 

647 

V.  Sykes,  30  Barb.  (N. 

Y.)  173 

V.     Washington     Nat. 

Bank,   11  Wash.   550;    40 
Pac.  225 

Ex  parte,  1  Drewry  204 

Roberts  Mfg.  Co.  v.  Schlick, 

62  Minn.  332;    64  N.   W. 

826  307,  309 
V.  Wright,  62  Minn.  337; 

64  N.  W.  827  307,  309 

Robertson  v.  Bucklen  &  Co., 

107  111.  App.  369  1083,  1310 

V.  Bullions,  11  N.  Y.  243     1184 

V.    De    Brulatour,     188 

N.  Y.  301;  80  N.  E.  938  503, 
1132,  1151,  1445,  1446 
V.  Parks,  76  Md.  118;  24 

Atl.  411  234 

Robinson    v.    Alabama,    etc. 

Mfg.  Co.,  48  Fed.  12      1585,  1587, 
1593,  1593 
V.  Blood  (Cal.),  91  Pac. 

258 
V.  Burnell's  Vienna  Bak- 
ery Co.  (1904).  2  K.  B.  624 
V.  Chartered  Bank,  1  Eq. 

32  764,  765,  765 
V.    Dolores,    etc.    Canal 

Co.,  2  Colo.  App.   17;    29 

Pac.  750  1407 


1239 
811 


1311 
165 


1201 


1546 


clxxiii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Robinson  v.  First  Nat.  Bank 

(Tex.),  79  S.  W.  103  386,  387 
V.  First  Nat.  Bank  (Tex.), 

82  S.  W.  505  379,  380 
V.    Holbrook,    148   Fed. 

107  78,  79 
V.  Iron  Ry.  Co.,  135  U.  S. 

522;  10  Sup.  Ct.  907  1485 
V.  Jenkins,  24  Q.  B.  D. 

275  423 
V.  Kirkwood,  91  111.  App. 

54  1617,  1618 
V.  Montgomeryshire 

Brewing  Co.  (1896),  2  Ch. 

841  1405,  1524,  1524 
V.  Muir  (Cal.),  90  Pac. 

521  511 
V.  National  Bank  of  New 

Berne,  95  N.  Y.  637  695,  753, 
1122,  1130,  1131 
V.  Philadelphia,  etc.  R. 

R.  Co.,  28  Fed.  340  1660,  1660 
V.  Smith,  3  Paige  (N.  Y.) 

222;  24  Am.  Dec.  212  974 
V.  Southern  Nat.  Bank, 

180  U.  S.  295;   21  Sup.  a. 

383  74 
V.   West   Virginia   Loan 

Co.,  90  Fed.  770  970 

Robinson  Mineral  Spring  Co. 

V.  DeBautte,  50  La.  Ann. 

1281;   23  So.  865  1074 

Robinson     Printing     Co.     v. 

Chic  (1905),  2  Ch.  123  1580 

Robinson    Reduction    Co.    v. 

Johnson,  10  Colo.  App.  135; 

50  Pac.  215  912,  912,  1196 

Robinson's  Case,  4  Ch.  322  166,167 
Robinson's  Trust,   Re   (Pa.), 

67  Atl.  775  1137 

Robotham  v.  Prudential  Ins. 

Co.,  64  N.  J.  Eq.  673;    53 

Atl.  842  57,  58,  75,  77,  1306, 

1326 
Robson   V.    Smith    (1895),    2 

Ch.  118  1546,  1547,  1547 

Rochester    Distilling    Co.    v. 

Rasey,  142  N.  Y.  570;    37 

N.  E.  632;  40  Am.  St.  Rep. 

635  1503 

Rochester  District  Tel.   Co., 

40  Hun  (N.  Y.)  172      1015,  1039, 

1064 
Rochester  Trust,  etc.  Co.  v. 

Oneonta,  etc.  R.  R.  Co.,  107 

N.  Y.  Supp.  237  1646,  1649, 

1653 
Rochester,  etc.,  Land  Co.  v. 

Raymond,  158  N.  Y.  576; 


53  Nf  E.  507;   47  L.  R.  A. 

246  617,  619 

Rochester,  etc.  R.  R.  Co.,  110 

N.  Y.  119;    17  N.  E.  678  76 

Rock  River  Bankr.  Sherwood, 

10  Wise.  230;   78  Am.  Dec. 

669  865,  868 

Rockford,   etc.   R.  R.  Co.  v. 

Sage,  65  111.  328;    16  Am. 

Rep.    587  293,  1237,  1246 

Rockhold  V.  Canton  Masonic 

Benev.    Soc,  129   111.   440; 

21  N.  E.  794;    2  L.  R.  A. 

420  35,  42,  851 

Rockwell  V.  Elkhorn  Bank,  13 

Wise.  653  63,  66 

Rockwith    ex    rel.    Kerns    v. 

State  Road  Bridge  Co.,  108 

N.  W.  785  (Mich.)  107 

Rodger  Ballast  Co.  v.  Omaha, 

etc.  R.  Co.,  154  Fed.  629  1561, 
1563,  1563,  1564,  1567 
Rodney    v.    Southern    R.    R. 

Ass'n,  3  N.  Y.  St.  Rep.  564; 

14  Daly  70  1239 

Roebling's  Sons  Co.,  John  A. 

V.  Barre,  etc.  Power  Co.,  76 

Vt.  131;  56  Atl.  530  1213,  1215 
Roedde    v.    News-Advertiser 

Pub.  Co.,  4  Brit.  Columbia 

7  80 

Roehler  v.  Mechanics'  Aid  So- 
ciety, 22  Mich.  86  580 
Rogers  v.  Burr,  105  Ga.  432; 

31  S.  E.  438;    70  Am.  St. 

Rep.  50  174 
V.  Citizens'  Nat.  Bank, 

93  Md.  613;  49  Atl.  843  455 
V.    Gladiator,    etc.    Co. 

(S.  Dak.),113N.  W.86  197,645 
V.  Hastings,  etc.  Ry.  Co., 

22  Minn.  25  1247 
V.  Huntingdon  Bank,  12 

Serg.  &  R.  (Pa.)  77  776,  776 
V.    Jewell    Belting    Co., 

184  111.  574  84 
V.  Mobile,  etc.  R.  R.  Co., 

12  Am.  &  Eng.  R.  R.  Cases 

442  (Tenn.)  1609 
V.    Nashville,    etc.    Ry. 

Co.,  91  Fed.  299;    33  C.  C. 

A.  517  836,  935,  942,  951,  1026 
1077,  1522 
V.  N.  Y.,  etc.  Land  Co., 

134  N.  Y.  197;  32  N.  E.  27  288 
?'.  Oxford,  etc.  Ry.  Co., 

2  De  G.  &  J.  662  965,  966 
V.  Pell,  154  N.  Y.  518; 

49N.  E.  75  1187,1315,1374 


clxxiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Rogers  v.  Penobscot,  154  Fed. 

606  ^^8,  338 
V.  Southern  Fiber  Co. 

(La.),  44  So.  442  737,  739 
V.  Stevens,  8  N.  J.  E(|. 

167  716 
V.    Wheeler,    43    N.    Y. 

598  1582,  1582,  1582 

Rogers    &   Co.    v.    British    & 

Colonial  Ass'n,  68  L.  J.  Q. 

B.  14  1529,  1594 

Rogers   Co.,    R.  W.  v.  Win. 

Rogers  Mfg.  Co.,   70   1-ed. 

Rep.  1017;  17  C.  C.  A.  576  376 
Rogers'  Case,  3  Ch.  633  166,  189 
Rogers,  Re,   161   N.  Y.   108: 

55  N.   E.  393  471,  1154 

Rogers'  Trusts,  Re,  1  Dr.  & 

Sm.  338 
Rogers,  etc.  Works  v.  South- 
ern R.   R.   Ass'n,  34   Fed. 

278 
Rogersville,  etc.  R.  R.  Co.  v. 

Kyle,  9  Lea  (Tenn.)  691 


1443 


1433 


1522, 
1597 


1359 

1248 

919 


Roland     v.     Lancaster,     etc. 

Bank,  135  Pa.  St.  598;    19 

Atl.  951 
Rolling  Stock  Co.  v.  Atlantic, 

etc.  R.  R.  Co.,  34  Oh.  St. 

450;    32  Am.  Rep.  380 
Rollins  V.  Clay,  33  Me.  132 
V.     Co-operative     Bldg. 

Bank,  98  N.  Y.  App.  Div. 

606;    90  N.  Y.  Supp.  631 
V.  Shaver  Wagon,  etc. 

Co.,  80  Iowa  380;  45  N.  W. 

1037;  20  Am.  St.  Rep.  427 

1206,  1323 
Romare  v.  Broken  Arrow,  etc. 

Mining  Co.,  114  Fed.  194 


811 


1306 

1188 


584 


517, 


1486, 
1603 


Rome,  etc.  R.  R.  Co.  v.  Sibert, 

97  Ala.  393 ;    12  So.  69 
Romford  Canal  Co.,  24  Ch.  D. 

85  1068,  1407 

Rommel  v.   Summit    Branch 

Coal  Co.,  18  Pa.  Super.  Ct. 

482 
Rondot  V.  Rogers  Tp.,  99  Fed. 

202;    39  C.  C.  A.  462 


1567 


1416 


1433, 
1440 


173 


Roney,  Ex  parte,  33  L.  J.  Ch. 

731 
Rood  V.  Railway  Pass.,  etc. 

Ass'n,  31  Fed.  62  577,  660 

V.  Wharton,  67  Fed.  434       647 

Roofing    Contractors'    Ass'n. 

200  Pa.  St.  Ill;  49  Atl.  894       '46 


Roosevelt  v.   Nashville,   etc. 

Ry.  Co.,  128  Fed.  465  70,  85 

Roots  V.  Williamson.  38  Ch. 

D.  485  696,  707,  710,  710 

Roper    t'.    Castell    &    Brown 

(1898),  1  Ch.  315         ^  1534,  1547 
Rorke  v.  Thomas,  56  N.  Y. 

559 
Rose  V.  Carbonating  Co.,  60 

Mo.  App.  28 
V.    Independent  Chevra 

Kadisho  (Pa.),  64  Atl.  401 
V.  Merchants'  Trust  Co., 

96  N.  Y.  Supp.  946  361,  361 

Rose  Hill,  etc.  Co.  v.  People 

ex  rel.  Lawless,  115  111.  133; 

3  N.  E.  725        147,  219,  230,  231, 
231,  553 
Rose    Hill    Cemetery    Co.    v. 

Dempster,  223  111.  567;   79 

N.  E.  276  1073,  1310,  1323 

Roseborough  v.  Shasta  River 

Canal  Co.,  22  Cal.  556 
Rosemond    v.    Northwestern, 

etc.  Register  Co.,  62  Minn. 

374;   64  N.  W.  925 
Rosenback    v.    Salt    Springs 

Nat.  Bank,  53  Barb.  (N.Y.) 

495 
Rosenfeld  v.  Einstein,  46  N.  J. 

Law  479  894,  897,  907 

Rosenkranz  v.  Lafayette,  etc. 

Ry.  Co.,  18  Fed.  513 
Ross  V.  Crockett,  14  La.  Ann. 

V.  Estate  In  vestment  Co., 

3  Eq.  122 

V.  Sayler,  104  111.  App.  19 

V.  Southwestern  R.   R. 

Co.,  53  Ga.  514 
Ross  Oil,  etc.  Co.  v.  Eastham 

(Kans.),  85  Pac.  531 
Ross,  Ex  parte,  59  L.  T.  291 
Rotch's  Wharf  Co.  v.  Judd, 

108  Mass.  224 
Roth    Tool    Co.    V.     Champ 

Spring   Co.,   93    Mo.    App. 

530;  67  S.  W.  967 
Rothchild    v.    Memphis,    etc. 

R.  R.  Co.,  113  Fed.  476;  51 

C.  C.  A.  310 
Rotherham  Alum  Co.,  Re,  25 

Ch.  D.  103  282,  293 

Rouede  v.  Jersey  City,  18  Fed. 

719  l-*36 

Rough  V.  Breitung,  117  Mich. 

48;    75N.  W.  147  1071,  1072 

Roundwood     Colliery     Co. 

(1897),  1  Ch.  373  1547,  1548 


1383 


1382 


571 


1475 

1167 

186 
354 

711 

1377 
1205 

302 


304 


1081 


clxxv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Rouse  V.  Harry,  55  Kans.  589; 
40  Pac.  1007 

V.    Redinger,    1    Kans. 

App.  355;    41  Pac.  433 

Routledge,    George    &    Sons 

(1904),  2  Ch.  474  1418,  1473 

Rowe  V.  White,  1 12  N.  Y.  App. 

Div.  688;    98  N.  Y.  Supp. 

729 

,  Re  (1904),  2  K.  B.  489 

Rowe's       Trustee's       Claim 

(1906),  1  Ch.  1 
Rowland  v.  Meader  Furniture 

Co.,38  0h.  St.  269       250,250,251 
V.  P.  P.  Carroll  Loan,  etc. 

Co. (Wash.),  87  Pac.  482 
Rowley  v.  Unvdn,  2  K.  &  J.  138 
Roxburg  Press  (1899),  1  Ch. 

210 
Roxbury  Lodge  v.  Hocking, 

60  N.  J.  Law  439;   38  Atl. 

693  590,  949 

Roy  &  Co.  V.  Scott,  Hartley, 

etc.  Co.,  11  Wash.  399;   39 

Pac.  679 
Royal  Bank  v.  Grand  Junction 

R.  R.  Co.,   100  Mass.  444; 

97  Am.  Dec.  115 
V.  Grand  Junction  R.  R. 

Co.,  125  Mass.  490 
Royal  Bank  of  India's  Case,  4 

Ch.  252        74,74,77,91,117,591, 
705,  706,  707 
Royal  British  Bank,  26  L.  J. 

Ch.  545  763 
V.  Turquand,  6  E.  &  B. 

327  739,  1219,  1220,  1220 

Royal  Trust  Co.  v.  Washburn, 

etc.  Ry.  Co.,  1 13  Fed.  531       1617, 
1629,  1629 

V.  Washburn,  etc.  Ry. 

Co.,     120     Fed.     11;      57 

C.  C.  A.  31  1646 

Rozecrans  Gold  Mining  Co.  v. 
Morey,  111  Cal.  114;  43 
Pac.  585  1169,  1225,  1343 

Ruben  v.  Great  Fingall  Con- 
solidated (1906),  A.  C.  439       739, 

740 

Rubino  v.  Pressed  Steel  Car 

Co.  (N.  J.),  53  Atl.  1050       78,  78, 

78 

Ruby  Chief,  etc.  Co.  v.  Gurley, 
17  Colo.  199;  29  Pac.  668 

V.  Prentice,  25  Colo.  4; 

52  Pac.  210 

Ruck  V.  Caledonia  Silver 
Mining  Co.  (Cal.),  92  Pac. 
194 


1619 
1618 


1135 
768 

624 


1374 
815 

642 


1314 


403 
1311 


298 
1246 


603 


338 


998 


304 


1569 
665 


Rudd  V.  Robinson,  126  N.  Y. 

113;  26N.  E.  1046;  22  Am. 

St.  Rep.  816;    12  L.  R.  A. 

473  914,  920, 1276 

Rudiger  v.  Coleman,  112  N.  Y. 

App.  Div.  279 
Rudolph     V.     So.     Beneficial 

League,    23    Abb.    N.    C. 

(N.  Y.)  199;  7N.  Y.  Supp. 

135 

,  Ex  parte,  11  W.  R.  806 

600,  766,  767 
Ruettell    V.    Greenwich    Ins. 

Co.  (N.  Dak.),  113  N.  W. 

1029 
Ruhlender  v.  Chesapeake,  etc. 

R.  Co.,  91  Fed.  5;   33  C.  C. 

A.  299 
Rule  V.  Jewell,  18  Ch.  D.  660 
Rumball       v.       Metropolitan 

Bank,  2  Q.  B.  D.  194      201,  688 
Rumbough  v.  Southern  Imp. 

Co.,  112  N.  Car.  751;    17  S. 

E.  536;    34  Am.  St.  Rep. 

528  1371 

Rumsey  v.  People's  Ry.  Co., 

91  Mo.  App.  202  1515,  1608 

Ruse   V.    Bromberg,   88  Ala. 

619;    7  So.  384  625 

Rush  V.  Halcyon  Steamboat 

Co.,  84  N.  Car.  702  234 

Russell  V.  Bristol,  49  Conn. 

251  176,  1093 
V.  Cassidy,  108  Mo.  App. 

577;  84  S.  W.  171  844 
V.  East  AngHan  Ry.  Co., 

3  Mac.  &  G.  124  1393,  1500 
V.  Easterbrook,  71  Conn. 

50;     40   Atl.    905  616,  748 

V.    McLellan,    14    Pick. 

(Mass.)  63  873 

V.      North     American 

Benefit    Ass'n,    116    Mich. 

699;  75N.  W.  137  577 

V.  Rock  Run  Fuel  Gas 

Co.,    184   Pa.   St.    102;    39 

Atl.  21  174,  1079,  1083 

V.    Temple,    3    Dane's 

Abridgment  (Mass.)  108 

V.    Wakefield     Water- 
works Co.,  20  Eq.  474 

V.     Washington     Sav. 

Bank,  23  App.  D.  C.  308 


420 
976 


Russian  Petroleum,  etc.  Co.  v. 

London   Investment  Trust 

(1907),  2Ch.  540 
Russian       Spratt's       Patent 

(1898),  2  Ch.  149 


591, 
1372 


1473 
1514 


clxxvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Rutherford  v.  Hill,  22  Oreg. 

218;   29  Pac.  546;    29  Am. 

St.  Rep.  596;    17  L.  R.  A. 

549 
Rutlierfonl's  (':ise,  4  A.  C.  548 
Rutland  lOlectric  Lif^lit  Co.  v. 

Bates,  08  Vt.  579;    :J5  Atl. 

480;  54  Am.  St.  Rep.  904 


252 
800 


1345, 
1345 


847 


Rutland,  etc.  Co.  v.  Proctor, 

29  Vt.  93 
Rutland,   etc.    R.   R.    Co.    v. 

Thrall,  35  Vt.  536  438,  602, 

603,610,  611,  626,  658,  661, 
667,  1108 
Rutledge,  Ex  parte,   1  Harp. 

En.  (S.  Car.)  65;    14  Am. 

Dec.  696  1114,  1137,  1147 

Rutten  V.  Union  Pac.  Ry.  Co., 

17  Fed.  480 
R.    W.    Rogers   Co.    v.    Wm. 

Rogers  Mfg.  Co.,   70   Fed. 

Rep.  1017;    17  C.  C.  A.  576 
Ryan    v.    Farmers'    Bank,    5 

Kans.  658 
V.  Hays,  62  Tex.  42 


1677 


376 


1041 


1622 


Sadgrove  v.  Bryden  (1902),  1 

Ch.  318 
Sadler  v.  VVorley  (1894),  2  Ch. 

170 
Sage  V.  Central  R.  R.  Co.,  99 

U.  S.  334  1558,  1622,  1623, 
1625,  1628,  1675 
V.  Culver,  147  N.  Y.  241 ; 

41  N.  E.  513  935 
V.  Mempliis,  etc.  R.  R. 

Co.,  125  U.  S.  361;   8  Sup. 

Ct.  887        1517,  1517,  1528 
V.  Shore  Line  Ry.  C^o.,  2 

New  Brunsw.  Eq.  321     1649 

,  Re,   70  N.  Y.  220    903,  906 

Sagory  v.  Dubois,  3  Sandf.  Ch. 

(N.  Y.)  406  162,  1128 

Salilgaard  v.  Kennedy,  2  Fed. 

295 
V.  Kennedy,  13  Fed.  242 


1636 
1588, 
1589 


226 
1610, 
1620 


V.  Leavenworth,  etc.  Ry. 

Co.,  21  Kans.  365  963,  1134 

1304,  1333  1346, 

V.  Martin,  91  N.  Car.  464      233 

V.  McLane,  91  Md.  175; 

46  Atl.   340;    80  Am.   St. 

Rep.  438;  50  L.  R.  A.  501         786 

V.  Williams,  100  Fed.  1 72       947 

1298,  1299 
Ryland  v.  Hollinger,  117  Fed. 

216  151,  220,  274 

Rylander  v.  Sheffield,  108  Ga. 

Ill;    34  S.  E.  348       1324,  1344 


S.  Abrahams  &  Sons  (1902),  1 

Ch.  695 
Sabin  v.  Bank  of  Woodstock, 

21  Vt.  353 
Sabine  Tram  Co.  v.  Bancroft 

&  Sons,  16  Tex.  Civ.  App. 

170;  40S.  W.  837 
Sabre  v.  United  Traction,  etc. 

Co.,  156  Fed.  79        876,  963,  967, 

976 
Sacramento  Bank  v.  Copsey, 

133  Cal.   663;    66  Pac.   8, 

205 
Sacramento,  etc.  R.  R.  Co.  v. 

Superior  Court,  55  Cal.  453 

I 


1498 
775 


79 


1296 
1600 


Sahlgreen  &  Carrall's  Case,  3 

Ch.  323  166,  196 

St.  Charles  Mfg.  Co.  v.  Britton, 

2  Mo.  App.  290 
St.    Clair    v.    Rutledge,    115 

Wise.  583 ;  92  N.  W.  234 
St.  Helen  Mill  Co.,  3  Sawy.  88 

992,  1210 
St.  James  Parish  v.  Newbury- 

port,   etc.   R.   R.   Co..    141 

Mass.  500;  6  N.  E.  749 
St.    Joe,    etc.    Mining   Co.   v. 

First  Nat.  Bank,   10  Colo. 

App.  339;    50  Pac.  1055 

1317,  1328 
St.  John  V.  Erie  Ry.  Co.,  22 

Wall.  136  449,  450 

St.  John's  Electric  Light  Co. 

(1897-1903),       Newfound- 
land 440 
St.  Johns  Nat.  Bank  v.  Steel, 

135  Mich.  165;    97  N.  W. 

704 
St.  Joseph,  etc.  R.  R.  Co.  v. 

Humphreys.  145U.  S.  105; 

12  Sup.  Ct.  795  1611,  1611, 

1612 
St.   Joseph,   etc.    Ry.   Co.   v. 

Shambaugli,  106  Mo.  557; 

17  S.  W.  581 
V.  Smith.  170  Mo.  327; 

70  S.  W.  700 
St.  Joseph  Union  Depot  Co. 

V.    Chicago,    etc.    Rv.    Co., 

131  Mo.  291:  31  S.  W.  908 
V.  Chicago,  etc.  Ry.  Co., 

89  Fed.  648;    32  C.  C.  A. 

284 


609 

392 
917, 


400 


1317, 


135 


1302 


250 
1503 


1632 


1632 


clxxvii 


TABLE    OF    CASES 

[The  references  are  to  pages] 


St.  Joseph's,  etc.  Soc.  v.  St. 

Hed\s-ig's   Church,    3    Pen. 

(Del.)  229;  50  Atl.  535  392 

St.  Joseph's,  etc.  Soc.  v.  St. 

Hedwag's   Church,    4   Pen. 

(Del.)  141;  53  Atl.  353  860 

St.  Ladislaus  Beneficial  Ass'n, 

19  Pa.  Co.  Ct.  Rep.  25      104,  108, 

120 
St.  Lawrence  Steamboat  Co., 

44  N.  J.  Law  529  955,  1014, 

1041,  1041,  1041,  1043,  1059, 
1066,  1066,  1169,  1176,  1178 
St.      Louis      Breweries      v. 

Apthorpe,  79  L.  T.  551  878, 

879 
St.  Louis  Car  Co.  v.  Stillwater 

St.  Ry.  Co.,  53  Minn.  129; 

54  N.  W.  1064  1598,  1598,  1599 
St.  Louis  Colonization  Ass'n 

V.  Hennessy,  11  Mo.  App. 

555  47,  244,  258,  1202 

St.  Louis  Mfg.  Co.  V.  Hilbert, 

24  Mo.  App.  338  517,  520 

St.  Louis  Rawhide  Co.  v.  Hill, 

72  Mo.  App.  142  517,  526,  919 
St.    Louis   Trust  Co.    v.  Des 

Moines,   etc.   Ry.  Co.,  101 

Fed.  632  1659 

V.  Riley,  70  Fed.  32  1568 

St.  Louis,    etc.    Ins.    Co.    v. 

Goodfellow,  9  Mo.  149  774 

St.  Louis,  etc.  R.   R.  Co.  v. 

Chenault,  36  Kans.  51;    12 

Pac.  303  1342 

V.   Cleveland,   etc.   Ry. 

Co.,  125  U.  S.  658;    8  Sup. 

Ct.  1011  1559,  1562,  1564 

V.  O'Hara,  177  111.  525; 

52  N.  E.  734;  53  N.  E.  118 

1247,  1564,  1569 

V.    Southwestern    Tel. 

etc.  Co.,  121  Fed.  276;   58 

C.  C.  A.  198  121 

V.    Terre    Haute,    etc. 

R.  R.  Co.,  145  U.  S.  393; 

12  Sup.  Ct.  953  836,  841,  843 

V.  Tieman,  37  Kans.  606; 

15  Pac.  544        82,  312,  330,  918, 

1320 
St.  Louis,    etc.    Ry.    Co.    v. 
Continental  Trust  Co.,  Ill 
Fed.  669;  49  C.  C.  A.  529       1566, 

1568 

V.    Holbrook,    73    Fed. 

112;  19  CCA.  385       1617,1618, 
1634,  1643 

V.  Jackson,  95  Fed.  560; 

37  C  C  A.  165  1633 


St.  Louis,  etc.  Ry.  Co.  v.  Stark, 

55  Fed.  758 ;  5  C.  C.  A.  264  1634 
V.  Whitaker,  68  Tex.  630 ; 

5  S.  W.  448  1551 

St.  Luke's  Church  v.  Mat- 
thews, 4  Desaus.    (S.   Car.) 

578;  6  Am.  Dec.  619  1031,  1227 
St.  Mary's  Benevolent  Ass.  v. 

Lynch,   64   N.   H.   213;     9 

Atl.  98  1003 

St.   Nicholas  Greek  Catholic 

Society,  29  Pa.  Co.  Ct.  193  996 
St.  Paul  Nat.  Bank  v.  Life  Ins. 

Clearing  Co.,  71  Minn.  123; 

73  N.  W.  713  772 

St.    Paul    Title,    etc.    Co.    v. 

Diagonal  Coal  Co.,  95  Iowa 

551;  64  N.  W.  606  1542,1655 
St.  Paul  Trust  Co.  v.  Wam- 

pach  Mfg.  Co.,  50  Minn.  93; 

52  N.  W.  274  75 

St.   Paul,  etc.   R.   R.   Co.   v. 

Robbins,  23  Minn.  439  198,  198 
St.  Peters  R.  C  Congregation 

V.  Germain,  104  111.  440  848 

St.    Romes   v.    Levee   Steam 

Cotton  Press,  20  La.  Ann. 

381  1122 

Salem    Mill    Dam    Corp.    v. 

Ropes,  6  Pick.  (Mass.)  23       607, 

608 
Salina  Nat.  Bank  v.  Prescott, 

60  Kans.  490;  57  Pac.  121  1306, 
1323,  1324 
Salisbury  v.  Metropolitan  Ry. 

Co.,  22  L.  T.  839  1265 

Salisbury  Gold  Mining  Co.  v. 

Hathom  (1897),  A.  C  268     1056, 

1057 
Salisbury  Mills  v.  Townsend, 

109  Mass.  115  711,  738,  756, 

799,  1130 
Salomon  v.   Salomon    &,   Co. 

(1897),  A.  C  22  148,  226,  262, 
266,  317,  330,  872,  881,  882, 
882,  883,  1085 
Salomons  v.  Laing,  12  Beav. 

339  92,  951 

Salt  Lake  City  v.   Hollister, 

118U.S.256;6Sup.Ct.  1055  870 
Salt  River  Canal  Co.  v.  Hickey, 

36  Pac.  171;  4  Ariz.  240  426, 

427 
Saltmarsh  v.  Spaulding,   147 

Mass.  224;  17  N.  E.  316  1208, 
1315,  1344 
Salton  V.  New  Beeston  &  Co. 

(1899),  1  Ch.  775  1170,  1172, 

1228,  1241 


clxxviii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Sampson  v.  Bowdoinham,  etc. 

Corp.,  36  Me.  78  912,  1004, 

1211,  1224 

V.   Fox,    109  Ala.   G62; 

19  So.  896;  55Am.  St.  Rep. 

950  1370 

Samuel  v.  Holladay,  1  Woolw. 

400  559,  588,  938,  946,  950, 

975,    1000,   1200,   1222 

V.   Jarrah  Timber,   etc. 

Corp.  (1904),  A.  C.  323  1405 

San  Antonio,  etc.  Ry.  Co.  v. 

Adams,  87  Te.x.  125;   26  S. 

W.  1040  1203 
V.  Barnett  (Tex.),  44  S. 

W.  20  1644 

San  Buenventura,  etc.  Co.  v. 

Vassault,  50  Cal.  534  998 

San  Diego  v.  San  Diego,  etc 

R.  R.  Co.,  44  Cal.  106 


San  Diego  Gas  Co.  v.  Frame, 
137  Cal.  441;  70  Pac.  295 


1305, 
1306 

124, 
125 


San  Diego,  etc.  R.  R.  Co.  v. 

Pacific  Beach  Co.,  112  Cal. 

53;   44  Pac.  333;   33  L.  R. 

A.  788  1306, 1306,  1310,  1310 

San  Francisco  Water  Co.  v. 

Pattee,  86  Cal.  623 ;  25  Pac. 

135  1343,  1344 

San     Joaquin,     etc.     Co.    v. 

Beecher,    101   Cal.   70;    35 

Pac.  349  154,  209,  212,  1227 
V.  West,  94  Cal.  399;  29 

Pac.  785  213,  303 

San    Jose    Savings    Bank    v. 

Sierra  Lumber  Co.,  63  Cal. 

179  1225 

San  Pedro  Lumber  Co.  v.  Rey- 
nolds,    121    Cal.     74;     53 

Pac.  410  1288 

Sanborn  v.  Clough,  64  N.  H. 

315;    10  Atl.  678  1451 

Sanders  v.  Bromley,  55  L.  T. 

N.  s.  145  502 

Sanderson  v.  Aetna  Iron,  etc. 

Co.,  34  Oh.  St.  442  520 

Sands  v.  Sanders,  26  N.  Y.  239 

604 
Sandusky  Coal  Co.  v.  Walker, 

27  Ont.  677  307,  337 

Sandy    River   R.    R.    Co.    v. 

Stubbs,  77  Me.  594;   2  Atl. 

9  1341 

Sanford  Fork  &  Tool  Co.  v. 

Howe,    Brown   &  Co.,    157 

U.S.  312;  15Sup.  Ct.  621 


1309 
1310,  1315 


354 


594 


Sanger  v.  Upton,  91  U.  S.  56         154 
Sangster  v.  Netter,  9  Times 

L.  R.  441 
Sanitaiy  Can  Co.  v.  MuUins, 

86  N.   Y.  App.   Div.   450; 

83  N.  Y.  Supp.  918 
Sankey,  Brook  Coal  Co.  (No. 

1),  9  Eq.  721  66,  1513 

(No.  2),  10  Eq.  381       65,  1513. 

1513 
Santa  Clara  Mining  Ass'n  v. 

Meredith,  49  Md.  389;    33 

Am.  Rep.  264  1237 

Santa    Cruz    R.    R.    Co.    v. 

Spreckles,  65  Cal.    193;    3 

Pac.  661,  802  651,  653 

Santa  Fe  Pac.  R.  R.  Co.  v. 

Davidson,  149  Fed.  603  890 

Santa  Rosa  R.  R.  v.  Central 

Street    Ry.    Co.,    38    Pac. 

986  (Cal.)  304 

Sanxey   v.    Iowa   City   Glass 

Co.,  63  Iowa  707;     17  N. 

W.  429  1622, 1628 

Saragossa,  etc.  Ry.  Co.  v.  Col- 

lingham  (1904),  A.  C.  159        1672 
Sargent  v.  Essex  Marine  Ry. 

Corp.,  9  Pick.  (Mass.)  202        1131 

V.  Franklin  Ins.  Co.,  8 

Pick.  (Mass.)  90;    19  Am. 

Dec.  306  571,  695,  716,  744, 
753,  813,  1124 
V.  Kansas,  etc.  R.  R.  Co., 

48    Kans.    672;     29    Pac. 

1063 
V.  Sargent  Granite  Co.,  3 

N.  Y.  Misc.  325;    23  N.  Y. 

Supp.  886  ■ 

V.    Webster,    13    Mete. 

(Mass.)  497;   46  Am.  Dec. 

743    1178,  1201,  1202,  1204, 
1205 

,  Ex  parte,  17  Eq.  273  686, 

686,  747,  807 
Sarmiento  v.  Boat  &  Oar  Co., 
105  Mich.  300:    63   N.   W. 
205;  55  Am.  St.  Rep.  446        397, 
398,  1382,  1382 
Sasser  v.  State,  13  Oh.  Rep. 

453  230 

Saunders  v.  Fanner,  62  N.  H. 

572  113 

V.  Sun  Life  Ass.  Co.  of 

Canada  (1894),  1  Ch.  537 


1347 


1246 


Saup  v:  Morgan  &  Co.,  108  III. 

326 
Savage  r.  Bartlett,  78  Md.  561 ; 

28  -Ul.  414 


375, 
378 

420 

ISO 


clxxix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Savage  v.  Madelia,  etc.  Ware- 
house Co.  (Minn.),  108  N. 
W.  296  1244 

V.   People's  Bldg.,   etc. 

.\ss'n,  45  W.  Va.  275;    31 

S.  E.  991  584 

Savannah  Mills  v.  Cunning- 
ham, 100  Ga.  468;  28  S.  E. 
435  1182 

Savannah,  etc.  Bldg.  Co.  v. 
Silverberg,  108  Ga.  281 ;  33 
S.  E.  908  456 

Savannah,  etc.  R.  R.  Co.  v. 
Jacksonville,  etc.  Ry.  Co., 
79  Fed.  35;  24  C.  C.  A. 
437  1612 

• V.  Lancaster,  62  Ala.  555 

392,  1429,  1462,  1466 

Savin  v.  Hoylake  Ry.  Co.,  L. 

R.  1  Ex.  9  294,  295 

Savings  Bank  v.  Burns,   104 

Cal.  473;  38  Pac.  102      1329 

V.  Davis,  8  Conn.  191    397, 

398,  912,  1200 

Savings  Bank  of  Cincinnati  v. 

Benton,  2  Met.  (Ky.)  240       1373, 

1382 

Savings  Bank  of  Louisville's 
Assignee  v.  Caperton,  87 
Ky.  306;  8  S.  W.  885;  12 
Am.  St.  Rep.  488  1275,  1278, 

1278 

Savings  &  Trust  Co.  v.  Bear 

Valley  Irr.  Co.,  93  Fed.  339      1585 

V.  Bear  Valley  Irr.  Co., 

112  Fed.  693  833 

Sawyer  v.  Hoag,  17  Wall.  610       528, 

612,  612 

V.    Pawners'    Bank,    6 

Allen  (Mass.)  207  1237 

Saxlehner     v.     Eisner,    147 

Fed.  189;   77  C.  C.  A.  417      1356 
Sayles  v.  Bates,  15  R.  L  342; 

5  Atl.  497  692 

V.  Blane,  14  Q.  B.  205        782 

V.      Brown,      40      Fed. 

Rep.  8  492,  1010 

V.  White,  18  N.  Y.  App. 

Div.  590;    46  N.  Y.  Supp. 
194  1285 

Saylor  v.  Commonwealth  In- 
vestment,   etc.    Co.,    38 
Oreg.  204;    62  Pac.  652  1299, 

1328 
Sayre  v.  Glenn,  87  Ala.  631; 

6  So.  45  623,  624 
Sayward  v.  Gardner,  5  Wash. 

247;   31  Pac.  761;   33  Pac. 

389  302 


Scadden  Flat,  etc.  Co.  v. 
Scadden,  121  Cal.  33;  53 
Pac.  440  .     280,  290 

Scanlan  v.  Snow,  2  App.  D. 

C.  137  583,  585,  962,  963, 

966,  973,  998,  1040,  1041 
Scarlett  v.  Academy  of  Music, 

43  Md.  203  603 

V.  Academy  of  Music,  46 

Md.  132  166,  605 

Schaefer  v.  Scott,  40  N.  Y. 
App.  Div.  438;  57  N.  Y. 
Supp.  1035  1372 

Schaeffer  Piano  Mfg.  Co.  v. 
Nat.  Fire  Extinguisher  Co., 
148  Fed.  159;  78  C.  C.  A. 
293  85 

Schaffhauser  v.  Arnholt,  etc. 
Brewing  Co.  (Pa.),  67  Atl. 
417  1322 

Schallard  v.  Eel  River  Nav. 
Co.,  70  Cal.  144;  11  Pac. 
590  1490,  1490 

Schantz  v.  Oakman,  10  N.  Y. 
App.  Div.  151;  41  N.  Y. 
Supp.  746  274,  336 

Schell  V.  Alston  Mfg.  Co.,  149 

Fed.  439  429,  1111 

Schenectady,  etc.  Co.   v. 

Thatcher,  11  N.  Y.  102  605, 

607,   617,    1007,    1227,    1232, 
1232 
Scherck   v.    Montgomery,    81 

Miss.  426;  33  So.  507  697, 

751,  787 
Schickel   v.    Berryville   Land 
Co.,  99  Va.  88;    37  S.  E. 
813  1238, 1320 

Schierenberg  v.  Stephens,  32 

Mo.  App.  314  493 

Schmidt  v.  Hennepin  County 
Barrel  Co.,  35  Minn.  511; 
29  N.  W.  200  776 

V.  Louisville, etc.  Ry. Co., 

84  S.  W.  314;  27  Ky.  Law 
Rep.  21       1449,  1678,  1679, 
1679,  1679 

V.  Mitchell,  101  Ky.  570; 

41  S.  W.  929;  72  Am.  St. 
Rep.  427      1024,  1025,  1044, 
1046, 1046, 1047, 1047, 1176, 1250 

V.  Nelke  Art  Lithograph 

Co.,  16  N.  Y.  Misc.  300;  37 

N.  Y.  Supp.  1138         293 

V.  Pritchard  (Iowa),  112 

N.  W.  801  506,  507,  509,1039 

1250 
Schneider  v.  Sellers,  98  Tex. 

380;   84  S.  W.  417  850,  1235 


clxxx 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Schnittger  v.  Old  Home,  etc. 

Co.,     144     Cal.      60.3;      78 

Pac.  9  1298,1299,1311,1317 

Sclioenfeld  v.   American   Can 

Co.  (N.  J.),  5.5  .\tl.  1U44  950 

Schoening    v.    Schwenk,     112 

Iowa  733;  84  N.  VV.  916  944, 
1320,  1365 
Schofield    V.    Goodrich    Bros. 

iiankiiig  Co..  98  Fed.  271; 

39  C.  C.  A.  76  75,  76,  834 
V.  Nat.  State  Bank,  97 

Fed.  282;  38  C.  C.  A.  179        1305 
Scholefield  v.  Redfern,  32  L. 

J.  Ch.  627;    2  Dr.  &  Sm. 

173  1156,  1444 

Scholey  v.  Central  Ry.  Co.,  9 

Eq.  266  181 

Schraederr.  HeinzelmanBros., 

51  111.  App.  31  1342 

Schreyer  v.  Turner  Flouring 

Mills  Co.,  29  Oreg.   1;    43 

Pac.  719  283,  284,  288 

Schuetz  V.  German-American 

Real  Estate  Co.,  21  N.  Y. 

App.  Div.   163;    47  N.  Y. 
•     Supp.  500  666 

Schufeldt  V.  Smith,  131    Mo. 

280;  31S.  W.  1039:  52  Am. 

St.  Rep.  628;  29  L.  R.  A. 

830  1318 
V.  Smith,  139  Mo.  367; 

40  S.  W.  887      297,  298,  299 
Schultze  V.  Van  Doren,  64  N. 

J.  Eq.  465;  53  Atl.  815;  65 

N.  J.  Eq.  764 ;  55  Atl.  1 133   1586 

Schurr  v.  Omaha,  etc.  Ry.  Co., 

98  Iowa  418;  67  N.  W.  280   1609 

Schuyler  County  v.   Coquard, 

9  Mo.  App.  592  230 

Schuyler  Nat.  Bank  v.  Gads- 
den, 191  U.  S.  451;  24 
Sup.  Ct.  129  835,  835 

Schwab  V.  Frisco  Mining,  etc. 
Co.,  21  Utah  258;  60  Pac. 
940  1226 

Schwartz  v.  State,  61  Oh.  St. 

497;   56  N.  E.  201  1015 

Sch\nnd  v.  Boyce,  94  Md.  510; 

51  Atl.  45  804 

Scinde,  etc.  Rank  Corpora- 
tion, 6  Ch.  5.3  n  434 

Scollans  v.  Rollins,  173  Mass. 

275  1430 

Scots  Charitable  Soc.   v. 

Shaw,  8  Mass.  532  304 

Scott  V.  B.  &  O.  R.  R.  Co.,  93 

Md.  475;  49  Atl.  327        457,  460, 

401 
clx 


Scott,   V.   Bankers'    Union 

(Ivans.),  85  Pac.  604  851,  1407 
V.  Central  R.  R.  etc.  Co., 

52  Barb.  45  1119,  1122 

V.   Clinton,  etc.   R.    R. 

Co.,  6  Bi.ss.  529  1503 

V.  Colburn,  26  Beav.  276  65 

V.  Depeyster,  1  Edw.  Ch. 

(N.  Y.)  513  1268,     1275, 

1728 

V.   Deweese,    181   U.  S. 

202;   21  Sup.  Ct.  585         489,  492 

V.   Eagle  Fire   Ins.  Co., 

7  Paige  (N.  Y.)  198         1112,1112 

V.  Farmers'  L.  &.  T.  Co., 

69    Fed.    17;    16  C.  C.  A. 

358  1608 

V.   Farmers',  etc.   Nat. 

Bank,   97  Te.x.  31;    75  S. 

W.  7  1317,  1334,  1497 
V.  Houpt,  73  Ark.  78;  83 

S.  W.  1057  702,  716 
V.  Latimer,  89  Fed.  843 ; 

33  C.  C.  A.  1  180,  491 

V.  Lord  Ebury,  2  C.  P. 

255  283,  310 

V.     Pequonnock  Nat. 

Bank,  21  Blatchf.  203  715 

V.  Rainier,  etc.  Ry.  Co., 

13  Wash.  108;  42  Pac.  531      1611, 

1611 

V.  Scott,  68  N.  H.  7;   38 

Atl.  567  1014,  1053,  1177 

V.   Superior  Sunset  Oil 

Co.,  144  Cal.  140;    77  Pac. 

817  1222 

Scott   &   Horton  v.   Godfrey 

(1901),  2  K.  B.  726  779 

Scottish  N.  E.  Ry.  Co.  v.  Stew- 
art, 3  Macq.  H.  L.  382  283 

Scottish    Petroleum    Co.,    23 

Ch.  D.  413         178,  179,  184,  1205 

Scottish  Security  Co.'s  Re- 
ceiver V.  Starks,  25  Ky. 
Law  Rep.  1722;  78  S.  W. 
455  204 

Scovill  V.  Thayer,   105  U.  S. 

143  483,  486,  492,  612,  614 

Screven  Hose  Co.  v.  Pliilpot, 

53  Ga.  625  858 
Scripture    v.    Francestown 

Soapstone   Co..   50   N.    H. 

571  715,  717 

Scruggs  V.  Cotterill.  67  N.  Y. 

App.  Div.  583;     73   N.    Y. 

Supp.  882  _  786 

Seaboard    .Vir    Line    Ry.    v. 

Knio'corbocker    Trust    Co., 

125  Ga.  403;  54  S.  E.  138  1568 
^:xi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Seacoast  R.  R.  Co.  v.  Wood, 

65  N.  J.  Eq.  530;    56  Atl. 

337  303,  332 

Seacord  v.  Pendleton,  55  Hun 

(N.  Y.)579;  9  N.  Y.  Supp. 

46  252 

Searles  v.  Gebbie,  115  N.  Y. 

App.  Div.  778;    101  N.  Y. 

Supp.  199  979,  1120,  1121,1354 
Sears    v.     Illinois    Wesleyan 

University,  28  111.  183  1377 
Seaton  v.  Grant,  2  Ch.  459  965, 
965,  968 
V.  Grimm,  110  Iowa  145; 

81  N.  W.  225  127,  237 

Seattle,  etc.  Ry.  Co.,  61  Fed. 

541  1614 

V.  Union  Trust  Co.,  79 

Fed.  179;  24  C.  C.  A.  512  1623, 
1638,  1638 
Seattle  Trust  Co.   v.   Pitner, 

18    Wash.    401;     51    Pac. 

1048  464,  613,  1114 

Sebastian  v.  Covington  Bridge 

Co.,  21  Oh.  St.  451  1371 

Second  Ave.  R.  R.  Co.  v.  Cole- 
man, 24  Barb.  (N.  Y.)  300  1378 
Second  Nat.  Banki;.  First  Nat. 

Bank,  8  N.  Dak.  50;   76  N. 

W.  504  753 

Second  Universalist  Church  v. 

Colegrove,    74    Conn.    79; 

49  Atl.  902  1099,  1144,  1154 

Secor  V.  Toledo,  etc.  Ry.  Co., 

7  Biss.  513  1620 

Securities,    etc.    Corp.    v. 

Brighton  Alhambra,  62  L. 

J.  Ch.  566;  68L.  T.  249         1590, 

1650 
Security    Nat.    Bank    v.    St. 

Croix  Power  Co.,  117  Wise. 

211;   94  N.  W.  74  833 

Security   Trust   Co.    v.    Ford 

(Oh.),  79  N.  E.  474  115,  143 

V.  Goble  R.  R.  Co.,  44 

Oreg.  370;   74  Pac.  919;  75 

Pac.  697  1543,  1560 

Sedalia,  etc.Ry.  Co.  v.  Wil- 

kerson,  83  Mo.  235  209,  209,  212 
Sedgwick,    Ex   parte,   2  Jur. 

N.S.  949  1244 

See  V.  Heppenheimer  (N.  J.), 

61  Atl.  843  634,  635 

Seebeck  v.    King,   34   N.    Y. 

Misc.  483;   70  N.  Y.  Supp. 

322  1185 

Seeley  v.  New  York  Nat.  Ex- 
change  Bank,  8  Daly  (N. 

Y.)  400;    78  N.  Y.  600  541 


715 


1517 


1641 
1173 


Seeligson  v.  Brown,  61  Tex. 

114 
Seibert   v.    Minneapolis,    etc. 

Ry.  Co.,  52  Minn.  246;    53 

N.  W.  1151 
Seignouret  v.  Home  Ins.  Co., 

24  Fed.  332  529,  529 

Seller  v.  Union  Mfg.  Co.,  50 

W.  Va.  208;  40  S.  E.  547 
Self-Acting   Sewing   Machine 

Co.,  54  L.  T.  676 
Seligman  v.  Prince  (1895),  2 

Ch.  617  1308,  1399 

Sellar  v.  Charles  Bright  &  Co. 

(1904),  2  K.  B.  446        415,  1397 
Sellers  v.  Greer,  172  111.  549; 

50  N.  E.  246;    40  L.  R.  A. 

589       1069,  1071,  1072,  1073,1078 
V.  Phoenix  Iron  Co.,  13 

Fed.  20  935,  1313 

Selley  v.  American  Lubricator 

Co.,     119    Iowa    591;     93 

N.  W.  590  918,  1276 

Selma,  etc.  R.  R.  Co.  v.  Tip- 
ton, 5  Ala.   787;    39  Am. 

Dec.  344  1231 

Selover  v.  Isle  Harbor  Land 

Co.,    91     Minn.     451;     98 

N.  W.  344  199,  287 
V.     Isle     Harbor    Co. 

(Minn.),  Ill  N.  W.  155  199 

Semple  v.  Glenn,  91  Ala.  245; 

6  So.  46;  9  So.  265;  24  Am. 

St.  Rep.  894  614,  615 

Seneca  County  Bank  v.  Lamb, 

26  Barb.  (N.  Y.)  595 
Senn  v.   Levy,  23   Ky.   Law 

Rep.  662,  1331;   63  S.  W. 

776 
V.  Union,  etc.  Mercantile 

Co.,  115  Mo.  App.  685;   92 

S.  W.  5D7  745,  752,  752,  752 

Senour   Mfg.    Co.    v.    Church 

Paint,   etc.   Co.,   81   Minn. 

294;    84  N.  W.  109  35,39 

Seventeenth   Ward    Bank   v. 

Smith,  51  N.  Y.  App.  Div. 

259 ;  64  N.  Y.  Supp.  888 
Seventh  Nat.  Bank  v.  Shen- 
andoah Iron  Co.,  35  Fed. 

436 
Severn  &  Wye  Ry.  Co.  (1896), 

1  Ch.  559  1122,  1123 

Severson   v.    Bimetallic,    etc. 

Co.,  18  Mont.  13 ;  44  Pac.  79     1247 
Sewall  V.  Boston  Water  Power 

Co.,  4   Allen    (Mass.)   277; 

81  Am.  Dec.  701       729,  755,  755, 
755,  755 


594 


141 


1368 


1560 


clxxxii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


94 

780 


Sewall  V.  Eastern  R.  R.  Co.,  9 

Gush.  (Mass.),  5  505,  507 
V.    Lancaster   Bank,    17 

S.  &  R.  (Pa.)  285       424,  424,  774, 

774 
Sewell    V.    Brainerd,   38    Vt. 

364  1453 

Sewell's  Case,  3  Ch.  131     142,  486, 

491 
Sexton   V.    Snyder,    119    Mo. 

App.  668;  94  S.  W.  562      129,  252 
Seyberger  v.  Calumet  Drain- 
ing Co.,  33  Ind.  330 
Seymour  v.  Bridge,  14  Q.  B 

D.  460 
V.  Canandaigua,  etc.  R. 

R.  Co.,  25  Barb.  284  1503,1520 
V.    Spring    Forest,    etc. 

Ass'n,   144  N.  Y.  333;    39 

N.  E.  365;  26  L.  R.  A.  859      286, 
331,  1341,  1342,  1342,  1342 
S.  Frost  &  Co.  (1899),  2  Ch. 

207  640,  640 

Shackleford  v.  New  Orleans, 

etc.  R.  R.  Co.,  37  Miss.  202     1246, 

1248 
Shackleford,    Ford   &  Co.   v. 

Dangerfield,  L.  R.  3  C.  P. 

407  385.  386,  606 

Shackleford's  Case,  1  Ch.  567       166 
Shakopee  Mfg.  Co.,  37  Minn. 

91;   33  N.  W.  219  219 

Shamokin  Valley  R.  R.  Co.  v. 

Livermore,  47  Pa.  St.  465; 

86  Am.  Dec.  552  1520 

Shannon    v.     Howard     Mut. 

Bldg.  Ass'n,  36  xMd.  383  580 

Sharp  V.  Dawes,  2  Q.  B.  D.  26     1010, 

1202 

Sharpe.  Re  (1892),  1  Ch.  154     1285, 

1287,  1289 

Sharpley  v.  South  Ry.  Co.,  2 

Ch.  D.  663 
Shattuck  V.  American   Cem- 
ent  Co.,    205    Pa.  St.  197; 

54  Atl.   785;    97  Am.   St. 

Rep.  735 
V.  Oakland,  etc.  Co.,  58 

Cal.  551 
Shaw  V.  Benson,  11  Q.  B.  D. 

563 
V.  Bentley  &  Co.,  68  L. 

T.  812 

V.  Bill,  95  U.  S.  10 

V.  Cordis,  143  Mass.  443; 

9  N.  E.  794 

V.    Davis,   78   Md.   308; 

28  Atl.  619;    23  L.  R.  A. 

294  1076,  1079,  1080,  1081 


177 


727 

1295 

260 

363 
1472 

1446 


Shaw  V.Gilbert,  111  Wise.  165; 

68  N.  W.  188  425 
V.  Holland  (1900),  2  Ch. 

305  1339 
V.  Nat.  German-Ameri- 
can   Bank,    132    Fed.    6.58; 

65  CCA.  620;    199  U.  S. 

603;    26  Sup.  Ct.  750  75,  834 
V.    Norfolk,   etc.    R.    R. 

Co.,  5  Gray  162  (Mass.)  I486, 
1495,  1584,  1.586,  1600 
V.    Port    Philip    Mining 

Co.,  13  Q.  B.  D.  103       730,  731, 
740,  1362 
V.     Railroad     Co.,     100 

U.  S.  605  1485,  1649,  1671 
V.    Spencer,    100    Mass. 

382;    97  Am.  Dec.  107;    1 

Am.  Rep.  115  720,798 

Shaw's  Case,  34  L.  T.  715      189,  192 
Shea  V.  Mabry,  1  Lea  (Tenn.) 

319  918,  1275 

Shearman, /2e,  66  L.  J.  Ch.  25      177, 

181 
Shears  v.  Jacobs,  L.  R.  1  C.  P. 

513  383,  405 

Sheffield  v.   Johnson  County 

Sav.  Bank  (Ga.),  58  S.  E. 

386  393 

Sheffield  Corporation  v.  Bar- 
clay (1905),  A.  C  392  758,759 
Sheffield  Gas,  etc.  Co.  v.  Har- 
rison, 17  Beav.  294  199 
Sheffield  Nickel  Co.  v.  Unwin, 

2  Q.  B.  D.  214  526 

Sheffield,    etc.     Ry.     Co.    v. 

Woodcock,  7  M.  &  W.  574      602, 
605,  1180 
Sheldon  Canal  Co.   v.   Miller 

(Tex.),  90  S.  W.  206        912,  1006 
Shellenberger  v.  Altoona,  etc. 

R.  R.  Co.,  212  Pa.  St.  413; 

61  Atl.  1000;    108  Am.  St. 

Rep.  876  1433 
V.  Patterson,  168  Pa.  St. 

30;   31  Atl.  943        509,  509,  1228 
Shellington    v.    Howard,    53 

N.  Y.  371  697 

Shelinerdine     v.     Welsh,     20 

Phila.  199  1053 

Shenandoah  Valley  R.  R.  Co. 

V.  Griffith,  76  Va.  913  717 

Shepard    v.    Richardson,    145 

Mass.  32;    11  N.  E.  738  1622 

Shopaug  Voting  Trust  Cases, 

60  Conn.  553;    24  Atl.  32         801, 
966,  1048,  10.50,  10.53,  1053 
Shepheard  v.  Bray  (1906),  2 

Ch.  235  1349 


clxxxiii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Shepherd  v.  Gillespie.  3  Ch. 

764  706,  782,  1349,  1350 

V.  Harris  (1905),  2  Ch. 

310  700,  701 

Sheppard  v.  Scinde,  etc.  Ry. 
Co.,  56  L.  J.  Ch.  866;  36 
W.  R.  1  433 

Sheridan  Brick  Works  v.  Ma- 
rion Trust  Co.,  157  Ind.  292 
61  N.  K.  666;    87  Am.  St. 
Rep.  207  958 

Sheridan,  etc.  Co.  v.  Chatham 
Nat.  Bank,  127  N.  Y.  517; 

28  N.  E.  467  1214,  1215 
Sherman  v.  Am.   Stove  Co., 

85  Mich.  169;  48  N.  W.  537  182 
Sherman,    etc.    Town   Co.    v. 

Morris,  43   Kans.  282;    23 

Pac.  569;    19  Am.  St.  Rep. 

134  109,  111,  852 
V.  Swigart,  43  Kans.  292 ; 

23  Pac.  569;  19  Am.  St. 

Rep.  137  1376,  1377 

Sherrard  v.  Sherrard,  3  Atk. 

502  1442 

Sherwood   v.    Alvis,    83   Ala. 

115;  3  So.  307  866 
V.  Atlantic,  etc.  R.  R. 

Co.,  94  Va.  291;    26  S.  E. 

943  1632 
V.  Illinois  Trust,  etc.  Co., 

195  111.  112;   62  N.  E.  835; 

88  Am.  St.  Rep.  183  616,  623 
V.  Meadow  Valley  Min- 
ing Co.,  50  Cal.  412  682,  726 
Shick  V.  Citizens'  Enterprise 

Co.,  15  Ind.  App.  329;    57 

Am.  St.  Rep.  230  113,  195,  213, 
214,  216 
Shickle  v.  Watts,  94  Mo.  410; 

7  S.  W.  274  635 

Shields  v.  Clifton  Hill  Land 

Co.,94Tenn.  123;  28  S.  W. 

668;   45  Am.  St.  Rep.  700; 

26  L.  R.  A.  509  118,  237,  251, 
306,  309 
Ship's  Case,  2  De  G.  J.  &  S. 

544  215,  215 

Shipley  v.   Mechanics   Bank, 

10  Johns.  (N.  Y.)  484  751 

Shipman  v.   Aetna   Ins.   Co., 

29  Conn.  245  717 
Shively  v.  Eureka,  etc.  Min- 
ing Co.  (Cal.),  89  Pac.  1073     1318 

Shoemaker  v.  Nat.  Mechanics 

Bank,  2  Abb.  (U.S.)  416       74,866 

V.     Nat.      Mechanics' 

Bank,  21  Fed.  Cas.  1331;   1 
Hughes  101  866 


Shoemaker  v.  Washburn  Lum- 
ber Co.,   97  Wise.   585;   73 

N.   \V.  333  517,  531,  534 

Shoknecht       v.       Milwaukee 

Brick,  etc.  Co.,   108  Wise. 

457;  84  N.  W.  838  1196,  1196 
Short   V.    Stevenson,    63    Pa. 

St.  95  340 

Shoun  V.  Armstrong  (Tenn.), 

59S.  W.  790  113 

Shrewsbury,  etc.   Ry.   Co.  v. 

North- Western     Ry.     Co., 

6  H.  L.  Cas.  113,  137  41,828 

Shropshire   Union   Rys.,   etc. 

Co.  V.  Queen,  L.  R.  7  H.  L. 

496  747 

Shufeldt  V.  Carver,  8  111.  App. 

545  416 

Shulman    v.    Star    Suburban 

Realty  Co.,  113  N.  Y.  App. 

Div.  759;    99  N.  Y.  Supp. 

419  1251 

Shumaker  v.   Davidson,    116 

Iowa  569;   87  N.  W.  441  298 

Sias  V.  Consolidated  Lighting 

Co.,  73  Vt.  35;  50  Atl.  554  1196 
Sibley  v.  Quinsigamond  Nat. 

Bank,  133  Mass.  515  716,  717 

Sickles  V.  Richardson,  23  Hun 

(N.  Y.)  559  1405,  1413 

Sidney's  Case,  13  Eq.  228  203,  204 
Siegman   v.   Electric   Vehicle 

Co.  (N.  J.),  65  Atl.  910  939,952, 
1091,  1290 
V.  Electric  Vehicle  Co., 

140  Fed.  117  939 
V.  Maloney,  63  N.  J.  Eq. 

422;   51  Atl.  1003;   54  Atl. 

405,    1125;    65   N.   J.    Eq. 

372  947,  1125,  1265 

Siemens-Halske  Electric  Co. 

V.   Duncan,    142   P'ed.    157; 

73  C.  C.  A.  375  296 

Sierra     Land,     etc.     Co.     v. 

Bricker  (Cal.),  85  Pac.  665  228, 
228,  233,  384 
Sigua  Iron  Co.  v.  Brown,  171 

N.  Y.  488;   64  N.  E.  194  601, 

617,  913 


V.  Greene,  88  Fed.  207 


705, 
921 


V.  Greene,  104  Fed.  854; 

44  C.  C.  A.  221  705 

Silber    Light    Co.    v.    Silber, 

12  Ch.  D.  717  933,  933 

Silk  Mfg.  Co.  V.  Campbell,  27 

N.  J.  Law  539  932 

Silsby  V.  Strong,  38  Oreg.  36; 

62  Pac.  633  1168,  1202,  1206 


clxxxiv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Silver  Hook  Road  v.  Greene, 

12  R.  I.  H)4  1216 

Siniis  V.  Davidson,  54  N.  Y. 

Super.  Ct.  235  1381,  1382 

Simni  V.  Anglo- American  Tel- 
egraph Co.,  5  Q.  B.  D.  188 


I  Singer  Mfg.  Co.  v.  Peck,  9  S. 


73G, 
738 


Simmons  v.  Burlington,  etc. 
Ry.  Co.,  159  U.  S.  278;  16 
Sup.  Ct.  1  1405,    1433, 

V.  Hill,  96  Mo.  679;    10 

S.  W.  61;  2  L.  R.  A.  476 

V.   London  Joint  Stock 

Bank  (1891),  1  Ch.  270; 
(1892)  A.  C.  201 

V.  Taylor,  23  Fed.  849 


1436, 
1627 

705, 
716 


689 
1405, 
1627 

V.  Taylor,  38  Fed.  682        1401, 

1433,  1436,  1627 
Simmons  v.  Troy  Iron  Works, 

92  Ala.  427;    9  So.  160  40 

Simon    v.    Calfee    (Ark.),    95 

S.  W.  1011  226 

Simons  v.  Vulcan  Oil  Co.,  61 

Pa.  St.  202;    100  Am.  Dec. 

628  325,  329 

Simonson  v.  N.  Y.,  etc.  Ins. 

Co.,  141  N.Y.  12;  35  N.  E. 

969  1239 

Simpson     v.     Building,     etc. 

Ass'n,  38  Oh.  St.  349  851 
V.  Heaton's,  etc.  Co.,  19 

W.  R.  614  193 
V.  Molson's  Bank  (1895), 

A.  C.  270  4,  796,  798 
V.    Moore,    30    Barb. 

(N.  Y.)  637  1150,1154 
V.    Palace    Theatre,    69 

L.  T.  N.  s.  70  470 
V.     Westminster,     etc. 

HotelCo.,8H.  L.  Cas.  712  91,97 
Simpson's  Case,  4  Ch.  184  171,  189 
Sims  V.  Comm.,  114  Ky.  827; 

71  S.  W.  929  127 
V.    Petal uma    Gas,    etc. 

Co.,  131  Cal.  656:    63  Pac. 

1011  1295,  1304,  1316 

Simultaneous  Colour  Printing 

Syndicate     v.    Fowerbaker 

(1901),  1  K.  B.  771  1416,  1546 
Sinclair  v.   Dwight,  9  N.   Y. 

App.  Div.  297;    41  N.  Y. 

Supp.  193  1262 

Singer  v.  Salt  Lake.  etc.  Mfg. 

Co.,  17  ITtah  143:    53  Pac. 

1024;  70  Am.  St.  Rep.  773  1199. 
1201,  1210,  1299 


Dak.  29;  67  N.  W.  947 


123,  150, 

151 

25,25 


V.  Wright,  33  Fed.  121 

V.   Wright,  97  Ga.    114; 

25  S.  E.  249;    35  L.  R.  A. 

497  25 

Siou.K  City,  etc.  Co.  v.  Trust 
Co.  of  North  America,  52 
Fed.  191  838 

V.    Trust   Co.    of   North 

America,  82  Fed.  124;    27 

C.  C.  A.  73  109,  1408 

V.   Trust   Co.   of  North 

America,  173  U.  S.  99;    19 

Sup.  Ct.  341  832 

Sioux  City,  etc.  Ry.  Co.  v. 
Manhattan  Trust  Co.,  92 
Fed.  428;  34  C.  C.  A.  431 


1402, 
1625 


Sivin   V.    Mutual    Match   Co. 

(N.  J.),  66  Atl.  921  628 

Skelly  V.  Private  Coachmen's 

etc.  Soc,  13  Daly  (N.  Y.) 

2  561 
Skiddy  v.  Atlantic,  etc.  R.  R. 

Co.,  Re  Stewart's  Petition, 

3  Hughes  320  443,  451,  451, 

1562,  1592,  1652 
Skiff  V.   Stoddard,  63  Conn. 

198;    26  Atl.  874;    28  Atl. 

104;    21  L.  R.  A.  102      418,  807, 

807 
Skillman,  Re,  24  Abb.  N.  C. 

(N.  Y.)  41;   9  N.  Y.  Supp. 

469  1155 

Skinner   v.    City    of    London 

Marine  Ins.  Corp.,  14  Q.  B. 

D.  882  750,  781 

Skinner    Dry    Dock    Co.    v. 

Mayor,   etc.   of   lialtimore, 

96  Md.  32;    53  Atl.  416  102 

Skinner  Mfg.  Co.  v.  Dowville, 

44  So.  1014  (Fla.)  1374 

Skowhegan    Bank  v.   Cutler, 

49  Me.  315  716,  923 

Slater  Woollen  Co.  v.  Lamb, 

143  Mass.  420;  9  N.  E.  823      850, 

856 
Slattery  v.  North  End  Sav. 

Bank,    175  Mass.  380;    56 

N.  E.  606  1373,  1379,  1379 
V.  St.  Louis,  etc.  Trans- 
portation Co.,  91  Mo.  217; 

4  S.  W.  79  978 
Slavden  v.  Seip  Coal  Co.,  25 

Mo.  App.  439  1122 

Slavmaker  v.  Bank  of  Gettys- 
burg, 10  Pa.  St.  373  422,  678 


Ixxxv 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Slee    r.    Broom,     19    Johns. 

(N.  Y.)  456;    10  Am.  Dec. 

273  18,  664 

Slipher  v.    Earhart,   83    Ind. 

173  154,  189,  198 

Sloan  V.  Central  Iowa  Ry.  Co., 

62  Iowa  728;    16  N.  W.  331     1655 
V.    Clarkson    (Md.),    66 

Atl.  18  936 

Slobodinsky,  Re  (1903),  2  K. 

B.  517  300 

Slocum  V.  Head,  105  Wise. 

431;    81  N.  W.  673;    50  L. 

R.  A.  324  124 
V.  Providence  Steam,  etc. 

Co.,  10  R.  I.  112      235,  242 

V.  Warren,  10  R.  I.  116        235 

Small  V.  Herkimer,  2  N.  Y. 

330  667,  769 

V.  Smith,  10  A.  C.  119  92 

Smallev  v.  McGraw  (Mich.), 

Ill  X.  W.  1093  1355 

Smead    v.    Indianapolis,    etc. 

R.  R.  Co.,  11  Ind.  104  1407 

Smiley  v.  Sioux  Beet  Syrup 

Co.  (Nebr.),  99  N.  W.  263        1646 
Smith  V.  Alabama  Fruit  Grow- 
ing, etc.  Ass'n,  123  Ala.  538 ; 

26  So.  232  451,  452,  1106 
V.  American  Coal  Co.,  7 

Lans.  (N.  Y.)  317       715,  748,  756 
V.    Automatic      Photo- 
graphic Co.,   118  111.  App. 

649  750 
V.  Bank  of  New  England, 

72  N.  H.  4;  54  Atl.  385  1234, 
1234,  1277 
V.  Bank  of  Nova  Scotia, 

8  Can.  Sup.  Ct.  558  616,  696, 
744,  746 
V.    Becker   (Wise),    109 

N.  W.  131  418,  807 
V.  Brown  (1896),  A.  C. 

614  641,  642 
V.  Bulkley,  18  Colo.  App. 

227;  70Pac.  958        951,955,955 
V.  Burns  Boiler  &  Mfg. 

Co.  (Wise),  11  N.  W.  1123 

157,  213,  214,  215,  215 
V.  Chicago,  etc.  Ry.  Co., 

18  Wise.  17  1632 
V.  City  of  Janesville,  52 

Wise.  680;  9  N.  W.  789  25 
V.  Cleveland,  etc.  Ry.  Co. 

(Ind.),8lN.  E.  501  250 
V.  Cork, etc.  Ry.  Co.,  3  Ir. 

Rep.  Eq.  356;    5  Ir.  Rep. 

Eq.  65         457,  458,  466,  467,  467, 
467,  467,  1057,  1123 


Smith  V.  County  of  Clark,  54 

Mo.  58 
V.  Dana,  77  Conn.  543; 

60  Atl.   117;    69  L.  R.  A. 

76;   107  Am.  St.  Rep.  51 


1451 


1144, 
1155 


—  V.  Danzig,  64  How.  Pr. 
(N.  Y.)  320  1182 

—  V.  David  H.  Brand  & 
Co.,  67  N.  J.  Eq.  529;    58 

Atl.  1029  371 

—  V.  Dorn,  96  Cal.  73;   30 

Pac.  1024  944,  1197,  1211 

—  V.  Eastern  R.  R.  Co.,  124 
Mass.  154  1515 

—  V.  Eastwood  Wire  Mfg. 
Co.,  58  N.  J.  Eq.  331;  43 
Atl.  567 

—  V.  Erb,  4  Gill  (Md.)  437 


138 
1231, 
1249 


V.   Franklin   Park,   etc. 

Co.,  168  Mass.  345;    47  N. 

E.  409  493 

V.   Galloway    (1898),    1 

Q.  B.  71  578 

V.  Goldworthy,  4  Q.  B. 

430  529 

V.  Gower,  63  Ky.  17  154, 

154,  156,  198 

—  V.  Hooper,  95  Md.   16; 

51  Atl.  844;   54  Atl.  95  1156 

—  V.  Hurd,  12  Mete.  (Mass.) 

371;    46  Am.  Dec.  690  928 

—  V.  Law,  21  N.  Y.  296  66, 

1198,  1203 

—  V.  Law  Guarantee,  etc. 

Soc.  (1904),  2  Ch.  569  1454, 

1454 

—  V.  London  United  Brew- 
eries (1907),  2  Ch.  511  1643, 

1647,  1647,  1655 

—  V.    Los      Angeles,      etc.  ' 
Ass'n,    78    Cal."  289;     20 

Pac.   677  1206,  1299,  1328 

—  V.Martin  Anti-Fire,  etc. 
Co.,  47  N.  Y.  St.  Rep.  26; 

19  N.  Y.  Supp.  285  591 

—  V.    Mayfield.     163    111. 

447;  45N.  E.  157  230 

—  V.  McCullough,  104  U.  S. 

25  1511 

—  V.   Natchez    Steamboat 

Co.,  1  How.  (Miss.)  479  914, 

916,  924,  1375 

—  V.  New  Hartford  Water 
Co.,  73  Conn.  626;    48  Atl. 

7.54  294,  1296 

—  V.  Paringa  Mines  (1906), 

2  Ch.  193  997,  1212 


clxxxvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Smith  V.  Parker,  148  Ind.  127; 


309,  311 


45  N.  ]<:.  770 

V.    People's    Mut.,    etc. 

Soc,  64   Hun  534;     19  N. 
Y.  Supp.  432 

—  V.  Plank  Road  Co.,  30 
Ala.  650 

—  V.  Poor,  40  Me.  415;  63 
Am.  Dec.  672 

—  V.  Pratt ville  Mfg.  Co., 
29  Ala.  503  1 1 10 

—  V.  Prosser  (1907),  2  K. 
B.  735 

—  V.  Putnam,  61  N.  H. 
632 

—  V.  Reese  River  Co.,  2  Eq. 
264 

—  V.  Rogers,  30  Ont.  Rep. 
256  722, 

—  V.  San  Francisco,  etc.  Ry. 
Co.,  115  Cal.  584;  47  Pac. 
582;   56  Am.  St.  Rep.  119; 

35  L.  R.  A.  309  1017,  1021, 

1029,  1042,  1050 
V.  Savin,  141  N.  Y.  315; 

36  N.  E.  338  244,  687,  723 


589 

604 

1350 

1274 

727 

1237 

184 

723 


■v.  Sheeley,  12  Wall.  358 

—  V.  Silver  Valley  Mining 
Co.,  64  Md.  85;  20  Atl. 
1032;   54  Am.  Rep.  760 

—  V.  Smith,  3  Desaus.  (S. 
Car.)  557 

—  V.  Smith,  62  111.  493 


248 


161, 
1009 

1188 
406, 


591,  1373,  1375 
407 


V.  Smith,  117  Mass.  72 

V.   Supreme   Lodge,   83 

Mo.  App.  512 

V.     Tallahassee,     etc. 

Plank  Road   Co.,   30   Ala. 

650  194,  368,  380,  381 

V.  Walkerville  Malleable 

Iron  Co.,  23  Ont.  App.  95 

V.  Wells  Mfg.  Co..   148 

Ind.  333;   46  N.  E.  1000 

Smith  &  Co.,  Richard  (1901), 

1  Ir.  73 
Smitli's  Estate,    140  Pa.   St. 

344;    21  Atl.  438;    23  Am. 

St.  Rep.  237  1147,1148 

Smith's  Extx.  v.  Washington 

City,   etc.    R.   R.   Co.,   33 

Gratt.  617 
Smith.  Re  (1896).  2  Ch.  590 
Smith,  S.  P.,  Lumber  Co.,  132 

Fed.  618 


584 


733 
1192 
1430 


1492 
20 


-,  132  Fed.  620 

Smithson's  Case,  68  L.  J. 
46 


Ch. 


518 
85,  838 

642 


Smyth  V.  Darley,  2  H.  L.  Cas. 

789  997,  999,  1069 

Smythe  v.   Chicago,   etc.    R. 

Co.,  22  Fed.  Caa.  711,  No. 

13,  135  1534 

Sneath  v.    Valley  Gold  Co. 

(1893),  1  Ch.  477     1673,  1674, 

1675 
Snediker  v.   Ayers,    146  Cal. 

407;    80  Pac.  511  1323,  1344 

Snider's  Sons  v.  Troy,  91  Ala. 

224;  8  So.  658;    11    L.   R. 

A.  515;    24  Am.  St.  Rep. 

887  248 

Snively  v.  Loomis  Coal  Co., 

69  Fed.  204  1560 

Snow  V.  Boston  Blank  Book 

Mfg.  Co.,  158  Mass.  325;  33 

N.  E.  588  967 
V.  Church,  13  N.  Y.  App. 

Div.  108;    42  N.  Y.  Supp. 

1072  1029,  1347 
V.  Thompson  Oil  Co.,  59 

Pa.  St.  209  297 

Snow,  Church  &  Co.  v.  Hall,  19  ' 

N.  Y.  Misc.  655;   44  N.  Y. 

Supp.  427  53 

Snyder  v.  DeForest  Wireless 

Tel.  Co.,   113  N.  Y.  App. 

Div.  840;    99  N.  Y.  Supp. 

644  890 

t'.  Philadelphia  Co.,  54 

W.  Va.  149;    46  S.  E.  366; 
102  Am.  St.  Rep.  941;    63 

L.  R.  A.  896  383 

V.  Studebaker,   19   Ind. 

462;   81  Am.  Dec.  415  236, 

243,  244 

Snyder  &   Johnson  Co.,  133 

Fed.  806  44 

Snyder,  Re,  29  N.  Y.  Misc.  1 ; 

59  N.  Y.  Supp. 993  1402 

Soci^t^  Anonjone  v.  Panhard- 
Levassor  Motor  Co.  (1901), 
2  Ch. 513  310,  373,  378 

Soci6t6  G6n6rale  de  Paris  v. 
Tramways  Union  Co.,  14 
Q.  B.  D.'  424  796,  1356 

V.  Walker,  11  A.  C.  20         685. 

685,  697.  697,  713,  747,  747,  748 

Society  of  Accountants  <fe  Au- 
ditors V.  Good  way  (1907), 
1  Ch.  489  372 

Society  of  Practical  Knowl- 
edge V.  Abbot,  2  Beav. 
559  627,  627,  1290 

Society  for  the  Propagation  of 
the  Gospel  v.  Town  of  Paw- 
let,  4  Pet.  480  226 


clxxxvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Society  for  Savings  v.   New 

London,  29  Conn.  174  1423 

Society   Perun   v.   Cleveland, 

43  Oh.   St.   481;    3  N.  E. 

357  249,  251 

Sodus  Bay,  etc.  R.  R.  Co.  v. 

Hamlin,   24  Hun   (N.   Y.) 

390  119 

Solomon  v.  Bates,  118  N.  Car. 

311:   24  S.  E.  478;  54  Am. 

St.  Rep.  725  1355 
V.  First  Nat.  Bank,  72 

Miss.  854;    17  So.  383  1124 

Somerset,  etc.   R.   R.   Co.  v. 

Cushing,  45  Me.  524    481,547,609 
Somerset  Nat.  Banking  Co.  v. 

Adams,  24  Ky.  Law  Rep. 

2083;    72  S.  W.  1125  174, 

204,  612 

Somerset  Ry.  v.  Pierce,  88  Me. 

86 ;  33  Atl.  772 
Somerville's  Case,  6  Ch.  266 


1658 
171, 
171 


1033 


870 
1239 


848 


Soper  V.  Littlejohn,  31  Can. 

Super.  Ct.  572 
Sorrentino  v.  Ciletti,  75  N.  Y. 

App.  Div.  507;    78  N.  Y. 

Supp.  322  556,  588 

South  &  North  Ala.   R.   R. 

Co.  V.  Chappell,  61  Ala.  527 

V.  Falkner,  49  Ala.  115 

V.  Highland  Ave.,  etc.  R. 

R.  Co.,  119  Ala.  105;  24  So. 

114 
South    African    Supply,    etc. 

Co.  (1904),  2  Ch.  268  58,  468, 

1473 
South  African  Tys.   v.   Wal- 

lington(1898),A.C.  309  1414, 

1414,  1415 

South  Baptist  Soc.  v.  Clapp, 

35  Barb.  (N.  Y.)  35 
South     Bay     Meadow     Dam 

Co.  V.  Gray,  30  Me.  547 
South  Bend  Chilled  Plow  Co. 

V.   George  C.  Cribb  Co.,  97 

Wise.  230 ;   72  X.  W.  749 
South  Carolina  v.  Port  Royal, 

etc.  Ry.  Co.,  89  Fed.  565 


397 
233 


961 


South  Carolina   Mutual    Ins. 

Co.  V.  Price.  67  S.  Car.  207 

45  S.  E.  173 
South  Carolina  R.  R.  Co.  v 

Wilmington,  etc.  R.  R.  Co. 

7  S.  Car.  410 
South    Covington,    etc.    Ry 

Co.  V.  Gest,  34  Fed.  628 


1644, 
1654 


386 


1632 

1456, 
1457 


South  Dakota  v.  North  Caro- 
lina, 192  U.  S.  286;  24  Sup. 
Ct.  269  154 

South  Durham  Brewery  Co., 

31  Ch.  D.  261  431,  439,  441 

South    Georgia,    etc.    R.    R. 

Co.  V.  Ayres,  56  Ga.  230  609, 

610 

South  Joplin  Land  Co.  v.  Case, 

104  Mo.  572 ;   16  S.  W.  390         322 

South   London  Fish  Market, 

39  Ch.  D.  324  1181 

South  Milwaukee  Co.  v.  Mur- 
phy, 112  Wise.  614;  88  N. 
W.  583 ;  58  L.  R.  A.  82  600, 

605 

South  Missouri,  etc.  Co.  v. 
Crommer  (Mo.),  101  S.  W. 
22  271,  273 

South  School  Dist.  v.  Blakes- 

lee,  13  Conn.  227  998 

South  Staffordshire  Ry.  Co.  v. 

Burnside,  5  Ex.  129  624,  624 

South  St.  Louis  Ry.  Co.  v. 
Plate,  92  Mo.  614;   5  S.  W. 

199  1636 
South   Texas   Nat.    Bank   v. 

Texas,  etc.  Liunber  Co.,  30 

Tex.  Civ.  App.  412;    70  S. 

W.  768  705,  705 

South  Western  R.  R.  Co.  v. 

Thomason,  40  Ga.  408  420, 

792 
South  Western,  etc.  Ry.  Co. 

V.  Hays,  63  Ark.  355;    38 

S.  W.  665  1627 

South  Western  of  Venezuela 

Ry.  Co.  (1902),  1  Ch.  701  1240 
South     Yorkshire    Ry.,    etc. 

Co.  V.  Great  Northern  Ry. 

Co.,  9  Ex.  55  824,1107 

South  Yorkshire  Wine  Co.,  8 

Times  L.  R.  413  791 

Southampton    Dock    Co.    v. 

Richards,  1  Man.  &  Gr.  448  614, 
915,  923,  925,  925 
Southampton,  etc.  Steam 

Boat  Co.,  4  De  G.  J.  &  S. 

200  175 
Southern   Bank  v.   Williams, 

25  Ga.  534  245 

Southern   Bldg.,  etc.  Ass'n  v. 

Casa    Grande    Stable    Co., 

128  Ala.  624;   29  So.  654  844 

Southern  Brazilian,  etc.  Ry. 

Co.  (1905),  2  Ch.  78         40,63,67, 

1470 
Southern    Counties    Bank    v. 

Rider,  73  L.  T.  374  996 


clxxxvni 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Southern  Counties    Bank    v. 

Kirkwood,   11  Times  L.  R. 

563  996 

Southern  Development  Co.  v. 

Farmers'   L.   &  T.   Co.,   79 

P'ed.  212;  24  C.  C.  A.  497  1570 

Southern    Electric    Securities 

Co.  V.  State  (Miss.),  44  So. 

785  57,  263,  265,  1063 

Soutiiern    Life,    etc.    Co.    v. 

Lanier,  5  Fia.  110;   58  Am. 

Dec.  448  868 

Southern  Loan  Co.  v.  Morris, 

2  Pa.  St.  175;   44  Am.  Dec. 

188  865 

Southern  Pac.  Co.  v.  Block,  84 

Te.x.  21;  19  S.  W.  300  381 
Southern  Pac.  R.  R.  Co.  v. 

Doyle,  1 1  Fed.  253  1495,  1543 
Southern  Plank  Road  Co.  v. 

Hi.xon,  5  Ind.  165  994,  1062 
Southern  Ry.  Co.  v.   Adams, 

76  Fed.  504 ;  22  C.  C.  A.  300   1570 

V.   American  Brake  Co., 

76  Fed.  502;  22  C.  C.  A. 

298    '  1570 

V.   Bouknight,  70  Fed. 

442;  17  C.  C.  A.  181      1543 

V.  Carnegie  Steel  Co.,  76 

Fed.  492;  22  C.  C.  A.  289; 
176  U.  S.  257;  20  Sup.  Ct. 
347      1517,  1560,  1562,  1564, 
1565,  1567,  1570,  1571,  1572 

V.  Carnegie  Steel  Co. ,  1 76 

U.S.  257;  20Sup.  Ct.  347   1562, 
1565,  1567,  1570,  1571,  1572 

V.   Chapman  Jack  Co., 

117  Fed.  424;  54  C.  C.  A. 

598  lo70,  1572 
V.  Dunlop  Mills,  76  Fed. 

505;  22  C.  C.  A.  302  1570 
V.  Ensign  Mfg.  Co.,  117 

Fed.  417;  54  C.  C.  A.  591  1570 
V.  North  Carolina  Corp. 

Comm.,  104  Fed.  700  891 
V.  Tillett,  76  Fed.  507; 

22  C.  C.  A.  303  1562,  1567 

Southern   Trust,    etc.    Co.    v. 

Yeatman.  134  Fed.  810;  67 

C.  C.  A.  456  646 

Southport,  etc.  Banking  Co., 

b-^  L.  J.  Ch.  497  .    .    191,  193 

Sovereen,  etc.  Co.  v.  Whitside, 

12  Ont.  L.  R.  638  994,  997, 

1165,  1165,  1204 
Spackman  v.  Evans,  L.  R.  3 

H.  L.  171  665 

V.  Lattimore,  3  GifT.  16         629, 

962 


Spader  v.  Mural  Decoration 
.Mfg.  Co.,  47  N.  J.  E(|.  18; 
20  Atl.  378  1242 

Spangler  v.  Indiana,  etc.  Ry. 

Co.,  21   111.  276  607 

Spargo's  Case,  8  Ch.  407       642,  642 

Sparks  v.  Company,  etc.  of  tlie 
Liverpool   Waterworks,    13 
Ves.  428  581,  662 

V.  Dispatch  Transfer  Co., 

104  Mo.  531;    15  S.  W.  417; 

24  Am.  St.  Rep.  351 ;   12  L. 

R.  A.  714  1381 
V.  Dunbar,  102  Ga.  129; 

29  S.  E.  295  874,  875,  878 
V.  Farmers'  Bank,  3  Del. 

Ch.  274  1185 

V.  Lower  Payette  Ditch 

Co.,    2     Idaho     1030;      29 

Pac.  134  652 
V.  Woodstock  Iron,  etc. 

Co.,  87  Ala.  294 ;  6  So.  195        130, 

220 
Sparrow    v.    E.    Bement    &. 

Sons,   142  Mich.  441;    105 

N.  \V.  881 
Spaulding  v.  North  Milwaukee 

Town  Site  Co.,    106  Wise. 

481;    81  N.  W.  1064 

982,  1331 
Spear  v.  Crawford,  14  Wend. 

(N.   Y.)   20;   28  Am.  Dec. 

513 

V.  Grant,  16  Mass.  9 

Speer  v.  Bordeleau  (Colo.),  79 

Pac.  332  630,  645 
V.  Colbert,  200  U.  S.  130; 

26  Sup.  Ct.  201 
Speight  Mfg.  Co.,  Boultbee's 

Case,    16    Ont.    App.    508, 

519 
Speir.  Re.  69  N.  Y.  App.  Div. 

149:    74  N.  Y.  Supp.  555 
Spellissy    v.    Cook    &    Bern- 

heimer  Co.,  58  N.  Y.  .\pp. 

Div.  283;   68  N.  Y.  Supp. 

995  748,  798 

Spence  v.  Mobile,  etc.  Ry.  Co., 

79  .\la.  576  1416,   1433,  1437 

Spencer  v.  Brooks,  97  Ga.  681 ; 

25  S.  E.  480  1611,  1614 

V.  James,  10  Tex.  Civ. 

App.  327:    31  S.   W.  540; 
43  S.  W.  556 

Spering's  Appeal,  71  Pa.  St. 

11;    10  Am.  Rep.  684 

1274,  1278 
Sperrv  v.  Dransfield,  2  New 

Zeal.  (Sup.  Ct.)  310  588 


1660 


322, 


156 
1127 


1186 


212 
430 


751 
1268. 


clxxxix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Spier  V.  Hyde,  92  N.  Y.  App. 

Div.  467;    87  N.  Y.  Supp. 

285  335 

Spies  V.  Chicago,  etc.  R.  Co., 

30  Fed.  397  1529,  1586,  1679 
V.  Chicago,  etc.  R.  Co., 

40  Fed.  34;  6L.  R.A.  565       1679, 

1680 
Spiller  V.  Paris  Skating  Rink 

Co.,  7  Ch.  D.  368 
Spinney  v.  Meloon  (N.  H.),  68 

Atl.  410  1502,  1534,  1534 

Spinning   v.  Home   Building, 

etc.  Ass'n,  26  Oh.  St.  483 
Spiral  Globe  (1902),  2  Ch.  209 
Spitzel  V.   Chinese  Corp.,   15 

Times  L.  R.  281 
Spokes   V.    Grosvenor   Hotel, 

etc.  Co.  (1897),  2  Q.B.  124 


286 


138 
1396 

193 


974, 
975 


1144 

16 

337 

733 


Spooner  v.  Phillips,  62  Conn. 

62;  24  Atl.  524;  16L.  R.  A. 

461 
Spotswood  V.  Morris  (Idaho), 

85  Pac.  1094 
Spottiswoode's  Case,  6  De  G. 

M.  &  G.  345 
Sprague  v.  Cocheco  Mfg.  Co., 

10  Blatchf.  173 
V.    National    Bank    of 

America,  172  111.   149;    50 

N.  E.  19;   64  Am.  St.  Rep. 

17;    42  L.  R.  A.  606       620,  647 
V.  Smith,  29  Vt.  421 ;   70 

Am.  Dec.  424  1582,  1582 

Spreckels  v.  Gorrill  (Cal.),  92 

Pac.  1011  181,  184 
V.  Nevada  Bank,  113  Cal. 

272 ;  45  Pac.  329 ;  33  L.  R. 

A.  459 ;    54  Am.  St.  Rep. 

348  807,  810 

Sprigg      V.      Commonwealth 

Title  Ins.,  etc.  Co.,  206  Pa. 

St.  548;   56  Atl.  33  1412 

Spring  Co.  V.  Knowlton,  103 

U.  S.  49  493,  493,  632 

Spring  Valley  Water  Works, 

17  Cal.  132  103 
V.  San  Francisco,  22  Cal. 

434  228,  304 

Springer  v.    Bigford,    55    111. 

App.  198 
V.  Chicago  Real  Estate, 

etc.  Co.,  202    111.     17;     66 

N.  E.  8.50 
Springfield     Wagon     Co.     v. 

Bank  of  Batesville,  68  Ark. 

234 :  57  S.  W.  257 
Sproat  V.  Porter,  9  Mass.  300 


408 


848 


770 
308 


Sproul  V.  Standard  Glass  Co., 

201  Pa.  103;  50  Atl.  1003  767, 
768,  1284 
S.  P.  Smith  Lumber  Co.,  132 

Fed.  618  518 

,  132  Fed.  620  85,  838 

Squair  v.  Lookout  Mountain 

Co.,  42  Fed.  729  941 

Squires  v.  Brown,  22  How.  Pr. 

(N.  Y.)  35  202,  205,  1181,  1182, 
1262,  1359 
Stace  and  Worth's  Case,  4  Ch. 

682  193,  1163,  1164 

Stackpole    v.    Seymour,    127 

Mass.  104  751 

Stacy  V.  Bank  of  Illinois,  5  111. 

91  1298 
V.  Cherokee,  etc.  Works, 

70  S.  Car.  178 ;  49  S.  E.  223  1321 
V.  Glen  Ellyn  Hotel,  etc. 

Co.,  223  111.  546;    79  N.  E. 

133  81 

Stafford  v.  Produce  Exchange 

Banking  Co.,  61  Oh.  St.  160 ; 

55  N.  E.  162;    76  Am.  St. 

Rep.  371  '  574,  775 
V.    Produce    Exchange 

Banking  Co.,  16  Oh.  CHrc. 

Ct.  50  557 
V.  St.  John,  164  Ind.  277 ; 

73  N.  E.  596  1359 

Stafford  Bank  v.  Palmer,  47 

Conn.  443  252 

Stafford  Springs  St.  Ry.  Co. 

V.  Middle  River  Mfg.   Co. 

(Conn.),  66  Atl.  775  1199,  1200 
Staffordshire  Gas  &  Coke  Co., 

66  L.  T.  413  1227,  1230 

Stainback  v.  Junk  Bros.,  etc. 

Co.,98Tenn.  306;  39  S.  W. 

530  1489 

Stainsby  v.  Frazer's  Metallic, 

etc.  Co.,  3  Daly  (N.  Y.)  98 


Standard  Bank  of  Australia, 

24  Vict.  L.  R.  304 
Standard  Gold  Mining  Co.  v. 

Byers,  31  Wash.   100;    71 

Pac.  766 
Standard  Mfg.  Co.  (1891),  1 

Ch.  627 
Standard   Oil   Co.   v.   Comm. 

(Ky.),  91  S.  W.  1128 
Standard      Telephone       & 

Electric  Co.,  157  Fed.  100 
Standing  v.  Bowring,  31  Ch.  D. 

282 
Stanford  Land  Co.  v.  Steidle, 

28  Wash.  72;    68  Pac.  178 


283, 
287 

1191 


1250 

1395 

232 

1553 

704 

230 


TABLE    OF    CASES 
(The  references  are  to  pages] 


Stanley  v.  Chester,  etc.  Ry. 

Co.,  3  Myl.  &  C.  773  281 
V.  Luse,  36  Oreg.  25;   58 

Pac.  75  1295,  1312 
V.  Moore,  17  Vict.  L.  R. 

285  928 

V.   Sheffield   Land,  etc. 

Co.,  83  Ala.  260;  4  So.  34  1372 
Stanley's  Case,  33  L.  J.  Ch. 

535  65,  1513 

Stanton  v.  Alabama,  etc.  R.R. 

Co.,  31  Fed.  585  1651,  1652 
V.   Alabama,  etc.  R.   R. 

Co.,   2   Woods   506       1651,  1652, 

1653 
V.  Alabama,  etc.  R.  R. 

Co.,  2  Woods  523  1489,  1494, 
1525,  1530 
V.  Gilpin,  38  Wash.  191; 

80  Pac.  290  1262 
V.  New  York,  etc.  Ry.  Co. 

59  Conn.  272;   22  Atl.  300; 

21  Am.  St.  Rep.  110  283 

Stanwood    v.    Sterling;    Metal 

Co.,  107  111.  App.  569  239,  247 
Staples  V.  Eastman's  Photo- 
graphic, etc.  Co.  (1896),  2 

Ch.  303  459 

Star  Loan  Ass'n  v.  Moore,  4 

Penn.    (Del.)  308;   55  Atl. 

946  557 

Stark  Bank  v.  U.  S.  Pottery 

Co.,  34  Vt.  144  92,  1187,  1296 
Stark,  Ex  parte  (1897),  1  Ch. 

575  ■  350,  350,  351,  351,  353, 
354,  362,  363,  364,  364 
Starkey  v.  Bank  of  England 

(1903),  A.  C.  114  701,  758 

Starkweather     v.     American 

Bible  Soc,  72  111.  50;    22 

Am.  Rep.  133  69 

Starr  v.  Shepard  (Mich.),  108 

N.  W.  709  946 

Starrett  v.  Rockland,  etc.  Ins. 

Co..  65  Me.  374  210 

State  V.  Baltimore,  etc.  R.  R. 

Co.,  6  Gill  (Md.)  363       498.  1103, 

1111,  1116,  1119, 1119,  1119. 

1122 

V.  Bank  of  Charleston. 

Dud.  (S.     Car.)     187;      35 

Am.  Dec.  135  500 
V.  Bank  of  Louisiana,  6 

La.  745  1111 
V.  Bank  of  Louisiana,  5 

Mart.  N.  s.  (La.)  327       1111,1112 

V.  Bank  of  Ogalalla.  65 

Nebr.  20;    90  N.  W.  961: 

91  N.  W.  497      518,  520,  520,  529 


State  V.  Bonnell,  35  Oh.  St.  10       998 

V.  Brown,  64  Md.  199;    1 

Atl.  54;    6  Atl.  172       1436,  1583, 

1624 

V.  Brown,  73  Md.  484; 

21  Atl.  374  1673,  16«2,  1682 

V.  Brown  (Utah),  93  Pac. 

51  230,  231 

V.  Cape  Girardeau,  etc. 

Road  Co.  (Mo.),  105  S.  W. 

761  6 
V.  Carpenter,  51  Oh.  St. 

83;   37  N.  E.  261;   46  Am. 

St.  Rep.  556  429 
V.  Central  Iowa  Ry.  Co., 

71  Iowa  410;  32N.  W.  409; 

60  Am.  Rep.  806  1633 

V.    Central    Ohio,    etc. 

Ass'n,  29  Oh.  St.  399  94 

V.  Chute,  34  Minn.  135; 

24  N.  W.  353  1032.  1057, 1060 
V.  Collins  (R.  I.),  67  Atl. 

796  263 
V.  Consolidated  Gas,  etc. 

Co.  (Md.),  65  Atl.  40  480 
V.  Consolidated  Ry.  Co., 

67  Me.  479  1583 
V.  Consolidation  Coal  Co., 

46  Md.  1  42,  867 

V.  Cowen,  94  Md.  487; 

51  Atl.  171  1682 

V.  Curtis,  9  Nevada  325       557, 

561,  1206,  1225,  1225,  1227 
V.  Debenture  Guarantee, 

etc.  Co.  (La.),  26  So.  600 


424 


Ferguson,  33  N.   H. 


46. 
258 

567 
1017, 


—  V.  Ferris,  42  Conn.  560 

1024,  1176,  1176,  1178 

—  V.  Florida  Central  R.  R. 

Co.,  15  Fla.  690        393.  986,  1500 

—  V.  Franklin  Bank,  10  Oh. 

St.  91  499.  516,  525 

—  V.  Glenn,  18  Nevada  34; 
1  Pac.  186 

—  V.  Harris,  3  Ark.  570;  36 
Am.  Dec.  460 

—  V.  Home  Co-operative 
Union,  63  Oh.  St.  547;  59 
N.  E.  220 

V.  How.  1  Mich.  512 

V.  Hunton.   28    Vt.  594 

V.  Kupferle,  44  Mo.  154; 

100  Am.   Dec.  265         1226.  1231 

V.  Leete,  16  Nevada  242      1019, 

1176,  1177 

V.  Lehre,  7  Rich.  Law 

(S.  Car.)  234  1065 


1512 
1231 


23 
252 
1025 


TABLE    OF    CASES 
[The  references  are  to  pages] 


State  V.  McDaniel,  22  Oh.  St. 

354  1031,  1066,  1169,  1249 

V.  McGrath,  86  Mo.  241      1006 

V.  Marchant,  37  Oh.  St. 

251  1059,  1059,  1062 

V.  Mead,  27  Vt.  722        25 

V.  Morristown  Fire  Ass'n, 

23  N.  J.  Law  195  416 

V.   Nebraska    Distilling 

Co..    29    Nebr.     700;      46 

N.  W.  155  263 

V.    New    Orleans,    etc. 

R.  R.  Co.,  20  La.  Ann.  489      1027, 
1066,  1067 

V.  New  Orleans  Water 

Supply  Co.,  Ill  La.  1049; 

36  So.  117  39,  261 

V.  Northern  Central  Ry. 

Co.,  18  Md.  193  1510,  1604, 

1676 

V.    Oberlin    Bldg.,   etc. 

Ass'n,  35  Oh.  St.  258        517,  525 

V.  Overton,  24  N.  J.  Law 

435;   61  Am.  Dec.  671  569 

V.    Pan    American    Co. 

(Del.),  61  Atl.  398      895,  906 

V.  Patterson,  159  Mo.  98; 

59  S.  W.  1104  384 
V.  Perkins,  90  Mo.  App. 

603  1203,  1210 

V.  Pettineli,  10  Nevada 

141  994,  1006,  1023,  1056 
V.  Pittam,  32  Wash.  137; 

72  Pac.  1042  231 
V.  Port  Royal,  etc.  Ry. 

Co.,    45    S.    Car.    470;     23 

S.  E.  383  958,  968,  1646,  1647 
V.  Port  Royal,  etc.  Ry. 

Co.,  84  Fed.  67  1615,  1617 

V.    Railroad    Commis- 
sioners, 41  N.  J.  Law  235  1618 

V.  Rohlffs,  19  Atl.  Rep. 

1099  (N.  J.)  1042 

V.    Scott    County,    etc. 

Road  Co.  (Mo.),  105  S.  W. 

752  106 

V.  Smith,   15  Oreg.  98; 

14  Pac.  814;    15   Pac.  137, 

386  1018,  1022,  1058,  1066, 

1176,  1217 

V.    Spartansburg,    etc. 

R.  R.  Co.,  8  S.  Car.  129        1452, 
1453,  1465 

V.  Stockley,  45  Oh.  St. 

304;    13  N.  E.  279  1016 

V.  Stone,  118  Mo    388; 

24  S.  W.  164;    25  L.  R.  A. 

243;  40  Am.  St.  Rep.  388  25,  25 
V.  Stormont.  24  Kan.  686       106 


State  V.  Taylor,  55  Oh.  St.  61 ; 

44  N.  E.  513  47,  125,  133,  134 
V.  Topeka  Water  Co.,  61 

Kans.  547;  60  Pac.  337  1521 
V.  Tudor,  5  Day  (Conn.) 

329;  5  Am.  Dec.  162      1040,  1040, 

1249 

V.   Wright,    10  Nevada 

167  996 

State    ex    inf.    Atty.-Gen.   v. 

Hogan,    163    Mo.    43;     63 

S.  W.  378  240 

State  ex  inf.  Hadley  v.  Delmar 

Jockey  Club  (Mo.),  92  S.  W. 

185  262 

V.    Meramec    Rod,   etc. 

Club  (Mo.),  98  S.  W.  815  262 
State    ex    rel.     Atty.-Gen.  v. 

Conklin,  34  Wise.  21  590,  591 
V.  Lee,  21  Oh.  St.  662  119 

V.   Wood,    13  Mo.  App. 

139  219,  645 

State    ex    rel.    Bellamore    v. 

Rombotis  (La.),  45  So.  43       1007 

State  ex  rel.  Benedict  v. 
Southern  Mineral,  etc.  Co., 
108  La.  24;    32  So.  174  431 

State  ex  rel.  Bergenthal  v. 
Bergenthal,  72  Wise.  314; 
39  N.  W.  566  900,  906 

State  ex  rel.  Biddle  v.  Superior 

Court  (Wash.),  87  Pac.  40        175, 

921 

State    ex    rel.    Bornefield    v. 

Rombauer,  46  Mo.   155  751 

State  ex  rel.  Bourdette  v.  Gas- 
light Co.,  49  La.  Ann.  1556; 
22  So.  815  892,  898,  900,  902 

State  ex  rel.  Bradford  v.  West- 
ern Irrigating  Co.,  40  Kans. 
96;  19  Pac.  349;  10  Am. 
St.  Rep.  166  18,  388 

State  ex  rel.  Brun  v.  Oftedal, 

72Minn.  498;75N.W.692       1162 

State  ex  rel.  Bruning  v.  Hobo- 
ken  Printing,  etc.  Co.,  67 
N.  J.  Law  1 19 ;   50  Atl.  906      895, 

905 

State  ex  rel.  Bugbeeu.  Holmes, 

60  Nebr.  40  984 

State  ex  rel.  Burke  v.  Citizens' 
Bank,  51  La,  Ann.  426;  25 
So.  318  896,  903,  904,  904 

State  ex  rel.  Canal  Bank  v. 
North  American,  etc.  Co., 
112  La.  441;    36  So.  488  807 

State  ex  rel.  Carolina  Iron  Co. 
V.  Abernethy,  94  N.  Car. 
545  228 


TABLE    OF    CASES 
[The  references  are  to  pagesl 


State  ex  rel.  Carroll  v.  Corning 
State  Savings  Bank  (Iowa), 
113  N.  \V.  500  864 

State  ex  rel.  Clapp  v.  Critch- 
ett,  37  Minn.  13;  32  N.  W. 
787  117,  137,  137 

State  ex  rel.  Collings  v.  Heck, 

81  Ind.  500  117 

State  ex  rel.  Columbia  R.  R. 
Co.  V.  Superior  Court, 
(Wash.),  88  Pac.  332        175,921 

State  ex  rel.  Corey  v.  Curtis, 

9  Nevada  325        557,  5G1,  1206, 
1225,  1225,  1227 

State  ex  rel.  Cuppel  v.  Mil- 
waukee Chamber  of  Com- 
merce, 47  Wise.  G70;  3 
N.  W.  760  580 

State  ex  rel.  Dent  v.  Holloway, 

1  Oh.  Circ.  Dec.  90  1016 

State  ex  rel.  Donnell  Mfg.  v. 

McGrath,  86  Mo.  239  488 

State  ex  rel.    Doyle   v.   Laugh- 
lin,  53  Mo.  App.  542         895,  903 

State  ex  rel.  vXWol  v.  Guer- 
rero, 12  Nevada  105  429 

State  ex  rel.  Ely,  etc.  Co.  v. 
Swanger,  195  Mo.  539;  93 
S.  W.  932  487 

State  ex  rel.  English  v.  Laz- 
arus (Mo.),  105  S.  W.  780         894, 
895, 906 

State  ex  rel.  Fears  v.  New 
Orleans,  etc.  Exchange, 
112  La.  868;    36  So.  760         906 

State  ex  rel.  Frank  v.  Swanger, 

190  Mo.  561 ;  89  S.  W.  872      473, 
473,  1028 

State  ex  rel.  Gorman  v.  Nich- 
ols (Wash.),  82  Pac.  741  114 

State  ex  rel.  Grimm  v.  Man- 
hattan Rubber  Co.,  149  Mo. 
181;   50  S.  W.  321        1198,  1212, 

1328 

State  ex  rel.  Higby  v.  Higby 

Co.  (Iowa),  106  N.  W.  382       55, 
56,  527 

State  ex  rel.  Home  Rldg., 
etc.  Ass'n  v.  Rotwitt,  17 
Mont.  537;  43  Pac.  922  125, 

488 

State  ex  rel.  Howe  v.  Shelby- 
ville,  etc.  Turnpike  Co.,  41 
Ind.  151  100 

State    ex    rel.    Howerton    v. 

Tate,  70  N.  Car.  161  1228 

State  ex  rel.  Hutchinson  v. 
McGrath,  92  Mo.  355;  5 
S.  W.  29  125,  374,  376 


State  ex  rel.  Jackson  v.  New- 
man, 51  La.  Ann.  833;  25 
So.  408;  72  Am.  St.  Rep. 
476  1026 

State  ex  rel.  Johnson  v.  St. 
Louis  Transit  Co.  (Mo.), 
100  S.  W.  1126  894,  895,  904 

State  ex  rel.  Jurgens  v.  Con- 
sumers' Hrewing  Co.,  115 
La.  782;    40  So.  45  750 

State  ex  rel.  Kennedy  v.  I'nion 
Merchants'  Exchange,  2  Mo. 
App.  96  576,  581 

State  ex  rel.   Koons  v.   First 

Nat.  Bank,  89  Ind.  302  716 

State  ex  rel.  Lawrence  v.  Mc- 

Gann,  64  Mo.  App.  225  1061, 

1065 

State  ex  rel.  Le  Blanc  & 
Raileyr.  Michel,  113  La.  4; 
36  So.  869  53,  54 

State  ex  rel.  Lederer  v.  Inter- 
National  Investment  Co., 
88  Wise.  512;  60  N.  W. 
796;  43  Am.  St.  Rep.  920  47, 

113 

State  ex  rel.  Mallinckrodt  v. 

McGrath,  75  Mo.  424  368 

State  ex  rel.  Martin  v.  Bien- 
ville Oil  Works  Co.,  28  La. 
Ann.  204  894,  896,  904 

V.  New  Orleans,  etc.  R. 

R.  Co.,  30  La.  Ann.  308       576,747 

State  ex  rel.  McCay  v.  New 
Orleans  Stock  Exchange, 
114  La.  324;   38  So.  204     430,  431 

State  ex  rel.  Mitchell  v. 
Horan,  22  Wash,  197;  60 
Pac.    135  1015,  1249 

State  ex  rel.  Newark,  etc.  R. 
R.  Co.  V.  Goll,  32  N.  J. 
Law  285  1376 

State  ex  rel.  Norvell-Shapleigh 
Hardware  Co.  v.  Cook,  178 
Mo.  189 ;  77  S.  W.  559      488,  1006 

State  ex  rel.  O'Brien  v.  Beth- 
lehem,etc.  Gravel  Road  Co., 
.32  Ind.  357  124 

State  ex  rel.  O'Hara  v.  Na- 
tional Biscuit  Co.  (N.  J.), 
54  Atl.  241  901 

State  ex  rel.  Osborne,  etc.  v. 
Nichols.  38  Wash.  309;  80 
Pac.  462  114,  136,  386 

State     ex     rel.     Padgett     v. 

Fmilkes.  94  Ind.  493  125 

State  ex  rrl.   Page  ?'.   Smith, 

48  Vt.  266        499,  509.  523.  745, 
1027,  1210,  1210 


TABLE    OF    CASES 

[The  references  are  to  pages] 


State  ex  rel.  Phillips  v.  New 
Orleans,  etc.  Co.,  25  La. 
Ann.  413  429,  431 

State  ex  rel.  Plock  &  Co.  v. 

Cobb,  64  Ala.  127  1530 

State    ex    rel.    Rosenfeld    v. 

Einstein,  46  N.  J.  Law  479      1252 

State  ex  rel.  Ross  v.  Ander- 
son, 31  Ind.  App.  34;  67 
N.  E.  207  116 

State  ex  rel.  Ryan  v.  Cronan, 

23  Nevada  437;  49  Pac.  41     1017, 

1020,  1056,  1056,  1249,  1249 

State  ex  rel.  Sanche  v.  Webb, 

110  Ala.  214;   20  So.  462  232 

State  ex  rel.  Schroeder  v.  Per- 
kins, 90  Mo.  App.  603  1234 

State  ex  rel.  Spinney  v. 
Sportsmen's  Park  Ass'n, 
29  Mo.  App.  326         902,  905,  905 

State  ex  rel.  Thompson  v. 
Cheraw,  etc.  R.  R.  Co.,  16 
S.  Car.  524        415,  429,  450,  450, 

455 

V.  Colias  (Ala.),  43  So. 

190  137 

State  ex  rel.  Tozer  v.  Probate 
Court  (Minn.),  113  N.  W. 
888  679,  816,  882 

State  ex  rel.  Voyles  v.  French 
Lick  Springs  Hotel  Co. 
(Ind.),  82  N.  E.  801  263 

State  ex  rel.  Walker  v.  Cork- 
ins,  123  Mo.  56;  27  S.  W. 
363  47 

State  ex  rel.  Walkins  v.  Don- 
nell  Mfg.  Co.  (Mo.),  107 
S.W.I  112  903,905 

State  ex  rel.  Watkins  v.  North 
Am.  Land,  etc.  Co.,  105  La. 
379;  29  So.  910  906 

State  ex  rel.  Wilson  v.  St. 
Louis,  etc.  Ry.  Co.,  29  Mo. 
App.  .301  902,  902,  903,  905 

State   use   M.    E.    Church   v. 

Warren,  28  Md.  338  255,  303 

State  use  Murray  v.  Murray, 

24  Md.  310;    87  Am.  Dec. 

608  799 

State  Bank  v.  Cox,  11  Rich. 

Eq.    (S.    Car.),    344  723 

State  Bank  of  Ohio  v.  Fox,  3 

Blatchf.  431  522,  526 

State  Board  of  Agriculture  v. 
Citizens'  Ry.  Co.,  47  Ind. 
407;     17   Am.   Rep.   702  852 

State  Council,  etc.  v.  Na- 
tional Council,  etc.  (N.  J.), 
64  Atl.  561  378 


844 


1007 
1381 


1208 


91 


1517 


State    Ins.   Co.    v.    Farmers' 

Mut.  Ins.  Co.,  65  Nebr.  34; 

90  N.  W.  9^7 
V.  Gennett,  2  Tenn.  Ch. 

100  699,  715 

V.  Sax,  2  Tenn.  Ch.  507       715 

State  Nat.  Bank  v.  Duncan, 

35  So.  569 
V.  John  Moran  Packing 

Co.,  68  111.  App.  25 
V.  Union  Bank,  168  111. 

519;   48  N.  E.  82 
State  of  Wyoming  Syndicate 

(1901),  2  Ch.  431  996,  1007 

State      Savings      Ass'n      v. 

Ni.xon- Jones   Printing  Co., 

25  Mo.  App.  642  558,  574 

State  Security  Bank  v.  Hos- 

kins,    130   Iowa  339;     106 

N.  W.  764 
State   Trust    Co.    v.    Kansas 

City,  etc.  R.  Co.,  120  Fed. 

398 

V.   National  Land,  etc. 

Co.,  72  Fed.  575  1602,  1602 

Steacy   v.    Little   Rock,    etc. 

R.  R.  Co.,  5  Dillon  348  647 

Steam  Dredge  No.  1,  87  Fed. 

760  1238,  1247 

Steam  Navigation  Co.  r.  Weed, 

17  Barb.   (N.  Y.)  378  853 

Steamship  Dock  Co.  v.  Her- 
on's Adm'x,  52  Pa.  St.  280       578, 
579,  768 
Stebbins  v.  Merritt,  10  Cush. 

(Mass.)  27  397,  406,  995,  999, 

1055 
Steel  V.  Island  City,  etc.  Co. 

(Oreg.),  83  Pac.  783 
Steele  v.  Gold,  etc.  Co.  (Colo.), 

95  Pac.  349 
V.      Lawyer,     91     Pac. 

958 
Steele's  Case,  1  Megone  246 
Steger  v.  Davas,  8  Tex.  Civ. 

App.  23;    27  S.  W.  1068 
Stein  V.  Howard,  65  Cal.  616; 

4  Pac.  662 

V.     Indianapolis,     etc. 

Ass'n,  18  Ind.  237;  81  Am. 
Dec.  353 

V.  Marks,  44  N.  Y.  Misc. 

140;   89  N.  Y.  Supp.  921 
Steinmetz  v.   Versailles,   etc. 

Turnpike  Co.,  57  Ind.  457 


1131 

1322 

1079 
1203 

556 

630 


383 

552 


117, 
1227 

Steinway,  Re,  159  N.  Y.  250; 
53  N.  E.  1103;  45  L.  R.  A. 
461  894,  895,  903 


TABLE   OF    CASES 
[The  references  are  to  pages] 


Stendell  v.  Longshoremen's, 
etc.  Ass'n,  110  La.  974;  41 
So.  228  ^      ^  90 

Stenton  v.  Jerome,  54  N.  Y. 

4.SU  808 

Stephens  v.  Foilett,  43  Fed. 

842  165,  172 

V.   Mysore  Reefa   (Kan- 

guniiy)  .Milling  Co.  (1902), 

1  Cli.  745  3H,  98,  99 

Stephenson  v.  Yokes,  27  Ont. 

691  (Can.)         560,  560,  584,  1043 

1183 

Stephenson's  Case   (1900),  2 

Ch.  442  642 

Stern  v.  Kirkby  Lumber  Co., 

134  Fed.  509  184 

V.  McKee,  70  N.  Y.  App. 

Div.  142;    75  N.  Y.  Supp. 

157  98,213 

V.    Wisconsin    Central 

R.  R.  Co.,  1  Fed.  555  1587 

Sternberg  v.  Wolff,  56  N.  J. 
Eq.  389;  39  Atl.  397;  67 
Am.  St.  Rep.  494;  39 
L.   R.  A.   762  958 

Stetson  V.  Northern  Invest- 
ment Co.,  104  Iowa  393; 
73  N.  W.  869       1228,  1309,  1311 

Stettauer  v.  N.  Y.,  etc.  Con- 
struction Co.,  42  N.  J.  Eq. 
46;    6  Atl.  303  907 

Stevedore's  Beneficial  Ass'n, 

14  Phila.    (Pa.)   130  111,  111, 

116 

Stevens  v.  Atchison,  etc.  Ry. 

Co.,  87  Mo.  App.  26  1609 

V.  Buffalo,  etc.  R.  R.  Co., 

31  Barb.  590  1396 

V.  Carp  River  Iron  Co., 

57  Mich.  427;  24  N.  W.  160     1379 

V.    Davison,    18    Gratt. 

(Va.)    819;    98    Am.   Dec. 

692  559,  560,  957,  958,  959, 

959 
V.  Eden  Meeting  House 

Soc,  12  Vt.  688  1000 

V.  Eldridge,  4  Cliffe  348 

1586 
r.    Hurlbut    Bank,    31 

Conn.  146  808 
V.  New  York,  etc.  R.  R. 

Co.,  13  Blatchf.  104  1617 
V.  New  York,  etc.  R.  R. 

Co.,  13  Blatchf.  412       1453,  1453 
V.  South  Devon  Ry.  Co., 

9  Hare  313  450 
V.  So\ith  Devon  Ry.  Co., 

20  L.  J.  Ch.  491  87 


Stevens  r.  Union  Trust  Co.,  57 

Hun  498;    11  N.  Y.  Supp. 

268  1586,  1588,  1590,  1645 
V.    U.  S.  Steel  Corp. 

(N.  J.),  59  Atl.  905  1111,  1112, 
1112,  1113 
V.   Watson,  4  Abb.  Ct. 

App.  Dec.  (N.  Y.)  302     1503, 

1520 
Stevens  Hospital  v.  Dyas,  15 

Ir.  Ch.  405  395 

Stevens,  Re,   187  N.  Y.  471; 

80  N.  E.  358  1154,  1446 

Stevenson   v.    Dubuque,   etc. 

Mining  Co.,  34  Iowa  577  1320 
Ste\enson's  Case,   2   Megone 

360  1416,  1419 
Stewart  v.  Austin,  3  Eq.  299  182, 
187,  342,  343 
V.     Chesapeake,     etc. 

Canal  Co.,  1  Fed.  361  1586 
V.     Chesapeake,     etc. 

Canal  Co.,  5  Fed.  149  1679, 
1683,  1683,  1683 
V.  Erie,  etc.  Transporta- 
tion Co.,  17  Minn.  372  966 
V.    Firemen's    Ins.    Co., 

53  Md.  565  792,  797,  798,  814 
r.  Harris,  69  Kans.  498; 

77  Pac.  277;    66  L.  R.  A. 

261  1351,  1352 
V.  Lehigh  Valley  R.  R. 

Co.,  38  N.  J.  Law  505  1300, 
1300,  1315 
V.  ^lahoney  Mining  Co., 

54  Cal.  149  1010,  1021 
V.    Rutherford,    74    Ga. 

435  177,  182,  187,  213 
V.   St.   Louis,   etc.    Rail 

Co.,  41  Fed.  736  1309,  1320 
V.     Walla     Walla,     etc. 

Pub.  Co.,  1  Wash.  St.  521; 

20  Pac.  605  617,  696,  698,  699 
V.  Washington,  etc.  S.  S. 

Co..  1S7U.  S.  466;  23  Sup. 

Ct.  161  949 
V.  Wisconsin  Central  R. 

Co..  95  Fed.  577  1569 

Stewart    Paper   Mfg.    Co.    v. 

Rau,  92  Ga.  511;    17  S.  E. 

748  236 

Stewart's  Appeal,  72  Pa.  St. 

291  1632 

Stewart's  Case.  1  Ch.  574  143,  214 
Stickel  V.  Atwood.  25  R.   I. 

456:   56  Atl.  687  1355 

Sticknev's  Will.   Re.  85  Md. 

79:  36  Atl.  654:  35  L.  R.  A. 

693;   60  Am.  St.  Rep.  308        847 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Co. 


44 


Stiewell   V.   Webb   Press 

(Ark.),  94  S.  W.  915 
Stillman    v.    Dougherty, 

Md.  380 
Stobart  v.  Forbes,   13  Mani 

toba  184 
Stobo  V.  Davis  Provision  Co. 

54  111.  App.  440 
Stock,  Ex  parte,  33  L.  J.  Ch. 

731  915,  1174 

Stocken's  Case,  3  Ch.  412      614,  667 
Stocker  v.  Wedderburn,  3  K. 

&  J.  393 
Stockholders     v.     Louisville, 

etc.    R.    R.    Co.,    12    Bush 

(Ky.)  62 
Stockton  V.  Harmon,  32  Fla. 

312:    13  So.  833 
Stockton,    etc.     Works    v. 

Houser,  109  Cal.  1;  41  Pac. 

809  1200,  1201 

Stockton  Iron  Co.,  2  Ch.  D. 

101 
Stoddard  v.  Bell  &  Co.,  100  N. 

Y.  App.  Div.  389;  91  N.  Y. 

Supp.  477 
V.    Shetucket    Foundry 

Co.,  34  Conn.  542 
Stoehlke  v.  Hahn,  158  III.  79; 

42  N.  E.  150 
Stoever  v.  Whitman's  Lessee, 

6  Binney  (Pa.)  416 
Stohr  V.  Musical  F\md  Soc, 

82  Cal.  557;   22  Pac.  1125 


1199 

608 

54 

1212 


338 


1000 
1207 


774 


980 
1122 
1193 

925 


578, 
586 
Stokes   V.   Continental   Trust 

Co.,    186   N.    Y.    285:     78 

N.  E.  1090  500,  500,  500,  501, 
501,  506,  506,  507,  507 
V.   Findlay,    4   McCrary 

205  147,  220 
V.  Lebanon,  etc.  Turn- 
pike Co.,  6  Humph.  (Tenn.) 

241  664 
V.  N.  J.  Pottery  Co.,  46 

N.  J.  Law  237  880,  1373 

Stone  V.   Great  Western   Oil 

Co.,  41  111.  85  1232 
V.  Kellogg,  165  111.  192; 

46  N.  E.  222;    56  Am.  St. 

Rep.  240;  62  111.  App.  444  894, 
896,  900,  902 
V.   Meredith,    78   L.   T. 

492  1157 
V.  Pontiac,  etc.  R.  R.  Co., 

139  Mich.  265;    102  N.  W. 

752  978 
V.  Rottman,  183  Mo.  552; 

82  S.  W.  76  1279,  1288 


Stoney  v.  American  Life  Ins. 
Co.,  11  Paige  Ch.  (N.  Y.) 
635  1407 

Storey,  Ex  parte,  6  Times  L. 

R.  357;  62L.  T.  791  178 

Storrovv  v.  Texas,  etc.  Mfg. 
Ass'n,  87  Fed.  612;  31  C. 
C.    A.     139  464,  466 

Stouffer  V.  Smith-Davis  Hard- 
ware Co.  (Ala.),  45  So.  021       803 

Stout  V.  Security  Trust,  etc. 
Co.,  82  N.  Y.  App.  Div. 
129;  81  N.  Y.  Supp.  708  1245, 

1247,  1248 

V.  Zulick,  48  N.  J.  Law 

599;   7  Atl.  362  118,  241,  243 

Stoutimore  v.   Clark,  70  Mo. 

471  237 

Stovell  V.  Alert  Gold  Mining 

Co.  (Colo.),  87  Pac.  1071  917 
Stowe  V.  Flagg,  72  111.  397  129,  253 
Stoystown,  etc.  Co.  v.  Gra- 
ver, 45  Pa.  St.  386  1196,1196 
Straker  v.  Wilson,  6  Ch.  503  1141 
Strand  Music  HallCo.,  3DeG. 

J.  &  S.  147  1416 

Strang  v.  Camden  Lodge  (N. 

J.),  64  Atl.  93  586 

V.  Montgomery,  etc.  R. 

R.   Co.,  3  Woods  613  1631, 

1631 

,  Ex  parte,  5  Ch.  492  613 

Strange  v.   Houston,  etc.  R.    • 

R.  Co.,  53  Texas  162  723,  732, 
732,  733 
Strapp  V.  Bull  (1895),  2  Ch.  1  1655 
Stratford  v.  Mallory,  70  N.  J. 

Law  294;   58  Atl.  347  1066 

Stratford,    etc.    Ry.    Co.    v. 

Stratton,  2  B.  &  Ad.  518  611 

Stratton  v.  Allen,  13  N.  J.  Eq. 

229  1323 
V.  European,  etc.  Ry.,  74 

Me.  422  1582,  1582,  1582 
V.  European,  etc.  Ry.  Co. 

76  Me.  269  1582,  1582 

Straus  V.   Eagle   Ins.   Co.,   5 

Oh.  St.  59  845 

V.     United     Telegram 

Co.,  164  Mass.  130;    41  N. 

E.  57  1430, 1675 

Stray  v.  Russell,  1  E.  &  E. 

888  779,  781 

Streatham  &  General  Estates 

Co.  (1897),  1  Ch.  15  1513 

Streator     Independent    Tel., 

etc.  Co.  V.  Continental  Tel. 

Const.    Co.,    217    111.    577; 

75  N.  E.  546  288 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Street  v.  Maryland,  etc.  Ry. 

Co.,  59  Fed.  2o  loGO 

Street  &  Co.,   17  Vict.  L.  II. 

717  115,629 

Streeten  v.  Robinson,  102  Cal. 

542;    30  Pac.  910  1375,  1382 

Streiglit  V.  Junk,  59  Fed.  321 ; 

S  C.  C.  X.  137  900,  967 

Strickland   v.    Nat.    Salt   Co. 

(N.  J.),  04  Atl.  982      440,  452,  635 
Stringer,  Ex  parte,  9  Q.  B.  D. 

430 
Stringer's  Case,  4  Ch.  475 


767,  776 
1094, 
1117 


10 

N. 


N. 
Y. 


1290 


1599 


392 


611 
619 


Strobel    v.    Brownell, 

Y.    Misc.    057;     40 

Supp.  702 
Strong     V.     Brooklyn    Cross- 
Town  R.  R.  Co.,  93  N.  Y. 

420  532,  540,  540,  541,  542 
V.  Carlyle  Press  (1893),  1 

Ch.  268 
Strop    V.    Hughes    (Mo.),    101 

S.  W.  146 
Stroud   V.    Royal    .\(]uarium, 

etc.  Soc,  89  L.  T.  243 
Strouse     v.     Sylvester,      134 

Cal.  .XX ;   00  Pac.  600 
Stuart  V.  Hayden,   109  U.  S. 

1 ;    18  Sup.  Ct.  274 
V.  Valley  R.  R.  Co.,  32 

Gratt.  (Va.)  140         108,  209,  922 
Stuart's  Trusts,  Re,  4  Ch.  D. 

213  1107 

Stubbs,  Ltd.,  Joshua  (1891), 

1  Ch.  475  1581,  1598 

Studdert  v.  Grosvenor,  33  Ch. 

D.  528 
Studebaker  Bros.  Mfg.  Co.  v. 

Montgomery,  74  Mo.  101 
Stufflebeam  v.  De  Lashmutt, 

83  Fed.  449 

V.    De    Laslimutt,    101 

Fed.  367 

Stunt    V.    Newark    Weldless, 

etc.  Co.,  22  Oh.  Circ.  Ct. 

120  191,  191 

Sturdevant  v.  Farmers',  etc. 

Bank,  62  Nebr.  472;   87  N. 

W.  150 

V.  Farmers',  etc. 

09  Nebr.  220;  95 
819;  02  Nebr.  472; 
W.  156 

Sturges  V.  Knapp,  31  Vt.  1  1487, 

1022,  1671 

V.  Stetson,  1  Biss.  240  1404 

V.  Vanderbilt,  73  N.  Y. 

384  1180,  1185,  1185 


89 
237 
620 

777 


S4.  853,  861 
Bink, 
N.   W. 
87  N. 

84 


Sturtevants  v.  City  of  Alton, 

3  McLean  393  403 

Succession  of  Lanaux,  46  La. 

Ann.  1030;    15  So.  708  804 

Succession    of    Thomson,    40 

La.  Ann.  1074 ;   15  So.  379  667 

Sulfell  V.  Bank  of  England,  9 

(.1  B.  D.  555  1435 

Sugden  v.  Alsbury,  45  Ch.  D. 

237  1142 

Sullivan  r.  Detroit,  etc.  Ry. 

Co.,  135  Mich.  601;    98  N. 

W.  750;    04  L.  R.  A.  073; 

100  Am.  St.  Rop.  403  293 
V.  Parkes,  09  N.  Y.  App. 

Div.  221;  74  N.  Y.  Supp. 

787  1043,  1050 
t'.  Portland,  etc.  R.  R. 

Co.,  94  U.  S.  800  454 

Sullivan     County     Club     v. 

Butler.  26  N.  Y.  Misc.  306; 

5()  N.  Y.  Supp.  1  650,  651,  653 
Summet  v.  City  Realty,  etc. 

Co.  (Mo.),  106  S.  W.014  848 

Sumner  v.  Marcy,  3  Woodb.  & 

M.  105  77 

Sumter  Tobacco  Warehouse 

Co.  V.  Plioenix  Ins.  Co.  (S. 

Car.),  56  S.  E.  654  228,  302 

Sun    Printing,    etc.    Ass'n   v. 

Moore.   183  U.  S.  042;    22 

Sup.  Ct.  240  1277,  1380 

Sunken  Vessels  Recovery  Co., 

3  De  G.  &  J.  85  189,  193 

Supply  Ditch  Co.  v.  Elliott, 

10  Colo.  327;    15  Pac.  091; 

3  Am.  St.  Rep.  580  732,  747 

Supreme      Commantlery     v. 

Ainsworth,   71   .\la.   436  586 

Supreme  Lodge  v.  Knight,  117 

Ind.   489;     20  N.    E.   479; 

3  L.  R.  A.  409  552.  583,  586 
V.  Kutscher,  179  111.  340; 

53  N.  E.  620;    70  Am.  St. 

Rep.  115  552.  560,  585 
V.  Robbins,  70  Ark.  364 ; 

67  S.  \y.  758  918 
V.  Simering,  88  Md.  276; 

40  .\tl.  723;     71    Am.    St. 

Rep.  409;  41  L.  R.  A.  720  947, 
1250,  1251 
V.  Trebbe,  179  111.  34S; 

53  N.  E.  730;  70  Am.  St. 

Rep.  120  ^  585 

Supreme    Lodge    Knights    of 

Pvthias  V.  Improved  Order 

Knights    of    Pvthias,     113 

Mich.  133;    7  IN.  W.  470; 

38  L.  R.  A.  658  371 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Supreme  Tent  v.  Volkert,  25 

Ind.  App.  627:  57N.  E.203 
Supreme  Tribe  v.  Hall,  24  Ind. 

App.  316:  56  N.E.  780;  79 

Am.  St.  Rep.  262 
Surety    Guarantee    &    Tru.st 

Co.,  121  Fed.  73;    56  C.  C. 

A.  654 
Susquehanna   Bridge,   etc. 

Co.  ?'.  General  Ins.  Co..  3 

Md.  305;  56  Am.  Dec.  740 


589 


662 


44 


65, 
406 


589 


1625 
481, 


Susquehanna  Mut.  Fire  Ins. 

Co.  V.  Elkins,  124  Pa.  St. 

484:  17  Atl.  24 
Sutlierland  v.  Lake  Superior, 

etc.  Co.,  23  Fed.  Cas.  459, 

No.  13,  643 

V.  Olcott,  95  N.  Y.  93 

486,  487,  494,  529 
Sutliff  V.   Cleveland,  etc.   R. 

R.  Co.,  24  Oh.  St.  147  1477 

Sutton  V.  English  &  Colonial 

Produce  Co.  (1902),  2  Ch. 

502  745,  793,  793,  1177, 

1177,  1177 
Sutton's    Hospital    Case,    10 

Co.  1  102,  824,  825,  825,  1273 

Swan  V.   North  British  Aus- 
tralasian Co.,  2  H.  &  C.  175 ; 

7  H.  &  N.  603  685,  685,  724 
,  Ex  parte,  7  C.  B.  n.  s. 

400 
Swann   v.   Clark,    110   U.    S. 

602;   4  Sup.  Ct.  241 
Swansea  Dock  Co.  v.  Levien, 

20  L.  J.  Ex.  447 
Swartley  v.  Oak  Leaf  Cream- 
ery Co.  (Iowa),  113  N.  W. 

496 
Swartwout    v.    Michigan    Air 

Line  R.  R.  Co.,  24  Mich. 

389  191,  193 

Swazey  v.   Choate  Mfg.   Co., 

48  N.  H.  200 
Sweatt  V.  Boston,  etc.  R.  R. 

Co.,  23  Fed.  Cas.  530 
Swedish,  etc.  Mission  Soc.  v. 

Lawrence,    79    Minn.    124; 

81  N.  W.  756 
Sweeney  v.  Tenn.,  etc.  R.  R. 

Co.    (Tenn.),     100    S.    W. 

732  193,  194,  609 

Sweeny  v.  Sugar  Co.,  30  W. 

Va.  443;    4  S.   E.  431;    8 

Am.  St.  Rep.  88  1315 

Sweet  V.  Montpelier  Savings, 

etc.  Co.,  69  Kans.  641;    77 

Pac.  538  1355,  1357 


685 
1651 


1000 


1359 


196 
23 


589 


Sweet  V.  Montpelier  Sanngs, 

etc.   Co.    (Kans.),   84   Pac. 

542 
Sweetland  v.  Quidnick  Co.,  11 

R.  I.  328 
Sweney  Bros.   v.  Talcott,  85 

Iowa  103;  52  N.  W.  106 


1355 

777 

127, 
160 


Swentzel  v.  Penn.  Bank,  147 
Pa.  St.  140;  23  Atl.  405, 
415;   30  Am.  St.  Rep.  718; 

15  L.  R.  A.  305  1274 
Sweny  v.  Smith,  7  Eq.  324  666, 

948,  952 

Swift  V.  Smith,  65  Md.  428;  5 

Atl.  534;  57Am.  Rep.  336        873, 
873,  1072,  1072,  1072 

V.  State  ex  rel.  Richard- 
son, 7  Houst.  (Del.)  338; 
6  Atl.  856;  32  Atl.  143;  40 
Am.  St.  Rep.  127  894,  903, 

906 

,  Re,  105  Fed.  493  785 

Swim  V.  Wilson,  90  Cal.  126; 
27  Pac.  33 ;  25  Am.  St.  Rep. 
110;    13  L.  R.  A.  605  683 

Swindell  &  Co.,  E.  v.  Bain- 
bridge  State  Bank  (Ga.),  60 
S.  E.  13  866 

Swing  V.  Consolidated  Fruit 
Jar  Co.  (N.  J.),  63  Atl. 
899  _  226 

Swisshelm  v.  Swissvale  Laun- 
dry Co.,  95  Pa.  St.  367  290 

Sword    V.     Wickershara,    29 

Kans.  746  120 

Sydney  Harbour  Collieries  Co. 
V.  Grey,  14  Times  L.  R. 
373;    13  Times  L.  R.  564  356 

Syers    v.    Brighton    Brewery 

Co.,  13  W.  R.  220  73 

Sykes  v.   Beadon,  11  Ch.  D. 

170  260 

V.  People,  132  111.  32;  23 

N.  E.  391  387 

Sylvania,  etc.  R.  Co.  v.  Hoge 

(Ga.),  59  S.  E.  806     692,  795, 

797,  996,  1011,  1012,  1049, 

1068,  1164,  1185,  1205 

Symon's  Case,  5  Ch.  298       708 

Synnott  v.  Cumberland  Bldg. 
Loan  Ass'n,  117  Fed.  379; 
54  C.  C.  A.  553      1005,  1044, 

1046 

V.  Gumming,  116  Fed.  40     1085 

Syracuse  City  Bank  v.  Davis, 

16  Barb.  (N.  Y.)  188  232 
Syracuse,  etc.  R.  R.  Co.,  91 

N.  Y.  1  1251 


i 


TABLE    OF    CASES 

[The  references  are  to  ijages] 


Syracuse,  etc.   R.   R.  Co.  v. 

Gere,  4  Hun  (N.  Y.)  392        301, 

645 


Taber  v.  Cincinnati,  etc.  Ry. 

Co.,  15  Ind.  459  14G5,  1623 

Tabor  v.  Hank  of  Leadville 

(Colo.),  83  Pac.  1060  1078 

Tafft  V.  Presidio,  etc.  R.  R. 
Co.,  84  Cal.  131;  24  Pac. 
436;  11  L.  R.  A.  125;  18 
Am.  St.  Rep.  166  687 

Taft  V.  Brewster,  9  Johns  (N. 

Y.)334;  6Am.  Dec.  280  398 

V.  Harrison,  10  Hare  489        766 

V.  Hartford,  etc.  R.  R. 

Co.,  8  R.    I.  310;    5  Am. 
Rep.  575  450 

Tagart   v.    Northern    Central 

Ry.  Co.,  29  Md.  557  1476 

Taggart  v.  Western  Md.  R. 
R  Co.,  24  Md.  563;  89 
Am.  Dec.  760  175,  188,  188, 

614 
Tahourdin  v.  Weston-Super- 
Mare    Grand    Pier    Co.,    4 
Times  L.  R.  124  1174 

Tailbv  V.  Official  Receiver,  13 

A.  C.  523  1504 

Tait  V.  Pigott,  32  Wash.  344; 

73  Pac.  364  518,  520 

V.  Pigott,  38  Wash.  59; 

80  Pac.  172  517,  520,  520 

Taifs  Case,  3  Eq.  795  177 

Talahasse    Mfg.    Co.,    Re,   64 

Ala.  567  1423 

Tahaferro  v.  First  Nat.  Bank, 

71  Md.  200;   17  Atl.  1036  694, 

701,  723,  724 
Talladega  Ins.  Co.  v.  Peacock, 

67  Ala.  253  1377 

Tallmadge    v.    Fishkill    Iron 

Co.,  4  Barb.  (N.  Y.)  382  1359 

Talmage  v.  Pell,  7  N.  Y.  328  77, 

845,  851 
Tanner    v.    Nichols,   25   Ky. 
Law  Rep.  2191;  SOS.  W. 
225  235 

Tanner's  Case,  5  De  G.  &  S. 

182  275,  308,  309 

Tapley  v.  Martin,  116  Mass. 

275  228 

Tar  River  Nav.  Co.  v.  Neal, 

3  Hawks  (N.  Car.)  520  222, 

601 
Tarbell  v.  Page,  24  111.  46  126 

Tasker  &  Sons,  W.  (1905),  2 

Ch.  587         1418,  1473,  1473,1524 


Tate  V.   Bates,    118  N.  Car. 

287 ;   24  S.  E.  482 ;   54  Am. 

St.  Rep.  719  1355,  1357 

Taunton   v.    Royal    Ins.   Co., 

2  Hem.  &  Mill.  135  81,  931 
V.  Sheriff  of  Warwick- 
shire (1895),  2  Ch.  319  1546 
Taurine   Co.,   He,   23  Ch.    D. 

118  707,763,1215,1215 

Taussig  V.  St.  Louis,  etc.  R.  R. 

Co.,    186   Mo.   269;     85   S. 

W.  378  293,  1246 

Tavaglini  v.  Societa  Italiane, 

5  Pa.  Dist.  R.  441  222 
Tayler    v.     Great     Indian 

Peninsula  Ry.  Co.,  4  De  G. 

6  J.  559  685 
Taylor  v.   Atlantic,  etc.    Ry. 

Co.,  55  How.   Pr.   (N.   Y.) 

275  1672 

V.  Atlantic,  etc.  R.  R. 

Co.,  57  How.  Pr.  (N.   Y.) 

26  1485,  1494 

V.    Burlington    Cotton 

Mills,  8  Hun  (N.  Y.)  1  22 

V.  Cummings,  127  Fed. 

108;  62C.  C.  A.  108  635 
V.  Decatur  Mineral,  etc. 

Co.,  112  Fed.  449  957,969 
V.  Griswold,  2  Green  222 

(14  N.  J.  Law);  27  Am. 

Dec.  33  1000,  1013,  1013, 
1014,  1015,  1040,  1040 

V.   Heggie,  83   N.   Car. 

244  .  398 
V.  Miami  Exporting  Co., 

6  Ohio  176  517,  526 
V.  Modern  Woodmen,  72 

Kans.  443;   83  Pac.  1099  590 

V.  Philadelphia,  etc.  R. 

R.  Co.,  7  Fed.  377         1559,  1649 

V.  Philadelphia,  etc.  R. 

R.  Co.,  7  Fed.  381  1062 

V.  Philadelphia,  etc.  R. 

R.  Co.,  7  Fed.  386  68 

V.  Philadelphia,  etc.  R. 

R.  Co.,  9  Fed.  1  1541,  1649 
V.  Pilsen  Joel  El.  Light 

Co.,  27  Ch.  D.  268  516 
V.  Portsmouth,  etc.  Ry. 

Co.,  91   Me.    193;    39  Atl. 

560;  64  Am.  St.  Rep.  216  226 

—  V.   R.    D.   Scott   &  Co. 
(Mich.),  113  N.  W.  32  1068, 

1199,  1210, 1212 

—  V.  South,  etc.  R.  R.  Co., 
13  Fed.  152  444 

—  V.  Soutlierlin-Meade  To- 
bacco Co.  (Va.),  60  S.E.  132     1379 


cxcix 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Taylor  v.  Taylor,  74  Me.  5S2 
Taylor    &    Co.     v.    Southern 

Pac.  Co.,  122  Fed.  147 
Taylor,  Re,  101  N.  Y.  Supp. 

1039 
Taylor's    Case,    Ipswich,    11 

Coke  53 
Taylor's  Trusts  (1905),  1  Ch. 

734 
Teachout  v.  Van  Hoesen,  76 

Iowa  113;  40  N.  W.  96;   14 

Am.  St.  Rep.206;lL.  R.A. 

664 
Teasdale's  Case,  9  Ch.  54 


1378 

1064 

895 

569 

1678 


340 
516, 
569 


Tecopa    Mining    &   Smelting 

Co.,  110  Fed.  120  44 

Teele  v.  Consolidated  Amuse- 
ment Co.,  102  N.  Y.  Supp. 

666  1372 

Teeplev.  HawkeyeCo.  (Iowa), 

114N.  W.  306  429 

T.  E.  Hill  Co.,  148  Fed.  832; 

78  C.  C.  A.  522  44 

Telegraph  Co.  v.  Davenport, 

97  U.  S.  369  727,  728,  728, 

754,  755,  755,  756 
Telegraph   Construction   Co., 

Re,  L.  R.  10  Eq.  384  534 

Telegraph,   The   v.    Lee,    125 

Iowa  17;  98  N.  W.  364  956, 
981,  1342 
V.  Loetscher,  127  Iowa 

383;   101  N.  W.  773  319,  327, 

1334,  1346 
Telfair  v.  Howe    (S.    Car.)  3 

Rich.  Eq.  235;  55  Am.  Dec. 

637  69 

Telford,  etc.  Co.  v.  Gerhab,  13 

Atl.  Rep.  (Pa.)  90  755,  756 

Teller  v.  Tonopah,  etc.  R.  R.,- 

155  Fed.  482  1312,  1318 

Tempel  v.  Dodge,  89  Tex.  68; 

32  S.  W.  514;  33  S.  W.  222  1214 
Templeton  v.  Hayward,  65  111. 

178  393 

Templin  v.  Chicago,  etc.  Ry. 

Co.,  73  Iowa  548;  35  N.  W. 

634  1372 

Ten  Broek  v.  Boiler  Com- 
pound Co.,  20  Mo.  App.  19  591 
Ten  Eyck  v.  Pontiac,  etc.  R. 

R.  Co.,  74   Mich.  226;    41 

N.W.  905;  16Am.  St.  Rep. 

633;  3  L.  R.  A.  378  912,912, 
918,  1069,  1246,  1299 
V.  Pontiac,  etc.  R.  R.  Co., 

114  Mich.  494;    72  N.  W. 

362  1566 


Tenison   v.   Patton,   95  Tex. 

284;     67   S.    W.    92       1298,  1331 
Tennant  v.  Stanley  (1906),  1 

Ch.  131  26 

Tennent  v.   City  of  Glasgow 

Bank,  4  A.  C.  615  179 

Tennessee  Ice  Co.  v.  Raine, 

107  Tenn.  151 ;    64  N.   W. 

29  851,  856 

Tennessee,  etc.  Lighting  Co. 

V.  Massey  (Tenn.),  56  S.  W. 

35  113 

Tenney  v.  East  Warren  Lum- 
ber Co.,  43  N.  H.  343       397,  399, 

407 
Terhune  v.  Midland  R.  R.  Co., 

38  N.  J.  Eq.  423  245 

Terre  Haute,  etc.  R.  Co.,  102 

Fed.  825 ;   42  C.  C.  A.  654        1569 
Terre  Haute,  etc.  Rj'.  Co.  v. 

Harrison,  96  Fed.  907;    37 

C.  C.  A.  615  1634 

Terrell  v.  Georgia  R.  R.,  etc. 

Co.,  115  Ga.  104;   41  S.  E. 

262  _  749 

Terry    v.    Birmingham    Nat. 

Bank,  93  Ala.  599;    9  So. 

299;  30  Am.  St.  Rep.  87  807, 

920 
V.   Eagle  Lock  Co.,  47 

Conn.  141  494,  498,  938,  952, 

966,  1060 
Tete  V.  Farmers',  etc.  Bank,  4 

Brewst.  (Pa.)  308        572,  768,  776 
Teversham  v.  Camerons,  etc. 

Co.,  3  De  G.  &  Sm.  296  1318 

Te\'is    V.    Hammersmith,    31 

Ind.  App.  281;  66N.  E.  79, 

912;   161  Ind.  74;  67  N.  E. 

672  944,  946 
V.  Hammersmith  (Ind.), 

81  N.  E.  614;  84  N.  E.  337 
Texas  v.  White,  7  Wall.  700 


1374 
1436, 
1436 


Texas  Consol.,  etc.   Ass'n  v. 

Storrow,    92    Fed.    5;     34 

C.  C.  A.  182  466 

Texas  Loan  Agency  v.  Hunter, 

13  Tex.  Civ.  App.  402;   35 

S.  W.  399  300 

Texas   Southern   Ry.    Co.    v. 

Harle    (Tex.),    105    S.    W. 

1107  1522 

Texas    Western    Ry.    Co.    v. 

Gentry,  69  Tex.  625;    8  S. 

W.  98  913,  1416 

Texas,  etc.  Navigation  Co.  v. 

County    of    Galveston,    45 

Tex.  272  47 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Texas,    etc.    R.    R.    Co.    v. 

Barber,  '61  Tex.  Civ.  App. 

84;  71  S.  W.  393  381 

Texas,  etc.  Ry.  Co.  v.  Bledsoe, 

2  Tex.  Civ.  App.  88;  20  S. 

W.  1135  1609 

V.  Bloom,  60  Fed.  979; 

9  C.  C.  A.  300  1610 

V.  Cox,  145  U.  S.  593;   12 

Sup.  Ct.  905  1615,  1617 

V.   Gaal,    14   Tex.    Civ. 

App.  459;  37  S.  W.  462  1610 
V.  Geiger,  79  Tex.  13 ;   15 

S.  W.  214  1610,  1^19 
V.  Huffman,  83  Tex.  286 ; 

18  S.  W.  741  1609,  1610 
V.  Johnson,  151  U.  S.  81 ; 

14  Sup.  Ct.  250  1609,  1610, 
1617,  1619 
V.  Marlor,  123  U.  S.  687; 

8  Sup.  Ct.  311;  19  Fed.  867  1458, 
1528,  1675 
V.  Watts  (Tex.),  18  S.  W. 

Rep.  312  1610 

Thames   Haven,    etc.    Co.    v. 

Rose,  4  Man.  &  G.  552  1205 

Thames  Tunnel  Co.  v.  Sheldon, 

6B.  &C.  341  162 

Thatcher  v.  Consumers'  Gas, 

etc.  Co.  (N.  J.),  66  Atl.  934  64 
Thayer  v.  Butler,   141   U.  S. 

234 ;  11  Sup.  Ct.  987  490 
V.  Herrick,  23  Fed.  Cas. 

899  560 
V.  Wathen,  17  Tex.  Civ. 

App.  382 ;    44  S.  W.  906  424 

Theis  V.  Durr,  125  Wise.  651; 

104  N.  W.  985;    110  Am. 

St.  Rep.  880;    1   L.  R.  A. 

N.  s.  571  529,  534,  534,  534, 

538,  951 
Thellusson  v.  Valentia  (1907), 

2  Ch.  1 ;  (1906)  1  Ch.  480  73,  133 
Thew  V.  Porcelain  Mfg.  Co.,  5 

S.  Car.  415  394,  1371 

Thigpen  v.  Mississippi  Central 

R.  R.  Co.,  32  Miss.  347  194,  625 
Third   Avenvie   R.    R.   Co.   v. 

Ebling,  12  Daly  (N.  Y.)  99      1215, 

1372 
Third  Nat.   Bank  v.   Buffalo 

German  Ins.  Co.,  193  U.  S. 

581;  24  Sup.  Ct.  524  114,  572, 
573,  714 
V.  Eastern  R.  R.  Co.,  122 

Mass.  240  1405 

Third  Street,  etc.  Ry.  Co.  v. 

Lewis.    79    Fed.    196;     24 

C.  C.  A.  482  1641 


Thistle  V.  Jones,  45  N.  Y.  Miac. 

215;    92  N.  Y.  Supp.  113        282, 
302,  304 

Thomas  v.  Brownvilie,  etc. 
R.  R.  Co.,  109  U.S.  522;  3 
Sup.  Ct.  315  1303,  1316,  1433 

V.   Cincinnati,  etc.  Ry. 

Co.,  62  Fed.  17  1620 

V.   Cincinnati,   etc.   Ry. 

Co.,  62  Fed.  669  1621 

V.   Cincinnati,  etc.  Ry. 

Co.,  77  Fed.  667  1612 

V.  City  of  Richmond,  12 

Wall.  349  840 

V.  East  Tennessee,  etc. 

Ry.  Co.,  60  Fed.  7  1575,  1642 

V.  Gregg,  78  Md.  545;  28 

Atl.  565;  44  Am.  St.  Rep. 3 10     1150 

V.  Musical,  etc.   Union, 

121  N.  Y.  45;  24  N.  E.  24; 

8  L.  R.  A.  175  583,  948 

V.  New  York,  etc.  Ry. 

Co.,  139  N.Y.  163;  34  N.  E. 

877  1500,  1679,  1679 

V.  Penniman  (Md.),  66 

Atl.  291  1280 

V.  Railroad  Co.,  101  U.  S. 

71  52,  836 

V.   Societa   Italiena,    10 

N.  Y.  Misc.  746;    31  N.  Y. 
Supp.  815  591 

V.  Western  Car  Co.,  149 

U.  S.  95;    13  Sup.  Ct.  824       1568, 
1612,  1643,  1654 

Thomas  F.  Meton  &  Sons  v. 
Isham  Wagon  Co.,  4  N.  Y. 
Supp.  215 

Thomas,  Re,  14  Q.  B.  D.  379 


Thomasson    v.    Grace   M.    E. 

Church,    113   Cal.  558;    45 

Pac.  838 
Thompson       v.       Alexander 

(1905),  1  Ch.  229 
V.  Commercial,  etc.  Ass. 

Co.  (Colo.).  78  Pac.  1073 
V.  Erie  Rv.  Co.,  11  Abb. 

Pr.  N.  s.  188 
V.  Erie  Ry.  Co.,  9  Abb. 

Pr.  N.  s.  212 
V.  Erie  Ry.  Co.,  45  N.  Y. 

468 
V.  Fairbanks.  196  U.  S. 

516;    25  Sup.  Ct.  306 
V.  Huron  Uumber  Co.,  4 

Wash.   (>00;    30   Pac.    741; 

31  Pac.  25 

V.  Lambert,  44  Iowa  239 

65,  854,  861, 


1364 
260, 
301 


1377 
70 
237 
448 
890 
475 


1506 


1553 

63, 

1407 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Thompson  v.  Lee  County,  3 

Wall.  327  1448 

V.  Natchez  Water  Co.,  68 

Miss.  423;  9  So.  821       1187,  1208, 

1208 

V.  N.  Y.,  etc.  R.  R.  Co., 

3  Sandf.  Ch.  (N.  Y.)  625, 

651  251 

V.   Perrine,    106    U.    S. 

589;   1  Sup.  Ct.  564  1451 

V.    St.    Nicholas    Nat. 

Bank,   146  U.  S.  240;    13 

Sup.  Ct.  66  866 

V.  Scott,  4  Dill.  508  1616, 

1616 

V.  Swoope,  24  Pa.  St.  474       69 

V.  Toland,  48  Cal.  99      799,  812 

V.  Trustees,  etc.  Corpora- 
tion (1895),  2  Ch.  454  511 

V.  White  Water  Valley 

R.  R.  Co.,  132  U.  S.  68;   10 

Sup.  Ct.  29  1537 
V.  Williams,  76  Cal.  153; 

18  Pac.  153 ;  9  Am.  St.  Rep. 

187  1198 

Thompson  Co.  v.   Brook,  37 

N.    Y.    St.    Rep.    506;     14 

N.  Y.  Supp.  370  1238 

Thompson's  Estate,  33  Barb. 

(N.  Y.)334  55 

Thompson-Houston,  etc.  Co. 

V.  Dallas,  etc.  Ry.  Co.,  54 

Fed.  1001;  5C.  C.  A.  11  628 

Thomson,    Succession   of,   46 

La.  Ann.  1074;    15  So.  379       667 
Thomson's  Case,  4  De  G.  J.  & 

S.  749  159,  633 

,  34  L.  J.  Ch.  525  169 

Thomson's  Estate,  153  Pa.  St. 

332;  26  Atl.  652.653  503 

Thorington  v.  Gould,  59  Ala. 

461  1185 

Thorn  v.  City  Rice  Mills,  40 

Ch.  D.  357  1462,  1472 

V.  Nine  Reefs,  67  L.  T.  93 

1416,  1603, 1604 
Thornsburgh  v.  Newcastle,  etc. 

R.  R.  Co.,  14  Ind.  499  194 

Thornton  v.  Balcom,  85  Iowa 

198;  52  N.  W.  190      108,  131,  149 
V.  Marginal  Freight  Ry. 

Co.,  123  Mass.  32  232 

V.  Martin,  116  Ga.  115; 

42  S.  E.  348  751,  787 

V.  Wabash  Ry.  Co.,  81 

N.  Y.  462  1664 

Thorpe  v.  Pennock  Mercantile 

Co.  (Minn.),  108  N.  W.  940   155, 
298,  299 


Thrasher  v.  Pike  R.  R.  Co.,  25 

111.  393  198 

Thruston  v.   Big  Stone  Gap 

Imp.  Co.,  86  Fed.  484  1585 

Thunder   Hill   Mining  Co.,   4 

Brit.  Columb.  61  492 

Thurber  v.  Crump,  86  Ky.  408 ; 

6  S.  W.  145  715 
Ticonic    Water,    etc.    Co.    v. 

Lang,  63  Me.  480  171 

Tiessen  v.  Henderson  (1899), 

1  Ch.  861  953,  1002,  1003 

Tift  V.  Quaker  City  Nat. 
Bank,  141  Pa.  St.  550;  21 
All.  660  280,  288 

Tilbury  Portland  Cement  Co., 

62  L.  J.  Ch.  814  11,  66 

Tilford  V.  Atlantic  Match  Co., 

134  Fed.  924  1510, 1536 

Tilley  v.  Coykendall,  69  N.  Y. 
App.  Div.  92;  74  N.  Y. 
Supp.  631  874 

Tillinghast  v.  Bailey,  86  Fed. 

46  489,  492 

V.  Troy,  etc.  R.  R.  Co., 

48    Hun    (N.    Y.)    420;     1 

N.  Y.  Supp. 243      1585, 1596, 1624 

Tillyer  v.   Hero  Jar  Co.,    17 

Phila.  (Pa.)  153  881 

Tilson  V.  Warwick  Gas  Light 

Co.,  4  B.  &  C.  962  295 

Timberlake  v.  Shippers'  Com- 
press Co.,  72  Miss.  323;  16 
So.  530  718,  1134 

Timmins   &   Sons,    Ebenezer 

(1902),  1  Ch.  238       149,  155,  205, 

642 

Timolat  v.  Held  Co.,  17  N.  Y. 
Misc.  556;  40  N.  Y.  Supp. 
692 

Tinker  v.  Kier,  195  Mo.  183; 
94  S.  W.  501 

Tinsdale  v.  Harris,  20  Pick.  9 
(Mass) 

Tippecanoe  County  v. 
Reynolds,  44  Ind.  509;  15 
Am.  Rep.  245 

Tippets  V.  Walker,  4  Mass. 
595 

Titus  V.  Cairo,  etc.  R.  R.  Co., 
37  N.  J.  Law  98 

V.  Great  Western  Turn- 
pike Road,  61  N.  Y.  237 

V.  Mabee,  25  111.  257 

T.  J.  Moss  Tie  Co.  v.  Common- 
wealth (Ky.),  105  S.W.  163 

Tobey  v.  Hakes,  54  Conn.  274 ; 

7  Atl.  551;   1  Am.  St.  Rep. 

114  751 


1181 
185 


422 


1352 

398 

1370 

741 
1503 

368 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Tobin  V.  Roaring  Creek,  etc. 
R.  R.  Co.,  8ti  Fed.  1020 


917, 
1371 


Tobin  Canning  Co.  v.  Fraser, 

81  Tex.  407;    17  S.  W.  25        1343 

Tod  V.  Kentucky  Union  Ry. 
Co.,  57  Fed.  47;  6  C.  C.  A. 
685  77,875,876,877,1106, 

1408,  1433 

Todd  V.  Moorehouse,  19  Eq. 

69  815 

V.  Taft,  7  Allen  (Mass.) 

371  786 

Toledo  Portland  Cement  Co., 

156  Fed.  83  44 

Toledo,  etc.  R.  R.  Co.  v.  Con- 
tinental Trust  Co.,  95  Fed. 
497;   36  C.  C.  A.  155        244,  444, 
468,  469,  645,  1260,  1329, 
1404,  1628 

V.  Hamilton,   134  U.  S. 

296;  10  Sup.  Ct.  546  1508, 

1538,  1539,  1542,  1550, 
1566 
Toler  V.  East  Tennessee,  etc. 

Ry.  Co.,  67  Fed.  168  1051, 

1585,  1589.  1589,  1592, 
1592,  1593,  1593 
Tombler  v.  Palestine  Ice  Co., 
17  Te.x.  Civ.  App.  596;   43 
S.  W.  896  715 

Tome  V.  King,  64  Md.  166;  21 

Atl.  279  1641 

V.  Parkersburg  Branch 

R.  R.  Co.,  39  Md.  36;    17 

Ani.  Rep.  540  593,  740 

Tomlin  v.  Farmers', etc.  Bank, 

52  Mo.  App.  430  1016,  1029, 

1030,  1067 
Tomlin's  Case,  14  Times  L.  R. 

53  189 

(1898),  1  Ch.  104  181 

Tompkins  v.  Sperry,  96   Md. 

560;    54  Atl.  254      330,  331,  331, 

1006 
Tompkins     Co.,     D.     A.     v. 

Catawba  Mills,  82  Fed.  780  958, 
1485,  1586 
V.  Chester  Mills,  90  Fed. 

37  1492 

Tomkinson  v.  South  Eastern 

Ry.  Co.,  35  Ch.  D.  675  81,  949 
Tontine  Surety  Co.,  116  Fed. 

401  22,  44 

Toppan    V.    Cleveland,     etc. 

R.  R.  Co.,  1  Flippin  74  1437 

Toppin  V.  Lomas,  16  C.  B.  145  1439 
Topping  V.  Bickford,  4  Allen 

(Mass.)  120  233 


Torbett    v.    Eaton,    49    Hun 

(X.  Y.>20y;   1  \.  Y.  Supp. 

614 
Torbeck  v.  Westbury  (1902), 

2  Ch.  871 
Toronto  Brewing  Co.  v.  Blake, 

2Unt.  175       994,  995,  1015,  1205 
Toronto  Gen.  Trusts  Corp.  v. 

Central  Ontario  Ry.  Co.,  6 

Ont.  L.  R.  1 
V.  Central  Ont.  Ry.  Co., 

6  Ont.  L.  R.  534 
Torrey  v.   Dustin  Monument 

Ass'n,  5  Allen  (Mass.)  327 

V.      Toledo      Portland 

Cement    Co.    (Mich.),    113 
N.  W.  580 

Tothill's  Case,  1  Ch.  85 

Totten  &  Co.  v.  Tison,  54  Ga. 
139 

Tottenham  v.  Swansea  Zinc 
Ore  Co.,  53  L.  J.  Ch.  776 

Touche  V.  Metropolitan  Ware- 
housing Co.,  6  Ch.  671 

Tourtelot  v.  Finke,  87  Fed. 
840 

V.   Stoleben,    101    Fed. 

362 

Towers   v.    African   Tug   Co. 

(1904),  1  Ch.  558      951,  966,  966, 

1101 
Town  of  Eagle  v.  Kohn,  84 

111.  292  1451 

Town  of  East  Rome  v.  City  of 

Rome  (Ga.),  58  S.  E.  854       107, 

381,  382 

Town  of  Pawlet  v.  Clark,  9 

Cranch  292 
Townes  v.   Nicholls,    73   Me 

515 
Townsend  v.  Mclver,  2  S.  Car. 

25  744,  745,  749,  750 
V.  Oneonta,  etc.  Ry.  Co., 

88  N.  Y.  App.  Div.  208;  84 

N.  Y.  Supp.  427 
Townsend's  Case.  13  Eq.  148 
Tracy  v.  Talmage,  14  N.  Y. 

162;  67  Am.  Dec.  132       856,  861, 
865,  867 
Traders'  Mut.  Life  Ins.  Co.  v. 

Humphrey,   109  111.  App. 

246;    affirming,  69  N.  E. 

875 
Traders'  Nat.   Bank  v.  Law- 
rence Mfg.  Co..  96  N.  Car. 


1365 
1004 


1606 
1447 


1380 


944 
173 

456 

1598 

286 

791 

698 


302 
429 


1649 
167 


591 


298 ;   3  S.  E.  363 


1401, 


Tradesman  Pub.  Co.   v.   Car 
Wheel  Co.,  95  Tenn.  634; 


1542, 
1542 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1094 


72 


32  S.  W.    1097;   31  L.  R. 

A.  593;   49  Am.    St.  Rep. 

943 
Traer  v.    Lucas    Prospecting 

Co.,     124    Iowa    107;     99 

N.  W.  290  52,  57 

Trainor  v.  German-American 

Bldg.  Ass'n,  204  111.  616;  68 

N.  E.  650  914,  920 

Trammell  v.  Pennington,  45 

Ala.  673  150 

Transport,    Ltd.,    v.    Schon- 

berg,  21  Times  L.  R.  305         996, 
1182,  1231 
Transvaal    Exploring   Co.    v. 

Albion  Gold  Mines  (1899), 

2  Ch.  370 
Travers  v.   Leopold,   124  III. 

431;    16  N.  E.  902 
V.  North  Carolina  R.  R. 

Co.,   133  N.  Car.  322;    45 

S.  E.  651 
Trawick  v.   Peoria,  etc.   Ry. 

Co.,  68  111.  App.  156 
Treadway  v.  Johnson,  33  Mo. 

App.  122 
Tread  well  v.  Clark  (N.  Y.),  82 

N.  E.  505 
V.  Clark,  114  N.  Y.  App. 

Div.     493;       100    N.     Y. 

Supp.  1  722,  724  • 

■ V.  Salisbury  Mfg.  Co.,  7 

Gray  (Mass.)  393;    66  Am. 

Dec.  490  72 

Treasurer    v.     Commercial 

Mining  Co.,  23  Cal.  390      786,  786 
Tres  Palacios,  etc.  Co.  v.  Eid- 

man  (Tex.),  93  S.  W.  698         592 
Trevor  v.  Whitworth,  12  App. 

Cas.  409       51,  516,  516,  516,  523, 
524,  564,  657,  830 
Triesler    v.    Wilson,    89    Md. 

169;  42  Atl.  926       577,  578,  1060 
Trimble  v.   Am.    Sugar  Ref. 

Co.,  61  N.  J.  Eq.  340;    48 

Atl.  912  907,  969,  1113 
V.  Union  Nat.  Bank,  71 

Mo.  App.  467  735,  737,  738 

Trinder  v.  Trinder,  1  Eq.  695         414 
Triplett  v.   Fauver,    103   Va. 

123 ;   48  S.  E.  875  1203,  1246 

Tripp  V.  Northwestern  Nat. 

Bank,   41    Minn.    400;     43 

N.  W.  60 
Troup's  Case,  29  Beav.  353 


640 
812 


430 
591 

782 


810 


Trowbridge    v.    Scudder,    11 

Cush.  (Mass.)  83 
Troy  Mining  Co.  v.  White,  10 


S.  Dak.  475;  74N.  W.  236; 
42  L.  R.  A.  549  1197,  1199, 

1199, 1207, 1212,  1212,  1299 

Troy  Steam  Laundering  Co., 

132  Fed.  266  43 

Troy,  etc.  R.  R.  Co.  v.  Tib- 
bits,  18  Barb.  (N.Y.)  297     155, 209 

Truman's  Case  (1894),  3  Ch. 

272  169,  169,  169 

Trust  &  Deposit  Co.  v.  Spar- 
tanburg, etc.  Co.,  91  Fed. 
324  1603,  1605 

V.  Spartanburg,  etc.  Co., 

97  Fed.  409  1240,  1640,  1671 

Trust  &  Savings  Co.  v.  Home 
Lumber  Co.,  118  Mo.  447; 
24  S.  W.  129       571,  571,  574,  589, 
712,  752,  773 

Trust  Co.  of  Georgia  v.  State, 
109  Ga.  736;  35  S.  E.  323; 
48  L.  R.  A.  520  57 

Trustees,    etc.    v.    Gibbs,    2 

Cush.  (Mass.)  39  1065 

Trustees   of   Free   Schools  v. 

Fhnt,  13  Mete.  (Mass.)  539      650 

Trustees  of  N.  C.  Endow- 
ment Fund  V.  Satchwell,  71 
N.  Car.  Ill  258 

Trustees  of  Smith  Charities 
V.  Connolly,  157  Mass.  272; 
31  N.  E.  1058  1382 

Trusts  &  Guarantee  Co.  v.  Ab- 
bott Mitchell  &  Co.,  11  Ont. 
L.  R.  403  1549 

Tryber  v.  Girard  Creamery, 
etc.  Co.,  67  Kans.  489;  73 
Pac.  83  289,  296 

Tschetinian  v.  City  Trust  Co., 
97  N.  Y.  App.  Div.  380; 
89  N.  Y.  Supp.  1053;  186 
N.  Y.  432;  79  N.  E.  401         1412, 

1488 

Tschumi    v.    Hills,    6    Kans. 

App.  549;  51  Pac.  619      481,493, 
547,  549 

Tucker  v.   Curtin,    148   Fed. 

929;   78  C.  C.  A.  557         708,  712 

V.    Mulligan,    28    Vict. 

L.  R.  1  .  747,  782 

V.  Russell,  82  Fed.  263         1183 

V.  Wilson,  1  P.  Wms.  261      808 

Tufts  V.  Plymouth  Gold  Min- 
ing Co.,  14  Allen  (Mass.) 
407  913 

Tulare  Irrigation  Dist.  v. 
Kaweah  Canal,  etc.  Co., 
44  Pac.  Rep.  662  (Cal.)  523 

252    V.  Shepard,  185  U.  S.  1 ; 

22  Sup.  Ct.  531  241,  243 

cciv 


1188 
831, 
832 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Tulare  Sav.  Bank  v.  Talbot, 

131  Cal.  45;    63  Pac.  172  627 

Tulley  V.  Citizens'  Nat.  Bank, 

18  Ind.  App.  210;   47  N.  E. 

850  .  1371 

Tunis    V.     Hestonville,     etc. 

R.  R.  Co.,  149  Pa.  St.  70; 

24  Atl.  88;  15L.  R.  A.  665  1025, 
1054,  1055,  1063 
Turnbull  v.  Payson,  95  U.  S. 

418  921 
V.     West     Riding,     etc. 

Club,  70  L.  T.  92  1179,  1184 

Turner   v.    Conant,    18   Abb. 

N.  C.  (N.  Y.)  160  1666 
V.  Cowan,  34  Can.  Sup. 

Ct.  160  645 
V.   Cross,   83  Tex.   218; 

18  S.  W.  578;    15  L.  R.  A. 

262  1619 
V.  Fidelity  Loan  Con- 
cern (Cal.),  83  Pac.  02  1201 
V.    Grangers',    etc.    Ins. 

Co.,  65  Ga.  649;    38  Am. 

Rep.  801  177,  180 
V.  Indianapolis,  etc.  Ry. 

Co.,  8  Biss.  380  1627,  1629 
V.  Indianapolis,  etc.  Ry. 

Co.,  8  Bi.ss.  527  1615,  1618 
V.  Peoria,  etc.  R.  R.  Co., 

95  111.   134;    35  Am.  Rep. 

144  1651,  1651 

Turpin's    Estate,    21    Wkly. 

Notes  Cas.  (Pa.)  542  1147 

Turquand  v.  Marshall,  4  Ch. 

376  1094 

Tussaud  V.  Tussaud,  44  Ch. 

D.  678  373,  374,  376 

Tuthill  Spring  Co.  v.  Smith, 

90  Iowa  331 ;  57  N.  W.  853  622 
Tuttle   V.   George   H.   Tuttle 

Co.  (Me.),  64  Atl.  496       293,  294 

V.  Michigan,  etc.  R.  R. 

Co.,  35  Mich.  247  999,  1000, 

1000,  1003 

V.  Walton,  1  Ga.  43       572,  770 

Twelfth  Street  Market  Co.  v. 

Jackson,  102  Pa.  St.  269  592, 

1215,  1381 
Twigg  V.  Thunder  Hill  Min- 
ing Co.,  3   Brit.   Columbia 
101  115,492,587 

Twin-Lick  Oil  Co.  v.  Marbury, 

91  U.  S.  587       1301,  1311,  1324, 

1344 
Twycross  v.  Grant.  2  C.  P.  D. 

469  271,  271,  273,  274 

Tyler  v.  Savage,  143  U.  S.  79; 

12  Sup.  Ct.  340  182,  183 


Tyler,  Re,  149  U.  S.  164;    13 

Sup.  Ct.  785  1617 

Tyne,   etc.    As.s'n   v.    Brown, 

74  L.  T.  283  1230 

Tyrrell  v.  Bank  of  London,  10 

H.  L.  Cas.  26  318,  320,  322,  1338 
V.  Cairo,  etc.  R.  R.  Co., 

7  Mo.  App.  294  1451 

Tyson  v.  Wabash  Ry.  Co.,  8 

Biss.  247  1602,  1603 

U 

Ulmer  v.  Lime  Rock  R.  R. 

Co.,  98  Me.   579;    57  Atl. 

1001;    66  L.  R.  A.  387  877 

Ulster  Ry.  Co.  v.  Bainbridge, 

Ir.  Rep.  2  Eq.  190  620,  1245 

Underhill   v.   Santa   Barbara, 

etc.  Co.,  93  Cal.  300 ;  28  Pac. 

1049  407,  407,  593,  1376,  1391 
Underwood  v.  London  Music 

Hall  (1901),  2  Ch.  309  111,446 
V.   Newport   Lyceum,  5 

B.    Monr.    (Ky.)    129;    41 

Am.  Dec.  260  861 

Union     Agricultural,     etc. 

Ass'n  V.  Neill,  31  Iowa  95        130, 

214 
Union    Bank    v.    Jacobs,    6 

Humph.  (Tenn.)  515 

i;.  Laird,  2  Wheat.  390 

772,  773,  776 
V.  Ridgely,   1   H.  &  G. 

(Md.)  324  107,  392,  392,  557 

Union    Cattle    Co.    v.    Inter- 
national   Trust    Co.,     149 

Mass.  492;   21  N.  E.  962 
Union  Compress  Co.  v.  Doug- 
lass, 60  Ark.  591;  31  S.  W. 

455 
Union    Fraternal    League    v. 

Johnston,  124  Ga.  902;   53 

S.  E.  241 
L'nion     Insurance     Co.,     22 

Wend.  (N.  Y.)  591 
Union  Loan,  etc.  Co.  v.  South- 
ern Cal.,  etc.  Road  Co.,  49 

Fed.  267 
V.    Southern    Cal.,    etc. 

Road  Co.,  51  Fed.  106 
Union   Mills  v.    Harder,    116 

N.  Y.  App.  Div.  22 
Union   Mutual   Fire   Ins.  Co. 

V.  Keyser,  32N.  H.  313;  64 

Am.  Dec.  375 
Union   Mutual   Life  Ins.  Co. 

t>.  Union  Mills,  etc.  Co.,  37 

Fed.  286;  3  L.  R.  A.  90 


66 
770, 


1405 


1239 


577 
1163 


1642 

1642 

388 


592 


1462, 
1604,  1604 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Union  Mutual  Life  Ins.  Co.  v. 

Wliite,  106  111.  67  591,  1373 

Union  Nat.  Bank  v.  Hill,  148 
Mo.  380;    49  S.  W.   1012; 
71  Am.  St.  Rep.  615       960,  1214, 
1276,  1279,  1357 

V.  Scott,  53  N.  Y.  App. 

Div.  65;  66  N.  Y.  Supp.  145     156, 
921,  1182,  1227 
Union  Pac.  Lodge  v.   Bank- 
ers'   Surety    Co.     (Nebr.), 
113N.  W.  263  _        237 

Union  Pac.  Ry.  Co.  v.  Chi- 
cago,   etc.    Ry.    Co.,    163 
U.  S.  564;    16  Sup.  Ct.  1173     107, 
992,  1192 

V.   Credit  Mobilier,    135 

Mass.  367  1306,  1307 

Union  Plate  Glass  Co.,  Re,  42 

Ch.  D.  513  ,    534,  536 

Union  Savings  Bank  v.  Leiter, 

145  Cal.  696;   79  Pac.  441        564, 
614,  614,  633 

V.  Willard  (Cal.),  88  Pac. 

1098  620,  621 

Union   Trust   Co.    v.    Carter, 

139  Fed.  717  116,  993,  1188, 

1194,  1299, 1299 

V.  Chicago,   etc.    R.  R. 

Co.,  7  Fed.  513      1651,  1652,  1652 

V.  Cuppy,  26  Kans.  754     1583, 

1609 

V.   Illinois  Midland  Ry. 

Co.,  117  U.  S.  434;   6  Sup. 
Ct.  809        1629,  1640,  1640,  1646, 
1647,    1647,    1649,    1649,    1651, 
1653,  1655,  1655 

V.     Mercantile     Library 

Hall  Co.,  189  Pa.  263;    42 

Atl.  129         _  109,  1501 

V.  Missouri,  etc.  Ry.  Co., 

26  Fed.  485  1465 

V.   Monticello,   etc.   Ry. 

Co.,  63  N.  Y.  311;  20  Am. 

Rep.  541  1456,  1456 

V.   Morrison,  125  U.  S. 

591:  8Sup.  Ct.  1004      1549, 
1551,  1567 

V.   Nevada,  etc.  R.  R. 

Co.,  10  Sawy.  122         1526 

V.    Souther,    107    U.    S. 

591 ;  2  Sup.  Ct.  295       1562,  1565, 

1566 

V.  St.  Louis,  etc.  R.  R. 

Co.,  4  Dill.   114  1003 

V.  St.  Louis,  etc.  Ry.  Co., 

5  Dillon  1  1463,  1465,  1468 

V.    Thomas    (Md.),    66 

Atl.  450  1470,  1583,  1584 


1626 

1570 

1496 

86 


1211 


957 


Union  Trust    Co.   v.    Union, 

etc.  Ry.  Co.,  26  Fed.  485 
V.    Walker,    107    U.    S. 

596;   2  Sup.  Ct.  299 
V.   Ward,    100   Md.   98; 

59  Atl.  192 
Union  Water  Co.  v.  Murphy's 

Flat,  etc.  Co.,  22  Cal.  620 
Union,  etc.  Bank  v.  Farring- 

ton ,  1 3  Lea  (Tenn . )  333     807, 1023 
Union,     etc.     Trust     Co.     v. 

Southern  Cal.,  etc.  Co.,  51 

Fed.  840      1343,  1403,  1403, 

1409,  1496 

United    Brethren    Church    v. 

Vandusen,  37  Wise.  54 
United  Electric  Securities  Co. 

V.  Louisiana  Electric  Light 

Co.,  68  Fed.  673 
United  Fire  Ass'n  v.  Bense- 

man,  4  Wkly.  Notes  Cas. 

(Pa.)  1  558,  559 

United  Fruit  Growers  Co.  v. 

Eisner,  22  N.  Y.  App.  Div. 

1;  47  N.  Y.  Supp.  906        604,607, 
924,  1165,  1197,  1197,  1199 
United     German     Bank     v. 

Katz,  57  Md.  128  844,  853 

United   Gold   Mining   Co.    v. 

Rocky     Mountain     Nat. 

Bank,  2  Colo.  565  917,  923, 

923,  1193 
United     Gold,     etc.     Co.     v. 

Smith,  44  N.  Y.  Misc.  567; 

90  N.  Y.  Supp.  199       1003,  1021, 
1046,  1084 
United    Lines    Tel.     Co.     v. 

Boston  Safe  Deposit,  etc. 

Co.,  147U.  S.  431;   13  Sup. 

Ct.  396  1540,  1549 

United  Ports,  etc.   Ins.  Co., 

20  W.  R.  88  172 

United  Society  v.  Eagle  Bank, 

7  Conn.  456  517,  518 

United  Society  of  Shakers  v. 

Underwood,  9  Bush.  (Ky.) 

609;    15  Am.  Rep.  731 
United   States  v.   Columbian 

Ins.   Co.,   2   Cranch.   C.   C. 

266 

—  V.  Debs,  64  Fed.  724 

—  V.  Flint,  etc.  Ry.  Co., 
95  Fed.  551;  37  C.  C.  A. 
156 

—  V.  Harris,  177  U.  S.  305; 
20  Sup.  Ct.  609 

—  V.  Kane,  23  Fed.  748 

—  V.  McKelden,  MacA.  & 
Mack.  (D.  C.)  162   998,  998, 1250 


1356 


1027 
1620 


1634 

1618 
1620 


ccvi 


TABLE    OF    CASES 
[The  references  are  to  pages] 


United    States  v.  Means,    42 

Fed.  599  1365 
V.     New    Orleans,     etc. 

R.  II.  Co.,  12  Willi.  362  1535, 
1537,  1539,  1540 
V.  Union  Pac.  R.  R.  Co., 

91  U.  S.  72  1463 
V.     Vaughan,     3     Hinn. 

(Pa.)  39  4;    5  .Vm.  Deo.  375      715 
United  States  Cast  Iron  Pipe, 

etc.  Co.,  65  Atl.  819  (X.  J.)      698, 

1017 
United    States    Express    Co. 

V.  Hedbury,  34  111.  459  383 

United    States    Hotel    Co.    v. 

Niles,    134    Fed.    225;     67 

C.  C.  A.  153  44 

United    States    Mercantile, 

etc.    Agency,    115    N.    Y. 

176;    21  N.  E.  1034  386 

United  States  Mineral  Co.  v. 

Camden  (Va.),  56  S.  E.  561      192, 
517,  527 
United  States  Mortgage  Co. 

V.  Sperry,   138  U.  S.  313; 

11  Sup.  Ct.  321  1449 

United  States  Mortgage,  etc. 

Co.    V.    Eastern    Iron    Co., 

105  N.  Y.  Supp.  291  1504 

United  States  Nat.   Bank  v. 

First  Nat.   Bank,    79  Fed. 

296;    24  C.  C.  A.  597  1374 
V.    Forstedt,    64    Nebr. 

855;  90  N.  W.  919  1235 

United  States  Rolling  Stock 

Co.,  57  How.  Pr.  16  1652 
V.   Atlantic,  etc.   R.   R. 

Co.,   34   Oh.    St.    450;     32 

Am.  Rep.  380  1296,  1299 

United     States     Savings     & 

Loan  Co.  v.  Convent  of  St. 

Rose,    133    Fed.    354;     66 

C.  C.  A.  416  834,  835,  838 

United   States   Savings,    etc. 

Co.  V.  Shain,  8  N.  Dak.  136; 

77  N.  W.  1006  562 

United  States  Steel  Corp.  v. 

Hodge,  64  N.  J.  Eq.  807; 

54  Atl.  1       1080,  1081,  1115,  1115 
United   States   Trust   Co.    v. 

Mercantile    Trust    Co.,    88 

Fed.  140;  31  C.  C.  A.  427         1611 
V.  New  York,  etc.  R.  R. 

Co.,  25  Fed.  800  1564 

V.  New  York,  etc.  R.  R. 

Co.,  lOlN.  Y.  478;  5  N.  E. 

316  1602, 1621 

V.  Omaha,  etc.  Ry.  Co., 

63  Fed.  737  1620 


United    States   Trust  Co.    v. 

Wabash,   etc.    Ry.  Co.,  38 

Fed.  891  1532 
V.  Wabash,  etc.  Ry.  Co., 

150  U.S.  287;    14  Sup.  Ct. 

86  1513,  1517,  1611,  1611 
1612,  1612 
V.  Western  Contract  Co., 

81  Fed.  455;  20  C.  C.  A.  472  1570 
United  States,  etc.  Trust  Co. 

v.  Young  (Tex.),  101  S.  W. 

1045  1623,  1623 

United  States  Vinegar  Co.  v. 

Foehrenbach,     148    N.    Y. 

58;  42  N.  E.  403  261,  261 

V.  Sclilegel,    143  N.  Y. 

537;   38  N.  E.  729  222,261 

United    Waterworks    Co.    v. 

Omaha  Water  Co.,  21  N.  Y. 

Misc.  594;    48  N.  Y.  Supp. 

817  1661 
V.  Omaha  Water  Co.,  164 

N.  Y.  41;  58  N.  E.  58  1663 

V.  Stone,  127  Fed.  587         1663 

United  Workmen  v.  Haddock, 

72  Kans.  35  590 

Unity  Co.  v.  Equitable  Trust 

Co.,  204  111.  595;   68  N.  E. 

654  1486 

Unity   Ins.   Co.  v.   Cram,   43 

N.  H.  636  117,  128 

University    of    Louisville    v. 

Hammock  (Ky.),  106  S.  W. 

219  381,  869 

Uptegrove   v.   Schwartzwael- 

der,  46  N.  Y.  App.  Div.  20; 

61  N.  Y.  Supp.  623;  167  N. 

Y.  587;   60  N.  E.  1121  103 

Upton  V.  Burnham,  3  Biss.  431 

696,  699 

V.  Tribilcock,  91  U.  S. 

45  177,  177,  185,  483,  492 

Umer  v.  Sollenberger,  89  Md. 

316;    43   Atl.    810  317,  984, 

1313,  1314 
Uruguay  Central,  etc.  Ry.  Co., 

11  Ch.  D.  372  1527,  1529 

Usher  v.  New  York  Central, 

etc.  R.  R.  Co.,   76  N.   Y. 

App.   Div.  422;    78  N.  Y. 

Supp.  508  853,  1189 

Utah  Optical  Co.  i>.  Keith,  18 

Utah  464;    56  Pac.   155  302 

Utica  Fire  Alarm  Co.,  115  N. 

Y.  App.  Div.  821  1017,  1017, 

1019,  1022 
Utica  Ins.  Co.  r.  Bloodgood,  4 

Wend.  (N.  Y.)  6.52  1248 

r.  Scott,  19  Johns,  (N.Y.)l     827 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Utica  Ins.  Co.   v.  Tilman,   1 

Wend.  (N.  Y.)  555  229 

Utley  V.  Union  Tool  Co.,  11 

Gray  (Mass.)  139  230,  247 

Uvalde  Paving  Co.  v.  City  of 

New  York,  99  N.  Y.  App. 

Div.  327;    91  N.  Y.  Supp. 

131  400 


Vail  v.  Hamilton,  85  N.Y.  453    1021, 

1022 
Vale  of  Neath  &  South  Wales 

Brewery  Co.,  3   De  G.    «fe 

Sm.  96  520 

Vale   Mills  v.   Spaulding,   62 

N.  H.  605  616 

Valk  V.  Crandall,  1  Sandf.  Ch. 

(N.  Y.)  179  _  121,  122,  137,  301 
Valletort  v.   Sanitary   Steam 

Laundry  Co.  (1903),  2  Ch. 

654  1394,  1547 

Valpy,  Ex  parte,  7  Ch.  289  1364 

Van  Allen  v.  Illinois  Central 

R.  R.  Co.,  7  Bosw.  (N.  Y.) 

515  188,  190,  200,  200,  1474, 

1475,  1477,  1477 
Van  Amburgh  v.  Baker,  81  N. 

Y.  46  1185 

Van  Atten  v.  Modem  Brother- 
hood   (Iowa),    108   N.    W. 

313  583,  585 

Van  Brocklin  v.  Queen  City 

Printing  Co.,  19  Wash.  552; 

53  Pac.  822  518 

Van    Cleve    v.    Berkey,    143 

Mo.  109;   44S.  W.  743;  42 

L.  R.  A.  593  645 

Van  Cott  V.  Van  Brunt,  82  N. 

Y.  535  1335 

Van   Diemen's   Land   Co.    v. 

Cockerell,  1  C.  B.  n.  s.  732  659, 
661,  661,  662 
Van  Doren  v.  Olden,  19  N.  J. 

Eq.  176  1149 

Van    Dyck   v.    McQuade,    86 

N.  Y.  38  1104 

Van  Frank  v.  Brooks,  93  Mo. 

App.  412;  67  S.  W.  688  1542 
V.  Missouri  Pac.  Ry.  Co., 

89  Mo.  App.  460  1562,  1567, 

1572 
V.  St.  Louis,  etc.  Ry.  Co., 

89  Mo.  App.  489  1564,  1565 

Van  Hook  v.  Somerville  Mfg. 

Co.,  5  N.  J.  Eq.  137  1203,  1204 
Van  Home  v.  State,  5  Ark.  349  24 
Van  Pelt  v.  Gardner,  54  Nebr. 

701;    75  N.  W.  874  112 

cev 


Van  Pelt  v.  Home  Bldg.,  etc. 

Ass'n,  79  Ga.  439;  4  S.  E. 

501  96,  382 

Van    Poucke   v.    Netherland, 

etc.  Society,  63  Mich.  378; 

29  N.  W.  863     •  577 

Van   Schaick   v.   Third   Ave. 

R.  R.  Co.,  49  Barb.  409  291, 

303 
Van  Siclen  v.  Bartol,  95  Fed. 

793  1661 

Van  Weel  v.  Winston,  115  U. 

S.  228 ;    6  Sup.  Ct.  22  1556 

Van  Winkle  Gin,  etc.  Co.  v. 

Mathews    (Ga.),  58  S.    E. 

396  384 

Vance  v.  Phoenix  Ins.  Co.,  4 

Lea  (Tenn.)  385  1275 

Vandeburg  v.  Broadway  Ry. 

Co.,  29  Hun  (N.  Y.)  348         1163, 

1186 
Vanderbilt  v.  Central  R.  R. 

Co.,  43  N.  J.  Eq.  669;  12 

Atl.  188   1615,  1615,  1616,  1643 
Vanderpoel  v.   Gorman,  140 

N.  Y.  563;  35  N.  E.  932; 

24  L.  R.  A.  548;  37  Am. 

St.  Rep.  601  1187 

Vanderveer  v.  Asbury  Park, 

etc.  Ry.  Co.,  82  Fed.  355  109, 

838,  1408 
Vanderwerken    v.    Glenn,    85 

Va.  9;   6S.  E.  806  614 

Vane  v.  Cobbold,  1  Ex.  798  341 

Vanneman  v.   Young,  52  N. 

J.  Law  403;    20  Atl.  53  123, 

126 
Vansands     v.     Middlesex 

County  Bank,  26  Conn.  144 

572,  574 
Vardeman  v.  Penn.  Mut.  Life 

Ins.  Co.,  125  Ga.   117;   54 

S.  E.  66  1364 

Varner  v.  St.  Louis,  etc.  R.  R. 

Co.,  55  Iowa  677;   8  N.  W. 

634  1632 

Varney  v.  Baker  (Mass.),  80 

N.  E.  524  894,  904,  904 

Vatable  v.  New  York,  etc.  R. 

R.  Co.,  96  N.  Y.  49         1664,  1664, 

1664 
Vaughn  v.   Ala.   Nat.   Bank, 

143  Ala.  572;    42  So.  64  631, 

645 
Vaught  V.  Ohio,  etc.  Fair  Co., 

20  Ky.  Law  Rep.  1471;   49 

S.  W.  426  1210,  1218 

Vaupell     r.     AVoodward,     2 

Sandf.  Ch.  (N.  Y.)  143  809 


TABLE   OF    CASES 

[The  references  are  to  pages] 


Vawterv.  Franklin  College,  53 

Ind.  88         124,  390,  ()04,  915,  924 

V.  Griffin,  10  Ind.  593  422 

Veatch  v.  Aineric-an,  etc.  Trust 

Co.,  79  Fed.  471;    25  C.  C. 

A.  39;   84  Fed.  274;    28  C. 

C.   A.   384  1517,  1518,  1559, 

1568 
Veeder  v.  Horstmann,  85  N. 

Y.  App.  Div.  154;  83  N.  Y. 

Supp.  99 
V.  Mudgett,  95  N.  Y.  295 


1328 
492, 
645 


Venable  v.  Ebenezer  Baptist 

Church,  25  Kans.  177  241 

Venner  v.  Atchison,  etc.  R. 

Co.,  28  Fed.  581  968,  969, 

1189,  1191 

V.  Denver  Union  Water 

Co.  (Colo.),  90  Pac.  623  1179, 

1182,  1375,  1614,  1659,1660 

V.  Farmers'  L.  &  T.  Co., 

90  Fed.  348;  33  C.  C.  A. 
95       884,  1455,  1503,  1535, 

1632 

V.   Fitzgerald,   91   Fed. 

335  1661 

V.  Great  Northern  Ry. 

Co.,    153    Fed.    408;    209 

U.  S.  24  970,  971,  975 

Vent  V.   Duluth  Coffee,   etc. 

Co.,  64  Minn.  307;    67  N. 

W.  ?0  191,  192,  527 

Vercoutere   v.    Golden    State 

Land  Co.,  116  Cal.  410;   48 

Pac.  375  558,  561,  564 

Vermont  &  Canada  R.  R.  Co. 

V.  Vermont  Central  R.  R. 

Co.,  50  Vt.  500  1668 

Vermont,  etc.  Co.  v.  Declez, 

etc.  Co.,  135  Cal.  579;    67 

Pac.  1057 ;  87  Am.  St.  Rep. 

143;   56  L.  R.  A.  728  704 

Vermont  Central  R.  R.  Co.  v. 

Clayes,  21  Vt.  30  278 

Verner  v.  General  &  Commer- 
cial, etc.  Co.  (1894),  2  Ch. 

239  1091,  1098,  1098 

Vernon,  Re,  1  Pennewill  (Del.) 

202;  40Atl.  60  1028 

Vernon    Society    v.    Hills,    6 

Cow.  (N.  Y.)  23;    16  Am. 

Dec.  429  1226 

Vertue  v.  East  Anglian  Rys. 

Co..  19  L.J.  Ex.  235  1426,1426 
Vicksburg,  etc.  R.  R.  Co.  v. 

McCutchen,  52  Miss.  645  1551 

Vicksburg,  etc.  R.  R.  v.  Mc- 

Kean.  12  La.  Ann.  638      175,  194 


Vicksburg  V.  Vicksburg  Water- 
works Co.,  202  L'.  S.  453; 

26  Sup.  Ct.  060  1606 

Victor     G.     Bloede     Co.     v. 

Bloede,  84Md.  129;  34  Atl. 

1127;  57  Am.  St.  Rep.  373; 

33  L.  R.  A.  107  571,  679 
V.  Joseph    Bancroft    & 

Sons  Co.,  98  Fed.  175  890 

Victoria   Steamboats    (1897), 

1  Ch.  158  1598,  1604,  1606 

Victorian    Mtge,    etc.    I3ank 

V.  Australian,  etc.  Co.,   19 

Viet.  L.  R.  680  74,  621 

Vidal    V.    Girard's    Ex'rs.,    2 

Plow.    127  54,  55 

Vierling    v.    Mechanics',    etc. 

Ass'n,  179  111.  524;    53  N. 

E.  979  582 

Vigers  v.  Pike,  8  CI.  &  Fin.  562  316 
Vigilancia,  The,  73  Fed.  452; 

19  C.  C.  A.  528  1224 

Vilas  V.  Milwaukee,  etc.  Ry. 

Co.,  17  Wise.  497  1523,  1632 
V.  Page,  106  N.  Y.  439; 

13  N.  E.  743  1643,  1654,  1655 
Villamil  v.  Hirsch,   138  Fed. 

690;    143  Fed.  654  954,  955, 

1025,  1063,  1064 
Vimbos,   Ltd.    (1900),    1   Ch. 

470  1580 

Vincenheller    v.    Reagan,    69 

Ark.  460;   04  S.  W.  278  1363 

Vint    &   Sons    (1905),    1    Ir. 

112  1405 

Violet     Consolidated      Gold 

Mining  Co.,  80  L.  T.  n.  s. 

684  746 

Virginia  v.   Chesapeake,  etc. 

Canal  Co.,  35  Md.   1  1670 

Virginia-Carolina       Chemical 

Co.  V.  Provident  Sav.,  etc. 

Soc.  (Ga.),  54  S.  E.  929  485 

Virginia    Pass.,    etc.    Co.    v. 

Fisher,  104  Va.  121;    51  S. 

E.  198  942,  942,  1586 

Virginia,    etc.    Coal    Co.    v. 

Central  R.  R.  Co.,  170  U.S. 

355;  18  Sup.  Ct.  657  1559, 
1562,  1563,  1565.  1569,  1572 
Visalia  Gas.  etc.  Co.  v.   Sims, 

104  Cal.  320;  37  Pac.  1042; 

43  Am.  St.  Rep.  105  863 

Visalia,    etc.    R.    R.    Co.    v. 

Hyde.    110    Cal.    632;     43 

Pac.  10;    52  Am.  St.  Rep. 

130  006.  616.  617,  618 

Vivian  &  Co.    (1900),  2  Ch. 

654  1545,  1548 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Voseler  v.  Punch  (Mo.\  103 

S.  W.  1001  ^  633.  634,  955 

Yokes  V.  Eaton,  27  Kv.  Law 

Rep.  358;  85  S.  W.  174  47 

Voluntary'    Relief    Dept.     v. 

Spencer.  17  Ind.  App.  123; 

46  N.  E.  477  576,  949 

Von  Arnim  v.  American  Tube 

Works.  188  Mass.  515;    74 

N.  E.  680  941,    982,  1284, 

1285,  1286 
Von  Schmidt  v.  Huntington, 

1  Cal.  55  16 

Von    Thodorovich    v.    Franz 

Joseph     Beneficial     Ass'n, 

154  Fed.  911  370 

Vonnoh  v.  Sixty-seventh  St. 

Atelier   Bldg.,    105   N.    Y. 

Supp.  155  1327 

Voorhees  v.  Nixon  (N.  J.),  66 

Atl.  192  1307,  1332 

Vose  V.  Bronson,  6  Wall.  452       1417, 

1484 

V.  Grant,  15  Mass.  505         1127 

Vowell  V.  Thompson,  3  Cranch 

C.  C.  428  1021,  1022 

Vredenburg  v.  Behan,  33  La. 

Ann.  627  244,  252 

Vreeland  v.  New  Jersey  Stone 

Co.,  29  N.  J.  Eq.  188         174,  176, 

183 
Vrooman  v.  Vansant  Lumber 

Co.,  215  Pa.  St.  75;  64  Atl. 

394  517,  528, 1006 

Vulcan  Detinning  Co.  v.  Am. 

Can  Co.  (N.  J.),  67  Atl.  339     1263 

W 

Wabash  R.  Co.,  24  Fed.  217        1620 

Wabash  R.  R.  Co.  v.  Adelbert 
College,  208  U.  S.  38;    28 
Sup.  Ct.  182  1591,1619,1630 

Wabash,  etc.  Ry.  Co.  v.  Cen- 
tral Trust  Co.,  22  Fed.  138        1629 

V.  Central  Trust  Co.,  22 

Fed.  269  1611 

V.  Central  Trust  Co.,  22 

Fed.  272  1598 

V.  Ham,  114  U.  S.  587; 

5  Sup.  Ct.  1081  1416,  1500 

V.  Stewart,  41  111.  App. 

640  1633 

Wachtel  v.  Noah  Widows,  etc. 
Society,  84  N.  Y.  28;  38 
Am.  Rep.  478  580 

Wade  V.  Chicago,  etc.  R.  R. 
Co.,  149  U.  S.  327;  13  Sup. 
Ct.  892  1434,  1508 


Wade  V.  Donau  Brewing  Co., 

10    Wash.    284;     38    Pac. 

1009  ^  1497 
V.  Kendrick,  37  Can.  Sup. 

Ct.  32  1304,  1333 

Wadliam    v.    Litchfield,    etc. 

Turnpike  Co.,  10  Conn.  416  1210 
Wadlinger  v.  First  Nat.  Bank, 

209  Pa.  197 ;  58  Atl.  359  751,  807 
Wagg-Anderson   Woolen   Co. 

V.  Lester  &  Co.,  78  111.  App. 

678  406,  1373,  1375,  1381 

Wagner  v.   Marple,    10  Tex. 

Civ.  App.  505;    31  S.  W. 

691  805,  873,  874 
V.  St.  Peter's  Hospital, 

32    Mont.    206;     79    Pac. 

1054  1196 

Wahlig    V.    Standard    Pump 

Mfg.   Co.,   9  N.    Y.   Supp. 

739  1379 

Wainwright,  Ex  parte,  59  L.  J. 

Ch.  281  182,  184 

Wainwright's  Case,  63  L.  T. 

429  184 

Wait  V.  Nashua  Armory  Ass'n 

66  N.  H.  581;   49  Am.  St. 

Rep.  630;    23  Atl.  77;    14 

L.  R.  A.  356  1370,  1372 

V.  Smith,  92  Rl.  385  594 

Waite  V.  Littlewood,  41  L.  J. 

Ch.  N.  s.  636  ^  1446 
V.  Windham,  etc.  Mining 

Co.,  36  Vt.  18  1005,  1012, 
1203,  1210 
V.  Windham,  etc.  Co.,  37 

Vt.  608  1201,  1228,  1321 

Wakefield  Rolling  Stock  Co. 

(1892),  3  Ch.  165  432,  434,  435 
Wakefield  Water  Co.  v.  New 

England    Trust    Co.,     175 

Mass.  478;  56  N.  E.  703  1416 

Walden  Nat.  Bank  v.  Birch, 

130  N.  Y.  221;    29  N.  E. 

127;    14  L.  R.  A.  211  522 

Waldoborough  v.  Knox,  etc. 

R.  R.  Co.,  84  Me.  469;    24 

Atl.  942  1671 

Walker    v.    Anglo-American, 

etc.  Co.,  72  Hun  334;    25 

N.  Y.  Supp.  432  277 

V.  Bartlett,  18  C.  B.  845        782' 

V.    Detroit  Transit   Ry. 

Co.,  47  Mich.  338;  llN.W. 

187  723,  1379 
V.   Elmore's,  etc.  Metal 

Co.,  85  L.  T.  767  1674,  1674 
V.     Granite     Bank,     44 

Barb.  (N.  Y.)  39  890 


TABLE    OF    C.\SES 
(The  references  are  to  pages] 


Walker  v.  Hacking,  57  L.  T.  763  524 
V.     Johnson,     17     App. 

Cas.  (D.  C.)  144  556,  557,  579, 
954,  1039,  1040,  1063,  1066 
V.     London     Tramways 

Co.,  12  Cli.  D.  705  585 
V.    Montdair,    etc.    Ry. 

Co.,  30  X.  J.  Eq.  525  1637 
V.    Pike    County    Land 

Co.,     139     Fed.     609;      71 

C.  C.  A.  593  322 
V.    S  h  e  1  b  y  V  i  1 1  e,    etc. 

Turnpike  Co.  SO  Ind.  452  228 
V.  Walker,  68  N.  H.  407; 

39  Atl.  432  502,  1 1 10,  1 154,  1 155 
Walker  &  Smith,  Re,  88  L.  T. 

792  531 

Walker,    Ex   parte,    1    Tenn. 

Ch.  97  374 

Wall  V.  London  &  Northern 

Assets  Corp.  (1898),  2  Ch. 

469  951,  1005,  1060,  1060 
V.    London,   etc.    Assets 

Corp.  (1899),  1  Ch.  550  1058 
V.  Mines,  130  Cal.  27;  62 

Pac.  386  118,228 
V.     Utah     Copper     Co. 

(N.  J.),  62  Atl.  533  499,  500, 

1474 
Wall's  Case,  15  Eq.  18  167 

Wallace  v.   Burdell,  24  Hun 

(N.  Y.)  379  809 
V.  Carpenter,  etc.  Mfg. 

Co.,    70    Minn.    321;      73 

N.   W.    189;     68   Am.   St. 

Rep.  530  636,  648 
V.  Evershed  (1899),  1  Ch. 

891  1393 

V.  Hood.  89  Fed.  11   180,  182, 

183,  521 
V.    Lincoln  Sav.  Bank, 

89  Tenn.  630 :  15  S.  W.  448 ; 

24  Am.  St.  Rep.  625   938,  982. 

1125,  1263,   1273.  1274,  1276, 
1278,  1288,  1350 

V.  Long  Island  R.  R.  Co., 

12  Hun  (N.  Y.)  460  1312 

V.  Loomis,  97  U.  S.  146  20, 

227,  1646,  1649 
V.  Oceanic  Packing  Co., 

25  Wash.  143 :  64  Pac.  938  1296 
V.  Universal  Automatic, 

etc.  Co.  (1894),  2  Ch.  547  1470, 
1598,  1604 
V.  Walsh.  125  N.  Y.  26; 

25N.  E.  1076;   11  L.  R.  A. 

166  1229 

Wallace's  Case  (1900).  2  Ch. 

G71  164,  169,  170 


Wallamet  Falls  Co.  v.   Kitt- 

redge,  5  Sawy.  44  1193 

Wallasey  Brick  &  Land  Co., 

Re,  63  L.  J.  Ch.  415  538 

Wallbridge    v.     Farwell,     18 

Can.  Sup.  Ct.  1  1574,  1582 

Wallerstein     v.     Ervin,     112 

Fed.     124;     50    C.    C.    A. 

129  835 

Wallscourt's  Case,  7  Manson 

235  523,  702 

Wain's  Assignees  v.  Bank  of 

N.    America,    8  -S.    &    R. 

(Pa.)  73;  11  Am.  Dec.  575  557, 
571,  752 
Walnut  V.  Wade,   103  U.  S. 

683  1460 

Walsenburg     Water    Co.     v. 

Moore,  5  Colo.  App.  144;  38 

Pac.  60  992 

Walsh  V.  Barton,  24  Oh.  St. 

28  847 
V.    Goulden,    130   Mich. 

531;  90  N.  W.  406  1352 
V.     Sexton,     55     Barb. 

(N.  Y.)  251  695,  712 

Walsham  v.  Stainton,  1  De  G. 

J.  &  S.  678  1352 

Walstab  v.  Spottiswoode,  15 

M.  &  W.  501  274,  276,  341 

Walter  v.  F.  E.  McAlister  Co., 

21    N.    Y.    Misc.    747;     48 

N.  Y.  Supp.  26  960 
V.  King,  13  Times  L.  R. 

270  809 

Walters    v.    Anglo-American 

Mtge.,    etc.    Co.,    50    Fed. 

316  1371 
V.  Porter  (Ga.),  59  S.  E. 

452  517,  521 

Walton  V.   Oliver.   49   Kans. 

107;   30  Pac.  172;   33  Am. 

St.  Rep.  355  148 
V.    Riley,   85    Ky.    413; 

3  S.  W.  605  125,  126,  127 

Walworth    v.     Brackett,    98 

Mass.  98  161 

Walworth    County    Bank    v. 

Farmers'    L.  &  T.  Co.,  14 

Wise.  325  1371 

Wandsworth,     etc.     Co.       r. 

Wright,  18  W.  R.  728  932,  1057 
Ward  V.  Brigham,   127   Mass. 

24  253.  274,  274,  276 

V.  Con?be,  7  Sim.  634  1141 

V.  Davidson,  89  Mo.  445; 

1  S.  W.  846  1184.  1295.  1.322 

V.Johnson,  95111.  215       63,65, 

66,  591,  852 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Ward  V.  JosHn.  186  U.  S.  142; 

22  Sup.  Ct.  807 
V.  Minnesota,  etc.  R.  R. 

Co.,  119  111.  287;    10  N.  E. 

365 
V.     Royal     Exchange 

Shipping  Co.,  58  L.  T.  174 


840 


249 

1546, 
1547 
V.  Sea  Ins.  Co.,  7  Paige 

(N.  Y.)  294  1194 

Ward's  Case,  10  Eq.  659       166,  172 
Warden  v.  Railroad  Co.,  103 

U.  S.  651  1295,  1305 

Warden,    etc.    of   Mercers   v. 

Hart,  1  C.  &P.  113  230 

Wardens  of  Christ  Church  v. 

Pope,  8  Gray  (Mass.)  140    1036, 

1065,  1065 

Wardlaw  v.  Troy  Oil  Mill,  74 

S.  Car.  368 ;   54  S.  E.  658 
Warfield  v.  Marshall  County 

Canning  Co.,  72  Iowa  666; 

34  N.   W.  467;  2  Am.  St. 

Rep.  263 
Warner  v.  Callender,  20  Oh. 

St.  190 
V.  Daniels,   1  Wood.  & 

Min.  90 
V.  James,  88  N.  Y.  App. 

Div.  567;    85  N.  Y.  Supp. 

153 

V.  Mower,  11  Vt.  385 

1002,  1004,  1005 
V.  Penoyer,  91  Fed.  587; 

33C.  C.  A.  222;  44  L.  R.  A. 

761  1278, 1282 
V.  Rising  Fawn  Iron  Co., 

3  Woods  514       1406,  1406,  1461, 
1462,  1603,  1603 
Warren  v.  Davenport  Fire  Ins. 

Co.,  31   Iowa  464;    7  Am. 

Rep.  160  421 
V.  King,  108  U.  S.  389; 

2  Sup.  Ct.   789       449,  449,  449, 
450,  450 
V.   Louisville  Leaf,   etc. 

Co.  (Ky.),55S.W.Rep.912       566 
V.    Para    Rubber    Shoe 

Co.,  166  Mass.  97;  44  N.  E. 

112    956, 1259,  1259,  1284,  1309 

1310 
V.    Pim,  66  N.  J.  Eq. 

353;  59  Atl.  773    1030,  1052, 
1052,  1053 
V.    Robinson,  19  Utah 

289;  57  Pac.  287;  75  Am. 

St.  Rep.  734  1275,  1279 
V.    Robinson,    21    Utah 

429;    61  Pac.  28  1285,  1289 


1234 


109 
118 
230 


1355 
1002, 


Warren's   Estate,    11    N.    Y. 

Supp.  787  1143,  1153 

Washburn  v.  National  Wall- 
Paper  Co.,  81  Fed.  17;  26 
C.  C.  A.  312  634,  1096,  1098, 

1392,  1398 

Washer  v.  Allensville,  etc. 
Turnpike  Co.,  81  Ind.  78 

Washington  County  Nat. 
Bank  v.  Lee,  112  Mass. 
521 

Washington  Diamond  Min- 
ing Co.   (1893),  3  Ch.  95 


228 


381 


Washington  Irrigation  Co.  v. 
California,  etc.  Co.,  115 
Fed.  20;  52  C.  C.  A.  614 

Washington  Mill  Co.  v. 
Sprague  Lumber  Co.,  19 
Wash.  165;   52  Pac.  1067 


612, 
1241 


1631 


84, 
142 


Washington  Nat.,  etc.  Ass'n 

V.  Buser  (W.  Va.),  57  S.  E. 

40  394 

Washington     Trust     Co.     v. 

Morse     Iron     Works,     106 

N.  Y.  App.  Div.   195;    94 

N.  Y.  Supp. 495  1503, 1504, 1536 
Washington,   etc.   R.   R.   Co. 

V.   Alexandria,   etc.   R.   R. 

Co.,   19  Gratt.  (Va.)    592; 

100  Am.  Dec.  710  1493 
V.     Cazenove,     83     Va. 

744;   3  S.  E.  433  1625 

Wasser  v.  Western  Land,  etc. 

Co.,  97  Minn.  460;    107  N. 

W. 160  284 

Waterford,    etc.    Ry.    Co.    v. 

Dalbiac,  6  Eng.   Ry.  Cas. 

753;    6  Ex.  443  608 

Waterhouse  v.  Comer,  55  Fed. 

149;  19  L.  R.  A.  403  1620 
V.  Jamieson,  L.  R.  2  H. 

L.  (Scotch)  29  647,  648 

Waterloo     Organ     Co.,     134 

Fed.  341 ;  67  C.  C.  A.  255  837, 
838,  1402 
,  134  Fed.  345;  67  C.  C. 

A.  327  1402 

,  147  Fed.  814  1492,  1492 

Waterman   v.   Alden,   42   111. 

App.  294;  144  111.  90;  32 

N.  E.  972  1143,  1145,  1146 
V.   Browm,  31  Pa.  St. 

161  811 
V.   Chicago,  etc.  R.  R. 

Co.,  139  111.  658;  29  N.  E. 

689;  32  Am.  St.  Rep.  228; 

15  L.  R.  A.  418     1225,  1228 


TABLE    OF    CASES 
[The  references  are  to  pages] 


369 


1246 


1564 


786 


588 
420 


Waterinjin  v.  Troy,  etc.  R.  R. 

Co.,  8  Ciray  (Mass.)  433      438,  450, 
450,  457,  1108 
Waterman's  Appeal,  26  Conn. 

96  297,  297 

Waterous  Engine  Works  Co. 

V.  McLean,  2  Manitoba  279 
Waters  t'.  Anu'rican  Finance 

Co.,  102  Md.  212;    62  Atl. 

357 
Waters-Pierce  Oil  Co.  v.  U.  S. 

etc.  Trust  Co.  (Tex.),  99  S. 

W.  212 
Watkinsv.  Glas  (Cal.),89Pac. 

840  407,  408 
V.   Robertson  (Va.),  54 

S.  E.  33 
Watson  V.  Bendigo  Bldg.  Soc, 

10    Vict.    Rep.    (Cases    at 

Law)  26 
V.  Black,   16  Q.   B.   D. 

270 
V.  Bonfils,  116  Fed.  157; 

53  C.  C.  A.  535  886,  1071 

V.  Cave,  17  Ch.  D.  19         1592 

V.  Eales,  23  Beav.  294        659, 

763 

V.  Spratley,  10  Ex.  222      420, 

423 
V.  Woody  Printing  Co., 

56  Mo.   App.    145  558,  560 

Watson  &  Co.,  Robert  (1899), 

2  Ch.  509  640,  640 

Watson,  Ex  parte,  54   L.  T. 

233  204,  204,  204 

Watt     V.     Hestonville,     etc. 

Pass.  R.  R.  Co.,  1  Brewst. 

(Pa.)  418 
Watts  V.  Bucknall  (1902),  2 

Ch.  628 
V.   Equitable  Mut.   Life 

Ins.  Co.,  Ill  Iowa  90;    82 

N.  W.  Rep.  441 
V.  Port  Deposit,  46  Md. 

500 

V.  Salter,  10  C.  B.  477 

Watts's  Appeal,    78   Pa.   St. 

370  63,  64,  966,  1268 

Waukon,   etc.   R.    R.   Co.   v. 

Dvryer,   49   Iowa    121        157,  600 
Wausau  Boom  Co.  v.  Plumer, 

35  Wise.  274  1296 

Wav  V.  American  Grease  Co., 

60  N.  J.  Eq.  263;    47  Atl. 

44  409,  948,  1063 

Waycross,  etc.  R.  R.  Co.  v. 

OfTerman,  etc.  R.  R.  Co., 

109  Ga.  827;   35  S.  E.  275       874, 

1086 


1555 
315 


589 

386 
341 


486 
940 


Waymire   v.    San    Francisco, 

etc.  Ry.  Co.,  112  Cal.  640; 

44  Pac.    1086 
Wayne  Piko  Co.  v.  Hammons, 

129  Ind.  368;   27  N.  E.  487 
W.  C.  Home  &  Sons  (1900),  I 

Ch.  271  1591,  1621,  1621 

Woatherford,  etc.  Ry.  Co.  v. 

Granger,  86  Tex.  350;    24 

S.  \V.  795;  40Am.  St.  Rep. 

837  280,  289,  293,  294 

Weatherly    v.    Medical,    etc. 

Soc,  76  Ala.  567  1010,  1035 

Weaver  v.  Barden,  49  N.  Y. 

286  680,  681,  682 

Webb      V.     Baltimore,      etc. 

R.  R.  Co.,  77  Md.  92;    26 

Atl.  113;   39  Am.  St.  Rep. 

396  154,  174,  188,  198,  421, 

422 

V.  Earle,  20  Eq.  556  458 

V.  Ridgely,  38  Md.  364       1014 

V.  Rockefeller,  195  Mo. 

57;  93  S.  W.  772        142.  240,  252 
V.   Shropshire  Rys.   Co. 

(1893),  3  Ch.  307  830,  1400 

V.     Vermont     Central 

R.  R.  Co.,  20  Blatchf.  218; 
9  Fed.  793 

Webb,  Hale  &  Co.  v.  Alex- 
andria Water  Co.,  93  L.  T. 
339 

Webber  v.  Williams  College, 
23  Pick.  (Mass.)  302 

Weber  v.  Delia,  etc.  Co. 
(Idaho),  94  Pac.  441 

V.  Fickey,  52  Md.  500 

912,  921 

V.  Spokane  Nat.  Bank, 

64  Fed.  208;   12  C.  C.  A.  93      109, 

109,  867,  868,  1408 
V.  Wallenstein,  111  N.  Y. 

App.  Div.  693;    97  N.  Y. 

Supp.  846 
Webster  r.  Howe  Machine  Co., 

54  Conn.  394;  8  Atl.  482 

V.    Upton,    91    U.    S. 

65  601,  617,  706, 
V.    Whitworth    (Tenn.), 

63  S.  W.^  290 
V.    Ypsilanti    Canning 

Co.  (Mich.),  113  N.  W.  7 
Webster's  Case,  2  Eq.  741 


1586 


689 

1380 

1030 
646, 


962 
862 

781 
1410 


1317 
143, 
214 

.  32  L.  J.  Ch.  135  661,  667 

Wechselberg    v.    Flour    City 
Nat.  Bank,  64  Fed.  90;    12 
CCA.  56;  2r)L.  R.  A.  470      148. 
150,  151,  151,  152,  251 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Weckler  v.  First  Nat.  Bank, 

42  Md.  581 ;   20  Am.  Rep. 

95  870 

Weed  V.  Gainesville  R.  R.  Co., 

119  Ga.  576;  46  S.  E.  885  1400, 
1404,  1626 
Weedon's  Case,  22  Vict.  L.  R. 

235  521 

Weeks  v.  Esler,  68  Hun  (N. 

Y.)  518;  22  N.  Y.  Supp.  54  403 
V.    International    Trust 

Co.,     125     Fed.     370;      60 

C.  C.  A.  236  107 
V.    Silver    Islet    Consol. 

Mining  Co.,  55  N.  Y.  Super. 

Ct.  1  651 
V.  Silver  Islet,  etc.  Min- 
ing   Co.,    23    Jones    &    S. 

(N.  Y.)  1  191,  660,  661,  662 

Weetjen    v.    St.    Paul,    etc. 

R.  R.  Co.,  4  Hun    (N.  Y.) 

529  1550,  1554 
V.     Vibbard,      5     Hun 

(X.    Y.)   265  1489,  1586 

Wehr  V.  German  Ev.  Luth., 

etc.  Congregation,  47   Md. 

177  1215 

Weidenfeld  v.  Northern  Pac. 

Ry.  Co.,  129  Fed,  305;    63 

C.  C.  A.  537        501,  508,  521,  976, 

977 
V.  Sugar  Run  R.  R.  Co., 

48  Fed.  615  939,  1214 

Weigand  v.  Fraternities  Ac- 
cident Order,  97  Md.  443; 

55  Atl.  530  948 

Weihenmayer   v.    Bitner,    88 

Md.  325;    42  Atl.  245;    45 

L.  R.  A.  446  899,  902,  905,  906 
Weikersheim's  Case,  8  Ch.  831  925 
Weinburgh   v.    Union    Street 

Ry.  Ad.  Co.,  55  N.  J.  Eq. 

640;  37  Atl.  1026  1006,  1015 
Weir  V.  Bay  State  Gas  Co.,  91 

Fed.  940  890,  969,  978 
V.    Metropolitan    Street 

Ry.  Co.   (Mo.),  103  S.  W. 

583  8,  16 

Welch   V.    Gillelen,    147   Cal. 

571;   82  Pac.  248      155,  156,  692, 

705 
V.  Sage,  47  N.  Y.  143; 

7  Am.  Rep.  423  1433,  1435 

Welker    v.     Anheuser-Busch 

Brewing  Ass'n,  114  N.  W. 

745  1227 

Welland  Canal  Co.  v.  Hatha- 
way. 8  Wend.  (N.  Y.)  480; 

24  Am.  Dec.  51       230,  233,  238 


610 
151 


250 


563 


Welland  Ry..  Co.  v.  Berrie,  6 

H.  &  N.  416 
Wellersburg,  etc.  Plank  Road 

Co.  V.  Hoffman.  9  Md.  559 
Wellington,  etc.  R.  R.  Co.  v. 

Casliie,    etc.    Lumber    Co., 

114  N.  Car.  690;    19  S.  E. 

646 
Wells  V.  Black,  117  Cal.  157; 

48  Pac.   1090;    59  Am.  St. 

Rep.  162;   37  L.  R.  A.  619 
V.  Dane,  101  Me.  67;   63 

Atl.  324  928,  929,  947 
V.  Gates,  18  Barb.  (N. 

Y.)   554  252 
V.  Green  Bay,  etc.  Co., 

90  Wise.  442;   64  N.  W.  69      429, 
429,  650 
V.   Northern  Trust  Co., 

195  111.  288;   03  N.  E.  136       1624 
V.  Rahway  White  Rub- 
ber Co.,  19  N.  J.  Eq.  402       911, 
912,  923,  925, 1205 
V.    Rodgers,    50    Mich. 

294;    15  N.  W.  462 
V.  Rodgers,  60  Mich.  525; 

27  N.  W.  671 

V.  Tyler,  25  N.  H.  340 

Wells    &    Co.    V.    Thompson 

Mfg.  Co.,  54  Mo.  App.  41 
Wells  &  McComas  Council  v. 

Littleton,  100  Md.  416;   60 

Atl.  22  _  948,  949 

Wells  Co.  V.  Gastonia  Cotton 

Mfg.  Co.,  198  U.S.  177;  25 

Sup.  Ct.  640 
Wells,  Fargo  &  Co.  v.  Enright, 

127  Cal.  669;   60  Pac.  439 
V.  Northern  Pac.  Ry.  Co., 

23  Fed.  469 
Wellsborough,      etc.      Plank- 
Road  Co.  V.  Griffin,  57  Pa. 

St.  417 
Welsbach    Incandescent   Gas 

Light  Co.  (1904),  1  Ch.  87 

111,  131,  446,  546 
Welsh  V.  First  Div.  St.  Paul, 

etc.  R.R.  Co.,  25  Minn.  314     1448, 
1449,  1460,  1469,  1528, 
1638 
Welsh    Flannel    Co.,  20  Eq. 

360  614,  614 

Welsh  Whiskey,  etc.  Co.,  16 

Times  L.  R.  246  432,  436 

Welton  V.  Saffory  (1897),  A. 

C.  299  564,  627,  639 

Wemple  v.  St.  Louis,  etc.  R.  R. 

Co.,  120  111.  196;    11  N.  E. 

906  156,  163 


66 

1201 
792 

702 


249 
1382 


45 


1523 


94, 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Wemyss    Collieries   Trust    v. 

Melville,  8  Fraser  (Sc.)  143  465 
Wendel  v.  State,  62  Wise.  300 ; 

22  N.  W.  435  ^  95 

Wengerv.  Cliicago,  etc.  R.  Co., 

114  Feci.  34;  51  C.  C.  A.  660  1659 
Wenlock  v.  River  Dee  Co.,  19 

Q.  B.  D.  155  831,  831,  832 
V.  River  Dee  Co.,  36  Ch. 

D.  675  n  824 
V.  River  Dee  Co.,  38  Ch. 

D.  534  223 
V.  River  Dee  Co.,  10  App. 

Cas.  354  41,  64,  109 

Wenstrom  Consol.,  etc.  Co.  v. 

Purnell,    75   Md.    113;     23 

Atl.  134  185 

Wentworth  v.  Chevell,  3  Jur. 

N.  s.  805  789 

Wentworth  Co.  v.  French,  176 

Mass.  442;  57  N.  E.  789  1017, 
1023,  1067 
Werle  v.  Northwestern  Flint, 

etc.  Co.,  125  Wise.  534 ;  104 

N.  W.  743  1181,1225 

Wert  V.   Crawfordsville,   etc. 

Turnpike  Co.,  19  Ind.  242  204 

West     V.     BuUskin     Prairie 

Ditching  Co.,  32  Ind.  138  94 
V.   Camden,    135   U.   S. 

507;  10  Sup.  Ct.  838  1347 
V.  Crawford,  80  Cal.  19; 

21  Pac.  1123  211 
V.  Topeka  Sav.  Bank,  66 

Kans.  524;  72  Pac.  252;  97 

Am.  St.  Rep.  385;  63  L.  R. 

A.  137  614 
West  Branch  Bank  v.  Arm- 
strong, 40  Pa.  St.  278  769 
V.  Chester,  1 1  Pa.  St.  282 ; 

51  Am.  Dec.  547  1528 

West  Chester,  etc.  R.  R.  Co.  v. 

Jackson,  77  Pa.  St.  321  445,  458 
464,  466 
West  Coast,  etc.  Co.  v.  Wvilff, 

133  Cal.  315;   65  Pac.  622; 

85  Am.  St.  Rep.  171  716 

West    Cornwall    Ry.    Co.    v. 

Mowatt,  17  L.  J.  Ch.  n.  s. 

366  1409 

West    Devon    Great    Consols 

Mine,  27  Ch.  D.  106  889,  904 

West  End,  etc.  Co.  v.  Nash, 

51  W.  Va.  341:  41  S.  E.  182  213 
West   of   England   Bank,    14 

Ch.  D.  317  92 

West  of  England  Paper  Mills 

V.  Gilbert,  61  L.  J.  Ch.  92       1360, 

1360 


West  London  Ry.  Co.  v. 
IJernhard,  1  Dav.  &  Mer. 
397  915 

West  Manayunk,  etc.  Co.  v. 
New  Gas  Light  Co.,  21  Pa. 
Co.  Ct.  Rep.  393  46 

West  Nashville  Planing-Mill 
V.  Nashville  Sav.  Bank,  86 
Tenn.  252;  6  S.  W.  340;  6 
Am.  St.  Rep.  835  648 

West    Norfolk    Lumber    Co., 

112  Fed.  759  43 

West  Point  Foundry  Ass.  v. 
Brown,  3  Edw.  Ch.  (N.  Y.) 
284  274 

West  Point  Tel.,  etc.  Co.  v. 
Rose,  76  Miss.  61;  23  So. 
629  294,  1247 

West  W'insted  Sav.  Bank  v. 
Ford,  27  Conn.  282;  71  Am. 
Dec.  66  237 

Westchester  Trust   Co.,    186 

N.  Y.  215  105,  139,  141, 

1181 

Westcott  V.  Minnesota  Min- 
ing Co.,  23  Mich.  145       658,  1000 

Westerfield  v.  Radde,  7  Daly 

(N.  Y.)  326  1372 

Western  Bank  v.  Addie,  L.  R. 

1  H.  L.  (Sc.)  185  181 

Western      Boatmen's,      etc. 

Ass'n  V.  Kribben,  48  Mo.  37         86 

Western  Counties  Steam  Bak- 
eries, etc.  Co.  (1897),  1  Ch. 
617  1363, 1363 

Western  Improvement  Co.  v. 
Des  Moines  Nat.  Bank,  103 
Iowa  455;  72  N.  W.  657  517, 

522,  602,  603,  603,  648, 
1197 

Western  Investment  Co.  v. 
Davis  (Ind.  Ty.),  104  S.  W. 
573  237 

Western  Md.  R.  R.  Co.  v. 
Blue  Ridge  Hotel  Co.,  102 
Md.  307;  62  Atl.  351;  111 
Am.  St.  Rep.  362  81,84,851 

V.  Franklin  Bank,  60  Md. 

36  740.  741, 1458 

Western  Mining,  etc.  Co.  v. 
Peytona  Coal  Co.,  8  W.  Va. 
406  1078 

Western  Nat.  Bank  v.  Arm- 
strong. 152  U.  S.  346;  14 
Sup.  Ct.  572  483,  492,  1382 

Western  Pa.  Hospital  v. 
Mercantile  Librarv  Hall  Co., 
lS9Pa.  St.  269;  42  Atl.  183 

1527,  1528 


TABLE    OF    CASES 

[The  references  are  to  pages] 


Western    Pa.    R.    R.    Co.    v. 

Johnson,  59  Pa.  St.  290         1535 
Western  R.  R.  Co.  v.  Avery, 

64   i\.    Car.  491  601,  614 

Western    Screw,    etc.    Co.    v. 

Consley.  72  111.  531  280 

Western   Supply,   etc.   Co.   f. 

U.  S.,  etc.  Trust  Co.  (Tex.), 

92  S.  W.  9S6        1402,  1405,  1626, 

1626 
Western    Union    Tel.    Co.    v. 

Burlintjton,  etc.  R.  R.  Co., 

3  McCrary  130  1537 

Western,  etc.  R.  Co.  v.  Penn 

Refining  Co.,  137  Fed.  343; 

70  C.  C.  A.  23  1620 

AVestern,    etc.    Trust    Co.    v. 

Ogden    (Tex.),    93    S.    W. 

1102  381 

Westinghouse  v.  German  Nat. 

Bank,  188  Pa.  St.  630;    41 

Atl.  734  807,  808 
V.  German  Nat.   Bank, 

196  Pa.  St.   249;    46  Atl. 

380  723 

Westinghouse  Air  Brake  Co. 

V.  Kansas  City,  etc.  Co.,  137 

Fed.  26;    71  C.  C.  A.  1  1542, 

1563,  1571,  1572 
Westinghouse  El.,  etc.  Co.  v. 

New    Paltz,    etc.    Co.,    32 

N.  Y.  Misc.  132;    65  N.  Y. 

Supp.  644  1535,  1633 
V.  Reed  (Mass.),  80  N.  E. 

621  1359 

Westminster   Nat.    Bank   v. 

New   England   El.   Works, 

73  N.  H.  465;   62  Atl.  971; 

111  Am.  St.  Rep.  637  74,  91, 

730,  730,  751 
Weston   V.    Bear   River,   etc. 

Co.,  5  Cal.  186;  63  Am.  Dec. 

117  716 
V.  Bear  River,  etc.  Co., 

6  Cal.  425  716,  716 

Weston's  Ca.se,  4  Ch.  20  744,  745 

,  10  Ch.  D.  579  1334, 1339 

Wetherell  v.  Thirty-first  St., 

etc.  Ass'n,  153  ill.  361;   39 

N.  E.  143  571,  768,  775 

Wetmore    v.    St.    Paul,    etc. 

R.  R.  Co.,  3  Fed.  177      1636,  1637 
Weymoutli,        etc.        Steam 

Packet  Co.  (1891 ),  1  Ch.  66        627 
Whaley    Bridge,    etc.    Co.    v. 

Green,  5  Q.  B.  D.  109       271,  272, 
273,  319 
Wheal  Buller  Consols.,  Re,  38 

Ch.  D.  42  1172 


85 


524 


Wheat  V.  Bank  of  Louisville, 

9   Ky.    Law   Rep.    738;     5 

S.  AV.  305  1372 

Wheatcroft's   Case,   42   L.   J. 

Ch.  853  171,  189 

Wheat  lev    v.    Silkstone    Coal 

Co.,  29  Ch.  D.  715  1546 

Wheeler  v.  Abilene  Nat.  Bank, 

159  Fed.  391  1083 
V.     Aiken,    etc.    Bank, 

75  Fed.  781  1266,  1274 
V.  Everett  Land  Co.,  14 

Wash.  630;   45  Pac.  316 
V.  Mineral  Farm,  etc.  Co., 

31  Colo.  110;    71  Pac.  1101 
V.  Northwestern  Sleigh 

Co.,  39  Fed.  347  1132,  1134, 

1135 
V.  Perry,  18  N.  IL  307; 

29  Am.  Dec.  664  1154,  1155 

V.  Smith,  81  Fed.  319  1617 

Wheeler,    etc.    Mfg.    Co.    v. 

Lawson,  57  Wise.  400;    15 

N.  W.  398  1304 

Wheeler,  Re,  2  Abb.  Pr.  N.  s. 

(N.  Y.)  361  499,  508,  1059 

Wheeling     Ice,     etc.     Co.     v. 

Connor  (W.  Va.),  55  S.  E. 

982  _ 
Wheeling,    etc.    Ry.    Co.    v. 

Reymann  Brewing  Co.,  90 

Ved.  189 ;  32  C.  C.  A.  571 
Wheelock    v.    Kost,    77    111. 

296 
V.  Moulton,  15  Vt.  519 


1328 


1628 


235 
1070, 
1071 
Wheelwright  v.  St.  Louis,  etc. 

Co.,  56  Fed.  164  1405,  1586, 

1590 
Whetstone  v.  Crane  Bros.  Mfg. 
Co.,  1  Kans.  App.  320;    41 
Pac.  211  278 

Whetstone    v.    Ottawa    Uni- 
versity, 13  Kans.  320  81 
Whightsel  v.  Felton,  95  Fed. 

923  1613 

Whipple  V.  Parker,  29  Mich. 

369  251,  254 

Whitaker  v.  Grummond,  68 

Mich.  249;    36  N.  W.  62         525, 

528 

V.  Hartford,  etc.  R.  R. 

Co.,8R.  1.47;  5  Am.  Rep. 

547  1449,  1460 

V.  Kilby,  106  N.  Y.  Supp. 

51 1  509,  510 

White  V.  Carmathen  Ry.  Co., 

1  Hem.  &  Miller  786  87,  972, 

972 


TABLE    OF    CASES 
[The  references  are  to  pages] 


786 

933 

1030. 


White  V.  Commercial,  etc. 
Bank.  GO  S.  Car.  491;  45  S.E. 
94;  97  Am.  St.  Rep.  803  616 

V.  Elgin  Creamery  Co., 

108  Iowa  522;    79  N.  W. 

283  1373 
V.    Franklin    Bank.    22 

Pick.  (Mass.)  181        856,  865,  867 
V.  Marquardt,  105  Iowa 

145;    74  N.  W.  930  617 
V.  Mount  Pleasant  Mills 

Corp.,  172  Mass.  462;  52 

N.  E.  632  173 
V.   New  York.  etc.  Soc, 

45  Hun  (N.  Y.)  580   1041,  1041, 

1041 

V.  Salisbury,  33  Mo.  150       689, 

781 
V.  Schuyler,  1  Abb.  Pr. 

N.  3.  (N.  Y.)  300 
V.  Shaw,  21  Vict.  L.  R. 

559 

V.  Thomas  Tire  Co.,  52 

N.  J.  Eq.  178;  28  Atl.  75 

1030,  1052 

V.  Vermont  &  Massachu- 
setts R.  R.  Co.,  21  How. 
575  1423,  1432 

V.  Westport  Cotton  Mfg. 

Co.,  iPick.  (Mass.)  215;   11 

Am.  Dec.  168  297,  297 

• V.  Wood,  129  N.  Y.  527; 

29  N.  E.  835 

White  Chimney,  etc.  Co.  v. 
McMahan,  21  Ky.  Law  Rep. 
41;  50  S.  W.  Rep.  836 

White  Co.,  J.  F.  v.  Carroll 
(N.  Car.),  59  S.  E.  678 

White,  Corbin  &  Co.  v.  Jones, 
167  N.  Y.  158;  60  N.  E. 
422 

V.  Jones,  79  N.  Y.  App. 

Div.  373;    79  N.  Y.  Supp. 
583 

White,  Ex  parte,  2  S.  Car.  469 

White  Mountain  Paper  Co.  v. 
Morse,  127  Fed.  643;  62 
C.  C.  A.  369 

White  Mts.  R.  R.  Co.  v.  East- 
man, 34  N.  H.  124 

V.  White  Mts.   (N.  H.) 

R.  R.,  50  N.  H.  50         1636,  1637 
White  Oak  Grove  Benev.  Soc. 
V.  Murray,  145  Mo.  622:  47 
S.  W.  501  235,  254,  304 

White  River,  etc.  Bank  r. 
Capital,  etc.  Trust  Co.,  77 
Vt.  123;  59  Atl.  197;  107 
Am.  St.  Rep.  754  775 


1662 


918 
1503 


647 


634 
1670 


44 


191 


White  Star  Laundry  Co.,  117 

Fed.  570  44 

Wliite  Star  Line  v.  Star  Line 

of  Steamers,  141  Mich.  004; 

105  N.  W.    135;    113   Am. 

St.  Rep.  551  80 

White  Water,  etc.  Canal  Co.  v. 

Vallette,  21  How.  414  1395, 

1400.  1401,  1401,  1416,  1499 
White's  Bank  v.  Toledo  Ins. 

Co.,  12  Oh.  St.  601  775 

White's  Case,  12  Ch.  D.  511  643 

Whitechurch,  Ltd.,  George  v. 

Cavanaugh    (1902),    A.    C. 

117  649,703,743,744 

Whitehaven    Joint  Stock 

Banking  Co.  v.  Reed,  54  L. 

T.  360  1405, 1411 

Whitehead     v.     American 

Lamp  &  Brass  Co.  (N.  J. 

Ch.),  62  Atl.  554  853 
V.  Hamilton  Rubber  Co., 

52  N.  J.  Eq.  78;    27  Atl. 

897  1198, 1200 

Whitehead   &  Co.    (1900),    1 

Ch.  804  642 

Whitehouse  &  Co.,  9  Ch.  D. 

595  612 

Whitehouse's  Case,  3  Eq.  790  181 
Whiteley  v.  Central  Trust  Co., 

76  Fed.  74;  22  C.  C.  A.  67; 

34  L.  R.  A.  303  1567 

Whiteley's    Case,    1    Megone 

154  196,  200 

(1900),  1  Ch.  365  178 

Whiting    V.     Commonwealth 

(Mass.),  82  N.  E.  670  1366 

V.  Hovey,  13  Ont.  App.  7     1 187 

Whiting  Safety  Catch  Co.  v. 

Western,  etc.  Co.,  148  Fed. 

396  879,  1356 

Whitley  Partners,  32  Ch.  D. 

337  118,  121,  122 

Whitman  v.  Granite  Church, 

24  Me.  237  923 

V.    National    Bank    of 

Oxford,  83  Fed.  288;  28  C. 

C.   A.  404  385 

Whitney   v.    Hazzard,    18   S. 

Dak.  490:    101  S.  W.  346         937 

V.   Robinson,   53  Wise. 

309;    10  N.  W.  512  235,  237 

V.  Wyman,  101  U.  S.  392 

283,  309 
Whitney  Arms  Co.  r.'  Barlow, 

63  N.  Y.  62;    20  Am.  St. 

Rep.  504  853,  854 

Whitt  V.  Blount,  124  Ga.  671; 

53  S.  E.  205  383 


ccxvii 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Whittaker    v.    Amwell    Nat. 

Bank.  52  N.  J.  Eq.  400;  29 

Atl.  203  1100,  1165,  1199 

Whittenton  Mills  v.  Upton,  10 

Gray  (Mass.)  582;    71  Am. 

Dec'.  6S1  79 

Wliittingtont'.  Farmers'  Bank, 

5  H.  &  J.  (Md.)  489  912,1123, 
1201,  1204 
Whittle  r.  Vanderbilt  Mining 

Co.,  83  Fed.  48  158,  1329 

Whittmore     i\     Beekman,  2 

Dem.  (N.  Y.)  276  1444,  1446 

Whitwam  v.  Watkin,  78  L.  T. 

188  966,  1288 

Whit  well  V.  Warner,  20  Vt. 

425  297 

Whit  wham  v.  Piercy  (1907), 

1  Ch.  289  511,  533,  533,  1143, 
1153,  1155 
Whit  worth  v.  Erie  R.  R.  Co., 

5  Jones  &  S.  (N.  Y.)  437  889 

Wiarton  Beet  Sugar  Co.,  12 

Ont.  L.  R.  149  620 

Wiberg  v.  Minnesota,  etc.  Re- 
lief Ass'n,    73   Minn.   297; 

76  N.  W.  37  589 

Wickersham    v.   Brittan,    93 

Cal.   34;   28   Pac.    792;   29 

Pac.  51;    15  L.  R.  A.  106       1251 

V.   Crittenden,   93   Cal. 

17;   28  Pac.  788  972,  1322 

V.  Crittenden,   110  Cal. 

332;    42  Pac.  893  1217,  1238, 

1312 
Wickham  and  Bullock  Island 

Coal  Co.,  5  New  So.  Wales 

State  Rep.  365  100 

Widener   v.    Railroad   Co.,    1 

Wkly.  Notes  Cas.  (Pa.)  472  1528 
Wiedynska  v.  Pulaski  Polish 

Benev.  Soc,     110     N.     Y. 

App.  Div.   732;    97  N.  Y. 

Supp.  413  584 

Wiegand    v.    Lewis    Lumber 

Co.,  158  Fed.  608  1400,  1402, 

1403 
Wier  V.  Bush,  4  Litt.  (Ky.) 

429  1185 

Wiggin  V.     Freewill    Baptist 

Church,  8  Met.  (Mass.)  301  1000 
Wight  I'.  Shelby  R.  R.  Co.,  16 

B.  Monr.  (Ky.)  4;    63  Am. 

Dec.  522  175,  194 

Wilbur  V.  Linde,  49  Cal.  290; 

19  Am.  Rep.  645  1296 
V.  Stoepel,  82  Mich.  344; 

46  N.  W.  724;    21  Am.  St. 

Rep.  568  1347 


Wilcox  V.  Foley,  64  Conn.  101 ; 

29   Atl.   303;     42   Am.   St. 

Rep.  159;  25  L.  R.  A.  90  320 

AVilde    V.    Jenkins,    4    Paige 

481    (N.    Y.)  873 

Wildy  V.  Mid-Hants  Ry.  Co., 

18  L.  T.  73  1546,  1604 

Wiley  V.  Board  of  Education, 

11  Minn.  371  398 
V.  Borough  of  Towanda, 

26  Fed.  594  290,  301,  309 

Wilhite  V.  Convent  of  Good 

Shepherd,     25     Ky.     Law 

Rep.  1375;   78  S.  W.  138        381, 
386,  386 
Wilkins  v.   Davies,    16   Vict. 

L.  R.  70  274 

y.  Thorne,  60  Md.253      974, 975 

Wilkinson  v.  Fleming,  30  111. 

353  1582 
V.  Providence  Bank,  3 

R.  I.  22  751 

Wilkinson's  Case,  2  Ch.  536        177, 

214 
Wilks  V.  Georgia  Pac.  R.  Co., 

79  Ala.  180  858 

Willamette  Freighting  Co.  v. 

Stannus,  4  Oreg.  261         148,  562, 

608 
WiHamette  Mfg.  Co.  v.  Bank 

of    British    Columbia,    119 

U.  S.  191;  7  Sup.  Ct.  187       1521, 

1521 
Willcocks,  Ex  parte,  7  Cow. 

(N.  Y.)  402;    17  Am.  Dec. 

525  1011,  1022,  1059,  1202, 

1203 
Willcox  V.  Trenton  Potteries 

Co.,  64  N.  J.  Eq.  173;    53 

Atl.  474 
Willett  V.  Farmers'  Sav.  Bank, 

107  Iowa    69;     77    N.    W. 

519 
Willey  V.  Crocker  Woolworth 

Nat.  Bank.  (Cal.),  72  Pac. 

832 

V.  Parratt,  3  Ex.  211 

William    Firth   Co.   v.    South 

Carolina,  etc.  Co..  122  Fed. 

569;  59  C.  C.  A.  73         1402,  1402 
William  Radam  Microbe  Kil- 
ler  Co.,    110   N.    Y.    App. 

Div.  329;    97  N.  Y.  Supp. 

76  1493 

Williams  v.  Bank  of  Michigan, 

7  Wend.  (N.  Y.)  539  233,  233, 

234 

V.  Boice,  38  N.  J.  Eq.  364 

1127,  1128, 1129 


448 


851 


844 
341 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Williams    v.    Brewster,     117 

Wise.  370;   93  N.  W.  479         645 

V.Cheney,  3  Gray  (Mass.) 

215  232,  1370 

V.  Chester,  etc.  Ry.  Co., 

15  Jur.  828  1376 

V.  Citizens'   Enterprise 

Co.,   153  Ind.  490;    55  N. 

E.  425  216 

V.   Citizens'    Enterprise 

Co.,  25  Ind.  App.  351;  57 

N.  E.  581  45,  47,  113 
V.  Citizens'  Ry.  Co.,  130 

Ind.  71;  29  N.  E.  408;  30 

Am.  St.  Rep.  201;  15  L. 

R.   A.   64  244,  250 
V.  Colby,  53  Hun  (N.  Y.) 

637;  6N.  Y.  Supp.  459  297 
V.  Colonial  Bank,  38  Ch. 

D.  388  423 
V.  Erie  Mountain,  etc.  Co. 

(Wash.),  91  Pac.   1091  940 

V.  Fullerton,  20  Vt.  346 

1120,  1354 
V.  Gaylord,  186  U.  S.  157 ; 

22  Sup.  Ct.  798  1221 

V.   Hewitt,  47  La.  Ann. 

1076;    17  So.  496;    49  Am. 

St.  Rep.  394  110,  238,  242, 

246,  251 

V.  Little  Falls,  etc.  Co. 

(Minn.),  108  N.  W.  289  1321 

V.    Matthews,    103    Va. 

180;    48  S.  E.  861  600,615 

V.  McDonald,  42  N.  J. 

Eq.  392 ;  7  Atl.  866  1264 

V.  McKay,  40  N.  J.  Eq. 

189;   53  Am.  Rep.  775  1259, 

1273,  1276,  1281,  1281, 

1286,  1288 

V.   Mechanics'   Bank,   5 

Blatchf.  59  693,  700,  716 

V.     Montgomery,     148 

N.  Y.  519;   43  N.  E.  57 


—  V.  Morgan,  1 1 1  U.  S.  684 ; 
4  Sup.  Ct.  638 

—  V.  Page,  24  Beav.  654 


573, 
1030 

1592 
342, 
343 
443 


—  V.  Parker,  136  Mass.  204 

450,  451,  455 

—  V.  Pigott,  2  Ex.  201  308 

—  V.  Prince  of  Wales,  etc. 

Co.,  23  Beav.  338  889 

—  V.  Riley,  34  N.  J.  Eq.  398     1288 

—  V.    St.    George's    Har- 
bor Co.,  2  De  G.  &  J.  546  288 

—  V.  Salmond,  2  Kay  &  J. 

463  342 


Williams  v.  Savage  Mfg.  Co.,  3 

Md.  Ch.  418        522,  522,  526,  526 

V.  Taylor,  99  Md.  306; 

57  AtL  641  614 

V.  L'nion  Bank,  2  Humph. 

(Tenn.)  339  232 

V.  Western    Union  Tel. 

Co.,  93  N.  Y.   162  416,  496, 

511,  1092,  1096,  1117,  1119 
Williams  Co.  v.  U.  S.  Baking 

Co.,  86   Md.   475;    38  Atl. 

990  393,  394 

Williams'  Case,  1  Ch.  D.  576      620 

,  9  EcL  225  n  763,  766 

Williams,  Ex  parte,  17  S.  Car. 

396  1607 

Williamsburg,  etc.  Ins.  Co.  v. 

Frothingham,     122     Mass. 

391  232,  384 

Williamsburgh  Sav.  Bank  v. 

Town  of  Solon        136  N.  Y. 

465  ;  32  N.  E.  1058  1450 

Williamson  v.  Eastern  Bldg., 

etc.  Ass'n,  54  S.  Car.  582; 

32  S.  E.  765;    71  Am.   St. 

Rep.  822  593 

V.   Kokomo  Bldg.,  etc. 

Ass'n,  89  Ind.  389  127,  249 

I'.  Krohn,  66  Fed.  655; 

13  C.  C.  A.  668;    62  Fed. 

869  340,  1351,  1353 

V.  New  Albany,  etc.  R. 

R.  Co.,   1  Biss.   198  1584, 

1603,  1603 

V.  New  Jersey  Southern 

R.  R.  Co.,25N.  J.  Eq.  13         1503, 

1585 

V.  New  Jersey  Southern 

R.  R.  Co.,  26  N.  J.  Eq.  398        423, 
1397,  1511 

V.  New  Jersey  Southern 

R.  R.  Co.,29N.  J.  Eq.  311        1496 
1535,  1539 
Williamson  County  Bank  v. 
Roberts-Buford,    etc.     Co. 
(Tenn.),  101  S.  W,  421  1239, 

1242 
Williamson's  Adm'r  v.  Wash- 
ington City,  etc.  R.  R.  Co., 

33  Gratt.   (Va.)  624  1559, 

1562,  1572 
Willink  r.  Morris  Canal,  etc. 

Co.,4N.J.  Eq.377         1503,1585, 

1606 
Willis    V.    Jermin,  Cro.   Eliz. 

167;  2  Leon  97  400,  401,  402 

I'.  Philadelphia,  etc.  R. 

R.   Co.,   6  Wkly.   N.   Cas. 

(Pa.)  461  731 


TABLE    OF    CASES 
[The  references  are  to  pages] 


466 


981 

808 

1364 
1197 


507 
1511 
1354 

844 

1020 


Williston  V.  Michigan,  etc.  R. 

R.  Co..  13  Allen  (Mass.)  400 
Willoughby  v.  Chicago  Junc- 
tion Rys.,  etc.  Co.,  50  N. 

J.  Eq.  656;   25  Atl.  277 
V.  Comstock,  3  Hill  (N. 

Y.)  389 
Wills  V.  James  Rowland  &  Co., 

102N.  Y.  Supp.^86 

V.  Murray,  4  Ex.  843 

Wilmer  v.   Atlanta,  etc.  Ry. 

Co.,  2  Woods  409  1600,  1603 
V.  McNamara,  etc.  Co. 

(1895),  2  Ch.  245  1096,  1099, 

1099 
Wilmott  V.  London  Celluloid 

Co.,  34  Ch.  D.  147         1315,  1323, 

1545 
Wilson  V.  Atlantic,  etc.  R.  R. 

Co.,  2  Fed.  459  431,  793 
V.  Bank  of  Montgomery 

County,  29  Pa.  St.  537 

V.  Boyce,  92  U.  S.  320 

V.  Bury,  5  Q.  B.  D.  518 

V.  Carter  Oil  Co.,  46  W. 

Va.  469 ;   33  S.  E.  249 
V.  Central  Bridge,  9  R.  I. 

590 
V.  Curzon,  15   M.  &  W. 

532  275,  309 
V.  Duplin  Telephone  Co., 

139  N.  Car.  395;    52  S.  E. 

62  662,  666 
V.  Hotchkiss,  2  Ont.  L. 

Rep.  261  274,307,310,311 
V.  Hundley,  96  Va.  96; 

30  S.  E.  492;    70  Am.  St. 

Rep.  837  180,  183 
V.  Little,  2  N.Y.  443;  51 

Am.  Dec.  307  803,  808 
V.  Metropolitan  Elevated 

Ry.  Co.,  120  N.  Y.  145;  24 

N.  E.  384;   17  Am.  St.  Rep. 

625  1343 
V.  Miers,  10   C.  B.  N.  s. 

348  71,  1188 
V.  Parvin,  119  Fed.  652; 

56  C.  C.  A.  268  439,  440,  472 
V.  Stevens,  129  Ala.  630; 

29  So.  678;  87Am.  St.  Rep. 

86 
V.  St.  Louis,  etc.  Ry.  Co., 

108  Mo.  588;   18S.  W.  286; 

32  Am.  St.  Rep.  624 
V.  West  Hartlepool  Ry. 

Co.,  2  De  G.  &  Sm.  475 
Wilson  Sewing  Machine  Co.  v. 

Spears,  50  Mich.  534;     15 

N.  W.  894 


1357 


715 
395 


230 


Wilson,  Ex  parte,  8  Ch.  45  1265 

Wilson's  Case,  20  L.  T.  962  169, 

169,  171,  171 
Wiltbank's    Appeal,    64    Pa. 

St.  256;  3  Am.  Rep.  585  499, 
503,  1147 
Winboum's  Case,  30  Fed.  167  1618 
Winch    V.    Birkenhead,    etc. 

Ry.  Co.,  5  De  G.  &    Sm. 

562  978 

Winchester  v.    Howard,    136 

Cal.  432;    64  Pac.  692  1280 

Winchester,     etc.     Turnpike 

Co.  V.  Wicliffe,  100  Ky.  531 ; 

38  S.  W.  866;    66  Am.  St. 

Rep.  356  1122,  1122,  1123 

Windmuller  v.  Standard  Dis- 
tilling, etc.   Co.,    114  Fed. 

491  1080,  1080,  1081 

V.    Standard    Distilling 

Co.,   115  Fed.  748  1080 

V.    Standard    Distilling 

Co.,   106  N.  Y.  App.  Div. 

246;   94  N.  Y.  Supp.  52  86 

Windram  v.  French,  151  Mass. 

547;    24  N.  E.  914;    8  L. 

R.  A.  750  730 

Wineburgh  v.  U.  S.  Steam, 

etc.  Ad.  Co.,  173  Mass.  60; 

53  N.  E.  145;    73  Am.  St. 

Rep.  261  1285 

Wing  V.  Charleroi  Plate  Glass 

Co.,  112  Fed.  817  1335 

Winnipeg,    etc.    Ry.    Co.    v. 

Mann,  7  Manitoba  81  1399 

Winona,  etc.  R.  R.  Co.  v.  St. 

Paul,   etc.    R.    R.    Co.,   23 

Minn.    359  873,  874,  877 

Winslow  V.  Minnesota,  etc.  R. 

R.   Co.,  4  Minn.   313;    77 

Am.  Dec.  519  1484,  1585 

Winsor,  Ex  parte,  3  Story  411        993 

1123, 1125,  1195 

V.  Bailey,  55  N.  H.  218         968, 

972,  980 
Winsted  Hosiery  Co.  v.  New 

Britain     Knitting    Co.,  69 

Conn.    565;    38    Atl.   310 

1376,  1379 
Winston  v.  Dorsett,  etc.  Co., 

129    111.    64;     21    N.     E. 

514;   4L.  R.  A.  507  620 

Winstone's   Case,  12  Ch.   D. 

239  102,  111 

Winter  v.   Baldwin,  89  Ala. 

483;   7  So.  734  899,  906,  906, 

906 
V.  Belmont  Mfg.  Co.,  53 

Cal.  428  682 


TABLE    OF    CASES 
[The  references  are  to  pages] 


1543 
23 


Winter  v.   Iowa  Central  Ry. 

Co.,  lllIo\va342;82N.  W. 

760 
V.  Iowa,  etc.  Ry.  Co.,  2 

Dill.  487 

V.     Montgomery    Gas- 

Light  Co.,  89  Ala.  544;    7 

So.  773  710,  711 

Winters  v.  Armstrong,  37  Fed. 

508  490,  493 

V.  Hub    Mining  Co.,  57 

Fed.  2S7  280 

Wisconsin     Lumber    Co.     v. 

Greene,  etc.  Co.,  127  Iowa 

350;    101  N.  W.  742;    109 

Am.  St.  Rep.  387;  69  L.  R. 

A.  968  192,  527,  952 

Wisconsin  Tel.  Co.  v.  City  of 

Oshkosh,  G2  Wise.  32;    21 

N.  W. 828  47 

Wishard  v.  Hansen,  99  Iowa 

307;  68N.  W.  691;  61  Am. 

St.  Rep.  238  648,  648 

Wist    V.    Grand    Lodge,    22 

Oreg.    271;     29   Pac.    610; 

29  Am.  St.  Rep.  603  584,  590 

Witliam   V.    Cohen,    100   Ga. 

670;    28  S.  E.  505 
Withers  v.  Edwards,  26  Tex. 

Civ.  App.   189;    62  S.  W. 

795 

V.     Lafayette     County 

Bank,  67  Mo.  App.  115      430,  749 

Witmer  v.  Schlatter,  2  Rawle 

(Pa.)  359 
Witters    v.    Foster,  26    Fed. 

737 
Wittmer  Lumber  Co.  v.  Rice, 

23  Ind.  App.  586 
Witts  V.  Steere,  13  Ves.  363 
W.  Key  &  Son  (1902),  1  Ch. 

467  428,  771,  793 

W.  L.  Wells  Co.  V.  Gastonia 

Cotton  Mfg.  Co..  198  U.  S 

177;   25  Sup.  Ct.  640 
Wolf  V.  Davenport,  etc.  R.  R 

Ca,  93  Iowa  218;  61  N.  W, 

847 

V.    Pennsylvania  R.  R. 

Co.,    195   Pa.    St.    91;     45 

Atl.  936  941,  946,  1081 

Wolfe  V.  Simmons,  75  Miss. 

539;  23  So.  586  1356 
V.   Underwood,  96  Ala. 

329  889,  1111,  1112 

Wolverhampton,   etc.   Co.   v. 

Hawksford,  7  C.  B.  n.  s. 

795;   Ex.  Ch.  11  C.  B.  n.  s. 

456  923,  925,  925 


1024 


1029 


310 

1285 

852 
1141 


249 


1376 


Woman's  Foreign  Missionary 

Soc.    V.    Mitchell,    93    Md. 

199;   48  Atl.  737;  53  L.  R. 

A.  711  380 

Wood   V.    Chamber   of   Com- 
merce,  119  Wi.sc.  367;    96 

N.  W.  835  566,  580 
V.  Coosa,  etc.  R.  R.  Co., 

32  Ga.  273  175,  914 
V.   Corry  Water  Works 

Co.,  44  Fed.  146;    12  L.  R. 

A.  108  110,  1006,  1408 
V.    Drummer,    3    Mason 

308  1127 
V.  Dubuque,  etc.  R.  R. 

Co.,  28  Fed.  910  1633 
V.  Goodwin,  49  Me.  260; 

77  Am.  Dec.  2.59  1627 
V.  Guarantee  Trust  Co., 

128  U.  S.  416;    9  Sup.  Ct. 

131    1453,  1455,  1457,  1457, 
1461,  1.559,  1562,  1566 
V.   Hammond,  16  R.  I. 

98;  17  Atl.  324;  18  Atl. 

198  848 
V.   Holly  Mfg.  Co.,    100 

Ala.  326;    13  So.  948;    46 

Am.  St.  Rep.  56  1537,  1540 
V.      .Jefferson      County 

Bank,  9  Cow.   (N.  Y.)  194       230 
V.  Lost  Lake  Mfg.  Co., 

23  Oreg.  20;    23  Pac.  848; 

37  Am.  St.  Rep.  651     1237,  1238, 
1320,  1321 
V.  Mott  Iron  Works,  114 

N.  Y.  App.  Div.  108  890 
V.  New  York,  etc.  R.  R. 

Co.,  70  Fed.  741  1561,  1563 
V.    Odessa   Woodworks, 

42  Ch.  D.  636  1117 
V.    Sheldon,    42    N.    J. 

Law    421;     36    Am.    Rep. 

523  784,  785 
V.  Union  Gospel  Church 

Bldg.   Ass'n,   63    Wise.    9; 

22  N.  W.  756  124,  493,  1063, 

1354 
V.   What   Cheer   Lodge, 

20  R.  I.  795;   38  Atl.  895         948 

V.  Whelen,  93  111.  153  283, 

290, 1186, 1187,  1190,1409 
V.    Wiley    Construction 

Co.,  56  Conn.  87;    13  Atl. 

137  127,  221,  228,  912,  1006 

Wood's   Appeal,    92   Pa.    St. 

379;   37  Am.  Rep.  694      723,  725 
Wood's  Case,  15  Eq.  236  189 

Wood's    Ship,    etc.    Co.,    62 

L.   T.   760  1238.  1242 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Wood's  Sons  Co.  v.  Schaefer, 

173  Mass.  443;    53  N.  E. 

881 ;    73  .Ajn.  St.  Rep.  305      1379 
Woodberrv    v.    McClurg,    78 

Miss.  831 ;  29  So.  514     57, 113, 258 
Woodbury  v.  Allegheny,  etc. 

Ry.  Co.,  72  Fed.  371  1587 

Woodbury  Heights  Land  Co. 

V.   Loudenslager,   55  N.   J. 

Eq.  78;    35  Atl.  436  322 

Woodhaven  Bank  v.  Brooklyn 

Hills   Imp.   Co.,  69  N.   Y. 

App.  Div.  489;    74  N.  Y. 

Supp.  1023  924 

Woodhill  V.  Sullivan,  14  C.  P. 

(Up.  Can.)  265  396,  408 

Woodman  v.  York,  etc.  R.  R. 

Co.,  50  Me.  549  406 

Woodroof  V.  Howes,  88  Cal. 

184;   26  Pac.  Ill  978,  979 

Woodruff    V.    Dubuque,    etc. 

R.  Co.,  30  Fed.  91  1047 
V.  Erie  Ry.  Co.,  93  N.  Y. 

609  852,863,1611 
V.  New  York,  etc.  R.  R. 

Co.,  129N.  Y.  27;  29  N.  E. 

251  1490, 1490 
V.  Wentworth,  133  Mass. 

309  1029,  1030 

Woodruff's   Estate,    1    Tuck. 

(N.  Y.)  58  1150 

Woods  V.  Pittsburgh,  etc.  Ry. 

Co.,  99  Pa.  St.   101  1533 

Woods  Motor  Vehicle  Co.  v. 

Brady,  181  N.  Y.  145;    73 

N.  E.  674  212,  214,  215 
V.  Brady,  39  N.  Y.  Misc. 

79;   78  N.  Y.  Supp.  203  209 

Woodside  Coal  Co.,  105  Fed. 

56  44 

Woodson     V.     Murdock,     22 

Wall.  351  1484 

Woolf  V.  East  Nigel  Gold  Min- 
ing Co.,  21  Times  L.  R.  660      152, 

1228 
Woolaston's  Case,  4  De  G.  & 

J.  437  660 

Wooten  V.  Wilmington,  etc. 

R.  Co.,  128  N.  Car.  119;  38 

S.  E.  298;  56  L.  R.  A.  615       792, 
798,  798,  814,  814 
Worcester  Med.  Inst.  v.  Hard- 
ing, 11  Cush.  285  237 
Workingmen's    Accommoda- 
tion Bank  v.  Converse,  29 

La.  Ann.  369  241,  247 

World's   Fair  Excursion   Co.  ' 

'      V.  Gasch,  162  111.  402;    44 

N.  E.  724  528 


967 
616 


592 
418, 


Wormser  v.  Metropolitan  St. 

Ry.  Co.,  184  N.  Y.  83;    112 

Am.  St.  Rep.  596       966,  967,  967 
V.  Metropolitan  St.  Ry. 

Co.,   98   N.  Y.   App.  Div. 

29:    90  N.  Y.  Supp.  714 
Worrall   v.   Judson,   5    Barb. 

210 
Worthington  v.  Schuylkill  El. 

Ry.  Co.,  195  Pa.  St.  211; 

45  Atl.  927 

V.  Tormey,  34  Md.  182 

785,  809 
Wragg,  Re  (1897),  1  Ch.  796       634, 
635,  639 
Wray  v.  Wray  (1905),  2  Ch. 

349  254 

Wrexham,      etc.      Ry.      Co. 

(1899),  1  Ch.  440      831,  832,  1455 
Wright  V.  Bundy,  1 1  Ind.  398     1495, 

1584 
V.  Central,  etc.  Co.,  67 

Cal.  532;    8  Pac.  70       1016,  1250 
V.    Com.,    109    Pa.    St. 

560;     1    Atl.    794        1015,  1015, 
1016,  1163 
V.  First  Nat.  Bank,  52 

N.  J.  Eq.  392;  28  Atl.  719      1164, 
1205   1222 

—  V.  Horton,  12  A.  C.  371      '  1396, 

1396 

—  V.  Hughes,  119  Ind.  324; 
21  N.  E.  907;  12  Am.  St. 
Rep.  412  63,  65,  852,  862 

—  V.  Incorporated  Synod, 
11  Can.  Sup.  Ct.  95  586 

—  V.  Knoxville  Livery,  etc. 
Co.  (Tenn.),  59  S.  W.  677       1244 

—  V.  Lee,  2  S.  Dak.  596; 
51  N.  W.  706       1009,  1009,  1187, 

1208,  1224 

—  V.  Ohio,  etc.  R.  R.  Co., 
1   Disney   (Oh.)   465 

—  V.  Pipe  Line  Co.,  101  Pa. 
St.  204;    47  Am.  Rep.  701 


1451 


—  V.  St.  Louis  Sugar  Co. 
(Mich.),   109  N.  W.   1062 

—  V.  Springfield,  etc.  R.  R. 
Co.,  117  Mass.  226;  19  Am. 
Rep.  412 

—  V.  Tuckett,  IJ.  &  H.  266 

—  V.  Vermont,  etc.  R.  R. 
Corp.,  12  Cush.  (Mass.)  68 


846, 
862 

293 


1169 
1137, 
1156 

457, 
1108 


Wright-Ca;sar  Tobacco  Co. 
v.A.  Hoen  &  Co.  (Va.),  54 
S.  E.  309  141,  386 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Wright  Lumber  Co.  v.  Hixon, 
105  Wise.  153;  80  N.  W. 
1110,  1 135  770,  773 

Wright's  Appeal,  99  Pa.   St. 

425  735 

Wrigiit's  Case,  7  Ch.  55;    20 

W.  R.  45  179,  179,  525 

Wright's  Estate,  24  Pa.  Co. 

Ct.  Rep.  376  503 

W.  Tasker  &  Sons  (1905),  2 

Ch.  587        1418,  1473,  1473,  1524 

Wyeth  V.  Renz-Bowles,  23 
Ky.  Law  Rep.  2337;  06 
S.  W.  825  158 

Wylie  V.    Missouri   Pac.   Ry. 

Co.,  41   Fed.  623  1435,  1435 

Wylly-Gabbett  Co.  v.  Wil- 
liams (Fla.),  42  So.  910  1553 

Wyman  v.  American  Powder 

Co.,  8  Cash.  (Mass.)  168  430 

V.    Bowman,    127    Fed. 

257;    62  C.  C.  A.  189       189,  702, 
1296,  1316,  1317,  1318 

V.  Citizens'   Nat.  Bank, 

29  Fed.  734  866 

V.    Wallace,    201    U.    S. 

,   230;    26  Sup.  Ct.  495  63 

Wynne  v.  Price,  3  De  G.  &  S. 

310  783,  785 

Wynne's  Case,  8  Ch.  1002      165,  171 

Wyoming  Coal  Mining  Co. 
V.  State  e.r  rel.  Kennedy 
( Wyo. ),  87  Pac.  337  896,  905 

Wyoming  Valley  Ice  Co.,  153 

Fed.  787  1400,  1402,  1403, 

1403 

Wyss-Thalman  v.  Beaver  Val- 
ley Brewing  Co.  (Pa.),  68 
Atl.  187  919,  924,  1223 

X 

X.  Company  (1907),  2  Ch.  92      1364 
Xantha  Beneficial,  etc.  Ass'n, 

8  Pa.  Dist.  Rep.  142  40 


Yager's  Adm'r  v.  Bank  of 
Kentucky  (Ky.),  100  S.  W. 
848  815 

Yale  Gas  Stove  Co.  v.  Wilcox, 
64  Conn.  101;  29  Atl.  303; 
42  Am.  St.  Rep.  159;  25 
L.  R.  A.  90  318,  319,  320 

Yanish  v.  Pioneer  Fuel  Co., 
64  Minn.  175;  66  N.  W. 
198  407 

Yarborough  v.  Bank  of  Eng- 
land, 16  East  6  869 


Yates    V.    Jones    Nat.    Bank 

(1907),   27   Sup.   Ct.    Rep. 

638;  206  U.  S.  158  1355,  1359 
V.   Jones    Nat.    Bank 

(Nebr.),  105  N.  W.  287  1355 
V.  Utica  Bank,  206  U.  S. 

181  1355,  1359 

Yeager  v.  Bank  of  Kentucky 

(Ky.),  106  S.  W.  806  814 

Yeaton  v.  Eagle  Oil,  etc.  Co., 

4  Wash.  183;  29  Pac.  1051  517 
Yeiser  v.  U.  S.  Board,  etc.  Co., 

107  Fed.  340;    46  C.  C.  A. 

567;  52  L.  R.  A.  724        322,324, 

326 
Yelland's  Case,  4  Eq.  350  1242 

Yellow    Jacket,    etc.    Co.    v. 

Stevenson,  5  Nevada  224       1235, 

1372 
Yeoland  Consols,  58  L.  T.  922  173 
Yetts  V.  Norfolk  Ry.  Co.,  3 

De  G.  &  Sm.  293  931,  946 

Yoakum    v.    Selph,    83    Tex. 

607;    19  S.  W.  145  1619 

Yonkers  Gazette  Co.  v.  Taylor, 

30  N.  Y.  App.  Div.  334;  51 

N.  Y.  Supp.  969  209,  209,  214 
York  V.  Mathis,  68  Atl.  746  1374 
York  Glass  Co.,  Re,  60  L.  T. 

744  534 

York  Tramways  Co.  v.  Wil- 
lows, 8  Q.  B.  D.  685        1 164,  1 165, 
1175,  1182,  1212,  1230,  1232 
York  &  North  Midland  Ry.  v. 

Hudson,  16  Beav.  485  1320 

York,     etc.     R.     R.     Co.     v. 

Ritchie,  40  Me.  425  658,  1214 
Yorkshire  Ry.  Wagon  Co.  v. 

Maclure,  21  Ch.  D.  309  64,  1545 
Young   V.    Commissioners    of 

Mahonning    Co.,    53    Fed. 

895  971 
V.    Equitable    Life   Ass. 

Soc,  112  N.  Y.  App.  Div. 

760  944,  979,  1285 
V.   MacNider,    25   Can. 

Sup.  Ct.  Rep.  272  1436 
V.  Montgomerv,  etc.  R. 

R.  Co.,  2  Woods  606  1485,  1588 
■;;.   Naval,   Militarv,   etc. 

Soc.  (1905),  1  K.  B.'687        1245, 
1281,  1283, 1300 
V.    Plattner    Implement 

Co.  (Colo.).  91  Pac.  1109  237 
V.   New   Standard   Con- 
centrator   Co.     (Cal.),    83 

Pac.  28  797 
V.  South  African  Syndi- 
cate (1896),  2  Ch.  268             1004 


TABLE    OF    CASES 
[The  references  are  to  pages] 


Young  V.  South  Tredegar  Iron 

Co.,  S5Tenn.  1S9;   2  S.  W. 

202;  4  Am.  St.  Rep.  752  381, 
386,  386,  715 
V.  Vough,  23  N.  J.  Eq. 

325  571,  572,  769,  774 

Young  Reversible   Lock-Nut 

Co.  r.  Young  Lock-Nut  Co., 

72  Fed.  62  127,  300 

Young     Women's     Christian 

Ass'n  V.  St.  Louis  Women's 

Christian    Ass'n,    115    Mo. 

App.  228;    91  S.  W.  171         129, 

369 
Youngblood  v.  Comer,  97  Ga. 

152;  23S.  E.  509;  25  S.  E. 

838  1619 

Younglove  v.   Steinman,   80 

Cal.  375;    22  Pac.  189  652 

Youree  v.  Home  Town  Mut. 

Ins.  Co.,  180  Mo.  153;  79 

S.  W.  175  1185 

Yuruari  Co.,  6  Times  L.  R. 

119  764,  765 


Zabriskie   v.    Cleveland,    etc. 

R.  R.  Co.,  23  How.  381  86,  972, 
1221,  1221 
Zalesky  v.  Iowa,  etc.  Ins.  Co., 

102   Iowa  512;    70  N.  W. 

187;    71  N.  W.  433  912 

Zang  V.  Adams,  23  Colo.  408; 

48  Pac.  509;    58  Am.  St. 

Rep.  249  213 


Zartman  v.  First  Nat.  Bank, 

1S9N.  Y.  267;  82  N.  E.  127 

1503,  1505,  1505,  1506,  1553 
Zearfoss     v.     Farmers',    etc. 

Inst.,  154  Pa.  St.  449;    26 

Atl.  211;   35  Am.  St.  Rep. 

848  1224 

Zebley  v.   Farmers'   L.   &  T. 

Co.,    139    N.    Y.    461;     34 

N.  E.  1067  1488 

Zeigler    v.    Valley    Coal    Co. 

(Mich.),  113  N.  W.  775  300 

Zelaya,  etc.  Co.  v.  Meyer,  8 

N.  Y.  Supp.  487;  28  N.  Y. 

St.  Rep.  759  627 

Zellerbach    v.    Allenberg,    99 

Cal.  57;  33  Pac.  786        809,  1111 
Zeltner    v.    Zeltner    Brewing 

Co.,    174   N.    Y.    247;     66 

N.  E.  810;  95Am.  St.  Rep. 

574  1183 

Zihlman  v.  Cumberland  Glass 

Co.,74Md.  303;  22Atl.  271      400 
Zimmerman  v.   Kansas  City, 

etc.  R.  Co.,  144  Fed.  622; 

75  C.  C.  A.  424  1543,  1635 
V.    Masonic    Aid    Ass'n, 

75  Fed.  236  917,  918 

Zinc  Carbonate  Co.  v.   First 

Nat.  Bank,  103  Wise.  125; 

79  N.  W.  229;   74  Am.  St. 

Rep.  845  327,  870,  1346 

Zinn  V.  Baxter,  65  Oh.  St.  341 ; 

62  N.  E.  327       962,  972,  974,  982 
V.     Germantown,     etc. 

Mut.  Ins.  Co.  (Wise),  111 

N.  W.  1107  1131 


ADDENDA 


CASES  OF  ESPECIAL  INTEREST  REPORTED  WIIILE 
THIS  BOOK  WAS  GOING  THROUGH  THE 
PRESS. 


National  Life  his.  Co.  of  the  United  States  v.  National  Life 
Ins.  Co.,  209  U.  S.  317,  modifying  or  supplementing  the  hiw  as 
stated  in  §  456,  holds  that  where  a  corporation  has  engaged  in 
business  under  a  certain  name  at  a  certain  city  before  the  incor- 
poration of  another  company  under  substantially  the  same  name, 
the  courts  will  not  supervise  the  discretion  of  the  post  office 
authorities,  so  as  to  enjoin  them  from  delivering  to  the  former 
company  mail  matter  addressed  to  the  common  name  at  the 
city  in  question,  without  any  distinguishing  street  or  number, 
merely  because  a  vastly  larger  proportion  of  such  matter  may 
have  been  found  by  experience  to  be  intended  for  the  second 
company. 

Richardson  v.  Shaw,  209  U.  S.  365,  and  Thomas  v.  Taggart, 
209  U.  S.  385,  are  important  cases,  although  laying  down  no 
novel  propositions  of  law,  upon  the  subject  of  purchases  of 
shares  on  margin  and  of  the  mutual  rights  of  pledgors  and 
pledgees  of  shares. 


i 


i 

1 


MODERN  CORPORATION   LAW 


CHAPTER  I 

HISTORICAL  AND  INTRODUCTORY 

Section 

Formation  of  corporations  at  common  law 1 

Common  law  rule  in  America •    •         2 

Dissimilarity  of  American  statutory  corporations  and  corporations 

formed  by  royal  charter      3 

Development  of  modern  corporation  or  company  law  in  England        4-13 

Incorporation  by  royal  charter      •         4 

Incorporation    by   special    Act    of    Parliament  —  "Companies 

Clauses  Consolidation  Act" 5 

Development   of  unincorporated  joint-stock  companies  —  The 

Bubble  Act 6 

General  incorporation  laws  —        7-13 

The  Statute  39  Eliz.,  c.  5        7 

Companies  Act  of  1844 8 

Companies  Act  of  1856 9 

Companies  Act  of  1862 10-12 

The  "  Memorandum  of  Association " 10 

The  "  Articles  of  Association  " 11 

"Table  A" 12 

Amendments  and  Supplements  to  Companies  Act  of  1862  — 

Companies  Act  of  1900 13 

Development  of  modern  corporation  law  in  the  United  States    .    .    .14-18 

In  general      !■* 

Growth  of  system  of  general  incorporation  laws 15 

Constitutional  prohibition  of  incorporation  by  special  act    .    .    .        16 

Unincorporated  joint-stock  companies 17 

Modern  general  incorporation  laws 18 

Effects  of  moiiern  hberal  incorporation  laws 19-22 

Right  to  incorporate  no  longer  a  franchise  or  special  privilege    .        19 

Early  judicial  recognition  of  this  principle 20 

Liberal  construction  of  modern  incorporation  laws 21 

Frauds  perpetrated  under  cover  of  hberal  laws 22 

Classification  of  corporations 23-29 

Distinction  between  corporations  formed  under  general  laws  and 

corporations  created  by  special  act 23 

Under  what  statute  corporation  is  deemed  to  be  formed      .       24 

Classification  with  respect  to  liability  of  members 25 

Classification  with  respect  to  objects 26-29 

Ancient  classification 26 

VOL.  I.  —  1  1 


§  1  HISTORICAL    AND    INTRODUCTORY  [ChAP,  I 

Classification  of  corporations  (continued)  Section 

How  objects  determined  for  purposes  of  classification  ...  27 
Municipal     corporations,    religious     corporations,    business 
corporations,    public-service    corporations,    financial 

corporations,  etc 28 

"Public"  and  ''private"  corporations 29 

Nomenclature  —  "  Corporations"  and  "Companies" 30 

§  1.  Formation  of  Corporations  at  Common  Law. —  Bv  the 
common  law  of  England,  corporations  could  be  formed  in  only 
one  way  —  by  a  special  charter  granted  by  the  crown.  To 
be  sure,  the  legislature  by  special  act  might  create  a  corpora- 
tion ;  but  an  act  of  the  legislature  involves  a  change  in  the  law, 
so  that  a  corporation  formed  by  special  act  of  the  legislature 
could  not  properly  be  said  to  be  organized  under  the  common 
law.  No  sufficient  sound  economic  reason  applicable  to  modern 
conditions  can  be  adduced  to  support  this  common  law  doc- 
trine. For,  in  a  free  commercial  country,  individuals  should 
have  the  power  by  mere  private  contract  or  agreement  to  asso- 
ciate themselves  together  as  a  corporation  for  any  merely  private 
lawful  object.  They  should  enjoy  the  same  freedom  in  the 
formation  of  corporations  that  Anglo-Saxon  jurisprudence  has 
always  accorded  in  the  formation  of  partnerships  or  voluntary 
associations.  To  be  sure,  safeguards  should  be  provided  against 
fraud,  and  particularly  against  abuse  of  that  immunity  from 
individual  liability  of  the  members  for  the  debts  of  the  company 
which  in  popular  estimation  constitutes  the  most  valuable,  if 
not  the  most  essential,  characteristic  of  a  commercial  corpora- 
tion. But  subject  to  all  needful  restrictions  of  this  sort,  the 
organization  of  corporations  in  any  country  that  prides  itself 
on  freedom  of  contract  and  on  the  right  of  its  citizens  to  co- 
operate in  the  most  effective  manner  in  any  lawful  enterprise, 
should  be  as  free  as  the  formation  of  unincorporated  associa- 
tions; and  most  certainly  the  benefits  of  doing  business  under 
the  corporate  form  should  not  be  dependent  on  the  caprice  of 
a  monarch  or  of  a  minister,  or  upon  the  special  favor  of  the 
legislature. 

§  2.  Common  Law  Rule  in  America.  —  Nevertheless,  the  com- 
mon law  prohibition  of  corporations  except  by  royal  charter 
was  carried  by  our  ancestors  across  the  Atlantic,  and  became 
part  of  the  jurisprudence  of  the  United  States.  In  colonial 
times,  the  king  did  occasionally  erect  corporations  in  America 

2 


§   l-§  30]  TUE    COMMON    LAW  §  3 

l)V  liis  charter,  as  witness  the  well-known  instance  of  Dartmouth 
College.'  In  some  of  the  colonies,  notably  in  MarylancJ  -  and 
Pennsylvania,^  this  prerogative  of  the  crown  was  delegated  in 
part  or  in  whole  to  the  lord  j)roj)rietary  or  viceroy,  and  by  him 
sparingly  exercised ;  but  if  in  any  colony  the  prerogative  extended 
to  the  incorporation  of  business  corporations,  no  instance  is 
known  in  which  it  was  exercised  for  that  purpose. 

After  the  Declaration  of  Independence,  the  prerogative 
perished  altogether;  and  was  not  renewed  or  vested  by  the 
various  state  constitutions  in  the  executive.  Accordingly,  the 
royal  charter,  the  only  common  law  method  of  forming  cor- 
porations, having  become  impracticable,  persons  desiring  to 
become  incorporated  were  obliged  in  each  case  to  apply  to  the 
-legislature  for  a  special  act  of  incorporation.  Thus,  the  separa- 
tion from  the  mother  country,  the  abolition  of  the  royal  prerog- 
ative, and  the  endeavor  to  preserve  and  even  to  increase  the 
individual  liberties  previously  enjoyed  by  the  colonists  as  British 
subjects,  resulted,  curiously  enough,  in  depriving  the  American 
people  of  the  only  mode  of  incorporating  known  to  the  common 
law,  and  thus  in  still  further  restricting  the  already  too  limited 
power  of  organizing  corporations. 

§  3.  Dissimilarity  of  American  Statutory  Corporations  and 
Corporations  formed  by  Royal  Charter.  —  In  the  United  States, 
although  royal  charters  of  incorporation  have  been  obsolete  for 

'  See  Dartmouth  College  v.  Wood-  city  of  Annapolis  was  incorporated 

ward,  4  Wheat.  .')18.  by  a  deputy  of  Queen  Anne  liuring 

'  See  Charter  of  Marjdand,   §  14  the    suspension  of    the   proprietary 

(Kilty's  Laws  of  M(i. ;  Md.  Code  Pub.  government,    and  the    charter   was 

Gen.   Laws  of   1904,  p.    100),  where  confinned  with  modifications  bj' Act 

the   Lord  Proprietary  was  invested  of  Assembly,  Laws  of  Md.  of  1708, 

wth    the    power    "Villas    item    in  Chap.   7. 

Burgos   et   Burgos   in   Civitates   ad  ^  Charter  of    Pennsylvania,   §   10 

Inhabitantium   Merita   et    Locorum  (Charters  and  Provincial  Laws  of  Pa., 

(^l)portunitates    cum    Privilegiis    et  ed.  of   1762,  p.  3),  where  diaries  II 

Innnunitatibus  congruis  erigendi  et  granted  to  Penn  and  his  heirs  power 

iucorporandi."      Perhaps    the    only  "to  erect  and  incorporate  towns  into 

exercise  of  this  power  was  the  grant  boroughs  and  boroughs  into  cities." 

of  a  charter  by  Lord  Baltimore  in  In  pursuance  of  this  power,  the  pro- 

1667,  incorporating  the  "Mayor,  Re-  prietary   granted   a   charter   of    in- 

(order,     Aldermen,     and     Common  corporation   in    1701  to  tlie  city  of 

Council  of  the  City  of  St.   Mary's  Philadelphia,       and      subsequently 

City."      See    McKim    v.    Odom,    3  erected     a    number    of    boroughs. 

lUand   Ch.     (Md.),   407,   41fi,    note,  Charters    and    Provincial    Laws    of 

where  a  recital  of  some  of  the  terms  Pa.,  ed.  of  1762,  pp.  10  et  seq.     See 

of  the  charter  will   be    found.     The  also  3  "Wilson's  Lectures,  409. 


§  4  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 

more  than  a  century,  the  old  terminology  has  to  a  great  extent 
survived,  and  is  applied  to  the  wholly  different  statutory  corpora- 
tions of  to-day.  Thus,  special  acts  of  incorporation  are,  in 
America,  commonly  called  "charters,"  although  this  use  of  the 
term  is  perhaps  inappropriate  and  is  certainly  not  in  vogue  in 
England.  There,  "charter"  still  means  a  royal  charter,  and  is 
very  rarely  applied  to  a  special  act  of  parliament  creating  a  cor- 
poration.^ Indeed,  the  American  law  of  corporations  is  not 
merelv  in  terminology  but  to  some  extent  in  substance  an  out- 
growth of  the  old  law  of  corporations  formed  under  royal  charter. 
This  is  certainly  unfortunate ;  for  what  law  there  is  relating  to 
the  old  corporations  chartered  by  the  crown  —  and  the  cases 
on  the  subject  are  comparatively  few  and  meagre  —  is  of  an 
antiquated  nature,  totally  inapplicable  to  modern  joint-stock 
business  corporations.  The  greatest  harm  that  has  come  from 
assimilating  modern  incorporated  companies  to  old-fashioned 
chartered  corporations  is  the  notion  that  the  right  to  be  a  cor- 
poration is  a  special  franchise.  To  be  sure,  this  was  true  at 
common  law;  but  as  stated  above  this  feature  of  the  common 
law  was  an  anomaly  in  the  jurisprudence  of  a  free  country,  and, 
as  will  be  more  fully  explained  below,^  it  is  now  completely 
abrogated  both  in  England  and  in  most  of  the  United  States, 
where  the  right  to  incorporate  for  any  lawful  object  is  free  to 
everybody,  on  observing  certain  statutory  formalities.  ^ 

§  4-§  13.   DEVELOPMENT  OF  CORPORATION  OR  COM- 
PANY LAW  IN  ENGLAND 

§  4.  Incorporation  by  Royal  Charter.  —  Even  in  England  the 
formation  of  corporations  by  royal  charter,  although  always  pos- 
sible, was  never  frequent,  and  is  perhaps  at  the  present  day 
even  rarer  than  ever.  The  corporations  organized  in  this  way 
have  been  chiefly  for  municipal,  charitable,  educational,  or  re- 
ligious purposes,  and  have  but  little  in  common  with  the  ordi- 

'  In  Simpson  v.   Molson's  Bank  uses  the  word  in  that  sense.    For  an 

(1895),  A.  C.  270,  the  reporter  in  his  instance  of  similar  use  of  the  word 

statement  of   the  facts  of  the  case  in  Canada,  see  McMurrich  v.  Bond 

refers  to  a  special  act  of  incorpora-  Head  Harbour  Co.,  9  Up.  Can.  Q.  B. 

tion  as  a  "charter,"  and  in  A torney-  333,  .336. 
General  v.  Mersey  Ry.  Co.    (1907),         ^  See  infra,  §  19-§  20. 
A.   C.   415,   417,   Lord  Macnaghten 


§  l-§  1)0]  COMPANIES    CLAUSES    ACTS  §  5 

nary  business  corporation  of  to-<liiy.  Some  famous  historic 
organizations,  formed  partly  for  private  gain  and  partly  for 
public  governmental  objects,  such  as  the  East  India  Company, 
were  incorporated  in  this  way.  The  Bank  of  England  was  in- 
corporated by  royal  charter  but  in  pursuance  of  a  special  act 
of  parliament.' 

§    ').     Incorporation  by  Special  Act  of  Parliament  —  The  "  Com- 
panies   Clauses    Consolidation   Act."    -  In    England,    partly    be- 
cause the  crown  was  for  some  reason  so  very  chary  in  granting 
charters  of  incorporation,  applications  to  parliament  for  special 
acts    of    incorporation    became    more   and    more    frequent    as 
business   conditions  developed   and    the    desirability  of   incor- 
porating became  constantly  greater.-    Special  acts  of  incorpora- 
tion particularly  for  canal  and  railway  companies  accordingly 
multiplied  apace.    A  general  resemblance  pervaded  all  of  these 
special  acts;    but  each  was  characterized  by  its  own  peculiar 
features.     As  the  general  scheme  or  constitution  of  all  such 
corporations  was  the  same  or  nearly  so,  the  same  language  to 
a  great  extent  was  employed  in  all  such  special  acts;    and,  in 
order  to  avoid   this  repetition,  parliament  in  1845  adopted  a 
code  or  system  of  provisions  which  should  be  taken  as  em- 
bodied in  all  subsequent  special  acts  of  incorporation, ^  except 
in  so  far  as  expressly  excluded.     This  code  is  known  as  the 
"Companies   Clauses    Consolidation   Act,"    sometimes   abbre- 
viated to  "Companies  Clauses  Act."     At  the  same  session  of 
parliament,   a  statute   was   passed,   known   as   the   "Railway 
Clauses  Consolidation  Act,"  containing  certain  provisions  as 
to  the  construction  of  railways  which  in  like  manner  were  to 
be  taken  as  embodied  in  all  sul)sequent  special  acts  for  the  in- 
corporation of  railway  companies.*    These  statutes,  it  will  be 

»  Stat.   5  &  6  W.   &  M.,    c.   20.  are    the    "Companies   Clauses   Act, 

See  1  Black.  Comm.  47.3.  1863,"     the     "Companies     Clauses 

2  As  Blackstone  points  out,  spe-  Act,  1869,"  the  " Companies  Clauses 

cial  acts  of  parliament  creating  cor-  Consolidation   Act,    1888,"   and   the 

porations  had  become  common  only  "Companies    Clauses    Consolidation 

in  his  own  time.     1  Black.  Comm.  Act,   1889." 

473.  <  8    &   9   Vict.,   c.    20.     See  the 

'8  &  9  Vict.,  c.  16.  See  also  "Lands  Clauses  ConsoUdation  Act," 
"Companies  Clauses  Consolidation  8  &  9  Vict.,  c.  18,  containing  pro- 
Act  (Scotland),"  8  &  9  Vict.,  c.  17,  visions  to  apply  to  companies  upon 
a  similar  act  applicable  to  Scotland,  which    the    power    of    condemniug 

Later  "Companies  Clauses  Acts"  land  should  be  conferred. 

5 


§  5  HISTORICAL    AND    INTRODUCTORY  [ChAP,   I 

observed,  are  not  general  incorporation  laws,  and  do  not  apply 
to  companies  organized  luider  general  laws  or  "Companies 
Acts,"  the  first  of  which  had  been  passed  in  the  preceding 
year. 

This  separation  between  matters  so  distinct  as  a  general 
enabling  act  and  the  establishment  of  regulations  for  companies 
thereafter  incorporated  by  special  act  certainly  avoids  confu- 
sion; and  the  example  might  perhaps  profitably  be  followed 
in  those  American  states  where  special  acts  of  incorporation  are 
still  resorted  to.  IMuch  trouble  has  been  occasioned  by  en- 
deavoring to  combine  in  one  act  or  code  general  provisions 
for  the  formation  of  corporations  and  for  the  regulation  of  the 
companies  formed  thereunder,  with  provisions  for  the  regula- 
tion of  such  companies  as  the  legislature  had  previously  incor- 
porated or  might  subsequently  see  fit  to  incorporate  by  special 
act,  the  only  object  of  which  latter  provisions  is  avoidance  of 
the  necessity  of  inserting  in  each  special  act  a  complete  system 
of  corporation  law.^  This  trouble  and  confusion  might  be  ob- 
viated, it  would  seem,  by  the  passage  of  a  "Companies  Clauses 
Act " ;  although  this  opinion  must  be  expressed  with  diffidence, 
inasmuch  as  some  English  lawyers  advocate,  as  tending  to 
greater  simplicity,  a  consolidation  of  the  Companies  Clauses 
Acts  with  the  Companies  Acts.- 

1  Cf .  Gregg  v.  Granby  Mining,  etc.  granted  by  the  act  of  incoq^oration, " 

Co.  (Mo.),  65  S.  W.  312  (a  constitu-  held  not  to  apply  to  co'-porations 

tional  provision  making  all  charters  created  by  special  act  of  the  legisla- 

of  incorporation  subject  to  amend-  ture  but  only  to  tliose  formed  under 

ment   or   repeal   by   the   legislature  the  general  law) ;    Love  v.   Holmes 

held  to  apply  both  to  companies  in-  (Miss.),  44  So.  835  (municipal  cor- 

corporated  under  general  laws  and  poration  created  by  special  act,  held 

companies  created  by  special  act) ;  not  subject  to  a  limitation  of  munici- 

Montclair   v.    N.    Y.    &    Greenwood  pal  indebtedness  prescribed  by  the 

Lake  Ry.  Co.,  45  N.  J.  Eq.  436,  441-  general  statutes  applicable  to  mu- 

442 ;    18  Atl.  242 ;    Hayes  v.  Mor-  nicipalities) ;    State  v.   Cajpe   Girar- 

gan's  La.,  etc.  Co.,  42  So.  150;   117  deau,  etc.  Road  Co.  (Mo.),  105  S.  W. 

La.  593;  Frazier  v.  Railway  Co.,  88  761  (where  the  question  was  decided 

Tenn.  138   (headnote  8) ;   12  S.   W.  whether  a  turnpike  company  incor- 

537 ;  City  of   Atlanta   v.    Gate   City  porated  by  special  act  was  subject 

Gas   Light   Co.,    71    Ga.    106- (pro-  to  a  provision  in  a  statute  applica- 

vision  in  general  incorporation  law  ble  to  corporations  generally,  or  to 

that  "  no  charter  shall  have  any  force  a  different   provision    in    a    general 

or  effect  for  a  longer  period   tlian  law    for    incorporation   of    turnpike 

two  years  unless  the  incoqjorators  companies). 

within  that  time  shall  in  good  faitli  -  Kawhiis     Sc     Macnaghten     on 

commence   to    exercise    the    powers  Companies,  itreface,  pp.  v-vi. 

0 


§  l-§   30]  UNINXORPOUATED    COMPANIES  §  G 

§  0.  Development  of  Unincorporated  Joint-stock  Companies. 
—  The  Bubble  Act.  —  Side  by  .side  witli  tlie  constantly  in- 
creasing frequency  of  incorporation  by  special  statutes,  which 
occasioned  the  Companies  Chui.ses  ConsoHdation  Act,  there 
developed  in  England  out  of  the  ordinary  partnership  a  form 
of  association  known  as  joint-stock  companies,  which,  although 
unincorporated,  much  more  closely  resemble  the  ordinary  stock 
corporations  of  to-day  than  do  the  common  law  corpora- 
tions chartered  by  the  crown.  These  joint-stock  companies 
originated  in  an  attempt  to  secure  so  far  as  practicable  by  mere 
mutual  agreement  among  the  members  the  same  advantages 
that  would  be  obtained  by  incorporation.  Parliament  unwi.sely 
frowned  upon  this  endeavor,  and  the  Bubble  Act  ^  sought  alto- 
gether to  repress  it.  That  statute,  however,  never  proved  very 
effective  in  accomplishing  its  purpose,-  and  in  1825  was  re- 
pealed.^ Notwithstanding  this  repeal,  .some  judges  continued 
to  look  askance  at  these  associations;  *  but  other  judges  evinced 
a  more  liberal  dispo.sition,*  and  the  number  of  such  companies 
constantly  increased. 

Although  these  unincorporated  joint-stock  companies  were, 
in  legal  contemplation,  nothing  but  huge  partnerships  distin- 
guished from  ordinary  firms  only  by  the  number  of  their  mem- 
bers, yet  the  ingenuity  of  the  cleverest  solicitors  was  taxed 
in  order  to  give  them,  practically,  all  the  most  important 
attributes  of  corporations.  Every  member  or  shareholder 
was  required  to  sign  and  seal  the  company's  deed  of  settle- 
ment, which  contained  elaborate  provisions  for  the  govern- 
ment of  the  concern.  Particularly,  it  provided  that  the 
partnership  should  not  be  dissolved  by  the  death  of  a  member 
but  that  his  personal  representative  should  on  executing  the 
deed  of  settlement  become  a  member  in  his  room.  Transfers  of 
shares  inter  vivos  were  also  provided  for.  Moreover,  the  manage- 
ment of  the  company  was  vested  in  a  board  of  directors,  and  the 
deed  always  stipulated  that  a  mere  private  member  or  partner 
should  have  no  power  to  act  as  agent  for  the  concern.     The 

»  6  Geo.  I,  c.  18,  §  18.  *  Harrison  v.  Ileathorn,  6  Man.  & 

■  Cf.  Rex  V.  Wehh,  14  East  406;  Gr.   81;     Re  Aston,   27   Beav.   474, 

Rex  V.  Dodd,  9  East  516;   Josephs  affirmed,  4  De  G.  &  J.  320 ;  Mexican, 

V.  Prebber,  3  B.  &  C.  639.  etc.  Co.,  4  De  G.  &  J.  544.     Cf.  cases 

3  6  Geo.  IV,  c.  91.  cited,  infra,  §  17. 

*  Blundell  v.  Winsor,  8  Sim.  601. 

7 


§  7  HISTORICAL    AND    IXTKODUCTOKY  [ChAP.   I 

capital  of  the  company  was  to  consist  of  a  certain  amount  divided 
into  shares,  very  much  as  in  the  modern  stock  corporation. 
Sometimes  it  was  sought  to  approximate  hmited  HabiHty  by  pro- 
viding that  all  the  company's  contracts  should  contain  a  clause 
•by  which  the  contractor  should  agree  to  look  only  to  the  capital 
of  the  company  for  his  damages  in  case  of  breach.^  How  to 
avoid  the  necessity  of  making  all  of  the  shareholders  parties  to 
any  action  or  suit  by  the  company  was  a  serious  problem.  Some- 
times special  acts  of  parliament  were  obtained  authorizing  the 
association  to  sue  and  be  sued  in  the  name  of  some  officer,  and 
in  1835  a  general  statute  authorized  the  crown  to  grant  to  unin- 
corporated companies  the  right  to  sue  and  defend  in  the  name 
of  an  officer.^  Sometimes  the  legal  title  to  the  company's  prop- 
erty and  ckoses  in  action  was  vested  in  trustees,  who  would  thus 
be  entitled  to  sue  in  their  own  names  for  any  breach  of  contract 
or  injury  to  the  company's  property.^  Of  course,  the  members 
of  such  companies  were  not  greatly  concerned  in  facilitating 
actions  against  the  companies;  and,  moreover,  failure  to  join 
all  the  members  as  defendants  in  actions  of  tort  was  no 
irregularity  at  all,  and  even  in  actions  of  contract  could  not 
be  availed  of  except  by  plea  in  abatement.* 

§  7-§  13.     General  Incorporation  Laws. 

§  7.  The  Statute  of  39  Elizabeth  Chapter  5.  —  As  long  ago 
as  the  reign  of  Elizabeth  a  general  statute  for  the  incorporation  of 
hospitals  and  similar  charities  had  been  enacted  by  parliament.* 
This  act  provided  that  any  person  seised  of  land  in  fee  simple 
might  by  deed  enrolled  in  the  High  Court  of  Chancery  create 
a  corporation  to  hold  the  land  for  the  purpose  of  a  "hospital, 
maison  de  dieu,  abiding  place  or  house  of  correction."  ^    By  its 

'  E.  g.   Ex   parte   Liquidators  of  held  that  an  unincoiporated   com- 

British   Nation  Life   Ass.  Ass'n,    8  pany  could  not  sue  in  the  names  of 

Ch.  D.  679.  its  "tnistees,"  who,  however,  do  not 

2  4  &  .5  Wm.  IV,  c.  94.  appear  to  have  been  invested  with 

•'  Cf.  Weir  v.  Metropolitan  Street  legal  title,  but  seem  to  have  been 

Ry.  Co.  (Mo.),  103  S.  W.  583  (where  mere  directors. 

a   similar  device   was   held   not   to  *  Cf.    McCreary  v.   Chandler,   58 

obviate  the  necessity  for  making  all  Me.  537. 

the  shareholders  parties).     It  would  *  39  Eliz.,  c.  5. 

seem  that  the  case  last  cited  mis-  «  See  2  Coke  Inst.,  720-725,  where 

applies    Niven    v.    Spickerman,    12  the  statute  is  commented  upon  and 

Johns.  (N.  Y.)  401,  where   it   was  a  form  of  a  deed  is  given. 


§  l-§  30]  THE    COMPANIKS    ACTS  §  8 

terms  the  act  was  to  continue  in  force  for  only  twenty  years; 
but  a  few  years  after  its  expiration  it  was  revived  and  made  per- 
petual/ Notwithstanding  the  interest  attaching  to  this  statute 
as  the  first  general  incorporation  act  in  a  conunon-law  jurisdic- 
tion, its  effect  upon  the  history  of  English  law  has  been  neg- 
ligible. Modern  English  general  incorporation  laws  were  not 
suggested  by  this  statute  of  Elizabeth  init  were  evolved  from 
the  statutes  mentioned  in  the  last  paragraph,  which  removed 
impediments  in  the  way  of  the  formation  and  operation  of  joint- 
stock  companies. 

§  8.  Companies  Act  of  1844.  —  In  1^44,  Parliament,  which 
by  the  above  mentioned  Acts  of  1825  and  1835  had  already  aban- 
doned the  policy  of  discouraging  combinations  of  men  and 
money  for  legitimate  business  purposes,  definitively  embarked 
upon  the  enlightened  course  of  facilitating  rather  than  thwart- 
ing all  such  enterprises.  In  that  year,  the  first  English  general 
incorporation  law,  or  companies  act,  was  passed  —  the  "Joint 
Stock  Companies  Registration  Act,"  or  Companies  Act  of  1844.^ 
This  statute,  after  providing  as  to  companies  to  be  organized 
under  it  for  a  preliminary  embryonic  period  of  "provisional 
registration,"  ^  went  on  to  enact  that  the  subscribers  to  the 
capital  of  the  projected  company  should  sign  and  seal  a  "deed 
of  settlement"  stating  among  other  things  the  business  or  pur- 
pose of  the  company,  the  amount  of  its  capital  and  the  number 
of  shares  into  which  it  should  be  divided,  the  amount  authorized 
to  be  raised  by  loan,  etc.  The  deed  was  also  to  contain  a  cove- 
nant by  each  shareholder  to  pay  all  instalments  of  his  subscrip- 
tion to  the  capital  and  perform  all  engagements  resting  upon 
him  as  shareholder.  Upon  the  due  execution  of  this  deed,  it 
was  to  be  recorded,  after  which  a  "certificate  of  complete  regis- 
tration" might  be  obtained.  Thenceforth,  the  company  was 
incorporated  for  the  purpose  of  carrying  on  the  trade  or  business 
for  which  it  was  formed,  but  without  restriction  of  liability  of 
the  shareholders  under  any  judgment  or  decree.  With  this  im- 
portant exception,  the  act  conferred  all  advantages  of  doing 
business  under  a  corporate  form.  Finally,  by  an  amendatory 
statute  passed  some  ten  years  later,^  the  privilege  of  limited 
liability  was  conferred  upon  members  of  all  companies  organ- 

'  Stat.  21  Jac.  1.  c.  1.  '  See  infra,  §  312. 

»  7  &  8  Vict.,  c.  110.  *  18  &  19  Vict.,  c.  133. 


§  9  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 

ized  under  the  Act  of  1844  whose  deed  of  settlement  should 
provide  therefor  and  whose  name  should  cont&.in  the  word 
"Lhnited." 

§  9.  Companies  Act  of  1856.  —  In  the  year  following,  that 
is  to  say,  in  ISoO,  the  Act  of  1844  with  its  amendments  was  re- 
pealed, and  a  new  and  more  progressive  system  was  adopted 
known  as  the  Companies  Act  of  18o().'  This  statute  provided 
for  the  formation  of  corporations  with  either  limited  or  un- 
limited liability.  It  was  in  its  main  features  similar  to  the  Com- 
panies Act  of  1862-  by  which  six  years  later  it  was  superseded 
and  which,  being  still  the  basis  of  the  company  law  of  England 
and  ha\ing  given  rise  to  many  leading  cases,  demands  some- 
what detailed  examination. 

§  10.  Companies  Act  of  1862.  —  The  Memorandum  of  Asso- 
ciation.—  Under  the  Companies  Act  of  1862,^  the  method  of 
forming  corporations  and  the  general  nature  of  their  constitu- 
tion is  as  follows :  First,  at  least  seven  persons  sign  a  document 
known  as  the  "memorandum  of  association,"  which  must  state 
where  the  company  is  formed  on  the  principle  of  having  the  lia- 
bility of  its  members  limited  to  the  amount,  if  any,  unpaid  on 
their  shares,  the  company's  name,  the  location  of  its  office,  its 
objects,  the  fact  that  the  liability  of  its  members  is  limited, 
and  the  amount  of  its  capital  divided  into  shares  of  a  certain 
fixed  amount.  Each  subscriber  to  the  document  shall  write 
opposite  his  name  the  number  of  shares  he  takes,  and  must  take 
at  least  one.  This  memorandum  of  association  is  then  lodged 
for  record  with  the  registrar  of  joint-stock  companies,  who  after 
its  registration  issues  a  certificate  stating  that  the  company  is 
incorporated;  and  thenceforth  the  company  is  a  corporation. 

The  memorandum  of  association,  it  will  be  observed, 
embodies  the  fundamental  constitution  of  an  English  com- 
pany. It  must  state  the  company's  objects,  and  any  object 
not  therein  contained  is  ultra  vires  of  the  corporation.*  It 
cowesponds  to  the  instrument  that  in  some  American  states  is 

*  19  &  20  Vict.,  c.  47.  shareholders  may  make  such  regu- 

*  25  &  26  Vict.,  c.  89.  lations  for  their  own  government  as 

*  25  &  26  Vict.,  c.  89.  they  think  fit."    Per  Lord  Cairns  in 

*  "The  memorandum  of  associa-  Ashhury  Ry.  Carriage  Co.  v.  Riche, 
tion,  is,  as  it  were,  the  area  beyond  L.  R.  7  H.  L.  653,  671  See  also 
which  the  action  of  the  company  infra,  p.  11  note  2. 

cannot    go;     inside    that    area   the 

10 


§  l-§  30] 


THE    COMPANIES    ACTS 


§11 


called  a  "certificate  of  incorporation,"  and  in  others  "articles 
of  association."  ' 

§  11.  The  Articles  of  Association.  —  Contemporaneously 
with  tiie  filing  of  the  menioraiulum  of  association,  the  incor- 
porators under  tlie  Companies  Act  of  1802  may  file  for  record 
what  are  known  as  "articles  of  association,"  containing  regula- 
tions for  the  management  of  the  company  and  the  conduct  of  its 
business.  These  partake  of  the  nature  of  by-laws  according 
to  American  terminology;  but,  inasmuch  as  they  are  recorded, 
all  who  deal  with  the  company  are  chargeable  with  notice  of 
their  contents.  Thev  must  be  carefully  distinjjuished  from  the 
memorandum  of  association,  to  which  they  are  distinctly  sub- 
ordinate.- As  a  learned  judge  has  said,  "the  memorandum  of 
association  is  the  constitution  of  the  company,"  while  the  articles 
are  "  merely  the  machinery  for  carrying  that  into  effect."  ^  And, 
of  course,  the  English  articles  must  not  l^e  confused  with  what 
in  some  American  states  are  known  by  the  same  name,  —  arti- 
cles of   association,  —  which   as  stated   in  the  last  paragraph 


»  See  infra,  §  31. 

'  In  Ashbury  Rij.  Carriage  Co.  v. 
Riche,  L.  R.  7  H.  L.  653,  667-668, 
Lord  Cairns  said:  "I  will  ask  your 
Lordships  to  observe  *  *  *  the  marked 
and  entire  difference  there  is  be- 
tween the  two  documents  which 
form  the  title  deeds  of  companies 
of  this  description  —  I  mean  the 
Memorandum  of  Association  on  tlie 
one  hand  and  the  Articles  of  Associa- 
tion on  the  other  hand.  With  re- 
gard to  the  memorandum  of 
association,  your  Lordships  will 
find,  as  has  often  been  pointed  out, 
although  it  appears  to  have  been 
somewhat  overlooked  in  the  present 
case,  that  that  is,  as  it  were,  the 
charter,  and  defines  the  limitation 
of  the  powers  of  a  company  to  be 
establisheil  under  the  act.  With 
regard  to  the  articles  of  association, 
those  articles  play  a  part  subsidiary 
to  the  memorandum  of  association. 
They  accept  tlie  memorantlvun  of 
association  as  the  charter  of  the 
company,  and  .so  accepting  it,  the 
articles  proceed  to  define  the  duties. 


the  rights  and  the  powers  of  the  gov- 
erning boily  as  between  themselves 
and  the  company  at  large,  antl  the 
mode  and  form  in  which  the  busi- 
ness of  the  company  is  to  be  carried 
on,  and  the  mode  and  form  in  whicli 
changes  in  the  internal  regulationj 
of  the  company  may  from  time  to 
time  be  made.  With  regard,  there- 
fore, to  the  memorandum  of  associa- 
tion, if  you  find  anything  wliich 
goes  beyond  that  memorandum,  or 
is  not  warranted  by  it,  the  question 
\v\l\  arise  whether  that  which  is  so 
done  is  ultra  vires,  not  only  of  tlie 
directors  of  the  company,  but  of 
the  company  itself.  With  regard  to 
the  articles  of  a.ssociation,  if  you 
find  anything  which,  still  keeping 
within  the  memorandum  of  asso- 
ciation, is  a  violation  of  the  articles 
of  association,  or  in  excess  of  them, 
the  question  will  arise  whether  that 
is  anj-thing  more  than  an  act  extra 
inres  the  directors,  but  intra  vires 
the  company." 

'  Tilbury    Portland    Cement    Co., 
62  L.  J.  Ch.  814.  815. 


11 


§   12  HISTORICAL    AND    INTRODUCTORY  [ChAP.   I 

correspond  to  the  memorandum  of  association  of  an  English 
company.  The  articles  cannot  add  to  or  subtract  from  the 
memorandum.  For  instance,  a  power  that  is  not  conferred 
upon  the  company  by  the  memorandum  is  ultra  vires  even 
though  expressly  authorized   by  the  articles.' 

But  so  great  latitude  is  allowed  by  the  statute,  and  so  few 
particulars  as  to  the  company's  constitution  are  required  to  be 
stated  in  the  memorandum,  that  many  matters  of  deep  concern 
to  the  company  are  left  to  be  regulated  by  the  articles.  For  ex- 
ample, the  articles  may  regulate  the  number  and  powers  of 
directors,  their  term  of  office,  the  manner  of  their  appointment 
or  election,  the  method  of  conducting  general  meetings  of  the 
company,  the  number  of  votes  to  which  each  shareholder  shall 
be  entitled,  the  manner  of  transferring  shares,  calls  for  unpaid 
subscriptions  to  capital,  the  forfeiture  of  shares,  and  many 
other  matters  of  equal  or  greater  importance.  Parliament  has 
undertaken  to  prescribe  no  hard  and  fast  rules  on  such  subjects 
of  internal  management,  but  has  wisely  left  each  corporation 
to  regulate  them  for  itself  according  to  its  own  conceptions  of 
its  needs.  The  result  is  a  freedom  of  regulation  which  is  prob- 
ably obtainable  nowhere  in  the  United  States.  In  the  not  dis- 
tant future,  however,  some  state  legislature  may  perceive  that 
these  matters,  at  least  in  the  case  of  industrial  corporations,  are 
of  purely  private  concern  and  should  accordingly  be  committed 
entirely  to  the  parties  interested.  The  prediction  may  be  ven- 
tured that  when  one  state  shall  have  taken  the  lead  in  this  direc- 
tion, others  will  fast  follow  the  example. 

§  12.  "  Table  A."  —  As  already  stated,  the  promoters  of 
an  English  company  may  prepare  for  their  corporation  such 
articles  of  association  as  they  please,  so  long  as  no  rule  of  law 
or  of  public  policy  is  contravened.  But  the  act  provides,  in  a 
schedule  annexed  thereto  known  as  "Table,A,"  a  very  complete 
set  of  articles,  which  are  to  apply  to  any  company  "limited  by 
shares  "  unless  other  articles  be  adopted.  Accordingly,  any  such 
company  may  be  registered  without  articles,  and  in  that  event 
Table  A  will  constitute  its  articles.  Moreover,  even  where 
Table  A  is  not  thus  adopted  in  toto,  it  serves  as  a  convenient 
model  for  such  articles  as  may  be  desired ;  and  often  the  articles 
adopt  or  embody  some  of  the  provisions  of  Table  A,  but  modify 

'  Ashbury  Ry.  Carriage  Co.  v.  Riche,  L.  R.  7  H.  L.  653,  671. 
12 


§   l-§  30]  THE    COMI'A.MKS    ACTS  §   13 

or  exclude  the  remainder.  An  English  writer  questions  the  de- 
sirability of  providing  by  statute  any  such  form  or  model  of 
articles  of  association.'  Hut  all  who  have  experienced  the  diffi- 
culties that  are  occasioned  in  .^merica  by  the  frecjuent  failure 
of  corporations  to  adopt  any  by-laws  will  readily  perceive  the 
advantages  to  be  derived  from  a  complete  statutory  code  of  in- 
ternal regulations  which  is  to  govern  every  company  except  in 
so  far  as  other  regulations  may  be  adopted  by  the  company  itself. 
§  13.  Amendments  and  Supplements  to  Companies  Act  of 
1862  —  Companies  Act  of  1900.  The  Companies  Act  of  18G2 
is  still  in  force  in  Great  Britain,  and  its  main  features  remain 
unaltered.  A  number  of  amendatory  or  supplemental  acts, 
however,  have  been  passed.-  Of  these,  the  only  one  that  makes 
any  very  substantial  inroads  on  the  general  scheme  for  the 
formation  and  constitution  of  British  corporations  is  the  Com- 
panies Act  of  1900.  This  statute,  which  has  been  criticised  by 
some  English  lawyers  as  a  bungling  piece  of  legislation,  pro- 
vides, infer  alia,  that  although  a  company  becomes  incorporated 
upon  the  issuance  by  the  registrar  of  a  certificate  of  due  regis- 
tration, yet  no  allotment  of  shares  shall  be  made  until  a  certain 
amount  of  capital  shall  have  been  subscribed,  payable  in  cash, 
and  that  the  company  shall  not  commence  business  until  a  cer- 
tain amount  of  capital  has  been  allotted  and  other  conditions 
complied  with.  Any  contract  made  by  a  company  before 
it  is  entitled  to  commence  business  shall  be  provisional  only, 
and  shall  not  be  binding  on  the  company  until  that  date,  when 
it  shall  become  binding.  It  will  be  seen  that  these  provisions, 
although  making  serious  changes  in  the  law  governing  the 
organization  of  corporations,  leave  untouched  the  fundamental 
scheme  for  incorporation  by  registration  of  a  memorandum 
and  articles. 

'  Palmer's  Company  Precedents,  panies  Act,  1880,"  43  Vict.,  c.    10; 

9th    ed.,    Appendix    on    "Revised  "Companies     (Colonial     Registers) 

Table  A,"  p.  5.  Act,  1883,"  46  &  47  Vict.,  c.   30; 

'  See     "Companies     Seals     Act,  "Companies  Act,  1886,"   49   Vict., 

1864,"  27  Vict.,  c.  19;  "Companies  c.    23;     "Companies    (Winding-up) 

Act,  1867,"  30  &  31  Vict.,  c.  131;  Act,   1890,"  53  &  54   Vict.,  c.  63; 

"Joint    Stock    Companies  Arrange-  "Companies   Act,    1898,"   61   &   62 

ment  Act,  1870,"  33  &  34  Vict.,  c.  Vict.,    c.    26;    "Bodies    Corporate 

104;  "Companies  Act,  1877,"  40  &  (Joint  Tenancy)  Act,"  62  &  63  Vict., 

41   Vict.,    c.  26;    "Companies    .\ct,  c.  20;  "Companies    Act,  1900,"  63 

1879,"  42  &  43  Vict.,  c.  76;  "Com-  &  64  Vict.,  c.  48. 

13 


§   14  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 

Within  the  last  year,  another  statute,  the  Companies  Act  of 
1907,^  has  made  important  changes  in  British  company  law, 
some  of  which  will  be  noted  from  time  to  time  below;  but  this 
act  like  its  predecessors  is  a  mere  amendment  or  supplement 
to  the  Act  of  1862  and  not  a  substitute  for  it.  Some  of  its 
provisions,  as  well  as  some  of  those  of  the  Companies  Act  of 
1900,  display  a  tendency  to  multiply  arbitrary  statutory  re- 
strictions and  thus  to  break  in  upon  the  freedom  of  internal 
company  management  allowed  by  the  Act  of  18G2.  Other 
provisions,  however,  are  intended  to  remove,  subject  to  cer- 
tain conditions,  hampering  restrictions  which  had  been  im- 
posed by  judicial  decision. 

§  14-§  18.     Development  of  Modern  Corporation 
Law  in  the  United  States. 

§  14.  In  general.  —  In  America,  corporation  or  company 
law  has  developed  along  somewhat  the  same  lines  as  in 
England.  In  both  countries,  the  same  economic  forces  have 
been  at  work,  and  very  similar  results  have  been  reached.  In- 
deed, the  development  has  been  along  converging  rather  than 
parallel  lines;  for  the  resemblance  between  American  corpora- 
tion law  and  English  company  law  is  closer  at  the  present  time 
than  fifty  years  ago.  The  methods  of  incorporating  in  colonial 
times  have  been  indicated  briefly  above.  Before  the  Declara- 
tion of  Independence,  incorporation  for  business  purposes  had 
not  even  made  a  beginning.  After  the  Revolution,  the  develop- 
ment has  in  each  state  pursued  a  course  peculiar  in  many  re- 
spects to  the  local  jurisprudence,  so  that  the  history  of  this 
branch  of  the  law  throughout  the  nation  cannot  be  traced  ex- 
cept by  the  tedious  and  for  present  purposes  profitless  labor 
of  investigating  the  course  of  legislation  in  each  state.  And  to- 
day the  law  has  attained  very  different  stages  of  development 
in  different  states. 

§  15.  Growth  of  System  of  General  Incorporation  Laws.  — 
Everywhere,  however,  during  the  first  half  of  the  nineteenth 
century,  incorporation  by  special  act  became  increasingly  fre- 
quent; and  everywhere  the  necessity  was  felt  of  relieving  the 
legislatures  from  the  pressure  of  this  business  as  well  as  of  free- 

'  7  Edw.  VII,  c.  50. 

14 


§  l-§  30]  GROWTH    OF    AMEHICAX    LAW  §   15 

ing  them  from  the  temptation  to  corruption  which  such  lousiness 
was  too  apt  to  bring.  As  in  England,  general  incorporation 
laws  were  the  means  adopted  for  attaining  this  result.  The 
earliest  general  incorporation  laws  or  enabling  acts  provided  for 
the  formation  of  religious  corporations,'  the  need  for  which  was 
experienced  as  soon  as  the  Revolution  had  brought  aljout  di.s- 
establishment.  The  earliest  general  law  for  the  formation  of 
business  corporations  was  passed  in  New  York  in  1811,  pro- 
viding for  the  incorporation  of  manufacturing  companies.-  As 
this  law  antedates  the  Companies  Act  of  1844  by  more  than 
thirty  years,  general  incorporation  laws  may  fairly  be  claimed 
as  an  American  invention.  To  be  sure,  the  statute  of  Elizabeth 
for  the  incorporation  of  hospitals  preceded  the  New  York  statute 
by  more  than  two  centuries ;  but  there  is  every  reason  to  suppose 
that  the  New  York  statute  was  an  original  invention  and  was 
not  even  suggested  by  the  long-forgotten  statute  of  Elizabeth. 

By  the  middle  of  the  century,  general  enabling  acts  for  the 
formation  of  manufacturing  and  mining  corporations  had  be- 
come common  throughout  the  United  States.  Gradually,  the 
purposes  for  which  companies  could  be  incorporated  under 
these  general  laws  were  extended,  until  at  the  present  time, 
in  all  except  a  few  ultra-conservative  states,  corporations  may 

'  See  Laws  of  N.  Y.  of  1784  (7th  poration  laws,  see  Laws  of  Pa.,  Sesa. 

session),  Chap.  18;  Laws  of  Del.  of  of    1835-3G,    Chap.    194;    Laws    of 

1787,  Chap,  cxliv  b  (Laws  of  Del.,  N.  Car.  1836  (2  Rev.  Stats,  of  1837, 

ed.  of  1797,  Vol.  II,  p.  878) ;  Laws  of  p.  214) ;  2  Kent  Coinm.  272,  note  (6), 

Pa.  of  1791,  Chap,  mdxxvi  (provid-  referring  to  a  law  of  Massachusetts, 

ing  for  incorporation  for  literary  or  and    to    laws    of    Connecticut    and 

charitable   as   well  as  for   religious  Michigan  of  1837,  as  well  as  to  the 

purposes) ;     Laws  of  Md.   of    1802,  New  York  law  above  cited. 
Chap.  111.    Cf.  Laws  of  Md.  of  1798,         A    statute    of    North    Carolina, 

Chap.  24,  providing  for  the  incorpo-  Laws    of    1795,  Chap,    iii    (Revised 

ration  of  vestries  of  the  Protestant  Laws,  ed.  of  1821,  Vol.  I,  p.  769), 

Episcopal  Church  which  had  been  sometimes  referred  to  as  a  general 

disestablished    in    1776.      Although  incorporation    law,    provided     that 

the  last  mentioned  statute  has  been  whenever  a  number  of    subscribers 

held   not   to   be   a   "public   general  should  have  formed  themselves  into 

law,"  Bartlett  v.  Ilipkiyis,  76  Md.  5,  a  company  for  the  purpose  of  cutting 

25-26,  34-37  (headnote  inadecjuate) ;  a  canal  they  should  have  tlie  power 

23    Atl.     1089;     24    Atl.    532,    yet  to  condemn   private   property   and 

it    did    certainly    provide    for    the  to  sue  and  be  sued  in  the  company 

formation  of  an  indefinite  number  name,  but  does  not  expressly,  nor  it 

of  corporations.  would  seem   by    implication,   make 

'  Laws  of  N.  Y.,  Sess.  34,  Chap,  the  companies  corporations. 
67.     For  other  early  general  incor- 

15 


§  16  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 

be  organized  under  general  laws  for  the  conduct  of  any  lawful 
business,  with  usuaUv  some  few  named  exceptions.  Even  where 
the  objects  for  which  incorporation  can  be  had  are  not  expressed 
in  these  sweeping  terms,  they  are  so  numerous  and  varied  as 
to  include  all  the  usual  forms  of  business  enterprise. 

§  16.  Constitutional  Prohibition  of  Incorporation  by  Special 
Act.  —  Not  merely  have  the  legislatures  voluntarily  evolved 
this  system  of  incorporation  under  general  laws,  but  also  the 
framers  of  state  constitutions  have  undertaken  to  accelerate  the 
process.  In  almost  every  recent  state  constitution  some  pro- 
hibition, more  or  less  stringent,  is  directed  against  incorporation 
by  special  act.  Consequently,  incorporation  under  general  laws 
has  everywhere  become  the  rule,  and  incorporation  under  special 
act  the  exception.  Although  much  of  the  law  governing  cor- 
porations formed  by  special  act  is  also  applicable  to  those  or- 
ganized under  general  laws,  yet  the  two  kinds  of  associations 
are  in  many  respects  very  different  from  one  another ;  and  these 
differences  are  or  should  be  attended  with  important  legal 
consequences. 

§  17.  Unincorporated  Joint-stock  Companies  in  America. — 
Unincorporated  joint-stock  companies  have  played  a  much 
less  important  part  in  the  development  of  incorporated  com- 
panies in  America  than  in  England.  Nevertheless,  in  some 
states  such  unincorporated  associations  have  been  at  times  very 
common,'  and  are  probably  everywhere  in  the  United  States 
legally  possible.^  These  unincorporated  bodies  are,  however, 
in  America  a  by-product.  The  general  trend  of  American  law 
has  not  been  influenced  by  such  unincorporated  joint-stock 
companies  as  have  existed  in  this  country.  The  only  influence 
of  unincorporated  joint-stock  companies  upon  American  law 
has  been  indirect  through  the  connection  between  English 
unincorporated  companies  and  the  modern  English  company 
law. 

§  18.  Modern  General  Incorporation  Laws.  —  Obviously, 
even  cursory  summaries  of  the  general  laws  now  in  force  in  all 
the  various  states  of  the  Union  would  be  both  tedious  and,  for 

>  For      illustrations,      see      Von    Street  Ry.  (Mo.),  10.3  S.  W.  583  (as 
Schmidt  v.  Huntington,  1    Cal.    55;    to  Adams  Express  Company). 
Hoadley    v.    County    Comm'rs,    105        ^  See  Spotswood  v.  Morris  (Idaho), 
Mass.    519 ;     Weir    v.    Metropolitan  85  Pac.  1094. 

16 


§  l-§  30]  EFFFX'TS    OF    LIBERAL    LAWS  §   19 

present  purposes,  useless.'  The  statutes  in  some  states  consist 
of  a  jumble  of  old  acts  thrown  toi^ether  almost  indiscriminately 
with  more  recent  amendments.  In  other  states,  the  legislatures 
have  intended  to  display  the  utmost  lii)erality;  l)ut  unfortu- 
nately this  disposition  has  often  been  evinced  by  removing 
salutary  restrictions  and  at  the  same  time,  in  order  to  make  a 
show  of  legislative  regulation,  by  imposing  vexatious  and  un- 
reasoning restraints.  The  New  Jersey  Law  has  proved  one 
of  the  most  popular  of  the  general  incorporation  laws,  and  has 
served  as  a  model  in  many  other  states.  It  is  not,  however, 
altogether  free  from  the  faults  above  referred  to. 

In  general,  it  may  be  said  that  the  liberal  incorporation  laws 
that  are  in  force  in  most  states  authorize  incorporation  for  any 
lawful  purpose  by  the  mere  execution  and  registration  of  a  docu- 
ment setting  forth  the  objects  of  the  company  and  certain  other 
particulars  as  to  its  proposed  business  and  constitution. 


§  19-§  22.     Effects  of  Modern  Liberal  Incorporation  Laws. 

§  10.  Right  to  Incorporate  no  longer  a  Franchise  or  Special 
Privilege.  —  When  individuals  may  incorporate  themselves  by 
these  simple  means,  the  notion  that  the  right  to  be  a  corpora- 
tion is  a  franchise  is  manifestly  baseless.  The  right  was  formerly 
a  franchise,  when  it  could  be  secured  only  by  the  special  favor 
of  the  crown  or  of  the  legislature.  But  a  franchise  is  a  special 
privilege,  and  any  right  that  can  l)e  obtained  by  anybody  merely 
by  going  through  a  few  statutory  forms  cannot  properly  be 
designated  by  that  term.  As  well  might  it  be  said  that  the  right 
to  make  a  conveyance  of  real  estate  is  a  franchise  because  the 
deed  must  be  signed  and  sealed  by  the  grantor  with  certain 
formalities  and  recorded  in  the  registry  of  deeds.  The  require- 
ments for  the  formation  of  a  corporation  are  scarcely  less  simple. 
More  than  twenty  years  ago,  Mr.  Morawetz  with  his  accus- 
tomed accuracy  and  insight  said,  "The  right  of  forming  a  cor- 
poration and  of  acting  in  a  corporate  capacity,  under  the  general 
incorporation  laws,  can  be  called  a  '  franchise '  only  in  the  sense 
in  which  the  right  of  forming  a  limited  partnership  or  of  execut- 

'  The    various    statutes    \n\\    be    poration    and    Organization    of 
found  analyzed  in  Frost  on  Incor-    Corporations. 
VOL.  I.  — 2  17 


I  20  •  HISTORICAL   AND    INTRODUCTORY  [ChAP.  I 

incy  a  conveyance  of  land  by  deed  can  be  called  a  franchise."  ^ 
The  progress  of  events  and  the  development  of  jurisprudence 
in  recent  vears  make  this  statement  more  profoundly  true  and 
more  important  to  be  borne  in  mind  than  when  it  was  uttered. 
To  be  sure,  many  corporations  do  hold  franchises.    For  instance, 
the  ric'ht  to  condemn  private  property  or  the  right  to  operate 
a  railway  along  the  public  streets   or  highways  is  a  franchise, 
and  these  rights  are  frequently  enjoyed  by  corporations.     But 
the  mere  right  to  be  a  corporation  for  some  purely  private  pur- 
pose is  no  longer  of  this  character.    We  may  call  it  a  franchise  if 
we  choose,  and  we  sometimes  speak  of  taxes  on  the  business  of  cor- 
porations as  franchise-taxes ;   but  in  all  such  cases  we  are  using 
the  term  with  a  new  meaning.    Always  should  the  fact  be  recog- 
nized that  nowadays  when  the  right  to  organize  a  corporation  is 
almost  as  free  as  the  right  to  execute  a  deed  of  real  estate,  cor- 
porations are  very  different  things  from  what  they  were  when 
that  right  was  confined  to  a  few  favorites  of  king  or  parliament. 
§  20.     Early   Judicial   Recognition    of    this   Principle.  —  These 
principles  respecting  the  nature  of  the  right  to  be  a  corporation 
under  modern  incorporation  acts  were  recognized  and  stated 
in  an  early  New  York  case  where  the  court  was  dealing  with, 
perhaps,  the  very  first  general  incorporation  law  ever  enacted 
for  the  formation  of  business  corporations.    The  court,  speak- 
ing by  Chief  Justice  Spencer,  said:   "The  object  and  intention 
of  the  legislature  in  authorizing  the  association  of  individuals 
for  manufacturing  purposes,   was,  in  effect,   to  facilitate  the 
formation  of  partnerships,  without  the  risk  ordinarily  attending 
them,  and  to  encourage  internal  manufactures.    There  is  noth- 
ing of  an  exclusive  nature  in  the  statute ;   but  the  benefits  from 
associating  and  becoming  incorporated,  for  the  purposes  held 
out  in  the  act,  are  offered  to  all  who  will  conform  to  its  requisi- 
tions.    There  are  no  franchises  or  privileges  which  are  not  com- 
mon to  the  whole  community.     In  this  respect,  incorporations 
under  the  statute  differ  from  corporations  to  whom  some  ex- 
clusive or  peculiar  privileges  are  granted." 

»  2    Morawetz    on    Priv.    Corps.,  =*  Slee  v.  Broom,  19  Johns.  (N.  Y.) 
2d    ed.,    §923.      Approved:     State  456,473-474;    10  Am.  Dec.  273,  re- 
ex    rel    Bradford    v.    Western    Irri-  f erring  to  the  N.  Y.  Act  of  1811, 
gating  Co.,  40  Kans.  96,  99  (head-  cited  above,  §  15. 
note  inadequate) ;    19  Pac.  349 ;    10 
Am.  St.  Rep.  166. 

18 


§  l-§  30]  EFFECTS  OF  libf:hal  laws  §  22 

§  21.  Liberal  Construction  of  Modern  Incorporation  Laws. 
—  In  construing  modern  goncrul  incorporatiiMi  laws,  these 
principles  should  always  be  borne  in  mind.  ^Ve  sliould  never 
forget  that  the  object  of  such  laws  is  to  further  the  prosjM-rity 
of  the  country  by  promoting  connnercial  enterprise,  and  that 
this  object  should  not  be  thwarted  by  a  narrow  construction 
different  in  spirit  from  that  in  which  the  laws  themselves  are 
conceived.  Fraud  should  be  elfectively  punished;  but  in  order 
to  prevent  frauds,  the  courts  should  not  discourage  enterprise. 
It  is  easy  to  prevent  fraud  by  stopping  commercial  intercourse; 
but  the  remedy,  if  not  worse,  is  more  disastrous  than  the  disease. 
An  attempt  to  prevent  the  growth  of  fraudulent  schemes  and 
unlawful  "trusts"  by  a  strict  construction  of  the  general  incor- 
poration laws  may  perhaps  hinder,  somewhat,  monopolistic 
schemes,  but  it  will  certainly  absolutely  prohibit  many  legiti- 
mate' business  enterprises. 

§  22.  Frauds  perpetrated  under  cover  of  Liberal  Incorpora- 
tion Laws.  —  Moreover,  the  fact  that  frauds  are  committed 
by  abuse  of  the  incorporation  laws  should  not  be  allowed  to 
obscure  the  fact  that  such  frauds  are  small  in  comparison  with 
the  amount  of  good  that  is  accomplished  by  liberal  laws  liberally 
construed.  As  was  said  by  a  learned  English  judge  in  a  recent 
case,  "The  statutes  relating  to  limited  liability  have  probably 
done  more  than  any  legislation  of  the  last  fifty  years  to  further 
the  commercial  prosperity  of  the  country.  They  have,  to  the 
advantage  as  well  of  the  investor  as  of  the  public,  allowed  and 
encouraged  the  aggregation  of  small  or  comparatively  small 
sums  into  large  capitals  which  have  been  employed  in  under- 
takings of  great  public  utility,  largely  increasing  the  wealth  of 
the  country.  But  at  the  same  time  in  this  branch  of  the  law  the 
apathy  of  the  public  in  setting  the  law  in  motion  has,  I  will  not 
say  encouraged,  but  has  at  least  failed  to  repress,  grievous  frauds 
which  have  been  committed  and  too  often  have  gone  unpunished. 
Relatively,  I  think,  compared  with  the  advantages  which  have 
accrued  from  the  law  of  limited  liability,  the  mischief  of  such 
frauds  has  been  small,  but  when  regarded  not  relatively,  but 
absolutely,  the  frauds  which  have  been  committed  imder  cover 
of  these  acts  have  no  doubt  been  great."  ' 

'  London  &  Globe  Finance  Corp.  (1903),  1  Ch.  72S,  731-732,  per 
Buckley,  J. 

19 


§  23  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 


§   23- §   29.      CLASSIFICATION    OF    CORPORATIONS. 

§  23.  Distinction  between  Corporations  formed  under  Gen- 
eral Laws  and  Corporations  created  by  Special  Act.  —  The 
most  obvious  classification  of  ordinary  business  corporations 
merely  distinguishes  corporations  incorporated  by  special  act 
from  corporations  organized  under  general  laws.  The  gulf 
between  these  two  classes  of  corporations  is  so  great  that  little 
difficulty  can  be  experienced  in  distinguishing  between  them; 
but  occasionally  some  peculiar  company  is  encountered  which 
is  hard  to  classify.  ^Moreover,  ambiguous  expressions  may 
sometimes  be  used  in  statutes,  wills,  contracts,  and  so  forth, 
which  leave  a  doubt  whether  they  were  intended  to  apply  to 
both  or  to  one  only  of  these  two  great  divisions  of  corporations. 
For  instance,  in  England,  it  is  held  that  a  company  incorporated 
under  a  general  law  is  not  within  a  power  given  to  trustees  to 
invest  in  the  securities  of  a  "company  incorporated  by  Act  of 
Parliament."  ^  But  in  America,  a  corporation  organized  under 
a  general  enabling  act  has  been  held  to  be  a  company  "chartered 
by  law."  ^  The  provision  in  the  National  Bankruptcy  Act  ex- 
empting from  its  provisions  "banks  incorporated  under  state 
or  territorial  laws"  clearly  applies  to  a  company  incorporated 
for  banking  purposes  under  a  state  statute  providing  for  the 
formation  of  corporations  for  any  lawful  purpose  but  contain- 
ing no  particular  provisions  for  the  regulation  of  banks.^  Where 
an  act  of  the  legislature  consolidating  two  corporations  does  not 
create  a  new  corporation,  but  merely  enables  one  of  the  old  com- 
panies to  absorb  the  other,  the  amalgamated  company  is  not 
"incorporated  by  Act  of  Parliament."  * 

§  24.  Under  what  Statute  Corporation  is  deemed  to  be  formed. 
• —  Where  corporations  are  classified  with  respect  to  the  statutes 
under  which  they  are  respectively  incorporated,   a  company 

1  Re  Smith  (1896),  2  Ch.  590.  501,   508.     Compare  the  American 

But  see  Elve  v.  Boynton  (1891),  cases    on    the    question    whether   a 

1  Ch.  501.  special  act  amendatory  of  a  com- 

*  Lindsay,  etc.  Co.  v.  Mullen,  pany's  charter  is  within  a  constitu- 
176  U.  S.  126,  136-137 ;  20  Sup.  Ct.  tional  provision  prohibiting  incor- 
325.  poration  by  special  act:  Wallace  v. 

'  Oregon  Trust  &  Savings  Bank,  Loomis,  97  U.  S.  146,  and  1  Clark  & 
156  Fed.  319.  Marshall  on  Priv.  Corps.,  pp.  108, 

*  Elve  V.  Boynton  (1891),   1  Ch.    109. 

20 


§  l-§  30]  CLASSIFICATION  OF    CORPORATIONS  §  25 

whose  incorporation  paper  states  that  the  organization  is  under 
one  statute  whereas  the  objects  as  set  forth  in  the  instrument 
bring  the  company  within  anotlier  statute,  is  to  be  chtssed  as 
a  company  incorporated  under  the  last  mentioned  statute.' 

§  25.  Classification  with  respect  to  Liability  of  Members.  — 
Another  chissihcation  —  more  useful  in  England  than  in  the 
United  States  —  is  based  on  the  extent  of  the  members'  lia- 
bility for  the  company's  debts.  The  British  law  permits,  in  the 
first  place,  the  incorporation  of  companies  with  unlimited  lia- 
bility; but,  as  may  readily  be  understood,  companies  of  this 
sort  are  rarely  formed.  The  same  statute  authorizes  the  forma- 
tion of  "companies  limited  by  guarantee"  —  that  is,  compa- 
nies in  which  the  liability  of  their  members  is  limited  to  such 
amount  as  the  members  respectively  undertake  to  contribute 
to  the  assets  of  the  company  in  the  event  of  the  same  being 
wound-up.  Companies  of  this  class  are  also  comparatively 
uncommon.  In  by  far  the  most  usual  class  of  companies,  even 
in  England,  the  liability  of  the  members  is  limited  to  the  amount, 
if  any,  unpaid  on  the  shares  respectively  held  by  them.  Com- 
panies of  this  class  are  called  in  England  "companies  limited 
bv  shares."  The  first  of  these  three  classes  of  corporations  — 
that  is,  companies  with  unlimited  liability  —  may  exist  in  some 
few  of  the  United  States ;  but  in  this  country  generally  they  are 
not  met  with,  and  their  number  is  not  likely  to  increase.  The 
second  class,  or  companies  limited  by  guarantee,  are  nearly  if 
not  quite  unknown  in  America.  The  great  majority  of  business 
corporations,  in  the  United  States  as  well  as  in  England,  belong 
to  the  third  class,  or  companies  limited  by  shares.  Corpora- 
tions of  this  sort  are  in  this  country  called  joint-stock  corpora- 
tions. This  term  is,  to  be  sure,  somewhat  indefinite,  since 
it  would  include  joint- stock  companies  incorporated  without 
limited  liability;  but  it  is  convenient  and  sufficiently  accurate 
for  all  practical  purposes.  In  America,  some  liability  in  addi- 
tion to  the  liability  to  contribute  to  the  capital  the  amount,  if 
any,  unpaid  on  the  shares,  is  frequently  imposed  by  statute; 
but  these  statutory  liabilities  are  always  limited  in  amount  so 
that  they  do  not  destroy  the  character  of  the  corporations  as 
limited  liability  companies. 

'  International  Boom  Co.  v.  Rainy  Lake  River  Boom  Co.,  97  Minn.  513; 
107  N.  W.  735.    Cf.  infra,  §  63. 

21 


§  20  niSTORICAL    AND    INTRODUCTORY  [ClL\P.  I 

§  26-§  29.     Classification  with  respect  to  Objects. 

§  26.  Ancient  Classification.  —  The  old  classification  of 
corporations  with  reference  to  their  objects  as  civil  and  elee- 
mosynary, ecclesiastical  and  lay/  may  now  be  regarded  as 
obsolete,  at  least  in  America;  but  the  purposes  or  objects  of 
corporations  still  constitute  convenient  criteria  for  classifying 
corporations  and  for  distinguishing  between  them. 

§  27.  How  Objects  determined  for  Purposes  of  Classifica- 
tion. —  ^Yhen  a  classification  of  corporations  with  respect  to 
their  objects  or  purposes  is  employed,  reference  may  be  had 
either  to  the  objects  which  the  company  is  actually  pursuing 
or  to  those  which  it  is  authorized  to  pursue.  Thus,  in  order 
to  determine  whether  a  corporation  is  within  the  classes  of  com- 
panies which  are  subject  to  the  United  States  Bankrupt  Act  of 
1898,  regard  must  be  had  to  the  business  which  the  company 
is  in  fact  carrying  on  and  not  to  that  which  it  is  authorized  to 
carry  on  by  its  charter  or  incorporation  paper.^  On  the  other 
hand,  in  order  to  determine  whether  a  company  is  a  manufactur- 
ing company  within  the  Minnesota  laws  which  exempt  the 
shareholders  in  such  companies  from  liability  to  creditors,  the 
terms  of  the  incorporation  paper  and  not  the  business  which 
the  company  in  fact  conducts  must  control.^  So  the  question 
whether  a  certain  corporation  is  a  charitable  corporation  within 
the  meaning  of  the  rule  which  exempts  charitable  corporations 
from^  liability  for  the  torts  of  their  servants  must  be  determined 
exclusively  from  the  incorporation  paper.* 

§  28.  Municipal  Corporations,  Religious  and  Charitable  Cor- 
porations, Public-service  Corporations,  Financial  Corporations,  etc. 
—  In   classifying  corporations   with   respect   to   their   objects, 

'   1  Black.  Coram.  470.  Frisk-Turner    Co.,    71    Minn.    413; 

2  Tontine  Surety  Co.,  116  Fed.  74N.  W.  160;  70  Am.  St.  Rep.  334. 
401;    New  York,  etc.  Water  Co.,  98         *  Gitzhoffen    v.    Sisters    of    Holy 

Fed.   711;     Chicago-Joplin   Lead   &  Cross  Hospital  Ass'n  (Vtsih),  SSFac. 

Zinc  Co.,  104  Fed.  67.  691,  694-695;    Craig  v.  Benedictine 

But  see  Quimhy  Freight  Forward-  Sisters  Hospital  Ass'n,  88  Minn.  535 ; 

ing  Co.,    121    Fed.    139    (where   the  93  N.  W.  669. 

court    refused    to    regard    an    ultra         Cf.  People  ex  rel.  Board  of  Chari- 

vires  business  as  the  main  business),  ties  v.  A''.  Y.  Society  for  Prevention, 

'  First   Nat.    Bank   v.    Converse,  etc.,    161   N.   Y.  233,  239-240;    55 

200  U.  S.  425;    26    Sup.  Ct.  306;  N.  E.  1063  (as  to  what  corporations 

Gould  V.  Fuller,  79  Minn.  414;    82  are  subject  to  visitation  as  charitable 

N.  W.  673;    Nicollet  Nat.  Bank  v.  corporations). 

22 


§   l-§  30]  CLASSIFICATION    OF    CORPORATIONS 


29 


municipal  corporations,  or  corj)oratioMS  formed  to  act  as 
governmental  agents  of  the  state,  may  for  our  present  purpose 
be  put  on  one  side.  So,  too,  religious  and  charitable  cor- 
porations belong  in  a  class  to  themselves,  and  are  rarely  or 
never  formed  on  the  joint-stock  principle.  The  only  class  of 
corporations  with  which  we  are  now  directly  concerned  con- 
sists in  companies  incorporated  for  the  acquisition  of  gain  for 
their  members,  or,  to  use  a  popular  term,  "business  corpora- 
tions." '  Even  of  these,  those  that  are  organized  for  carrying 
on  some  public  calling,  such  as  railway  and  canal  companies, 
gas,  electric  light,  and  telegraph  companies  —  in  a  word  public 
service  corporations  —  are  governed,  in  some  respects,  by  rea- 
son of  their  semi-public  character,  by  principles  of  law  in  many 
respects  peculiar  to  themselves.  From  these  peculiar  features 
of  the  law  of  public-service  corporations,  the  general  law  of 
corporations  is  quite  di.stinct.  Furthermore,  some  corporations 
that  cannot  fairly  be  classified  as  public-service  companies  are 
organized  for  the  transaction  of  a  financial  business,^  such  as 
banks  and  trust  companies,  and  in  a  less  degree  insurance  and 
guaranty  companies,  so  that  some  peculiar  regulations  to  secure 
their  depositors,  cestuis  que  trust,  and  policy-holders  are  and 
should  be  imposed  upon  them ;  and  w^th  these  peculiar  regula- 
tions we  shall  have  nothing  to  do.  Our  consideration  shall  be 
confined  to  the  principles  of  law  applicable  to  all  joint-stock 
corporations,  limited  by  shares,  and  organized  for  the  acquisi- 
tion of  gain. 

§  29.  "Public"  and  "Private"  Corporations.  —  A  classifica- 
tion of  corporations  which  is  much  used  in  America  divides 
them  into  public  and  private  corporations.  Public  corporations 
include  nmnicipal  corporations,  and  others  formed  as  govern- 

'  Tlie    term  "  bvisiness    corpora-  Sweatt  v.  Boston,  etc.  R.  R.  Co.,  23 

tions  "  includes  railway  companies,  Fed.  Cas.  530,  535. 
Adams  v.  Boston,  etc.  R    R.  Co.,  1         As  to  what  is  a  corporation  formed 

Fed.  Cas.  90;    Winter  v.  Iowa,  etc.  for  profit,    see    State   v.   Home    Co- 

i?j/.  Co.,  2  Dill.  487  (headnote  inade-  operative  Union,  63   Ohio    St.    547; 

quate);     and    also    insurance    com-  59  N.  E.  220;  People  v.  Rose,   188 

pa-nies,  Hercules  Mut.  Life  Ass.  Soc,  111.    268;  59  N.  E.   432;  American 

12    Fed.   Cas.    12;     but   not   educa-  Matinee  Ass'n  v.  Secretary  of  State, 

tional     corporations     even     though  104  N.  W.  141 ;   140  Mich.  579. 
they  charge  for  tuition,    McLeod  v.  -  For  ca.ses  const niing  the  phrase 

Lincoln    Med.    College    (Nebr.),    96  "moneyed    corporations,"    see   that 

N.  W.  265,  266.     A  railroad  com-  title  in  Words  and  Phrases  Judicially 

pany  is  a  "commercial  corporation."  Defined,  Vol.  V,  p.  4569. 

23 


§  30  HISTORICAL    AND    INTRODUCTORY  [ClIAP.   I 

mental  agents  of  the  state.  Private  companies,  on  the  other 
hand,  are  all  corporations  organized  in  whole  or  in  part  for  pri- 
vate objects  or  under  the  control  of  private  individuals.  In 
this  sense,  all  railroad  and  other  public  service  companies  are 
private  corporations.  In  England,  the  terms  "public"  and 
"private"  are  not  applied  to  corporations  in  this  sense.  For 
example,  any  company  incorporated  under  the  Companies 
Acts,  its  constitution  being  matter  of  record  and  open  to 
public  inspection,  may  in  one  sense  be  deemed  a  public  com- 
panv.^  But  the  term  public,  as  distinguished  from  private, 
company  has  acquired  in  popular  English  usage  a  quite  differ- 
ent signification.  A  private  company,  in  this  popular  sense,  is 
a  company  whose  shares  are  not  intended  for  public  subscrip- 
tion ;  any  other  company  is  a  public  company.-  This  meaning 
is  not  attached  to  these  terms  anywhere  in  the  United  States. 


§30.  Nomenclature  —  "Corporations"  and  "Companies."  — 
In  America,  we  speak  of  any  association  of  individuals,  in- 
corporated or  unincorporated,  as  a  company.  In  England,  the 
latter  term  is  generally  applied  to  associations  organized  for 
the  transaction  of  some  ordinary  business.  It  is  the  usual  name 
for  w^iat  in  America  would  be  more  commonly  termed  a  private 
corporation. 

Of  course,  in  America  we  recognize  that  our  ordinary  cor- 
porations are  companies;^    and  indeed  the  word  "company" 

•  Cf.  Rickett  V.  Sharpe,  45  Ch.  D.  the  words  "public  company"  in  the 

286;    Re  Lysaght  (1898),  1  Ch.  115.  Apportionment    Act    of    1870    were 

^  Palmer's  Company  Law,  3d  ed.,  held  to  include   an   unincorporated 

260-261 ;  British  Seamless  Paper  Box  joint-stock    company  estabUshed  in 

Co.,  17  Ch.  D.  467,  479.  1843,  before  the  passage  of  the  first 

Cf.  Lamonby  v.  Carter  (1903),   1  Companies    Act,    under    a    deed    of 

Ch.  352  (where  the  phrase  "public  settlement).       See    also    Companies 

companies"  in  a  will  of  an  EngUsh  Act,  1907,  §  37,  where  a  legislative 

testator    was    held    to    refer    exclu-  definition    or   interpretation  of    the 

sively  to  British  companies);  Innes  words   "private  company"   will  be 

&  Co.  (1903),  2  Ch.  254,  266  (where  found. 

Cozens-Hardy,    L.    J.,    said:    "On  ^  Cf.  Van  Home  v.  State,  5  Ark. 

principle,  it  is  not  easy  to  appreciate  349,    352     (headnote    inadeciuate) ; 

the   distinction   between   a   private  Gillig,  Mott  &    Co.    v.   Independent 

company  and  a  public  company") ;  Gold,  etc.  Co.,  1  Nev.  247. 
Carr  v.  CJrifjith,  12  Ch.  D.  655  (where 

24 


§  l-§  30] 


NOMENCLATURE 


§30 


Co.,  9  Minn.  239;  Commonwealth  v. 
Reinoehl,  163  Pa.  St.  287;  29  Atl. 
896 ;  25  L.  R.  A.  247. 

a.  State  V.  Stone,  118  Mo.  388, 
397-399 ;  24  S.  W.  164 ;  25  L.  R.  A. 
243 ;  40  Am.  St.  Rep.  388 ;  Goddard 


has  been  thought  to  import  a  corporation  '  ahhou^li  a  large 
number  of  American  cases,  supported  by  legal  reasoning  as  well 
as  by  literary  and  popular  u.sage,  hold  that  the  word  is  equally 
applicable  to  some  unincorporated  associations.-  A  rnunici|)al 
corporation  is  not  properly  included  within  the  term  "incor- 
porated company."  ^ 

So,  Englishmen  recognize  that  their  companies  are  corpora- 
tions. But  as  a  matter  of  popular  nomenclature  the  term  cor- 
poration is  in  more  general  use  here,  while  the  term  company 
is  in  more  general  use  in  England.  For  in.stance,  we  speak 
in  America  of  corporation  law  while  an  Englishman  calls  the 
same  branch  of  jurisprudence  company  law.     It  has  been  held 

'  Broome  v.   Galena,   etc.    Packet    used  in  this  sense  or  as  indicating 

a  partnership  that,"  etc.) 

The  word  "company"  has  even 
been  Iield  to  apply  to  an  individual. 
Efland  v.  Southern  Ry.  Co.,  59  S.  E. 
355,  357  ;  Singer  Mfg.  Co.  v.  Wright, 
97  Ga.  114,  119-122  (headnote  in- 
V.  Chicago,  etc.  Ry.  Co.,  202  111.  302,  adequate) ;  25  S.  E.  249  ;  35  L.  R.  A. 
^  497  ;    Singer  Mfg.  Co.  v.  Wright,  33 

Fed.  121,  127  (semblc) ;  Chicago 
Dock  Co.  V.  Garrity,  115  111.  155,  164 
(headnote  inadequate) ;  3  N.  E.  448. 
But  this  meaning  is  quite  foreign  to 
the  word  itself  and  can  only  be 
adopted  in  order  to  carry  out  the 
intent  as  collected  from  tlie  context. 
Cf.  Goddard  v.  Chicago,  etc.  Ry.  Co., 
202   111.  362,  369;  66  N.  E.   1066. 

'  Kansas  City  v.  Vineyard,  128 
Mo.  75 ;   30  S.  W.  326. 

Cf.  Smith  V.  City  of  Janesville, 
52  Wise.  680,  682  (headnote  inade- 
quate);  9  N.  W.  789  (where  the 
phrase  "corporations  and  com- 
panies "  was  held  not  to  include  mu- 
nicipal corporations  on  the  ground 
that  "companies"  could  oniy  de- 
note private  associations  of  persons 
for  the  prosecution  of  some  enter- 
prise, wliile  the  generality  of  the 
word  "corporations"  should  be  re- 
strained by  the  principle  of  noscilur 
a  sociis) ;  Charlottesville  v.  Southern 
Ry.  Co.,  97  Va.  428,  431  (headnote 
inadequate) ;  34  S.  E.  98. 


369;  66  N.  E.   1066. 

*  Singer  Mfg.  Co.  v.  Wright,  33 
Fed.  121,  127  (headnote  inade- 
quate) ;  State  v.  Stone,  118  Mo.  388; 
24  S.  W.  164;  25  L.  R.  A.  243; 
Bradley  Fertilizer  Co.  v.  South  Pub- 
lishing Co.,  4  N.  Y.  Misc.  172,  176 
(headnote  inadequate) ;  23  N.  Y. 
Supp.  675;  Lee  Mut.  Fire  Ins.  Co. 
v.  State,  60  Miss.  395  (where  the 
words  "company"  and  "associa- 
tion" were  declared  to  be  syn- 
onymous) ;  State  v.  Mead,  27  Vt. 
722;  Gillig,  Mott  &  Co.  v.  Inde- 
pendent Gold,  etc.  Co.,  1  Nevada,  247, 
249. 

Cf.  Mills  v.  State,  23  Tex.  295 
(construing  the  word  "company" 
in  a  statute  as  appljang  only  to 
associations  composed  of  a  large 
number  of  persons  and  acting 
through  officers  and  not  to  an  ordi- 
nary co-partnersliip) ;  Palmer  v. 
Pinkham,  33  Me.  32,  36.  ("The 
proper  signification  of  the  word 
'company,'  when  applied  to  persons 
engaged  in  trade,  denotes  those 
united  for  the  same  purpose  or  in  a 
joint  concern.     It  is   so   commonly 


26 


§  30  HISTORICAL    AND    INTRODUCTORY  [ChAP.  I 

in  England  that  an  "industrial  and  provident  society,"  although 
a  corporation,  is  not  a  company.^  On  the  other  hand,  Buckley,  J., 
in  a  recent  case  gave  a  definition  of  a  company  which  is  equally 
applicable  in  the  United  States.  "The  word  'company,'"  said 
he,  "has  no  strictly  technical  meaning.  It  involves,  I  think, 
two  ideas  —  namely,  first  that  the  association  is  of  persons  so 
numerous  as  not  to  be  aptly  described  as  a  firm ;  and  secondly, 
that  the  consent  of  all  the  other  members  is  not  required  to 
the  transfer  of  a  member's  interest.  It  may  *  *  *  include 
corporation."  ^ 

'  Great  Northern  Ry.  Co.  v.  Coal        ^  Tennant   v.    Stanley    (1906),    1 
Co-operative  Soc.  (1896),  1  Ch.  187,    Ch.  131,  134. 
194. 


26 


CHAPTER   II 

THE  INCORPOllATION   PAPER 

Section 

Name  of  instrument 31 

Function  of  instrument 32-36 

In  general      32 

Dual  nature  of  instrument  —  a  statutory  condition  and  a  private 

contract 33 

Instrument  a-s  a  contract 34 

As  a  contract  with  the  State 35 

As  a  contract  by  the  subscribers  and  shareholders    ....  36 

Rules  for  construction  of  instrument 37-44 

In  general      37 

ApplicabiUty    of    rules    for    construction    of    special    acts    of 

incorporation 38-40 

In  general      38 

Whetlier  instrument  should  be  construed  most  strongly  in 

favor  of  state 39 

Oregon  Ry.  Co.  v.  Oregonian  Ry.  Co.,  130  U.  S.  1     .    .  40 

Construction  neither  strict  nor  liberal      41 

Liberal  construction  to  carry  out  ascertained  objects 42 

Entire  instrument  to  be  construed  together 43 

Parol  evidence  —  contemporaneous  internal  regulations  as  aid  in 

construction      44 

Division  of  instrument  into  paragraphs  or  clauses 45 

Object  clause 46-108 

Function  of  object  clause 46 

Comparative  advantages  of  broad   and   narrow  statements  of 

objects 47 

What  objects  are  authorized  by  incorporation  law  to  be  expressed 

in  the  object  clause  as  the  purpose  of  incorporation     .    .     48-63 
Under  statutes  specif  jnng  objects  for  which  alone  companies 

may  be  incorporated 48 

Under  statutes   permitting   incorporation   for   any   lawful 

purpose 49-63 

In  general      49 

Whether  more  than  one  object  may  be  specified    ...  50 

Insertion  of  subsidiary  objects  or  powers 51 

People  V.  Chicago  Gas  Trust  Co.,  130  111.  268   .    .  52 

Objects  must  be  consistent  with  nature  of  a  corporation  53 

Sale  of  company's  entire  business  as  one  of  objects  .    .  54 

American  cases 55 

Acting  as  agent  or  attorney 56 

Acting  as  trustee      57 

Acting  as  executor,  guardian,  etc 58 

Owning  shares  in  another  corporation 59 

27 


THE    INCORPORATION    PAPER  [ChAP.  II 

Object  clause  {continued).  Section 

Ownership  of  shares  with  ulterior  illegal  intent      .  60 

Amalgamation  with  other  corporations 61 

Unlawful  objects,  how  illegahty  determined 62 

Incorporation  for  a  purpose  provided  for  by  a  different 

statute 63 

What    powers    implied    without    express    mention    in    object 

clause 64-102 

In  general      64 

Caution  as  to  reliance  on  implications  of  law 65 

Caution  as   to  express  mention  of  powers  that  might  be 

implied  —  maxim  of  expressio  unius,  etc 66 

Necessity  for  draftsmen  of  incorporation  paper  to  consider 

what  objects  may  be  implied  —  scope  of  treatment  ...  67 

General  rules  as  to  implied  powers 68 

Power  to  borrow 69-74 

In  general      69 

Evasion  of  prohibition  of  borrowing 70 

Power  to  secure  indebtedness  by  mortgage 71 

Power  to  mortgage  uncalled  capital 72 

Power  to  issue  notes,  bonds,  etc.,  as  evidence  of  in- 
debtedness       73 

Power   to   issue  perpetual   or  irredeemable  bonds   or 

debentures 74 

Power  to  acquire  and  hold  property 75-76 

In  general 75 

Power  to  hold  as  joint-tenant  or  in  common    ....  76 

Power  of  alienation      77-79 

In  general      77 

Sale  of  entire  property,  business,  etc 78 

Sale  of  business  in  exchange  for  shares  in  another  cor- 
poration   79 

Power  to  abandon  some  of  company's  objects 80 

Power  to  become  member  of  another  corporation,  to  pur- 
chase shares  in  another  company      81-84 

In  general      81 

When  power  may  be  implied 82 

When  not  implied 83 

Effect  of  clause  specifying  acquisition  of  shares  in  other 

corporations  as  one  of  company's  objects 84 

Power  to  promote  other  corporations 85 

Power  to  become  member  of  partnership 86 

Power  to  contribute    to    public    objects,    recognize    moral 

obligations,  etc 87-90 

In  general      87 

Gratuities  to  directors 88 

Payment  of  gratuities  out  of  capital 89 

Whether  desirable  to  supplement  implied  powers  of  this 

kind  by  express  provisions 90 

Power  to  guarantee 91 

Power  to  lend 92 

Power  to  advertise 93 

Power  to  promote  or  oppose  bills  in  the  legislature  ....  94 

28 


§  31-§  162]  SYNOPSIS 

Object  clause  (continued).  Section 

Power  to  inform  shareholders  of  facts   likely  to  influence 

their  votes 95 

Power   to    take    measures  to  bring  out  full  vote  at  sliare- 

holders'  meeting 96 

Power  to  pay  counsel  fees  in  internal  contest 97 

Power  to  make  best  of  a  situation 98-102 

In  general      98 

Power  to  utilize  surplus  property 99 

Power  to  compromise      100 

Limits  of  powers  of  this  kind 101 

Whether  desirable  to  supplement  these  powers  ....  102 
Provisions  proliibiting  exercise  of  powers  that  might  otherwise 

be  implied 103 

General  statements  of  objects 104-108 

What  particularity  requisite  in  .stating  objects 104 

Construction    of    general   words   accompanied  by  particu- 
lars       10^108 

Particular  objects  followed   by  general   words   wliich 

standing  alone  w^ould  be  too  indefinite 105 

General  words  followed  by  particulars 106 

General  words  which,  although  accompanied   by  par- 
ticulars, are  not  too  indefinite  to  stand  alone   .    .    .  107 

Limits  of  maxim  noscitur  a  sociis 108 

Capital  clause 109-113 

Statement  of  amount  of  capital  and  number  of  shares   ....  109 

Division  of  shares  into  preferred  and  common,  etc 110 

Statement  as  to  habihty  of  shareholders Ill 

Statement  of  time  and  manner  of  payment  for  shares      ....  112 

Combination  of  joint-stock  plan  with  non-stock  plan 113 

Chief  office,  or  place  of  business,  clause 114 

Directors'  clause ^^^ 

Duration  of  corporate  existence  clause 116 

Name  clause      H' 

Indebtedness  clause 118 

Effect  of  failure  to  state  all  particulars  required  by  law 119 

Insertion  of  provisions  in  addition  to  those  required  by  law    .    .      120-122 

Right  to  insert  such  additional  provisions 120 

Unauthorized  as  distinguished  from  unnecessary  provisions  — 

effect  of  inserting 121 

What  provisions  are  unauthorized 122 

Incorporation  of  other  documents  into  the  instrument  by  reference  123 

Execution  of  in.strument 124-131 

In  general  —  signature,  number  of  subscribers,  etc 124 

Sealing  of  instrument      12o 

Acknowledgment  of  instrument 126 

Place  of  execution 12' 

Execution  of  duplicate  instruments      128 

Execution  and  deUvery  in  escrow 129 

Who  may  act  as  subscriber  of  instrument 130 

Signature  by  agent  or  attorney 131 

Function  of  subscribers  as  shareholders  or  otherwise 132 

Registration  of  instrument 133-137 

29 


§  31  THE  i:;cjurc)iiATioN  taper  [Chap.  II 

Registration  of  instrument  {continued).  Section 

Necessity  for  registration 133 

What  must  be  registered  —  copy  or  original 134 

What  amounts  to  registration 135 

Powers  and  duties  of  registrar 136 

Registration  in  more  tlian  one  office 137 

Publication  in  newspaper 138 

Submission  of  instrument  to  public  officer  for  approval   ....      139-142 
Examination  of  instrument  by  .registrar  when  paper  filed  for 

record 139 

Submission  to  some  other  officer  before  filing  for  record  ....  140 

Submission  by  way  of  petition  to  officer  for  issue  of  " charter"    .  141 
Issue  of  certificate  of  approval  by  registrar  or  other  officer  after 

registration  of  instrument 142 

Alteration  of  instrument  after  execution  and  before  registration    .    .  143 

Alteration  after  registration 144-160 

Alteration  of  instrument  generally  impossible  without  enabling 

statute 144 

Reformation  for  mistake 145 

Historical  outline  of  statutes  authorizing  alteration      146 

What  alterations  are  authorized  by  enabling  statutes  .    .    .      147-149 

In  general      147 

Under  British  Act  of  1890  and  similar  statutes 148 

Amended  provision  must  be  such  as  might  have  been  in- 
serted in  original  instrument  at  the  time  of  amendment  149 
Necessity  for  accompanying  amendment  by  change  of   name 

where  old  name  would  be  misleading 150 

Fees  payable  on  amendment      151 

Effect  of  alteration  upon  instrument  originally  void  or  upon  pre- 
vious invalid  amendment 152 

Alteration  against  opposition  of  minority  shareholders     ....  153 
Statute  allowing  amendment  unless  prohibited  by  original  in- 
strument      154 

Formahties  required  in  making  alteration 155 

Whether  alteration  should  be  made  by  directors  or  shareholders  156 

Irregular  alteration 157 

Amendment  not  retroactive 158 

Creation  of  new  corporation  by  means  of  amendment 159 

Legislative  alteration 160 

Constructive  notice  of  contents  of  instrument 161-162 

In  general      161 

Limits  of  doctrine  of  constructive  notice 162 


§  31.  Name  of  Instrument.  —  All,  or  almost  all,  general 
laws  for  the  formation  of  incorporated  joint-stock  companies 
resemble  each  other  in  this,  that  the  formal  organization  of  a 
corporation  thereunder  is  commenced  by  the  promoters  by  sign- 
ing and  depositing  for  record  a  document  which  states  the  name 
and  purposes  of  the  company,  the  amount  of  its  capital,  and  in 
some  other  particular  outlines  the  fundamental  constitution  of 

30 


§  31- §  162]  NAME    OF    INSTRUMENT  §  31 

the  corporation.  This  document  is  variously  termed  in  different 
locaHties.  Under  the  first  EngHsh  general  incorporation  law 
it  was  called  a  "deed  of  settlement";  but  this  term  is  no  loii<r(.T 
in  use  on  either  side  ol"  the  Atlantic.  In  some  (jf  the  American 
states  it  is  called  "articles  of  association";  but  that  term  is 
ambiguous  and  objectionable,  because  in  England  it  bears  a 
totally  different  signification,  designating,  as  already  stated,  reg- 
ulations for  the  company's  management  which  partake  of  the 
nature  of  mere  by-laws.'  The  term  "articles  of  incorporation" 
is  sometimes  used,  but  this  likewise  is  ol)jectionai)le,  because 
the  word  "articles"  may  lead  to  confusion  with  the  English 
"articles  of  association,"^ — a  phrase  popularly  abbreviated  in 
England  to  "articles,"  —  which,  as  just  mentioned,  have  a  very 
different  nature  and  office.  In  some  of  the  United  States  the 
document  is  called  a  "certificate  of  incorporation";  but  that 
name  too  is  unfortunate,  for  it  is  applied  also  —  and  with  much 
appropriateness  —  to  a  certificate  issued  by  some  public  officer 
stating  or  certifying  that  the  requirements  of  the  law  have  been 
complied  with  in  the  formation  of  a  certain  company,  and  that 
the  company  is  therefore  a  corporation.  The  term  "charter" 
is  sometimes  used  in  America ;  ^  but  this  use  is  popular  rather 
than  legal ,^  and  is  not  to  be  commended.  A  charter,  in  Eng- 
lish law,  properly  denotes  an  instrument  which  confers  special 
privileges ;  and  while  in  America  it  is  perverted  from  its  original 
meaning  so  as  to  include  a  legislative  grant  of  corporate  privileges 
by  a  special  act  of  incorporation*  as  well  as  a  royal  charter,  — 
its  primary  signification,  —  yet  it  cannot,  except  by  a  figure  of 
speech,  be  applied  to  a  paper  drawn  up  in  pursuance  of  a  general 
law  that  offers  the  same  privileges  to  all  persons  upon  the  same 
terms.  The  name  which  is  now  used  in  England  is  "memo- 
randum of  association."  It  does  not  seem  to  have  gained  cur- 
rency in  America ;  but  it  is  unambiguous  and  appropriate.  The 
only  objection  that  might  be  urged  against  the  proprietv  of  this 
designation   is  that  the   word   "memorandum"   may   seem   to 

'  Supra,  §  11,  and  infra  §  6S3.  ter"  i.s  the  name  used  by  the  legis- 

*  See  New  Orleans  Xat.  Banking  lature  in  the  incorporation  law.  See 
Ass'n  \.  Wiltz,  10  Fed.  330;  Cuylcr  Kaiser  v.  Lawrence  Sav.  Bank,  56 
V.  City  Power  Co.,  74  Minn.  22;  76  Iowa,  104,  105;  S  N.  W.  772;  41 
N.  W.  948;    Red  Men's  Mutual  Re-  Am.  Rep.  85. 

lief  Ass'n,  10  Phila.  546.  *  Cf.    supra,    §   4,  as    to    EngHsh 

*  In  some  states,  however,  "char-     usage. 

31 


§  32  THE    INCORPORATION    PAPER  [ChAP.  II 

imply  a  less  formal  document  than  one  which  constitutes  the 
very  foundation  and  charter  of  a  corporation's  existence,  and 
which  is  or  should  be  drawn  up  with  the  greatest  possible  care 
and  formality.  A  colorless  and  unobjectionable  name  is  "in- 
corporation paper."  As  this  term  does  not  seem  to  have  been 
used  in  any  state  or  country  as  a  special  designation  of  the  in- 
strument under  the  local  laws,  it  commends  itself  by  virtue  of 
its  very  generality,  and  is  accordingly  used  throughout  this 
work. 

§  32- §  36.     Function  of  Instrument. 

§  32.  In  general.  —  The  importance  of  this  paper  can  hardly 
be  exaggerated.  It  takes  the  place  of,  and  in  America,  as  we 
have  seen,  is  sometimes  called,  a  charter  of  incorporation.  It 
delineates  the  limits  of  the  company's  powers,  and  the  exercise 
of  any  power  for  which  authority,  express  or  implied,  cannot  be 
found  in  this  instrument  is  ultra  vires  of  the  corporation.  It 
marks  out  not  merely  the  powers  and  objects  of  the  company, 
but  also  in  some  measure  the  means  by  which  those  objects  may 
be  pursued.  Thus,  it  prescribes  the  amount  of  the  capital  stock 
and  the  number  of  shares  into  which  it  is  divided.  It  is  the  con- 
stitution of  the  corporation,  and,  subject  only  to  the  laws  of  the 
land,  the  supreme  law  of  its  government  and  being.  "The 
memorandum  of  association  is  as  it  were  the  area  beyond  which 
the  action  of  the  company  cannot  go."  ' 

§  33.  Dual  Nature  —  A  statutory  Condition  and  a  private  Con- 
tract. —  An  incorporation  paper,  or  memorandum  of  associa- 
tion, has  a  double  function.  In  the  first  place,  it  operates 
as  a  compliance  with  the  statutory  conditions  necessary  to  secure 
the  benefits  of  corporate  existence;  it  is  a  talisman,  an  open- 
sesame,  required  by  sheer  force  of  positive  law.  In  the  second 
place,  it  is  a  private  contract  between  the  members  of  the  com- 
pany, and  performs  the  same  function  as  the  articles  of  partner- 
ship of  an  ordinary  firm,  or,  to  use  a  still  closer  analogy,  of  an 
unincorporated  joint-stock  company.  In  this  aspect,  the  in- 
strument derives  its  efficacy,  not  from  the  incorporation  law 
or  companies  act,  but  from  the  common  law  of  contracts,  of 
copartnerships  and  joint  enterprises;  and  accordingly  its  pro- 
visions are  effective  to  the  same  extent  as  similar  provisions  in 

^  Ashbury  Ry.  Carriage  Co.  v.  Riche,  7  H.  L.  653,  671,  per  Lord  Cairns. 

32 


§  31-§  1G2]  FUNCTION    OF    INSTRUMENT  §  30 

the  articles  of  agreement  of  a  copartnership  or  unincorporated 
joint-stock  company,  except  in  so  far  as  the  statute  under  which 
the  company  is  incorporated  may  otherwise  provide.  This 
second  aspect  and  function  of  a  memorandum  of  association 
or  incorporation  paper  is  sometimes  lost  from  sight ;  and  in 
consequence  of  such  a  one-sided  view  there  arises  a  narrowness 
of  construction  which  deprives  the  people  of  that  elasticity  in 
corporate  organization  which  modern  incorporation  laws,  fairly 
construed,  ought  to  secure.  Happily  this  one-sided,  partial 
view  of  the  subject,  which  is  a  survival  of  the  old  conception  of 
all  corporations  as  chartered  monsters,  is  much  less  common 
now  than  formerly.  The  English  courts  have  never  confu.sed 
the  modern  incorporated  partnerships  formed  under  general 
incorporation  laws  with  the  old  chartered  corporations;  and 
but  few  of  the  American  courts  still  fail  to  recognize  the  true 
breadth  and  significance  of  this  distinction.  The  dual  nature 
of  a  memorandum  of  association  or  incorporation  paper  is 
fundamental. 

§  34.  Instrument  as  a  Contract.  —  An  incorporation  paper 
is,  therefore,  properly  referred  to  as  a  contract.  Indeed,  it  is 
a  bundle  of  contracts. 

§  35.  As  a  Contract  with  the  State.  —  In  the  first  place,  it 
is  said  to  be  a  contract  by  the  State  with  the  corporators.  This 
notion  originated  with  royal  charters  of  incorporation,  which 
might  not  inaptly  be  deemed  grants  or  contracts  by  the  sovereign,^ 
and  was  then  applied  to  special  acts  of  incorporation,  and  has 
finally  been  extended  to  incorporation  papers  under  general 
laws.^  With  almost  equal  propriety,  ordinary  articles  of  partner- 
ship might  be  said  to  be  a  contract  between  the  state  and  the 
partners.  However,  the  aspect  of  an  incorporation  paper  as  a 
contract  between  the  corporators  and  the  state  pertains  to  the 
domain  of  constitutional  law,  and  therefore  need  not  be  further 
considered  in  this  work. 

§  36.  As  Contract  between  Subscribers  or  Shareholders.  — 
In  the  second  place,  every  incorporation  paper  is  indubitably 
a  contract  in  the  strictest  sense  between  the  several  signatories, 

'  Dartmouth  College  v.  Woodward,  v.  State,  15  Wall.  478,  492  (semble) ; 
4  Wheat.  518.  Garey  v.  St.  Joe  Mining  Co.  (Utah), 

»  Chicago,  etc.'R.  R.  Co.  v.  Iowa,     91  Pac.  3G9. 
94  U.S.  155.   161  (semble);    Miller 
VOL.  I.  —  3  33 


§  o7  THE    INCORPORATION    PAPER  [ChAP.  II 

and  between  the  persons  who  may  subsequently  become  share- 
holders.' A  section  of  the  English  Companies  Act,  which  has 
been  referred  to  above,  provides  that  the  several  members  of 
the  company  shall  be  bound  by  the  memorandum  of  associa- 
tion to  the  same  extent  as  if  they  had  signed  and  sealed  it,  and 
as  if  it  had  contained  a  covenant  on  their  part  to  abide  by  its 
terms.  But  this  express  provision  is  declaratory  merely,  exc?pt 
in  so  far  as  by  virtue  of  its  provisions  the  several  shareholders 
are  bound  as  by  a  specialty  whereas  otherwise  they  would  be 
bound  by  simple  contract  merely.  But  even  according  to  this 
emphatic  and  express  provision  of  the  British  statute,  the  share- 
holders are  bound,  probably,  only  in  their  capacity  as  share- 
holders. At  all  events,  the  document  is  only  a  contract  between 
the  shareholders  inter  sese,  and  gives  no  right  of  action  to  a 
stranger  against  the  company.^ 

§  37- §  44.      RULES    FOR    CONSTRUCTION    OF    INSTRUMENT. 

§  37.  In  general.  —  The  general  principles  of  construction 
applicable  to  these  incorporation  papers  are  not  very  fully 
worked  out  in  the  decisions,  probably  because  those  principles 
do  not  greatly  differ  from  the  rules  for  the  interpretation  of  other 
written  instruments  or  contracts.  Thus,  as  in  the  case  of  other 
written  instruments,  the  construction  of  an  incorporation  paper 
is  for  the  court  rather  than  the  jury.^ 

§  38-§  40.     Applicability  of  Rules  for  Construction  of  Special 
Acts  of  Incorporation. 

§  38.  In  general,  —  As  an  incorporation  paper  stands  in  the 
place  of  a  special  act  of  incorporation,  either  one  being  a  com- 
pany's fundamental  constitution  and  marking  out  the  objects 
and  purposes  of  its  existence,  the  rules  of  construction  which 

'  Loewenthal  v.  Rubber  Reclaim-  Rubber  Works,  31  Vict.  L.  R.  754. 

in^  Co.  52  N.  J.  Eq.  440;    28  Atl.  These  cases  related  to  "articles  of 

454 ;   Garey    v.  St.  Joe  Mining  Co.  association " ;      but     precisely     the 

(Utah),  91    Pac.   369,  where  it  was  same  principles  in  this  respect  would 

said  that  the  instrument  is  a  con-  apply  to  a  memorandum  of  associa- 

tract  between   the  corporation  and  tion  or  incorporation  paper.    For  the 

the  stockholders.  similar  rule  with  regard  to  by-laws 

'  Cf.  Eley  V.  Positive,  etc.  Ass.  Co.,  see  infra,  §  737. 
1  Ex.  D.  88;   Browne  v.  La  Trinidad,  '  Groeltz  v.  Armstrong  Real  Estate 

37  Ch.  D.   1,  13;    Glass  v.  Pioneer  Co.,  89  N.  W.  21*;    115  Iowa  602. 

34 


§  31-§   1G2]  RULES    FOR    CONSTRUCTION  §   39 

have  become  established  with  reference  to  special  acts  of  incor- 
poration, will  naturally  be  looked  to  as  authority  for  the  con- 
struction of  incorporation  papers  under  general  laws.'  This  is 
not  merely  natural  but  also  justifiable  and  indeed  necessary. 
Yet  the  ditt'epences  between  the  two  classes  of  instruments 
should  not  be  disregarded.^  A  special  act  of  incorporation  is  a 
statute;  an  incorporation  paper  under  general  law  is  a  private 
contract.  The  one  is  the  language  of  the  state,  speaking  by  its 
legislature;  the  other  is  the  language  of  the  individual  cor- 
porators or  promoters.  Consecjuently,  in  the  construction  of 
the  former  the  intention  of  the  legislature  so  far  as  ascertainable 
from  the  language  employed  should  govern ;  in  the  construc- 
tion of  the  latter,  the  intention  of  the  corporators  is  in  like 
manner  contiolling.^ 

§  39.  Whether  Instrument  should  be  construed  most  strongly 
in  Favor  of  State.  —  Now,  the  well-settled  and  cardinal  rule  for 
the  construction  of  special  acts  of  incorporation  is  that  they 
are  to  be  taken  most  strongly  in  favor  of  the  public.^  Nothing 
passes  from  the  sovereign  by  implication.  And  the  reason  for 
this  rule  is  that  the  state  in  conferring  a  special  act  of  incor- 
poration is  granting  special  privileges,  and  that  the  language  of 
the  legislature  must  always  be  taken  most  strongly  in  favor  of 
their  cestuis  que  trust,  the  people.  On  principle,  it  is  difficult  to 
see  how  this  rule  can  be  applicable  to  an  incorporation  paper. 
For  the  promoters  by  whom  it  is  framed  are  not  public  servants, 
are  under  no  duty  to  safeguard  the  interests  of  the  public;  and 
yet  as  we  have  seen  it  is  their  intention  which  the  courts  in  con- 

*  See  1  Morawetz  on  Priv.  Corps.,  quoted  below  p.  37  note  4) ;   Kings- 

2d   Ed.,    §  318,  where    the    learned  bury  Collieries  and  Moore's  Contract 

author   asserts    broadly    that    "the  (1907),  2  Ch.  259,  266-267. 
same  rules  of  construction  apply  to         '  Cf.  Riker  v.  Leo,  133  N.  Y.  519; 

articles    of    incorporation    adopted  30  N.  E.  598 ;   Receivership  of  {Mer- 

pursuant  to  general  laws,  as  to  char-  chants    Xat.     Bank    v.)     Minnesota 

ters    of    incorporation    granteil    by  Thresher  Mfg.  Co.,  95  N.  W.   767; 

special  acts  of  the  legislature."     Cf.  90  Minn.   144 ;    Senvur  Mfg.  Co.  v. 

llockhold  V.  Canton  Masonic  Benev.  Church  Paint,  etc.  Co.,  81  Minn.  294, 

Soc,   129   111.    440,  455-456  (where  298;  84  N.  W.  109  ("Tlie  intention 

t!ie  language  of   the  court  is  more  of  the  corporation  must  control "). 
cautious  and  less  sweeping  than  the  *  Charles  River  Bridge  v.  Warren 

I  eadnote  would  indicate);  21  N.  E.  Bridge,  11  Pet.  420;    Proprietors  of 

794  ;  2  L.  R.  A.  420.  Stourbridge  Canal  v.   Wheeley,  2  B. 

'  Cf.  Atty. -Gen.  \.  Mersey  Ry.  Co.  &    Ad.   792;    Edgewood    Borough  v. 

(1907),    1    Ch.    81,    101    (a   passage  Scott,  29  Pa.  Super.  Ct.  156. 

35 


§  40  THE    INCORPORATION    PAPER  [ChAP.  II 

struing  the  instrument  must  endeavor  to  ascertain.  How  can 
the  construction  of  such  a  document,  dependent  upon  the 
intention  of  mere  private  individuals,  be  either  favorable  or 
unfavorable  to  the  public?  It  is  a  private  matter  with  which 
the  public  have  no  concern.  As  well  might  one  say  that  articles 
of  partnership  should  be  taken  most  strongly  against  the  part- 
ners and  in  favor  of  the  state. 

§  40.  Oregon  Railway  Company  v.  Oregonian  Railway 
Company.  —  A  case  of  high  authority  which  may  be  thought  to 
militate  against  the  views  advocated  in  the  last  paragraph  is 
Oregon  Railway  Company  v.  Oregonian  Railway  Company} 
There  Mr.  Justice  Miller  in  delivering  the  judgment  of  the 
court,  after  stating  the  rule  that  special  acts  of  incorporation 
shall  be  construed  most  strongly  in  favor  of  the  state  and  against 
the  corporation,  added,  "How  much  more,  then,  should  this 
rule  be  applied,  and  with  how  much  more  reason  should  a  court, 
called  upon  to  determine  the  powers  granted  by  these  articles  of 
association,  construe  them  rigidly,  with  the  stronger  leaning  in 
doubtful  cases  in  favor  of  the  public  and  against  the  private 
corporation."  And  the  reporter  in  the  headnote  states  as  one  of 
the  leading  propositions  for  which  the  case  stands  that  "this 
rule  of  construction  applies  with  still  greater  force  to  articles  of 
association  organizing  a  corporation  under  general  laws." 
Nevertheless,  a  careful  examination  of  the  case  will  reveal  that 
the  decision  really  stands  for  nothing  of  the  sort.  The  case  was 
this :  a  corporation  had  been  formed  in  England  under  the 
Companies  Act  of  1862  by  the  name  of  the  Oregonian  Railway 
Company,  having  power  according  to  its  memorandum  of  asso- 
ciation to  construct,  own,  operate,  and  to  lease,  sell,  or  purchase 
lines  of  railway  in  the  State  of  Oregon.  Another  company, 
known  as  the  Oregon  Railway  Company,  was  formed  under  the 
general  laws  of  Oregon,  which  provided  for  the  organization  of 
corporations  for  any  "lawful  enterprise,  business,  pursuit  or 
occupation,"  that  might  be  specified  in  the  "articles  of  incor- 
poration." The  articles  of  incorporation  of  this  latter  company 
purported  to  clothe  it  with  power  to  construct,  purchase,  or 
lease  railways  in  the  State  of  Oregon.  Accordingly,  the  English 
company,  having  built  a  line  of  railroad  in  Oregon  leased  the 
same  for  a  term  of  years  to  the  Oregon  company;    and  the 

>  Oregon  Ry.  Co.  v.  Oregonian  Ry.  Co.,  130  U.  S.  1 ;  9  S.  Ct.  409, 

36 


§  31-§   1(52]  RULES    FOR    rOXSTHUCTIOV  §  40 

f|iie.stion  was  whether  this  lease  was  lawful  and  valid.  As  the 
inc()r[)()ration  papers  of  both  the  English  company  and  the 
Oregon  company  purported  expressly  to  confer  the  power  to 
make  or  take  leases  of  railways,  no-(jiiestion  arose  or  could  have 
arisen  in  the  case  as  to  the  pro[)er  rules  for  the  ccnistruction  of 
incorporation  papers;  and  the  only  question  was  whether  the 
clauses  in  the  incorporation  papers  which  attempted  to  confer 
these  powers  upon  the  corporations  were  valid  and  operative 
under  the  laws  of  Oregon.  As  the  court  itself  said:  "The 
memorandum  made  under  the  Companies'  Act  of  1.S02  bv  the 
plaintilf  and  the  articles  of  association  made  under  the  laws  of 
Oregon  by  the  defendant  both  contain  declarations  of  the 
powers  of  these  companies  and  of  each  of  them  to  buy  or  sell  or 
lease  railroads.  The  only  question,  therefore,  to  be  considered 
is  whether  this  declaration  of  power  is  authorized  by  the  laws 
of  Oregon."  ^  Hence,  anything  that  may  have  fallen  from  the 
court  to  the  effect  that  an  incorporation  paper  should  be  con- 
strued most  strongly  against  the  company  and  in  favor  of  the 
public  was  altogether  and  confessedly  obiter.-  The  proposition 
for  which  the  case  really  stands  is  that  a  general  incorporation 
law,  like  other  statutes,  is  to  be  taken  most  strongly  in  favor  of 
the  state.^  For  reasons  already  mentioned,  it  is  submitted  that 
this  rule,  which  is  quite  proper  in  the  interpretation  of  statutes, 
is  wholly  inapplicable  in  the  construction  of  an  incorporation 
paper.* 


'  130  U.  S.  24-25.  Ry.  Co.  (1907),  1  Ch.  81,  106,  where 
^  The  dictum  was,  however,  re-  Vaughan   Williams,  J.,  said,   "You 
ferred  to  with  approval  in   Central  ought  to  give  a  wider  construction 
Transportation  Co.  v.  Pullman's,  etc.  to  the  words  of  a  memorantlum  of 
Co.,   139    U.   S.   24,   49;     US.   Ct.  association  creating  and  defining  the 
478.  powers  of  a  purely  commercial  corn- 
See  also  Hamilton  Xat.  Bank  v.  pany  having  no  compulsory  powers 
American  Loan,  etc.  Co.,  92  N.  W.  and  no  monopoly  than  you  would 
189,    192  ;     66   Nebr.    77 ;     City   of  give  to  the  words  of  a  statute  creat- 
Goodland  v.  Bank  of  Darlington,  74  ing  a  company,  like  a  railway  com- 
Mo.  App.  365,  370.  pany,  having  compulsorj'  powers  of 
'  In  support  of  this  proposition,  land  purchase  and  a  practical  monop- 
which  is  clearly  soimd,  see  also.  City  oly."      This    language    was    quoted 
of  Goodkvui  V.  Bank  of  Darlington,  with    approval    in    Kingsbury    Col- 
74  Mo.  App.  365.  leries  and  Moore's    Contract  (1907), 
*  Cf.  Attorney-General  v.  Mersey  2  Ch.  259,  266-7. 

37 


§  41  THE    INCORPORATION    PAPER  [ChAP.  11 

§  41.  Construction  neither  Strict  nor  Liberal.  —  At  any  rate, 
the  general  principle  is  settled,  on  the  one  hand,  that  no 
extension  of  the  terms  of  the  instrument  is  permissible  by  con- 
struction, and  on  the  other  hand  that  its  meaning  is  not  to  be 
restricted  by  a  narrow  interpretation.  Said  Vice-Chancellor 
Bacon  in  an  important  case  upon  this  subject:  "I  wholly  re- 
pudiate the  notion  that  I  am  at  liberty  to  adopt  what  has  some- 
times been  called  a  '  liberal'  construction.  I  have  no  more  right 
to  do  that  on  the  one  hand  than  I  am  at  liberty  on  the  other  to 
adopt  a  more  rigorous  or  strict  construction  than  the  express 
stipulations  of  the  instruments  require.  AYhat  the  law  requires 
and  what  I  am  called  upon  to  do  is  to  put  a  just  construction, 
and  no  other,  upon  these  instruments."  ^ 

§  42.  Liberal  Construction  to  carry  out  ascertained  Objects. 
—  Although  when  a  court  is  endeavoring  to  ascertain  from  the 
incorporation  paper  the  objects  for  which  a  corporation  is 
formed,  the  construction,  as  we  have  just  seen,  should  be  neither 
strict  nor  liberal,  but  just;  yet  when  the  objects  of  the  company 
have  been  determined,  the  tendency  of  the  courts  is,  and  should 
be,  to  allow  the  greatest  possible  latitude  to  the  company  in  the 
choice  of  the  means  by  which  those  objects  are  to  be  attained. 
The  general  rule  being  that  all  means  that  are  reasonably  con- 
ducive to  the  objects  of  the  incorporation  and  not  prohibited 
are  permitted,  the  courts  will  not  incline  to  extend  any  restric- 
tions that  the  incorporation  paper  may  contain  in  respect  to  the 
means  that  may  be  employed  in  prosecuting  the  company's  ends. 
To  that  extent,  the  construction  of  an  incorporation  paper  will 
be  "liberal  to  carry  out  the  purposes  of  the  company's  forma- 
tion,"^ but  this  "liberal"  construction  cannot  be  resorted  to 
where  the  object  of  the  interpretation  is  to  discover  what  these 
purposes  are. 

§  43.  Entire  Instrument  to  be  construed  together.  — -  The 
entire  instrument  must  be  construed  together.  Hence,  the  cor- 
porate name  may  be  considered  in  the  construction  of  the  clause 


'  London     Financial     Ass^n     v.  Swinfen    Eady,    J.,    in   Stephens   v. 

Kelk,  26  Ch.  D.  107,  134.  Mysore    Reefs    (Kangundy)    Mining 

2  "  It  is  right  to  give  a  liberal  con-  Co.    (1902),    1    Ch.    745,    749.      Cf. 

struction  to  these  subsidiary  para-  Louisville,  etc.  Ry.  Co.  v.  Flanagan, 

graplis  to  enable  the  main  object  of  113  Ind.  4SS,  495,  14  N.  E.  370;    3 

the  company  to  be  carried  out,"  per  Am.  St.  Ilc[).  G74. 

38 


§  31-§  1G2] 


PAROL    EVIDENCE 


§44 


prescribing  the  company's  objects.'  A  fortiori,  "the  general 
object  of  the  corporation  is  to  l)e  gathered  not  from  any  one  of 
the  specifications  but  from  the  whole  of  the  paragra{)h  "  wliich 
states  the  objects  or  purjxises  of  tiie  company.'- 

§  44.  Parol  Evidence  —  Contemporaneous  Internal  Regida- 
tiotis  as  Aid  in  Construction.  — To  aid  in  the  construction  of  an 
incorporation  paper,  parol  evidence  it  seems  is  admissible  to 
the  same  extent  and  with  the  same  restrictions  as  in  the  case  of 
other  documents  formally  drawn  up  and  recorded.^  Thus, 
parol  evidence  is  not  admissible  to  show  that  the  objects  of  the 
company  were  in  fact  incorrectly  or  inadequately  set  out  in  the 
incorporation  paper.*  To  be  sure,  English  judges  have  gone  so 
far  as  to  declare  that  in  construing  a  memorandum  of  associa- 
tion contemporaneous  articles  of  association  "may  be  properly 
considered  for  the  purpose  of  explaining  the  terms  and  expres- 


'  See  infra  §  62,  §  117  and  §  462. 
But  cf.  International  Bonm  Co.  v. 
Rainy  Lake  River  Boo/n  Co.,  97 
Minn.  513;    107  N.  W.  73o. 

'  Ellerman  v.  Chicago  Junction 
Rys.,  etc.  Co.,  49  N.  J.  Eq.  217,  239; 
23  Atl.  287. 

'  "  If  any  doubt  arises  as  to  the 
true  intent  and  meaning  of  the  words 
employed,  it  is  essentially  requisite 
that  the  subject  to  which  the  words 
relate  should  be  distinctly  under- 
stood ;  and  to  this  end  it  may  at  all 
times  be  convenient,  and  in  some 
cases  necessary,  to  have  regard  to 
the  circumstances  attending  and 
relating  to  the  subject,  to  the  inter- 
ests comprised  in  it,  to  the  parties 
to  it,  and  most  especially  to  its 
avowed,  expressed  and  of  necessity 
implied,  objects.  Upon  these  prin- 
ciples and  rules  I  am  called  upon  to 
construe  this  memorandum."  Per 
Bacon,  V.  C,  in  London  Financial 
Ass'n  V.  Kelk,  26  Ch.  D.  107,  134. 

Cf.  Receivership  of  {Merchants' 
Nat.  Bank  v.)  Minnesota  Thresher 
Mfg.  Co.,  95  N.  W.  767;  90  Minn. 
144;  Senour  Mfg.  Co.  v.  Church 
Paint,  etc.  Co.,  81  Minn.  294;  84 
N.  W.  109;  National  Mechanical 
Directory   Co.,    121    Fed.    742;     58 


C.  C.  A.  24;  Rehbein  v.  Rahr,  109 
Wise.  136,  145-146;    85  N.  W.  315. 

*  Craig  v.  Benedictine  Sisters  Hos- 
pital Ass'n,  88  Minn.  535;  93  N.  W. 
669 ;  Gitzhoffen  v.  Sisters  of  Holy 
Cross  Hospital  Ass'n  (Utah),  88  Pac. 
691,  694-095;  City  of  Kalamazoo 
v.  Kalamazoo,  etc.  Power  Co.,  124 
Mich.  74,  81-82  (attempt  to  limit 
by  parol  evidence  general  objects 
expressed  in  incorporation  paper). 
Doubtless  this  rule  wouUl  not  apply 
in  a  proceeding  by  the  state  to  oust 
the  company  from  its  francliises  on 
the  ground  that  the  real  objects 
were  unlawful.     See  infra,  §  300. 

Cf.  Attorney-General  ex  rel.  Miner 
V.  Lorman,  59  Mich.  157;  26  N.  W. 
311;  60  Am.  Rep.  287;  State  v. 
Neiv  Orleans  Water  Supply  Co.,  36 
So.  117,  122;  111  La.  1049  ("The 
question  whether  a  corporation  has 
been  organized  for  an  illegal  purpose 
must  be  determined  by  the  provisions 
of  its  charter  and  not  by  the  declara- 
tions of  its  officers  or  agents"); 
Detroit  Drilling  Club  v.  Fitzgerald, 
109  Mich.  670,  675;  67  N.  W.  899 
("The  purposes  of  the  corporation 
or  association  are  to  be  determined 
by  the  statement  in  its  articles  of 
as.sociation. "). 


39 


§  45  THE    INCORPORATION    PAPER  [ChAP.  II 

sions  of  the  memorandum  whenever  it  is  just  and  reasonable  so 
to  refer."  ^  But,  as  it  is  well  settled  that  the  articles  of  an  Eng- 
lish corporation  cannot  in  any  way  add  to  or  control  the  memo- 
randum, any  resort  to  the  articles  to  aid  in  its  construction  is 
dangerous  in  the  extreme,  and  has  been  disapproved  by  one  of 
the  ablest  of  modern  English  judges.^  A  recent  case  intimates 
that  reference  to  the  contemporaneous  articles  is  permissible 
onlv  for  the  purpose  of  construing  those  parts  of  the  memoran- 
dum of  association  which  relate  to  matters  not  required  by  the 
statute  to  be  stated  in  that  instrument.^  The  question  is  per- 
haps of  but  little  practical  importance  in  the  United  States;  for 
the  by-laws  of  an  American  company  which  perform  in  some 
ways  the  same  functions  as  English  articles  of  association  are 
not,  like  the  latter,  matter  of  public  record;  and  therefore, 
whatever  may  be  the  case  with  respect  to  English  articles,  it  will 
hardly  be  contended  that  by-laws,  even  if  drawn  up  contem- 
poraneously with  the  incorporation  of  the  company,  can  be  used 
in  any  way  as  a  key  to  the  meaning  of  the  incorporation  paper.* 


§  45.  Division  of  Instrument  into  Paragraphs  or  Clauses.  — 
An  incorporation  paper  is  usually  divided  into  paragraphs  or 
clauses,  each  of  which  contains  some  statutory  requirement. 
Thus,  we  may  distinguish  the  object  clause,  the  capital  clause, 
the  chief-office  clause,  and  so  forth. 


*  London  Financial  Ass'n  v.  Kelk,  introduced  for  the  benefit  of  the 
26  Ch.  D.  107,  135,  138;  Fisher  v.  creditors,  and  the  outside  public 
Black  &  White  Publishing  Co.  {I'dQl),  as  well  as  the  shareholders.  The 
1  Ch.  174,  180-182  (per  Vaughan  articles  of  association  are  the  inter- 
Williams.  J.).  rial    regulations    of    the    company. 

*  "  I  shall  only  say  a  few  words  How  can  it  be  said  that  in  all  cases 
as  to  how  far,  in  my  opinion,  the  the  fundamental  conditions  of  the 
articles  of  association  may  be  looked  charter  of  incorporation,  and  the  in- 
at  and  read  together  with  the  mem-  ternal  regulations  of  the  company 
orandum  of  association.  .  .  .  There  are  to  be  construed  together."  Per 
is  an  essential  difference  between  Bowen,  L.  J.,  in  Guinness  v.  Land 
the  memorandum  and  the  articles.  Corporation,  22  Ch.  D.  349,  381. 
The  memorandum  contains  the  fun-  ^  Southern  Brazilian,  etc.  Ry.  Co. 
damental    conditions    upon     which  (1-905),  2  Ch.  78,  84. 

alone  tlie  company  is  allowed  to  be        *  See  Xantha  Beneficial,  etc.  Ass'n, 

incorporated.     They  are  conditions  8  Pa.  Dist.  Rep.  142. 

40 


§  31-§   102]  TIJE    OBJECT    CLAUSE  §  40 

§4G-§10S.    THE  OBJECT  CLAUSE. 

§  40.  Function  of  Object  Clause.  —  No  pait  of  an  iiicorjx>- 
ration  j)aj>cr  i.s  more  iiiij)ortaiit  or  deserves  (greater  attention 
than  the  object  chiuse,  in  whieli  the  purposes  or  objects  of  the 
company  are  set  forth.  In  England,  it  is  held  that  common  law 
corporations  —  that  is,  corporations  ereated  by  royal  charter — 
have  power  to  do  anything  that  an  ordinary  individual  mav  do 
except  in  so  far  as  they  may  be  restrained  or  restricted  by  direct 
prohibition ; '  but  on  the  other  hand,  it  is  held  that  corpora- 
tions incor{X)rated  by  special  act  of  the  legislature  possess  such 
powers  only  as  are  authorized  expressly  or  impliedly  by  the 
special  act  in  question,'-  and  that  corporations  incorporated 
under  general  laws  possess  only  such  powers  as  are  conferred 
by  the  general  law  or  are  necessary  to  the  attainment  of  the 
objects  specified  in  the  incorporation  paper. ^  There  has  been 
some  difference  of  opinion  in  England  whether  this  doctrine  as 
to  companies  incorporated  under  general  laws  is  due  to  the  fact 
that  a  company  of  that  class  is  a  corporation  only  for  the  pur- 
poses stated  in  its  incorporation  paper  or  to  the  fact  that  the 
exercise  of  any  power  which  is  not  incidental  to  the  objects  as 
expressed  in  the  incorporation  paper  is  either  expressly  or  im- 
pliedly prohibited  by  the  legislature;*  but  this  question,  which 
is  known  as  the  question  of  general  or  special  capacity,  is  largely 
if  not  altogether  a  matter  of  words.^  At  any  rate,  the  doctrine 
as  to  common  law  or  royal-charter  corporations  (which  with 
the  exception  of  one  or  two  survivals,  such  as  Dartmouth  Col- 
lege, are  non-existent  in  America),  is  a  matter  of  only  antiqua- 
rian and  academic  interest  in  the  United  States;    and  as  to 

'  Attorney-General  v.   Manchester  the  railway  company  has  no  author- 

Corporation  (1906),  1  Ch.  643  (head-  ity  given  to  it  by  its  incorporation 

note  inadequate).      See   also   infra,  to  enter  into  contracts  not  connected 

§  1022-§  1026.  with  its  corporate  duties,  or  that  it 

-  Wenlock  v.   River  Dee  Co.,    10  is  impliedly  prohibited  from   so  do- 

A.  C.  354.  ing  because  by  necessarj'  inference 

'  Ashbury  Ry.,  etc.  to.  v.  Riche,  the  legislature   must  be  considered 

L.  R.  7  H.  L.  653.  to  have  intended  that  no  such  con- 

*  1  Palmer's  Company  Precedents,  tracts  should  be  entered  into."     Per 

9th  ed.,  370-371  ;    Pollock  on  Con-  Lord  Cran worth  in  Shrewsbury,  etc. 

tracts,  6th  ed.,  674-683.  Ry.  Co.  v.  Aorth-Western   Ry.  Co., 

''"Practically,     it     makes    very  6  H.  L.  Gas.  113,  137. 
little  dilTerence  whether  we  say  that 

41 


^  47  THE    INCORPORATION    PAPER  [ChAP.  II 

corporations  created  by  special  act  of  the  legislature  or  formed 
under  oreneral  laws  the  American  cases  are  in  entire  accord 
with  the  English  authorities  and  hold  that  the  corporations 
possess  such  powers  only  as  are  conferred  upon  them,  expressly 
or  impliedly,  by  the  statute  or  the  incorporation  paper.^ 

^  47.  Comparative  Advantages  of  Broad  and  Narrow  Statements 
of  Objects.  —  In  the  preparation  of  the  object  clause  of  an 
incorporation  paper  the  fact  should  be  borne  in  mind  that  any 
objects  not  mentioned  therein  will  be  ultra  vires  of  the  corpora- 
tion and  cannot  be  pursued  against  the  opposition  of  a  single 
shareholder  and,  in  theory  at  least,  not  even  by  unanimous 
consent.  Hence,  if  the  object  clause  is  too  narrow  the  company 
may  find  its  operations  seriously  hampered.  On  the  other  hand, 
if  the  objects  are  stated  too  broadly,  the  power  of  the  majority 
is  almost  unlimited  and  may  serve  to  deter  conservative  in- 
vestors from  putting  their  capital  in  the  concern.  Yet,  at  least 
from  the  point  of  view  of  the  promoters,  who  usually  expect  to 
constitute  the  majority  of  the  corporation,  the  balance  of  incon- 
venience lies  decidedly  in  having  the  objects  too  closely  circum- 
scribed.^ Accordingly,  in  recent  years  the  approved  practice 
has  been  to  use  a  very  broad  and  elaborate  and  often  rather 
verbose  statement  of  objects.^  On  the  other  hand,  as  will  be 
more  fully  explained  below,  a  very  general  statement  of  objects 
may  be  too  indefinite  to  satisfy  the  law.* 

§  48-§  63.  WHAT  OBJECTS  ARE  AUTHORIZED  BY  INCORPORA- 
TION LAW  TO  BE  EXPRESSED  IN  OBJECT  CLAUSE  AS 
PURPOSE   OF   INCORPORATION. 

§  4S.  Under  Statutes  Specifying  Objects  for  which  alone  Com- 
panies may  be  incorporated.  —  The  objects  of  the  company  as 

'  Downing  v.' Mount  Washington  Dry   Dock   Co.,   28   La.    Ann.    173; 

Road  Co.,  40  N.  H.  230;    State  v.  Best  Brewing  Co.  v.  Klassen,  185  111. 

Consolidation  Coal  Co.,  46  Md.  1,  9  37;    57  N.  E.  20;    76  Am.  St.  Rep. 

(where  the  rule  was  expressly  laid  26;  50  L.  R.  A.  765. 
down  by  a  statute  which  was  pro-         ^  "The  balance  of  disadvantage 

nounced  declaratory  merely) ;  Rock-  decidedly  attaches  to  too  narrowly 

hold  V.  Canton  Masonic  Benev.  Soc,  defined  objects."    Dillon  New  Jersey 

129  111.  440;   21  N.  E.  794;   2  L.  R.  Corporations  (3d  ed.),  §  8,  p.  19. 
A.420;  Simmons  V.Troy  Ironworks,  ^  Cf.   Consett  Iron  Co.    (1901),    1 

92  Ala.  427;  9  So.  160  (corporation  Ch.  236  (headnote  inadequate), 
formed    under    general    law) ;    New         See  also  infra,  §  65. 
Orleans,  etc.  Steamship  Co.  v.  Ocean         *  Infra,  §  104-§  106, 

42 


§  31-§  102] 


THE    OBJECT    CLAUSE 


48 


expressed  in  the  ineorporation  paper  must,  of  course,  lie  autho- 
rized by  the  general  law  or  enabling  act  under  which  the 
company  is  organizing.  The  earlier  American  statutes  autho- 
rized the  formation  of  cor{M)rations  of  certain  particular  kinds 
or  classes  only.  Under  such  statutes,  it  was,  —  or  rather  is, 
for  they  still  remain  in  force  in  some  few  of  the  States  —  im- 
peratively necessary  that  the  objects  of  tiie  proposed  corpora- 
tion should  be  brought  within  some  of  these  classes.  Thus,  if 
a  statute  authorized  the  formation  of  manufacturing  corpora- 
tions, the  organization  of  a  company  to  engage  in  the  business 
of  buying  and  selling  merchandise  would   be  impossible.'     A 


'  Cf.  Meen  v.  Pioneer  Pasteuriz- 
ing Co.,  90  Minn.  501  ;  97  N.  W.  140 
(where  a  company  formed  for  "buy- 
ing, manufacturing  and  dealing  in 
milk,  cream,  butter,  cheese,  and 
other  dairy  products  and  pasteuriz- 
ing and  treating  said  milk,"  etc.,  was 
held  not  to  be  an  exclusively  manu- 
facturing or  mechanical  corpora- 
tion). As  to  what  is  a  "manufac- 
turing corporation,"  see  further, 
Bolton  V.  Xebraska  Chicory  Co.,  96 
N.  W.  148;  69  Nebr.  681 ;  Receiver- 
ship of  {Merchants'  Xat.  Bank  v.) 
Minnesota  Thresher  Mfg.  Co.,  95 
N.  W.  767;  90  Minn.  144;  Bern- 
heimer  v.  Converse,  27  Sup.  Ct.  755 ; 
Cuyler  v.  City  Power  Co.,  74  Minn. 
22;  76  N.  W.  948;  Nicollet  Nat. 
Bank  v.  Frisk-Turner  Co.,  71  Minn. 
413;  74N.W.  160;  70  Am.  St.  Rep. 
334  ;  Carlsbad  Water  Co.  v.  New,  33 
Colo.  389;  81  Pac.  34;  West  Nor- 
folk Lumber  Co.,  112  Fed.  759; 
Attorney-General  ex  rel.  Miner  v. 
Lorman,  59  Mich.  157;  26  N.  W. 
311;  60  Am.  St.  Rep.  287;  Com- 
monwealth V.  Keystone  Electric,  etc. 
Co.,  193  Pa.  St.  245;  44  Atl.  326; 
Powell  V.  Murray,  3  N.  Y.  App.  Div. 
273;  157  N.  Y.  717;  53  N.  E.  1130 
(manufacturing  company  no  power 
to  deal  in  products  manvifactured  by 
other  companies) ;  Frederick  Elec- 
tric Light,  etc.  Co.  v.  Mayor,  etc.  of 
Frederick  City,  84  Md.  599;  36 
Atl.  362;  36  L.  R.  A.  130  (electric 
light    company    distinguished    from 


manufacturing  company) ;  First  Nat. 
Bank  v.  William  R.  Trigg  Co.  (Va.), 
56  S.  E.  158. 

As  to  what  is  a  "trading  corpora- 
tion," see  Pocono  Spring,  etc.  Co.  v. 
Am.  Ice  Co.,  64  Atl.  398;  214  Pa. 
640. 

As  to  what  is  a  manufacturing, 
mercantile,  or  trading  (or,  after 
1901,  mining)  corporation,  consult 
the  cases  as  to  what  corporations 
may  be  adjudged  bankrupts  under 
the  Bankrupt  Act  of  1898  and  the 
amendatory  statute  of  1901.  In  the 
following  cases  corjiorations  have 
been  held  to  be  within  the  Act :  First 
Nat.  Bank  v.  Wyoming  Valley  Ice 
Co.,  136  Fed.  466  (company  dealing 
in  ice  partly  of  its  own  harvesting 
and  partly  bought  from  other  per- 
sons, held  to  be  engaged  chiefly  in 
trading  and  mercantile  pursuits) ; 
Troy  Steam  Laundering  Co.,  132  Fed. 
266  (laundry  company  the  largest 
part  of  whose  business  consists  in 
laundering  collars  and  cuffs  for  man- 
ufacturers held  to  be  engaged  prin- 
cipally in  manufacturing) ;  Marine 
Construction  A  Dry  Dock  Co.,  130 
Fed.  446 ;  64  C.  C.  A.  648  (company 
engaged  in  constructing  boats  and 
al.so  boilers,  masts,  desks,  etc.,  for 
vessels  held  engaged  principally  in 
manufacturing) ;  Columbia  Iron- 
tvorks  V.  National  Lead  Co.,  127  Fed. 
99 ;  62  C.  C.  A.  99  (corporation  en- 
gaged in  building  iron  ve.ssels  held 
engaged  in  manufacturing  and  mer- 


43 


§   48 


THE    INCOUrORVTION    PAPER 


[CUAP.    II 


statute  providing  for  incorporation  for  purposes  "of  trade  or  of 
carrying  on  any  lawful  mechanical,  manufacturing,  or  agri- 
cultural business,"  will  authorize  the  formation  of  a  corporation 
to  buy,  sell,  improve,  and  lease  real  estate.'  Under  a  law  au- 
thorizing the  formation  of  corporations  for  "hunting,  fishing, 
bathing  or  lawful  sporting   purposes,"  a  company  cannot  be 


cantile  pursuits) ;  White  Mountain 
Paper  Co..  127  Fed.  643;  62  C.  C.  A. 
369  (corporation  formed  for  manu- 
facturing paper  held  engaged  in 
manufacturing  although  it  had  never 
completed  the  manufacture  of  any- 
paper)  ;  Mutual  Mercantile  Agency, 
111  Fed.  152  (mercantile  agency 
publishing  a  book  for  ratings) ; 
Tecopa  Mining  &  Smelting  Co.,  110 
Fed.  120  (Mining  and  smelting  held 
to  be  manufacturing.  But  compare 
Act  of  1901  which  expressly  added 
"mining"  to  the  classes  of  corpora- 
tions within  the  act) ;  Morton 
Boarding  Stables,  108  Fed.  791 
(company  keeping  a  "boarding 
stable"  held  engaged  in  trading  or 
mercantile  pursuits) ;  Quincy  Granite 
Quarries  Co.,  147  Fed.  279  (quarry 
company  held  engaged  in  mining 
and  manufacturing) ;  Burdick  v. 
Dillon,  144  Fed.  737;  75  C.  C.  A. 
603  (quarrying  held  to  be  included 
within  the  term  mining) ;  First  Nat. 
Bank,  152  Fed.  64  (building  concrete 
arches  and  bridges,  and  dressing 
stone  held  to  be  manufacturing). 

In  the  following  cases  companies 
have  been  held  not  to  be  within  the 
Act:  U.  S.  Hotel  Co.  v.  Niles,  134 
Fed.  225;  67  C.  C.  A.  153  (hotel 
company);  Bay  City  Irrigation  Co., 
135  Fed.  850  (company  for  irriga- 
tion of  rice  fields) ;  Butt  v.  Mac- 
Nichol  Construction  Co.,  140  Fed. 
840;  72  C.  C.  A.  252  (company  for 
construction  of  bridges,  wharves, 
etc.);  Snyder  &  Johnson  Co.,  133 
Fed.  806  (company  soliciting  adver- 
tisements for  newspapers) ;  Surety 
Guarantee  &  Trust  Co.,  121  Fed.  73; 
56  C.  C.  A..  654  (buying  and  selling 
stocks,  bonds,  and  other  securities, 
not  trading  or  mercantile  pursuit) ; 


Quimby  Freight  Forwarding  Co.,  121 
Fed.  139  (forwarding  company  also 
engaged  in  buying  and  selling) ; 
Parmelee  Library,  120  Fed.  235 ;  56 
C.  C.  A.  583  (circulating  library 
company) ;  White  Star  Laundry  Co., 
117  Fed.  570  (laundry  company); 
Tontine  Surety  Co.,  116  Fed.  401 
(corporation  authorized  to  deal  in 
diamonds  which  had  contracted 
to  deliver  a  diamond  on  payment  of 
a  certain  sum,  but  which  had  never 
purchased,  owned,  or  delivered  a 
diamond,  not  engaged  in  trading  or 
mercantile  pursuits) ;  New  York,  etc. 
Water  Co.,  98  Fed.  711  (water-supply 
company) ;  Cameron  Town,  etc.  Ins. 
Co.,  96  Fed.  756  (insurance  com- 
pany) ;  Chesapeake  Oyster,  etc.  Co., 
112  Fed.  960  (saloon  and  restaurant 
company);  Woodside  Coal  Co.,  105 
Fed.  56  (Coal  mining  company. 
Note  that  mining  corporations  are 
now  expressly  included  by  Act  of 
1901) ;  New  York,  etc.  Ice  Lines,  147 
Fed.  214 ;  77  C.  C.  A.  440  (ice  com- 
pany selling  ice  of  its  own  harvest- 
ing);  T.  E.  Hill  Co.,  148  Fed.  832 
(building  of  concrete  piers  and  abut- 
ments for  bridges  held  not  manu- 
facturing) ;  Toledo  Portland  Cement 
Co.,  156  Fed.  83  (corporation  which 
was  formed  to  manufacture  cement 
but  which  had  not  completed  its 
buildings  nor  its  railroads  from 
them  to  the  marl  beds  from  which 
it  was  to  ol)tain  its  materials,  held 
not  "engaged"  in  manufacturing 
cement). 

As  to  classification  of  corpora- 
tions with  reference  to  their  objects, 
see  also  supra,  §  26- §  29. 

*  Finnegan  v.  Noerenberg,  52 
Minn.  239,  245;  53  N.  W.  1150;  38 
Am.  St.  Rep.  552. 


44 


§  31-§   1G2]  THE    OBJECT    CLAUSE  §  4S 

ori^aiiized  to  enforce  the  gjime  laws  and,  as  informer,  collect 
lines  for  their  violation.'  A  corporation  for  the  purpose  of  buy- 
ing and  selling  bonds  cannot  be  formed  under  a  statute  au- 
thorizinijj  inc()r|K)rati(Mis  "for  the  j)urpose  of  buying  and  selling 
merchandise  and  conducting  mercantile  o|)erations."  •  A  cor- 
poration cannot  be  formed  to  deal  in  rice  as  an  article  of  com- 
merce under  a  statute  authorizing  the  formation  of  corporaticMis 
for  growing,  purchasing,  and  selling  seeds  for  agricultural 
purposes.^  Laws  providing  for  the  incorporation  of  companies 
to  aid  in  the  inilustrial  or  productive  interests  of  the  country 
have  been  held,  by  a  rather  liberal  construction,  to  authorize 
the  formation  of  street  railway  or  tramway  companies.*  When 
the  objects  for  which  corporations  could  be  formed  were  few, 
it  was  a  comparatively  easy  matter  to  determine  whether  the 
objects  of  the  proposed  company  were,  or  were  not,  within  the 
statute,  even  where  the  act  allowed  incorporation  for  certain 
specified  purposes  only.  But  the  statutes  based  on  this  scheme 
which  remain  in  force  have  been  repeatedly  amended  by  en- 
larging the  permissible  objects,  so  that  although  these  permis- 
sible objects  now  embrace  all  the  more  usual  forms  of  business 
activity,  yet  when  some  novel  enterprise  is  being  launched  great 
difficulty  may  be  experienced  in  deciding  whether  or  not  it  falls 
within  the  statute. 

Where  a  statute  enumerated  a  number  of  different  objects 
for  which  corporations  might  be  formed,  it  was  held  in  Texas 
that  one  corporation  could  not  be  formed  for  two  of  such  ob- 
jects or  purposes ;  ^  and  a  fortiori  this  result  is  reached  where  the 
enumerated  objects  are  separated  in  the  statute  by  the  dis- 
junctive "or."  "  On  the  other  hand,  the  objects  of  a  corporation 
may  be  more  circumscribed  than  any  one  of  the  classes  named 

'  Ancient  City  Sportsman's  Club  474-475  (case    of   an  express    com- 

V.  Miller,  7  Lans.  (N.  Y.),  412.  pany). 

«  Indiana   Bond  Co.   v.   Ogle,  22  *  Ramsey  v.    Tod,   95  Tex.   614; 

Ind.  App.  593 ;  54  N.  E.  407.  69  S.  W.  133 ;   93  Am.  St.  Rep.  875. 

»  MUler  V.  Todd  (Tex.),  67  S.  W.  Cf.  Dancy  v.  Clark,  24  App.  D.  C.  487. 

483 ;  95  Tex.  404.  But   see  Finnegan  v.  Noerenberg, 

*  Central    Trust    Co.    v.    Warren,  52  Minn.  239,  245 ;    53N.  W.  1150; 

121  Fed.  323;    58  C.  C.  A.  289.     As  38   Am.    St.    Rep.   552;     Loui^ana 

to  the  meaning  of  tlie  word  "indus-  Xavigation,  etc.  Co.  v.    Doxdlut,  114 

trial"    as   applied    to    coqjorations,  La.  906;    38  So.  613. 

see  further,   Wells,  Fargo  ifr  Co.  v.  "  Williams  v.  Citizens'  Enterprise 

Northern  Pac.  liy.  Co.,  23  Fed.  469,  Co.,  25  Ind.  App.  351 ;  57  N.  E.  581 ; 

45 


§  49  THE   INCORPORATION    PAPER  [ChaP.  II 

in  the  statute.  For  instance,  if  one  of  the  objects  for  which 
companies  may  be  incorporated  is  manufacturing,  a  corporation 
may  be  formed  for  engaging  in  one  particular  kind  of  manu- 
facturing.^ ^Moreover,  it  is  permissible  to  combine  two  or  more 
objects  all  of  which  are  within  one  of  the  classes  designated  in 
the  statute,  such  as  the  mining  of  both  gold,  silver,  and  lead, 
where  mining  in  general  is  one  of  the  objects  mentioned  in  the 
statute  for  which  corporations  may  be  formed.^ 


§  49-§  63.     Under  Statutes  permitting  Incorporation  for  any 
Lawful  Purpose. 

§  49.  In  general.  —  The  statutes  now  in  force  in  most  parts 
of  America  as  well  as  in  Great  Britain  provide  for  the  forma- 
tion of  corporations  for  any  lawful  purpose  or  objects.^  From 
these  sweeping  terms,  express  exception  is  usually  made  of  bank- 
ing, insurance,  railroad  purposes,  etc. ;  but  these  exceptions 
are  generally  few  and  of  a  kind  that  does  not  call  for  extended 
consideration  here.*  Some  statutes,  after  mentioning  a  number 
of  specific  purposes  for  which  corporations  may  be  formed,  add 
"or  other  lawful  business,"  or,  "other  lawful  purpose"  or  the 
like.  It  has  been  held  that  such  general  expressions  cannot  be 
confined  in  their  operations  to  objects  ejusdem  generis  with  those 

West    Manayunk,    etc.    Co.    v.    New  contracts  for  maintaining  and  ope- 

Gas  Light  Co.,  21  Pa.  Co.  Ct.  Rep.  rating  railways,"  provided  that  the 

393;    Consumers'  Gas  Trust  Co.  v.  company  should   "not  operate  any 

Quinby,  137  Fed.  882 ;    70  C.  C.  A.  railroad,  engage  in  the  business  of  a 

220;      People    ex    rel.     Belknap    v.  railroad,  or  do  anything  in  the  prem- 

Beach,    19   Hun    (N.    Y.),   259,   260  ises    prohibited    to    corporations   of 

(semble).  this  character,"  was  held  not  proper 

Cf.  Bayou  Cook,  etc.  Co.  v.  Doullut,  to  be  recorded  under  a  statute  pro- 

35  So.  729;    111  La.  517.  hibiting   the   formation   of  corpora- 

'  Cf.   Roofing  Contractors'   Ass'n,  tions  for  the  operation  of  railroads) ; 

200  Pa.  St.  Ill ;  49  Atl.  894.  State  v.  Debenture  Guarantee,  etc.  Co., 

2  People  ex  rel.  Belknap  v.  Beach,  26   So.   600   (formation   of  corpora- 

19  Hun  (N.  Y.),  259.  tion  to  deal  in  debentures  not  per- 

'  As  to  incorporation  for  an  un-  missible  under  statute  providing  for 

lawful  purpose,  or  purpose  contrary  incorporation  for  any  lawful  purpose 

to  public  policy,  see  infra,  §  62  and  provided  that  no  corporation  should 

Chap.  V.  engage  in  "stock-jobbing"),  affirmed 

*  Cf.  Dancy  v.  Clark,  24  App.  D.  as  to  federal  questions  in  A' eio  Orleans 

C.  487,  50.5-506  (where  an  incorpo-  Debenture,  etc.  Co.  v.  Louisiana,  180 

ration  paper  which,  after  mention-  U.  S.  320;  21  Sup.  Ct.  378. 
ing  as  one  of  the  objects  "to  perform 

46 


§  31-§   102]  TUE    OBJECT    CLAUSE  §  50 

specifically  mentioned.'  ^Moreover,  where  the  statute  authorizes 
incorporation  "for  the  purpose  of  engaging  in  any  lawful  enter- 
prize,  business,  pursuit  or  occupation,"  the  words  cannot  be 
restricted  to  schemes  for  making  money,  but  authorize  incor- 
poration for  the  purpose  of  aiding  a  certain  educational  insti- 
tution by  guaranteeing  its  bonds. - 

§  50.  Whether  more  than  one  Object  may  be  specified.  — 
Where  the  statute  authorizes  the  organization  of  companies  for 
any  lawful  purpose,  business,  or  the  like,  in  the  singular,  doubt 
has  been  entertained  whether  a  corporation  may  be  formed  for 
two  or  more  distinct  objects,  or  whether  there  must  not  be  some 
one  main  purpose  to  which  everything  else  is  ancillary.^  To 
guard  against  all  question  of  this  sort,  some  statutes  use  a  plural 
as  well  as  the  singular  noun  —  "for  any  lawful  purpose  or  pur- 
poses." *  But  the  doubt  is  probably  unfounded.*  Thus,  the 
British  law  provides  that  "any  seven  or  more  persons  associated 
for  any  lawful  purpose"  may,  by  subscribing,  etc.,  form  an  in- 
corporated company.^  Yet  neither  the  English  lawyers  nor  their 
courts  have  ever  denied  that  a  corporation  might  lawfully  be 
organized  under  this  statute  for  two  or  more  disconnected  pur- 

*  Brown  v.  Corbin,  40  Minn.  508 ;  limited  by  the  ejusdem  generis  rule 

42  N.  W.  481 ;  Glen  v.  Breard,  35  and  that  a  corporation  could  accord- 
La.  Ann.  875 ;  State  ex  rel.  Walker  ingly  be  formed  to  insure  against 
V.  Corkins,  123  Mo.  56 ;  27  S.  W.  burglary) ;  St.  Louis  Colonization 
363;  National  Bank  v.  Texas  In-  Ass'n  v.  Hennessy,  11  Mo.  App.  555, 
vestment  Co.,  74  Tex.  421 ;    12  S.  W.  559  (headnote  inadequate). 

101  (distinguishing  Texas,  etc.  Navi-         ^  Maxwell  v.  Akin,  89  Fed.  178. 
gallon  Co.  v.  County  of  Galveston,  45  '  See   People  ex  rel.    Peabody   v. 

Tex.  272) ;   Vokes  v.  Eaton,  85  S.  W.  Chicago  Gas  Trust  Co.,  130  III.  268, 

174  ;  27  Ky.  Law  Rep.  358 ;  Lindsay,  290 ;  8  L.  R.  A.  497  ;  22  N.  E.  798 ; 

etc.Co.v.Mullen,  176  U.S.  126,138-  17    Am.  St.  Rep.   319    (stated    and 

139  (headnote  inadequate) ;  20  Sup.  criticised  infra,   §   52) ;    Ramsey  v. 

Ct.  325.  Tod,  95  Tex.  614;    69  S.  W.   133; 

But    see    contra:     State    ex    rel.  93  Am.  St.  Rep.  875;    Williatns  v. 

Lederer   v.    International    Investment  Citizens'    Enterprise    Co.,    25     Ind. 

Co.,  88  Wise.  512;    60  N.  W.  796;  App.  351,355;  57  N.  E.  581 ;  Dancy 

43  Am.  St.  Rep.  920  (with  which  v.  Clark,  24  App.  D.  C.  487.  500- 
compare  Wisconsin  Telephone  Co.  504  (a  strong  but,  it  is  submitted,  a 
V.  City  of  Oshkosh,  62  Wise.  32,  38 ;  questionable  decision) ;  State  v. 
21N.  W.  828.)  Taylor,  55  Ohio  St.  61,  67-68;    44 

Cf.  Banker's  Mut.  Casualty  Co.  v.  N.  E.  513. 

First  Nat.  Bank  (Iowa),  108  N.  W.  *  New  Jersey  Laws,  1899,  chap. 

1046  (holding  that  a  statute  provid-  176. 

ing  for  incorf)oration   of  companies  *  Cf.    People   ex   rel.    Belknap    v. 

for  insurance  against  damage  by  fire  Beach,  19  Hun  (N.  Y.),  259. 

"or  other  casualty"  should  not  be  "  Companies  Act,  1862,  §  6. 

47 


1 


§  51  THE    INCORPORATION    PAPER  [CuAP.   II 

poses.  Thus,  an  English  text-writer  of  authority  declares: 
"There  is  no  rule,  for  instance,  that  the  principal  or  leading 
object  must  be  stated,  and  that  all  the  other  objects  must  be 
conducive  or  auxiliary  thereto.  On  the  contrary,  it  is  permissi- 
ble to  have  any  number  of  objects  alternative,  concurrent,  or 
substitutional,  provided  they  are  legal  and  are  specified.  Thus, 
the  objects  clause  may  commence  by  declaring  that  the  company 
is  formed  to  carry  on  the  business  of  a  brewery  company;  but 
there  is  not  the  slightest  objection  in  point  of  law  to  stating  that 
another  object  is  to  carry  on  the  business  of  a  mining  company."  ' 
To  be  sure,  the  British  act  directs  that  the  memorandum  of  asso- 
ciation or  incorporation  paper  shall  state  the  "objects"  of  the 
company ;  -  but  this  use  of  a  plural  noun  has  never  been  thought 
to  enlarge  the  singular  term,  "purpose,"  which  is  found  in  a  pre- 
ceding section  of  the  same  statute.^  In  some  of  the  United  States 
the  general  rule  of  statutory  construction  has  been  laid  down 
that  the  singular  number  shall  include  the  plural  unless  a  con- 
trary intention  clearly  appear;  and  this  rule  of  construction 
would  remove  all  difficulty  arising  from  the  use  of  a  singular 
instead  of  a  plural  noun. 

§51.  Insertion  of  Subsidiary  Objects  or  Powers.  —  Under 
statutes  allowing  incorporation  for  any  lawful  purposes,  it  seems 
abundantly  clear  on  principle  that  the  incorporation  paper  may 
in  addition  to  the  company's  main  object  mention  as  subsidiary 
objects  the  exercise  of  any  powers  that  the  promoters  may  deem 
conducive  thereto  although  not  perhaps  such  as  the  law  would 
have  implied  as  incidental  to  the  prime  objects.  This  proposi- 
tion is  so  thoroughly  supported  by  the  liberal  policy  of  the  law , 
that  one  should  be  surprised  to  find  it  questioned.  In  England, 
no  doubt  ever  appears  to  have  been  entertained.    Thus,  although 

*  Palmer's    Company    Law,    17.  hotel  company,  'The  object  of  this 

Cf.     Governments    Stock     Investment  company  is  to  carry  on  the  business 

Co.   (1891),   1  Ch.  649,  6.55,  where  of  an  hotel' ;   and  you  may  go  down 

Chitty,   J.,  said:    "The    legislature,  from  that  in  a  manner  which  will 

no  doubt,  was  aware  that  according  surprise   the   uninitiated,    and    find 

to  the  way  in  which  the  Limited  Lia-  out  what  the  hotel  company  may, 

bility  Act  has  been  worked,  the  f ram-  according  to  the  ingenious    framer 

ers  of  memoranda  of  association  in-  of  the  memorandum  of  association, 

Bert  sometimes,  under  letters  which  do  —  things  which  I  think  would  as- 

exhaust  the  alphabet,  what  they  are  tonish  any  ordinary  hotel  keeper." 
pleased  to  call  the  '  objects'  of  the  ^  Companies  Act,  1862,  §  8  (3). 
company.     You  may  get  as  to  an         '  §  6. 

48 


§  31-§   l<i2]  THE    OBJECT    CLAUSE  §  52 

the  English  courts  will  not  readily  imply  the  power  to  issue  nego- 
tiable paper,  express  provisions  making  the  issue  thereof  a  sub- 
sidiary object  of  the  company  in  Cjuestion  are  frequent  and 
undoubtedly  efficacious.  The  English  bcKjks  are  full  of  similar 
instances  in  which  promoters  have  inserted  in  incorporation 
papers  clauses  mentioning  this,  that,  or  the  other,  as  one  of  the 
company's  objects,  merely  in  order  to  remove  any  possible 
doubt  as  to  whether  the  power  would  be  implied  as  incidental 
to  the  main  objects;  and  the  American  reports  contain  similar 
instances.'  The  validity  of  such  provisions  is  fundamental  in 
modern  corporation  law,  and  ought  not  to  admit  of  question. 

§  52.  People  V.  Chicago  Gas  Trust  Compatnj.  —  An  Illinois 
case,  decided  in  1890,-  which  is  somewhat  confused  and  re- 
actionarv,  vet  deserves  detailed  examination,  lest  it  should  prove 
misleading  upon  this  truly  fundamental  subject.  A  company 
was  incoriX)rated  under  an  Illinois  statute  which  provided  for 
the  formation  of  corporations  "for  any  lawful  purpose."  Its 
incorporation  paper,  or,  to  use  the  name  in  vogue  in  Illinois,  its 
articles  of  incorporation,  provided  that  the  object  of  the  com- 
pany should  be  to  engage  in  the  manufacture,  sale,  and  distribu- 
tion of  illuminating  gas,  and,  to  "purchase  and  hold  or  sell  the 
capital  stock,  or  purchase  or  lease  or  operate  the  property,  plant, 
good-will,  rights  and  franchises,  of  any  gas  works,  or  gas  com- 
pany or  companies."  In  fact,  the  corporation  was  organized 
to  acquire  the  majority  of  the  shares  of  the  four  competing  gas 
companies  which  were  then  in  operation  in  the  city  of  Chicago ; 
and  did  accordingly  carry  out  that  purpose.  It  never  established 
any  gas  works  of  its  own.  Upon  a  proceeding  in  the  nature  of 
quo  warranto  to  test  the  company's  right  to  hold  the  controlling 
interest  in  the  subsidiary  corporations,  the  court  held  that  the 
right  did  not  exist.  One  ground  relied  upon  by  the  court  and 
broad  enough  to  support  the  decision  was  that,  the  unlawful 
design  having  been  entertained  of  creating  a  virtual  monopoly, 
the  company  was  not  organized  for  a  la\\'ful  purpose.  If  the 
opinion  had  rested  here,  no  fault  need  have  been  found  with 
the  case;  but  various  other  propositions  were  advanced.    In  the 

'  See  People  ex  rel.  Lay  v.  Mount  '  People  ex  rel.  Peabody  v.  Chi- 

Shasta  Mfg.  Co.,  107  Cal.  25G;  40  cago  Gas  Trust  Co.,  130  111.  268; 
Pac.  391.  22  N.  E.  798 ;   17  Am.  St.  Hep.  319 ; 

8  L.  R.  A.  497. 

VOL.  I.  —  4  49 


§  53  THE    INCORPORATION    PAPER  [ChAP.  II 

first  place,  it  was  said  that  the  power  to  hold  the  shares  could 
not  be  implied  as  incidental  to  the  power  to  manufacture  and 
sell  illuminating  gas;  and  upon  this  point  the  case  is  certainly 
in  accord  with  the  weight  of  authority.^  As  to  the  clause  in  the 
incorporation  paper  purporting  expressly  to  confer  the  power, 
the  court  reasoned  that  if  the  clause  were  viewed  as  ancillary 
to  the  power  to  operate  gas  works,  it  would  not  be  effective  since 
the  promoters  could  not  by  express  stipulation  augment  the  im- 
plied or  incidental  powers.  If  this  obiter  dictum  were  correct, 
it  would  indeed  be  laying  the  axe  at  the  root  of  the  tree ;  but  as 
we  have  shown  in  the  last  paragraph  it  is  believed  to  be  opposed 
both  to  authority  and  to  reason."  The  legislature,  by  enabhng 
the  promoters  to  organize  a  corporation  for  any  lawful  purpose 
that  they  might  mention  in  their  incorporation  paper  indicated 
a  liberal  policy;  and  why  should  not  the  intention  of  the  pro- 
moters that  a  certain  power  should  be  exercisable  be  carried 
out  if  possible?  Why  should  they  not  have  the  right  under  a 
statute  of  this  liberal  sort  to  say  what  shall  be  deemed  in  their 
case  incidental  powers?  It  is  submitted  that  if  the  power  to 
hold  shares  in  other  companies  might  be  made  the  principal 
object,  or  one  of  the  principal  objects,  of  the  company,  then  only 
one  who  delights  in  unjust  technicalities  could  think  that  the 
same  power  should  not  be  exercisable  if  given  as  merely  ancil- 
lary to  some  other  object.  The  court,  however,  proceeded  to 
decide  that  the  holding  of  a  controlling  interest  in  the  other  gas 
companies  could  not  be  made  the  company's  principal  or  only 
object  because  of  the  unlawful  intention  of  creating  a  monopoly. 
With  this  latter  position,  as  applied  to  the  particular  facts  of  the 
case,  we  have,  as  already  stated,  no  disposition  to  quarrel.  The 
court  adverted  to  the  fact,  as  specially  indicative  of  monopoly, 
that  the  power  sought  to  be  conferred  was  to  acquire  and  hold 
not  certain  shares  of  stock,  but  "the  capital  stock"  —  that  is,  all 
the  shares.^ 

§  53.  Objects  must  be  consistent  with  Nature  of  a  Corpora- 
tion. —  Under  any  statute,  however  liberal,  the  objects  of  the 
company  must  be  legal  *  and  must  not  be  obnoxious  to  the  gen- 

»  Infra,  §  83.  ^  130  111.  290-291. 

'  Cf.  People  ex  rel.  Loy  v.  Mount        *  See  infra,  §  62  and  Chap.  v. 
Shasta  Mfg.  Co.,  107  Cal.  256;    40 
Pac.  391. 

50 


§  31-§   162]  THE    OBJECT    CLAUSE  §  55 

eriil  spirit  pervading  the  act  or  to  accepted  principles  of  cor- 
poration or  company  law.  I'hus,  in  any  jurisdiction  where  the 
purchase  by  a  corporation  of  its  own  shares  is  deemed  foreign 
to  tiie  nature  of  a  limited  company,  a  clause  in  the  incorporation 
paper  purporting  to  confer  a  power  to  make  such  puf chase  is 
illegal  and  void.'  The  same  thing  would  be  true  of  an  attempt 
to  authorize  the  payment  of  dividends  out  of  caj)ital,  the  giving 
of  a  preference  to  shareholders  over  creditors  in  the  distribution 
of  assets  in  a  winding-up,  or  any  other  transaction  which  is 
regarded  as  contrary  to  the  spirit  of  the  statute  and  to  the 
statutory  conception  of  a  corporation. - 

§  54.  Sale  of  Entire  Business  as  one  of  the  Objects.  —  The 
sale  of  a  business  or  undertaking  is  a  perfectly  lawful  object; 
and  hence,  according  to  English  authorities,  a  clause  in  an  in- 
corporation paper  mentioning  the  sale  of  the  company's  whole 
business  or  undertaking  as  one  of  its  objects  is  entirely  valid 
under  a  statute  allowing  incorporation  for  any  lawful  purpose.^ 
So,  also,  the  incorporation  paper  may  properly  provide  for  a 
transfer  of  the  company's  business  and  undertaking  in  exchange 
for  shares  in  another  corporation,*  or  other  property.  A  sale 
or  transfer  of  all  the  corporation's  assets,  in  pursuance  of  such 
a  provision,  is  to  be  deemed  a  transfer  in  the  ordinary  course  of 
business,  so  that  upon  the  consummation  of  the  transaction,  the 
company  does  not  necessarily  cease  to  be  a  going  concern.* 

§  55.  American  Cases.  —  The  American  cases  on  the  sub- 
jects treated  in  the  last  paragraph  are  neither  numerous  nor 
conclusive.  In  respect  to  corporations  formed  by  special  act, 
the  law  was  well  settled  that  no  power  of  selling  or  leasing  their 
whole  property  and  business,  or  franchises,  existed  unless  par- 

'  Trevor  v.    Whitworth,    12   App.  out  without  a  windinjij-up,  but  wliere 

Cas.  409,  136-437  (semble,  per  Lord  [pp.    840-841]    the    judge    doubted 

Macnaghten).  whether  on  principle,  an  incorpora- 

^  Cf.  infra,  §  122  and  §  624.  tion  paper  should  be  permitted   to 

'  Cotton  w  Imperial,  etc.  Corpora-  state  any  but  the  "living  objects" 

tion  (1892)  3    Ch.   454,  458   (head-  which  the  company  is  to  carrj'  out 

note  inadequate).  as  a  "  living  concern").    A  power  of 

*  Cotton  v.  Imperial,  etc.  Corpora-  sale  or  exchange  such  as  is  referred 

tion  (1892),  3  Ch.   454,  458   (head-  to  in  the  text  is  not  readily  impUed. 

note  inadequate) ;   Doughty  \' .  Loma-  People  v.   Ballard,    134   N.   Y.  269; 

gunda  Reefs  (1902),  2  Ch.  837  (where  32  N.  E.  54  ;    17  L.  R.  A.  737.     See 

the  incorporation  paper  was  held  to  also  infra,  §  78-§  79. 
authorize    a    contract    of    sale,    tiic         '-  Fm^tcr   v.   Borax  Co.    (1901),    1 

terms  of  which  could  not  be  carried  Ch.  326. 

51 


§  55  THE    IXCORPORATIOX    PAPER  [ChAP.  II 

ticularlv  conferred  by  statute.  Especially,  was  this  true  with 
respect  to  public-service  corporations  such  as  railroads.^  But 
manifestly,  these  cases  have  no  application  to  companies  which 
are  incorporated  under  general  laws  authorizing  incorporation 
for  any  lawful  purpose.  Surely,  the  English  cases  are  right  in 
holding  that  to  build  up  a  business  for  the  purpose  of  selling  it 
at  a  profit  is  a  lawful  object.  In  a  case  stated  above  at  consider- 
able length,  the  United  States  Supreme  Court  held  in  substance 
that  the  leasing,  or  taking  a  lease,  of  a  railway  was  not  a  lawful 
object  for  incorporation  under  the  Oregon  general  laws,  which 
provided  that  companies  might  be  incorporated  for  "any  lawful 
business,  pursuit  or  occupation."  -  But  railroad  corporations 
even  when  organized  under  general  laws  are  very  different  from 
companies  having  no  public  duties  to  perform,  A  railway  com- 
pany enjoys  the  power  of  condemning  private  property;  and 
sometimes  provision  is  made  for  a  judicial  investigation  into  the 
fitness  of  the  corporation  to  be  entrusted  with  this  delicate  fran- 
chise, so  that  perhaps  public  policy  might  be  thought  to  pro- 
hibit a  complete  transfer  of  its  line  into  other  hands  by  sale  or 
lease.  Moreover,  even  where  general  laws  provide  for  the  incor- 
poration, construction,  and  operation  of  railways,  the  sale  or 
lease  of  a  completed  road,  involving,  as  it  generally  does,  a 
transfer  of  control  from  small  local  capitalists  to  some  great 
foreign  corporation  or  syndicate,  may  be  deemed  contrary  to 
the  policy  of  the  law.  At  all  events,  the  case  with  respect  to  a 
railroad  differs  materially  from  that  of  mere  industrial  corpo- 
rations with  no  public  duties  to  perform.  Consequently,  while 
one  should  expect  Oregon  Railway  Com'pauy  v.  Oregonian  Rail- 
way Company  to  be  followed  in  America,  yet  its  doctrine  ought 
not  to  be  and  probably  would  not  be,  extended  or  applied  so  as 
to  prohibit  the  organization  of  an  industrial  corporation  for  the 
purpose  of  selling  or  otherwise  disposing  of  its  whole  business 
and  property  or,  in  other  words,  its  "undertaking."  ^    To  build 

>  See,     for    example,     Kean     v.  Rys.,  etc.  Co.,  49  N.  J.  Eq.  217,  241 ; 

Johnson,  9  N.  J.  Eq.  401 ;    Thomas  23  Atl.  287   (where  the  court  said, 

V.  Railroad  Co.,  101  U.  S.  71.  obiter:    "  The  Corporation  Act  per- 

'  Oregon    Ry.    Co.    v.    Oregonian  mits  incorporations  not  only  for  ob- 

Ry.  Co.,  130  u!  S.  1 ;  9  Sup.  Ct.  409.  jects  specified  therein,  but  for  'any 

*  Traer  v.  Lucas  Prospecting  Co.,  lawful  business  or  purpose  whatso- 

99  N.  W.  290;    124  Iowa,  107.  ever,'   which  general   clause  is  not, 

Cf.  EUerman  v.  Chicago  Junction  however,  to  be  construed  as  embrac- 

52 


§  31-§   102]  TUE    OBJECT    CLAUSE  §  5G 

up  a  private  business  for  the  purpose  of  selling  it  advantageously 
is,  for  individuals,  a  very  usual  and  perfectly  lawful  aim.  Why 
should  not  the  formation  of  a  corporation  for  the  same  object  be 
equally  legitimate  under  any  incorporation  law  providing  for  the 
organization  of  conijKUiies  for  any  lawful  purpose  or  business? 
Where  the  statutes  restrict  the  right  to  incorporate  to  certain 
named  classes  of  companies,  it  is,  however,  probably  true  that  no 
corporation  can  be  organized  for  the  purpose  of  selling  its  busi- 
ness and  undertaking:  for,  however  numerous  the  specified  ob- 
jects for  which  such  statutes  permit  incorporation,  this  is  not 
one  of  them.' 

§  56.  Acting  as  Agent  or  Attorney  as  one  of  Objects.  —  To 
act  as  agent  or  attorney  in  fact  for  other  persons  is  a  lawful 
business,  and  therefore  a  corporation  may  be  organized  for  that 
object.-  The  objection  that  a  corporation  can  act  only  by  agents, 
and  therefore  cannot  be  itself  an  agent,  since  delegata  poicstas 
non  potest  delegari,  is  wholly  unsubstantial ;  for  any  person  who 
employs  a  corporation  as  agent  necessarily  consents  that  it  shall 
in  the  course  of  its  agency  act  through  sub-agents.^  And  like- 
wise the  objection  that  a  corporation  cannot  as  agept  execute 
deeds  of  real  estate  on  the  principal's  behalf,  since,  being  an 
impersonal  entity,  it  cannot  make  an  acknowledgment,  is  unten- 
able ;  for  the  corporation  can  make  the  acknowledgment  in  the 
same  way  as  if  it  were  a  principal,  namely,  by  its  officers.  Con- 
sequently, a  corporation  may  even  be  formed  to  act  as  agent  or 

ing  powers  to  do  those  things  which  R.  A.  638  ;    17  Am.   St.    Rep.    737 ; 

would  deprive  the  corporation  of  its  State  ex  rel.   Le   Blanc   <&   Railey  v. 

abiUty  to  carry  out  the  objects  for  Michel,  36  So.  869;    113  La.  4. 
which   it  was  formed,   or  discharge         Cf.   Morris  v.   Third  Nat.   Bank, 

any  duties  which  it  miglit,  under  its  142  Fed.  25 ;   73  C.  C.  A.  211  (where 

charter,  owe  to  the  pubhc,  or  which  under  peculiar   circumstances  a  na- 

are  contrary   to   the    pohcy  of  the  tional  bank  was  held  to  have  implied 

law");     People    ex    rel.    Barney    v.  power  to   act   as   representative   of 

Whalen,  104  N.  Y.  Supp.  555  (pro-  other  persons);     Anderson  v.   First 

vision    for   sale   of   entire    property  Nat.  Bank,  5  N.  Dak.  451 ;  67  N.  W. 

held  to  be  in  conflict  witli  a  statute  821  (also  relating  to  the  powers  of 

expressly  conferring  a  more  limited  national  banks  as  agents), 
power  of  the  same  general   kind);         ^  Snow,  Church  &  Co.  v.  Hall,  19 

People  ex  ret.  Barney  w  Whalen,  106  N.   Y.   Misc.  655;    44  N.   Y.   Supp. 

N.  Y.  Supp.  434  (similar  decision  to  427  (a  corporation  formed  to  carry 

last  case).  on  a  collection  agency  may  employ 

'  See  infra,  §78.  attorneys  at  law  to  collect  claims  and 

-  Killingsworth  v.  Portland  Trust  charge  their  fees  against  its  client). 
Co.,  18  Greg.  351 ;    23  Pac.  06;  7  L. 

53 


§  57  TUE    INCORPORATION    PAPER  [ClIAP.   II 

broker  in  the  purchase  or  sale  of  its  own  shares.^  A  corporation 
may  be  formed  to  carry  on  the  business  of  acting  as  agents  of 
other  persons  even  though  a  statute  provides  that  no  corporation 
shall  act  as  administrator  or  guardian,  or  fill  "any  other  office 
of  personal  trust " ;  -  for  the  words  last  quoted  refer  to  offices  of 
personal  trust  ejusdeni  generis  as  those  specially  mentioned  and 
not  to  mere  private  agencies. 

§  57.  Acting  as  Trustee.  —  To  act  as  trustee  is  a  lawful 
object ;  and  therefore  under  statutes  providing  for  the  formation 
of  corporations  for  any  lawful  purpose,  there  is  no  reason  why 
acting  as  trustee  should  not  be  mentioned  in  the  object  clause  of 
an  incorporation  paper  as  an  object  of  the  proposed  company, 
unless  indeed  the  acting  as  trustee  be  contrary  to  the  very  nature 
of  a  corporation.  Now,  under  the  Statute  of  Uses  the  doctrine 
was  established  in  early  times  that  a  corporation  could  not  be  a 
trustee  or  feoffee  to  uses;  for  how,  it  was  said,  can  trust  be  re- 
posed in  a  being  which  has  no  soul  or  conscience  ?  The  force  of 
this  reasoning  has,  of  course,  long  since  ceased  to  be  felt ;  ^  and 
ever  since  the  growth  of  modern  trusts,  the  courts  have  held  that 
a  corporation  may  act  as  trustee  whenever  so  to  do  is  a  reason- 
able method  of  attaining  the  objects  for  which  it  was  formed.* 
Indeed,  it  would  seem  that  to-day  in  America  a  corporation  may 
be  seised  to  a  use  under  the  Statute  of  Uses,  and  may  accord- 
ingly convey  land  by  a  deed  of  bargain  and  sale.^  Even  if  the 
corporation  which  is  appointed  trustee  by  deed  or  will  have  no 
corporate  power  so  to  act,  nevertheless  equity  will  not  permit  the 
trust  to  fail  but  will  compel  the  corporation  or  whoever  holds 

1  Borland's  Trustee  v.  Steel  Bros.  *  Attorney-General  v.  Whorwood, 
&  Co.  (1901),  1  Ch.  279,  293  (head-  1  Ves.  Sr.  534,  536  (per  Lord  Hard- 
note  inadequate).  wicke) ;    Re  Howe,  1  Paige  (N.  Y.) 

2  State  ex  rel.  Le  Blanc  &  Railey  214;  Vidal  v.  Girard's  Ex'rs,  2  How. 
V.  Michel,  36  So.  869 ;  113  La.  4.  127,  187 ;  Stobart  v.  Forbes,  13  Mani- 

3  Cf.  Bacon  on  Uses,  p.  57,  where  toba,  184 ;  De  Camp  v.  Dobbins,  29 
a  less  scholastic  reason  is  assigned  N.  J.  Eq.  36,  39-40 ;  Phillips  Acad- 
for  the  doctrine.  "A  corporation,"  emy  v.  Km^r,  12  Mass.  546 ;  Lewinon 
says  the  author,  "cannot  be  seised  Trusts,  11th  ed.,  30;  Perry  on 
to  an  use  .  .  .  chiefly  because  of  the  Trusts,  5th  ed.,  §  42. 

letter  of  the  Statute  which  in  any         Cf.  Greene  v.  Dennis,  6  Conn.  292, 

clause  when  it  speaketh  of  the  feoffee  304. 

resteth  only  upon  the  word  person,  '  Angell  &  Ames  on  Corps.,  2d 

but  when  it  speaketh  of  cestui  que  ed.,   153-154. 

use,    it    addeth    person    or    body         But  see  Greene  v.  Dennis,  6  Conn, 

politic."  292,  304  (semble). 

54 


§  ol-§   162]  THE    OBJECT    CLAUSE  §  58 

the  legiil  title  to  convey  tlie  trust  projxrty  tO  the  person  whom 
the  chiincellor  may  appoint  to  execute  the  trust.'  The  conclu- 
sion necessarily  follows  that  under  the  modern  lii)eral  laws, 
acting  as  trustee  may  be  mentioned  in  an  incorporation  paper 
as  an  object  for  which  the  company  is  formed.-  Sometimes 
general  incorporation  laws  provide  that  trust  companies  cannot 
be  incorporated  under  them ;  and  where  such  statutes  are  in 
force  there  may  be  a  question  whether  a  company  can  be  incor- 
porated for  the  purpose  of  acting  as  trustee.  In  other  cases  it 
may  be  inadvisable  to  mention  the  acting  iis  trustee  as  one  of  the 
objects  of  the  corporation  lest  the  company  be  subjected  to 
burdensome  statutory  regulations  applicable  to  trust  companies. 
§  58.  Acting  as  Executor,  Guardian,  etc.  —  Whether  a  cor- 
poration may  be  formed  to  act  as  executor  or  administrator  or 
as  guardian  of  an  infant  or  committee  of  a  lunatic,  is  a  different 
question.  It  is  settled  that  a  corporation  has  no  implied  power 
to  act  in  any  of  those  capacities.  For  instance,  where  a  statute 
provides  that  in  case  a  will  appoints  no  executor,  administration 
siiall  be  granted  to  the  residuary  legatee,  a  charitable  or  educa- 
tional corporation  which  is  named  as  residuary  legatee  cannot 
be  appointed  administrator.''  It  would  follow  that  such  a  cor- 
poration, although  named  as  executor,  would  have  no  right  to 
letters  testamentary/  It  has  even  been  held  in  Nebraska  that  an 
order  of  a  probate  court  appointing  a  corporation  administrator 
is  void,  and  subject  to  collateral  attack.^  I'he  reason  for  this 
doctrine  is  that  statutory  provisions  requiring  executors  and 
administrators  to  make  oath  to  this,  that,  and  the  other,  in  the 

'  Vidd  V.  Girard's  Ex'rs,  2  How.  -patrick's  Will,  22  N.  J.  Eq.  463  (hold- 

127,  188.  ing  that  in  such  a  case  administra- 

Cf.    Jackson   ex    dem.    Lynch    v.  tion  should  be  granted  to  one  of  the 

Hartwcll,  8  Johns.  (N.  Y.)  422  (deed  members  of  the  corporation), 

to  corporation  in  trust  held  not  to  *  Cf.  1  Williams  on  Executors,  9th 

pass    legal    title    when    corporation  ed.,    183,    184  (where  early  English 

has  no  power  to  execute  the  trust,  authorities,  pro  and  con,  are  referred 

^nth   a  query   whether  a  court   of  to) ;    1  Woemer's  Am.  Law  of  Ad- 

e(]uitj'  would  prevent  the  trust  from  ministration,  §  233,  p.  509  (where  the 

failing  for  want  of  a  trustee).  author  expresses   the  opinion    that 

'  State  ex  rel.  Highy  v.  Higby  Co.  the  modern  trend  of  authorities  ia 

(Iowa),  lOG  X.  W.  382.  the  United  States  is  in  favor  of  the 

'  Presidctit,    etc.    of    Georgetown  capacity  of    corporations  to  act  as 

College  v.  Bronze,  34  Md.  450,  455  e.xecutors). 

(semble) ;     Thompson's     Estate,    33  *  Continental  Trust  Co.  v.  Peter- 
Barb.   (N.   Y.)  334.     a.    Re   Kirk-  son  (Nebr.),  107  N.  W.  786. 


§  59  THE    INCORPORATION    PAPER  [Ch.\P.  II 

course  of  the  administration  show  that  natural  persons  alone 
are  contemplated.'  As  res  Integra  it  might  be  doubted  whether 
this  reasoning  is  altogether  conclusive.  Nevertheless,  wherever 
such  reasoning  has  been  accepted,  it  would  necessarily  seem  to 
follow  that  a  corporation  cannot  be  formed,  even  though  the 
statute  authorize  incorporation  for  any  lawful  object,  for  the 
purpose  of  acting  as  executor  or  administrator,  and  that  any 
provision  in  an  incorporation  paper  purporting  to  empower  the 
company  to  act  in  either  of  those  capacities  would  be  inefiective,- 
According  to  this  view,  affirmative  legislative  sanction  is  neces- 
sary in  order  that  a  corporation  may  act  as  executor  or  adminis- 
trator. This  legislative  sanction  is,  nowadays,  not  infrequently 
granted.^ 

§  59.  Owning  Shares  in  another  Corporation.  —  The  forma- 
tion of  a  corporation  for  the  purpose  of  controlling  another 
corporation  by  means  of  ownership  of  shares  in  the  latter  com- 
pany is  often  highly  desirable.  Such  a  purpose  is  not  in  itself 
unlawful  unless  it  be  foreign  to  the  nature  of  a  corporation  to 
become  a  member  of  another  corporation.  It  would  seem  clear 
that  this  is  not  so,  and  that  in  the  absence  of  some  direct  statu- 
tory prohibition,  the  ownership  by  one  business  company  of 
shares  in  another  business  corporation,  even  though  possibly 
ultra  vires,  is  not  illegal  or  against  public  policy.  "There  is  no 
reason  at  common  law,  so  far  as  I  know,"  said  Lord  Cairns, 
"why  one  corporate  body  should  not  become  a  member  of  an- 
other corporate  body."*  This  is  rendered  abundantly  clear  by 
several  groups  of  cases,  in  which  corporations  are  allowed  to 

'  A  corporation,  says  Blackstone,  poration  not  qualified  under  domes- 
" cannot  be  executor  or  adrainistra-  tic  law);  Crowley  v.  Sandhurst,  etc. 
tor,  or  perform  any  personal  duties;  Co.,  23  Vict.  L.  R.  661  (holding  that 
for  it  cannot  take  an  oath  for  the  a  corporation  which  by  act  of  Par- 
due  execution  of  the  office."  1  Black,  liament  is  authorized  to  act  as  trus- 
Comm.  477.  tee    may    act    as    co-trustee    with 

2  Cf.  State  ex  ret.  Higby  v.  Higby  individuals,  as   to  which    point  see 

Co.  (Iowa),  1D6  N.  W.  .382.  also  infra,  §  76) ;  Louisville,  etc.  R.  R. 

'  E.  g.  Minnesota  Loan  &  Trust  Co.  v.  Herndon's  Adm'r  (Ky.),   104 

Co.  V.  Beebe  (Minn.),  41  N.  W.  2-32;  S.  W.  732  (holding  that  a  corpora- 

40  Minn.  7;  2  L.  R.  A.  418  (corpora-  tion  which  is  authorized  by  statute 

tions     as     guardians) ;      Deringer's  to  act  as  administrator  may  be  ap- 

Adm'r  v.  Deringer's  Adm'r,  5  Houst.  pointed  public  administrator). 

(Del.)   416;    1    Am.    St.     Rep.     1.50  *  Barned's    Banlcing   Co.,    3    Ch. 

(validity  of  foreign  appointment  of  105,  113. 
corporation  recognized,  although  cor- 

56 


§  31- §   1G2J  THE    OIJJECT    CLAUSE  §  GO 

become  members  of  otiier  corjxjrations  without  any  express 
authority.'  Since,  therefore,  the  ownership  by  one  cor{X)ration 
of  shares  in  another  corjxjration  is  not  necessarily  contrary  to 
the  pohcy  of  tlie  law,  it  follows  that  under  statutes  which  au- 
thorize the  incorjx),ration  of  companies  for  any  lawful  purposes, 
a  corporation  may  legally  be  organized  with  the  accjuisition  and 
ownership  of  shares  in  other  corjxjrations  as  one  of  its  objects  as 
expressed  in  its  incorporation  paj>er.-  Indeed,  the  so-called 
"holding-companies,"  which  have  become  not  infrequent  in 
these  latter  days,  are  based  on  this  principle. 

§  60.  Ownership  of  Shares  with  ulterior  Illegal  Intent.  —  Of 
course,  in  any  particular  case  the  ownership  of  shares  of  stock 
by  a  corporation  may  be  unlawful  because  of  some  ulterior 
illegal  intent,^  such  as  the  creation  of  a  monopoly,  restraint  of 
trade,  or  the  practical  consolidation  of  competing  lines  of  rail- 
way in  fraud  of  some  prohibitory  statute  *  or  in  violation  of  what 
is  deemed  the  public  policy  of  the  state.^  Indeed,  some  cases 
apparently  hold  that  the  acquisition  by  one  company  of  shares 
of  stock  in  another  corporation  foe  the  purpose  of  controlling 
the  latter's  business  is  prima  facie  at  least  contrary  to  public 

'  See  infra,  §  82.  ing  any  such   intent,   see  National 

'  Barned's    Banking   Co.,    3    Ch.  Salt  Co.  v.  Ingraham,  143  Fed.  805; 

105;    Dittman  v.  Distilling  Co.,  54  74  C.  C.  A.  479. 

Atl.  Rep.  570  (N.  J.  Ch.);    Market         *  Xorthern  Securities  Co.  v.  U.S., 

Street  Rij.  v.  Hellman,  109  Cal.  571,  193    U.  S.    197;    24   Sup.  Ct.  436; 

589-590;     42    Pac.    225;     Traer    v.  People    v.    Chicago    Gas    Trust  Co., 

Lucas  Prospecting  Co.,  99  N.  W.  290 ;  130  111.  2G8 ;   22  N.  E.  798 ;    17  Am. 

124   Iowa,    107;    Rohotham  v.  Pru-  St.  Rep.  319;    8  L.  R.  A.  497  (stated 

dentiai  ins.  Co.,  64  N.  J.  Eq.  673,  and  criticised,  supra,  §  52) ;  Dunbar 

696;  53  Atl.  842.  v.  American  Tel.,  etc.  Co.    (111.),  79 

But   see   People   v.   Chicago   Gas  N.  E.   423 ;    224   ill.  9 ;   Bigclow  v. 

rru-s;  Co.,  130  111.  268;  22N.  E.  798;  Calumet,  etc.  Mining  Co.,   155  Fed. 

17  Am.  St.  Rep.  319 ;  8  L.  R.  A.  497  869 ;  Southern  Electric  Securities  Co. 

(stated  and  criticised  supra,  §  52);  v.  State  (Miss.),  44  So.  785;  Burrows 

Woodberry  v.  McClurg,  29  So.  514;  v.  Interborough  Metropolitan  Co.,  156 

78  Miss.  831  (decided  under  a  Mis-  Fed.  389  (where  tlie  general  statute 

sissippi  statute,  known  as  tiie  anti-  expressly    authorized    formation    of 

trust  law,  e.xpressly  prohibiting  cor-  corporations    to    acquire     stock    in 

I)orations  from  owning  stock  of  other  other  companies  but  also  prohibited 

companies) ;      Parsons     v.     Tacoma  monopolies). 

Smelting,  etc.  Co.,  65  Pac.  765;    25         CLDittmanv.  DistillingCo.i'N.J.), 

Wash.  492.  54  Atl.  Rep.  570 ;  Trust  Co.  of  Georgia 

*  Cf .   Pearson  v.   Concord  R.   R.  v.  State,  35  S.  E.  323 ;    109  Ga.  736 ; 

Corp.,  62  N.   H.  537 ;    13  Am.  St.  48  L.  R.  A.  520. 
Rep.  590.  *  Klkins   v.    Camden,   etc.    R.   R. 

As  to  the  impossibility  of  presum-  Co.,  36  N.  J.  Eq.  5. 

57 


§  61  THE    INCORPORATION    PAPER  [ChAP.  II 

policv.^  At  all  events,  a  scheme  by  which  one  corporation  ac- 
quires a  majority  of  the  shares  of  another  which  at  the  same 
time  acquires  a  majority  of  the  shares  of  the  former  company  is 
illegal ;  inasmuch  as  its  effect  would  be  to  lodge  permanent  con- 
trol of  both  companies  in  the  men  who  happen  at  the  time  to  be 
the  directors,  and  to  deprive  the  persons  beneficially  interested  in 
the  companies,  namely,  the  other  shareholders,  of  all  power 
or  control  over  their  own  property.^  Where  the  ownership  of 
shares  in  another  company  is  not  vitiated  because  of  some  illegal 
intent,  the  question  whether  the  power  exists  is  purely  a  question 
of  construction  of  the  incorporation  paper. 

§61.  Amalgamation  with  other  Corporations. —  The  stat- 
utes of  Great  Britain  and  of  most  of  the  United  States  contain 
express  provisions  authorizing  a  consolidation  or  amalgamation 
of  corporations  formed  under  them  with  other  corporations  of  a 
similar  nature.  These  provisions,  at  least  in  the  United  States, 
commonly  provide  for  a  consolidation  in  the  technical  sense  in 
which  that  word  is  used  in  this  country  —  that  is  to  say,  a 
coalescing  or  merger  of  the  two  with  the  result  that  a  new  cor- 
poration is  formed  which  is  distinct  from  either  of  the  old  ones 
and  yet  which  in  a  certain  sense  is  composed  of  both.  In  order 
to  bring  about  a  union  of  this  sort,  recourse  must  be  had  to  ex- 
press statutory  authority;  for  without  such  authority  not  even 
the  most  express  authorization  in  an  incorporation  paper  would 
enable  such  a  consolidation  to  be  effected.  On  the  other  hand, 
where  such  statutory  authority  exists  there  is  ordinarily  no  need 
of  inserting  in  the  incorporation  paper  any  special  clause  sanc- 
tioning its  exercise.  But  sometimes  it  is  desirable  to  accomplish 
substantially  the  same  end  in  a  somewhat  different  way  from 
that  provided  by  the  statute ;  and  in  such  cases  a  clause  may  be 
inserted  in  the  incorporation  paper  authorizing  a  consolidation 
or  amalgamation,  and  such  a  clause  is  valid.^  The  term  amal- 
gamation is  difficult  to  define  "  although  it  is  of  very  frequent  use 
especially  in  England.  Sometimes,  the  provision  simply  au- 
thorizes a  sale  of  the  company's  assets,  business,  and  under- 

'  Pearson  v.  Concord  R.  R.  Co.,  '  Robotham  v.  Prudential  Ins.  Co., 

62  N.  H.  537;    13  Am.  St.  Rep.  590;  64  N.  J.  Eq.  673;    53  Atl.  842. 

An-glo- American    Land,    etc.    Co.    v.  ^  New  Zealand  Gold,  etc.   Co.   v, 

Lombard,    132    Fed.    721,    736-737;  Peacock  (1894),  1  Q.  B.  622. 

Dunbar   v.    American   Tel.,  etc.  Co.,  *  Cf.   South  African  Supply,  etc. 

79  N.  E.  423 ;   224  111.  9.  Co.  (1904),  2  Ch.  268. 

58 


§  31-§    162]  THE    OBJECT    CLAUSE  §  63 

tukirij^  in  exchiuif^e  for  shares  in  the  purchasing  company,  which 
provision  is  quite  vahd.'  No  provision  for  such  a  sale  or  ex- 
change or  for  an  amalgamation  will  l>e  construed  to  authorize 
an  arrangement  whereby  the  shares  in  the  purchasing  company 
which  constitute  the  consideration  for  the  transfer  are  to  Ix* 
distributed  among  those  who  are  shareholders  in  the  vendor 
company,  and  who  upon  the  consummation  of  the  scheme  are 
to  become  members  of  the  purchasing  company  whether  they 
will  or  not ;  ^  although  it  seems  to  be  conceded  that  if  express 
authority  for  such  an  arrangement  be  embodied  in  the  incor- 
poration paper,  it  will  be  efficacious.^ 

§  62.  Unlawful  Objects  —  How  Illegality  determined.  —  The 
determination  of  the  question  what  is  a  lawful  ol)ject  does  not, 
in  general,  depend  at  all  on  matters  of  corporation  law.  To  lie, 
to  steal,  to  kill  are  unlawful  objects  but  their  illegality  does  not 
depend  on  questions  pertinent  in  a  treatise  on  corporation  law. 
The  matter  of  incorporation  for  illegal  purposes  is,  moreover, 
the  subject  of  detailed  consideration  below.*  Suffice  it  here  to 
say  that  the  illegality  may  appear  from  other  parts  of  the  incor- 
poration paper  than  the  object  clause.  For  instance,  if  the  pro- 
posed name  of  the  company  involves  a  false  representation,  the 
company  is  not  formed  for  a  lawful  purpose,  however  innocent 
the  objects  as  specified  in  the  object  clause  may  be.^  The  ques- 
tion whether  the  purpose  of  incorporation  is  lawful  is  ordinarily 
a  question  of  state  rather  than  of  federal  law.® 

§  63.  Incorporation  for  a  Purpose  provided  for  by  a  differ- 
ent Statute.  —  Where  one  statute  authorizes  incorporation  for 
any  lawful  purpose  and  another  statute  provides  for  the  incor- 
poration of  certain  kinds  of  corporations  —  such  as  railway, 
telegraph,  telephone,  or  gas  companies  —  it  would  seem  that  no 
company  can  be  incorporated  under  the  more  general  statute 
for  purposes  which  are  covered  by  the  other  statute.^    The  legis- 

'  Supra,  §  54-§  55.  note    inadequate) ;      21     Sup.    Ct. 

-  Ex  'parte  Hagshaw,  4  Eq.  341.  378. 

'  Ex  parte    Bagshaw,  4  Eq.  341,        ^    Richards  v.  Dover,  61  N.  J.  Law 

348.  400  (headnote  inadequate),  39  Atl. 

*  Infra,  Chapter  V.  705.     Cf.   Montdair  Military  Acad- 

'  Rex    V.    Registrar    Joint    Stock  emy  v.  State  Board  of  Assessors,  Go 

Companies  (1904),  2  Ir.  634,  640.  N.  J.  Law    516;    47  Atl.  558;    Do- 

"  New  Orleans  Debenture,  etc.  Co.  mestic  Telegraph  Co.  v.  Newark,  49 

V.  Louisiana,    180  U.  S.  320  (head-  N.  J.  Law  344,  348;   8  Atl.  12S. 

59 


§  64  THE   INCORPORATION    PAPER  [ChaP.  II 

lature  is  taken  to  have  intended  that,  notwithstanding  the  gen- 
eral language  of  the  former  statute,  no  corporation  should  be 
formed  for  the  purposes  mentioned  in  the  other  statute  without 
subjecting  itself  to  the  provisions  of  the  last  mentioned  act.  In 
any  such  case,  the  courts  will  if  possible  refer  the  attempted 
incorporation  to  the  statute  under  which  the  company  might 
have  been  organized  rather  than  to  that  under  which  the  cor- 
poration  purported  to  be  acting.^ 


§  64-§  102.      WHAT  POWERS  IMPLIED   WITHOUT  EXPRESS 
MENTION  IN  OBJECT  CLAUSE. 

§  64.  In  general.  —  In  drawing  up  the  object  clause  of  an 
incorporation  paper,  much  may  safely  be  left  to  implication. 
The  old  list  of  implied  powers  given  by  Blackstone  and  other 
earlv  wTiters  —  the  power  to  sue  and  be  sued,  to  have  perpetual 
succession,  to  make  and  use  a  common  seal,  etc.,  —  is  far  too 
limited.  Moreover,  such  so-called  implied  powers  are  usually 
expressly  conferred  by  the  general  enabling  act  upon  all  cor- 
porations organized  under  it.  There  are  many  other  powers, 
not  enumerated  in  the  text-books  on  the  subject,  and  indeed  so 
many  and  various  as  almost  to  defy  enumeration,  which  are 
incidental  to  almost  every  modern  corporation  —  certainly  to 
every  corporation  framed  on  the  joint-stock  plan.  Such  powers 
need  not  be  expressly  mentioned  in  the  incorporation  paper  in 
specifying  the  objects  of  the  company.^ 

§  65.  Caution  as  to  Reliance  upon  Implications  of  Law.  — 
But  although  much  may  safely  be  left  to  implication,  a  few 
pregnant  phrases  carrying  a  world  of  meaning,  yet  the  part  of 
wisdom  is  to  rely  comparatively  little  on  important  powers  being 
read  into  the  incorporation  paper  by  construction  or  implication. 
A  learned  and  experienced  English  lawyer  and  text-writer  has 

'  Minneapolis,  etc.  Surburban  Ry.  under   a    law    for   incorporation    of 

Co.  (Minn.),  112  N.  W.  13;    Inter-  commercial     steam     railroads,     the 

national   Boom  Co.    v.    Rainy  Lake  word  "street"  should  be  disregarded 

River  Boom  Co.,  97  Minn.  513 ;    107  in    the   incorporation    paper,  which 

N.  W.  73.5.  set  forth  as  the  object  of  the  com- 

But  cf.  David  Bradly  Mfg.  Co.  v.  pany   the  construction  of  a  street 

Chicago,  etc.   Traction   Co.   (III.),  82  railway). 

N.  E.  210  (where  the  court  said  that         ^  Kingsbury  Collieries  and  Moore's 

where    a    corporation    is    organized  Contract  (1907),  2  Ch.  259. 

GO 


§  31-§   1G2]  POWEItS    IMPLIED  §  66 

said  on  this  subject:  "A  very  concise  statement  of  ol)jects  may, 
by  implication,  as  the  lawyer  is  aware,  cover  a  great  deal,  but  a 
memorandum  of  association  is  a  popular  document  intended 
not  merely  for  lawyers,  but  for  the  guidance  of  shareholders, 
directors,  and  of  the  general  pul)lic,  and,  accordingly,  it  is  not 
expedient  to  rely  too  much  on  implication.  Experience  shows 
that  it  is  better  to  be  explicit,  and  thus  to  preclude  as  far  as 
practicable  the  doubts  and  (hlHculties  which  inevitably  arise 
on  the  construction  of  a  very  concise  statement  of  objects. 
Hence  the  somewhat  elaborate  statements  of  objects  now  so 
commonly  found.  These  clauses  may  err  by  excess  of  detail; 
but  over-elaboration  is  better  than  over-conciseness.  Nothing 
is  more  irritating  to  those  who  have  to  manage  a  company  than 
to  find  that  the  powers  of  the  company  are  fettered  or  ques- 
tioned, and  its  business  impeded  or  prejudiced  simply  because 
the  framer  of  the  memorandum  of  association  has  framed  it 
without  sufficient  foresight  or  judgment,  and  has,  contrary  to 
the  fact,  assumed  that  the  ordinary  business  man  is  familiar 
with  the  legal  and  somewhat  conflicting  decisions  as  to  the 
powers  w^iich  may  be  implied  by  a  concise  statement  of 
objects."  ^ 

§  66.  Caution  as  to  express  Mention  of  Powers  that  might 
be  implied  —  Maxim  of  Expressio  Unius.  —  One  danger  lurks 
in  over-elaboration  and  the  statement  of  unnecessary  details: 
that  is,  that  the  express  mention  of  certain  powers  which  would 
ordinarily  be  imphed  should  be  held  an  inferential  exclusion  of 
all  other  similar  powers  that  would  likewise  ordinarily  be  im- 
plied. Expressio  wiius  exclusio  altcrius?  Thus,  an  express 
power  to  borrow  up  to  a  certain  amount  would  probably  operate 
as  an  implied  prohibition  of  borrowing  to  a  greater  amount,^ 
although,  had  nothing  been  said  on  the  subject,  the  corpora- 
tion would  have  possessed  an  unlimited  power  of  borrowing. 
This  danger  may  be  averted  by  an  express  provision  that  the 
mention  among  the  company's  objects  of  certain  powers  shall 
not  be  deemed  to  exclude  by  inference  the  exercise  of  any  powers 

'  Palmer's  Company  Law,  Sd  uniiLs  is  "not  applicable  to  the  con- 
ed-,  16.  Btruction  of    charters");    Kingsbury 

'  But  see   Edgewood  Borough  v.  Collieries      and     Moore's      Contract 

Scott.  29  Pa.  Super.  Ct.  156  (where  (1907),  2  Ch.  259,   267-268. 
a  somewhat     misleadinn;     hcadnote         "  Infra,  §  69. 
states    that    the    ma.xim    expressio 

61 


§  67  THE    IXCORPORATION    PAPER  [ChAP.   II 

that  might  have  been  iinpHed  if  no  such  express  mention  had 
been  made. 

§  07.  Necessity  for  Draftsman  to  consider  what  Objects  may 
be  implied  —  Scope  of  Treatment.  —  In  order  to  determine  what 
objects  or  powers  must  be  expressly  mentioned  in  preparing  an 
incorporation  paper,  and  what  need  not/  it  is  necessary  to  con- 
sider somewhat  in  detail  what  powers  and  objects  may  be  im- 
plied. This  consideration  will  not  be  permitted,  however,  to 
extend  to  a  thoroughly  exhaustive  examination  of  the  subject 
of  the  implied  or  incidental  powers  of  corporations,  but  will  be 
confined  to  such  points  as  may  be  useful  to  draftsmen  of  incor- 
poration papers. 

§  6S.  General  Rules  as  to  Implied  Powers.  —  The  general 
rules  with  reference  to  implied  powers  are  well  established. 
First,  all  powers  not  affirmatively  granted,  either  expressly  or 
impliedly,  are  denied.  A  corporation  has  such  powers,  and  such 
only,  as  are  conferred  upon  it  by  the  act  of  incorporation  or  its 
incorporation  paper ;  all  powers  not  either  expressly  or  impliedly 
given  are  impliedly  prohibited.^  Secondly,  a  corporation  may 
exercise  all  powers  that  are  fairly  incidental,  or  reasonably 
adapted,  to  the  attainment  of  its  expressed  objects;^  and  even 
a  statute  which  provides  that  no  corporation  shall  exercise  any 
powers  except  such  as  are  "necessary"  to  the  exercise  of  the 
powers,  or  attainment  of  the  objects,  set  forth  in  the  incorpo- 
ration paper  does  not  alter  this  rule.*  It  is  in  the  application  of 
the  rule  that  doubts  and  difficulties  are  encountered ;  for  the  ap- 
plication of  the  rule  involves  "either  a  question  of  fact  or  at 
least  a  mixed  question  of  law  and  fact,"  so  that  former  adju- 
dicated cases  often  furnish  an  unsatisfactory  guide.^  The  rule 
itself  is  settled  beyond  peradventure  both  in  England  and 
America.  But  the  uncertainties  of  its  application  give  rise,  as 
already  stated,  to  the  desirability  of  mentioning  expressly  in 
the  incorporation  paper  all  powers  that  the  company  may 
desire  to  exercise,  even  though  they  might  be  thought  implied 
or  incidental  to  the  attainment  of  its  other  objects. 

'  For   an   excellent   and    concise         *  Ellerman   v.    Chicago   Junction 

Bummary,    see    Palmer's    Company  Rys.,  etc.  Co.,  49  N.  J.  Eq.  217,  241- 

Law,  3d  ed.,  pp.  46,  47.  243  ;    23  Atl.  287. 

^  See  supra,  §  46.  ^  Attorney-General  v.  Mersey  Ry. 

^  Newport  News  Shipbuilding,  etc.  Co.    (1907),    A.    C.    415,    416,    per 

Co.  V.  Jones  (Va.),  54  S.  E.  314.  Lord  Loreburn. 

G2 


§  ol-§  1G2]  POWEKS    IMI'LIEU  §  69 


§  69-§  74.     Power  to  Borrow. 

§  ()0.  In  general.  —  Take  for  instance  the  power  to  Ixjrrow 
money.'  It  is  well  settled  l)otli  in  England  and  .\niericu  that 
a  corporation,  having  power,  as  of  course  it  has  as  incidental  to 
its  very  existence,  to  purchase  any  property  or  rights  that  may 
reasonably  he  deemed  proper  for  its  business,  may  purchase  the 
same  on  credit;  and  in  like  manner  may  order  work  and  labor 
to  be  done  for  it  on  credit.^  In  America,  it  may  accomplish  the 
same  result  by  borrowing  money  to  expend  for  its  purposes;^ 
but  in  England  this  is  indisputably  true  only  in  the  case  of  trad- 
ing companies,  other  corporations  having  perhaps  no  such 
power.*  The  validity  of  a  loan,  wherever  borrowing  is  intra 
vires,  cannot  be  impeached  because  of  an  intention  on  the 
company's  part,  unknown  to  the  creditor,  to  misapply  the 
moneys  and  divert  them  to  some  idtra  vires  object.^  Conse- 
quently, there  is  in  the  United  States  no  necessity  to  express  in 
an  incorporation  paper  the  power  of  borrowing  money  as  one 
of  the  company's  objects.  INIoreover,  any  provision  that  may 
be  inserted  on  the  subject  must  either  be  regarded  as  surplusage, 
put  in  out  of  abundant  caution,  or  else  as  restrictive  in  character. 
The  latter  alternative  has  received  judicial  approval.®     Thus, 

*  In  Southern  Brazilian,  etc.  Ry.  Barb.  (N.  Y.)  20 ;    Fifth  Ward  Sav. 

Co.  (1905),  2  Ch.  78,  84,  it  was  said  Bank     v.     First     Xal.     Bank,     48 

that   the   power   to   borrow    is   not  N.  J.  Law  513;    7  Ati.  318  (a  sav- 

propcrly   an    "object,"    and    there-  ings  bank) ;    Partridge  v.  Badger,  25 

fore  need  not  be  mentioned  in  the  Barb.    (N.    Y.)    146;     Burr   v.    Mc- 

incorporation  paper.  Donald,  3  Gratt.  (Va.)  215;  T/wmp- 

'  Bagnalstown  &  Wexford  Ry.  Co.,  son  v.  Lambert,  44  Iowa  239  ;  Wright 

Ir.B.ei^.A'Eq.oQb;  Cork  and  Youghal  v.  Hughes,  119  Ind.  324;    21  N.  E. 

Ry.  Co.,  4  Ch.  748,  757  (semble) .  907  ;    12  Am.  St.  Rep.  412 ;   Ward  v. 

'  TFa^^s's  i4 ppea/,  78  Pa.  St.  370;  Johnson,    95    III.    215;     Curtiss    v. 
Booth  V.  Robinson,  55  Md.  419,  436 ;  Lcavitt,  15  N.  Y.  1  ;  Eastmnn  v.  Park- 
Fidelity  Trust  Co.  V.  Louisi'iUe  Gas  in-son  (Wise.),  113  N.  W.  649. 
Co.,8lS.W.927;  26Ky.L.Rep.,401;         But    see    Bacon    v.    Mississppi 
Rockwell  V.  Elkhorn  Bank,  13  Wise.  Ins.   Co.   (1856),  31   Miss.    116   (in- 
653;    Wyman  v.  Wallace,  201  U.  S.  surance  company  no  power  to  bor- 
230 ;   26  Sup.  Ct.  495  (as  to  powers  row  to  pay  liabilities), 
of  national  banks) ;    Bohn  v.  Boone         *  1  Lindley    on    Companies,    6th 
Bldg.    &   Loan   Ass'n    (Iowa),    112  ed.,  284,  et  seq. 
N.    W.    199    (a    building    society);         "  See  infra,  §  1061. 
Heironimus  v.  Sweeny,  83  Md.  146;  '  In  addition  to  cases  cited  bolow, 
34  Atl.  823;    55  Am.  St.  Hep.  333 ;  see     Commonwealth     v.     Smith,     10 
33  L.  R.  A.  99;    Mead  v.  Kceler,  24  Allen  (Mass.),  448;  87  Am.  Dec.  672. 

63 


§   70  THE    INCORPORATION    PAPER  [ChAP.   II 

where  a  special  act  of  incorporation  provided  that  the  company 
should  have  power  to  borrow  on  mortgage  to  an  amount  not 
exceeding  one  third  of  the  company's  paid-up  capital,  any  other 
borrowing  was  held  to  be  ultra  vires}  Indeed,  express  authority 
to  a  railway  company  to  borrow  on  mortgage  has  been  declared 
to  be  an  implied  prohibition  of  borrowing  without  security.- 
On  the  other  hand,  a  clause  in  an  incorporation  paper  pur- 
porting to  empower  the  company  "to  issue  bonds  secured  by 
mortgage  or  mortgages  upon  the  property  and  franchises  of  said 
corporation,  and  to  sell  the  same  for  the  purpose  of  raising 
money  with  which  to  erect  machinery  "  has  been  held  not  to  be 
an  implied  prohibition  of  borrowing  money  on  mortgage  other- 
wise than  by  the  issue  of  bonds  and  for  a  purpose  other  than 
the  erection  of  machinery.^  This  last  cited  case  evinces  what 
is  submitted  to  be  the  proper  attitude  towards  such  questions. 

§  70.  Evasion  of  a  Prohibition  of  Borrowing.  —  Even  where 
a  corporation  is  expressly  prohibited  from  borrowing,  it  may 
often  accomplish  virtually  the  same  result  by  an  outright  sale 
of  its  property  coupled  with  an  agreement  for  a  lease  back  to 
the  company  for  a  period  of  years  at  a  rental  equal  in  the  aggre- 
gate to  the  purchase  price  and  interest  thereon,  the  title  at  the 
end  of  the  term  to  revert  to  the  company.*  Moreover,  even  where 
a  loan  is  effected  in  violation  of  a  prohibition,  valuable  rights 
may  be  acquired  by  the  lender  either  upon  the  express  contract 
or  quasi  ex  contractu.^ 

§  71.  Power  to  Mortgage.  —  The  power  to  borrow,  wher- 
ever it  exists,  or  to  create  an  indebtedness,  carries  with  it  the 
power  to  secure  the  indebtedness  by  mortgage  of  some  or  all 
of  the  company's  property.®    The  only  qualification  upon  this 

'  Landowners',  etc.  Drainage  Co.  Cf.  Thatcher  v.  Consumers'  Gas  & 

V.    Ashford,    16    Ch.    D.  411,    436-  Fuel  Co.  (N.  J.),  66  Ati.  934  (where 

437  (headnote   inadequate);     Wen-  a    statute    purporting    to    empower 

lock  V.  River  Dee  Co.,  10  App.  Cas.  corporations  to  increase  their  bonded 

354.  indebtedness  was  held  not  to  restrict 

^  Chambers  v.  Manchester,  etc.  Ry.  by  implication  such  corporations  as 

Co.,  5  B.  &  S.  588.     Cf.  Cape  Sable  already   enjoyed   a   more   extended 

Company's  Case,  3  Bland  Ch.  (Md.),  power  of  issuing  bonds  than  was  al- 

606.    A  power  to  mortgage  includes  lowed  in  the  statute). 

power     to     borrow     on     mortgage  *  Yorkshire    Ry.    Wagon    Co.   v. 

bonds.     Gloninger  v.  Pittsburgh,  etc.  Maclure,  21  Ch.  D.  309. 

R.  R.  Co.,  139  Pa.  St.  13.  *  Cf.  infra,  §  118. 

«  Brovm  v.  Citizens'  Ice,  etc.  Co.  *  Watts's  Appeal,  78  Pa.  St.  370; 

(N.  J.),  66  Atl.  181.  Hopson  v.  Mna  Axle,  etc.  Co.,  50 

64 


§  31     §   102]  POWERS    IMPLIED  .  §72 

Statement  is  in  the  case  of  railways  and  other  public  service  cor- 
porations which,  having  no  right  to  disable  themselves  from 
performing  their  public  duties  by  aliening  their  road-bed  or 
other  necessary  property,  cannot  lawfully  create  incumbrances 
upon  the  same  which  in  case  of  foreclosure  may  result  in  aliena- 
tion.' Even  a  railway  company,  however,  has  implied  power 
to  mortgage  its  surplus  lands.^  A  corporation  that  has  power 
to  mortgage  its  property  may  execute  a  mortgage  to  secure  future 
advances.-'  The  extent  to  which  express  provisions  conferring 
a  power  to  borrow  on  mortgage  can  be  construed  as  prohibit- 
ing any  other  or  further  mortgaging  has  been  considered  in  a 
former  paragraph  in  connection  with  the  power  to  borrow.  An 
express  power  to  execute  mortgages  to  secure  the  repayment 
of  borrowed  money  does  not  by  implication  exclude  the  power 
to  create  mortgages  to  secure  debts  contracted  otherwise  than 
for  money  lent.*  Where  the  directors  of  a  company  have  power 
to  mortgage  but  are  prohibited  from  issuing  bills  of  exchange, 
a  mortgage  securing  a  bill  of  exchange  representing  an  antece- 
dent debt  will  be  enforceable.* 

§  72.  Power  to  mortgage  uncalled  Capital.  —  \Yhile  the  power 
of  a  company  to  mortgage  all  its  property  and  rights  is  in  general 
incident  to  the  power  to  borrow,  an  exception  has  been  thought 
to  exist  in  the  case  of  one  very  peculiar  right  —  the  right  to  call 
up  unpaid  capital.  In  a  comparatively  early  English  case,  the 
power  of  a  corporation  to  create  a  charge  upon  future  calls  was 
denied ;  °  and  while  subsequent  cases  clearly  hold  that  such  a 
charge  is  legal  if  authorized  by  the  company's  memorandum 

C!onn.  597  ;    Booth  v.  Robinson,  55  acquired  property,  see  infra,  §  1853- 

Md.   419,  436;    Patent  File  Co.,   6  §  1858. 

Ch.  83 ;    Bickford  v.  Grand  Junction  '  See   Short    on    Railway  Bonds 

Ry.  Co..  1  Can.  Sup.  Ct.  Rep.  696,  and  Mortgages,  §142. 

729-732;    Susquehanna   Bridge,   etc.  *  Imperial  Mercantile  Credit  Ass'n 

Co.  V.  General  Ins.  Co.,  3  Md.  305;  v.  London,  etc.  Ry.  Co.,   15  W,  R. 

56  Am.  Dec.  740;   Belt  &  Coggeshall  1187. 

Co.  V.  Ky.  Glass  Works  Co.  (Ky.),  ^  Jones    v.    Guaranty,    etc.    Co., 

50  S.  W.  2 ;  20  Ky.  Law  Rep.  1684  ;  101  U.  S.  622. 

Thompson  v.  Lambert,  44  Iowa  239;  *  .Allen  v.  Montgomery  R.  R.  Co., 

Wright  V.  Hughes,  119  Ind.  324;  21  11   .Via.  437,  454. 

N.  E.  907;    i2  Am.  St.  Rep.  412;  *  Scott  v.  Colburn,  2G  Beav.  276. 

Ward  V.  Johnson,  95  HI.  215;  East-  »  Stanley's  Case,  33  L.  J.  Ch.  535. 

man    v.     Parkinson     (Wise.),     113  Cf.  Sankey  Coal  Co.  (No    2).  10 

N.  W.  649.  Eq.  381;    Bank  of  South  .Australia 

As  to  power  to  mortgage    after-  v.  .Abrahams,  L.  R.  6  P.  C.  265. 
VOL.  I.  —  5                                     65 


§73 


THE    INCORPORATION    PAPER 


[CriAP.  II 


of  association,'  yet  no  case  has  decided  that  the  power  exists 
in  the  absence  of  any  express  authority  therefor  in  the  com- 
pany's constitution.-  In  the  United  States,  the  question  has 
not  often  arisen.^  This  is  natural  enough;  for  the  practice  of 
carrying  on  business  with  a  portion  of  the  issued  capital  unpaid 
is  much  rarer  than  in  Great  Britain.  It  has  been  held  that  no 
power  exists  to  mortgage  an  unpaid  subscription  to  the  com- 
pany's capital  where  a  statute  empowers  the  company  to  mort- 
gage its  franchises  and  certain  named  kinds  of  property,  not, 
however,  mentioning  unpaid  subscriptions.*  At  all  events,  a 
call  which  has  been  already  determined  upon  but  which  is  still 
unpaid  may  be  mortgaged  to  the  same  extent  as  any  other  debt 
due  to  the  company.^ 

§  73.  Power  to  issue  Notes,  Bonds,  etc.  —  Another  con- 
comitant of  the  power  to  borrow  is  the  power  to  give  the  lender 
some  T\Titten  evidence  of  the  debt,  such,  for  instance,  as  a  bond ;  * 
and,  on  principle,  this  evidence  may  be  put  in  the  most  conven- 
ient and  available  shape,  that  is,  in  the  shape  of  a  promissory 
note  or  other  negotiable  instrument.''     In  England,  however, 


'  Newton  v.  Anglo- Australian, 
etc.  Co.  (1895),  A.  C.  244. 

Cf.  Phoenix  Bessemer  Co.,  44  L.  J. 
Ch.  683;  Tilbury  Portland  Cement 
Co.,  62  L.  J.  Ch.  814. 

^  But  see  Jackson  v.  Rainford 
Co.  (1896),  2  Ch.  340,  where  a  trad- 
ing company  whose  memorandum 
of  association  was  silent  on  the  sub- 
ject of  borrowing  and  whose  articles 
cf  association  recognized  a  power  to 
borrow  on  bonds,  debentures,  "or  in 
such  other  manner  as  the  company 
may  determine,"  was  held  to  have 
power  to  charge  uncalled  capital. 

Cf.  Coler  V.  Grainger  County,  74 
Fed.  16 ;  20  C.  C.  A.  267 ;  Beal  v. 
Dillon,  5  Kans.  App.  27;  47  Pac. 
317;  Lionberger  v.  Broadway  Sav- 
ings Bank,  10  Mo.  App.  499;  Epp- 
right  v.  Nickerson,  78  Mo.  482; 
Racine  County  Bank  v.  Ayers,  12 
Wise.  512. 

'  See,  however,  American  cases 
cited  in  last  note. 

*  Morris  v.  Cheney,  51  111.  451. 

"  Sankey   Coal   Co.,   9    Eq.    721; 


Gibbs  &  West's  Case,  10  Eq.  312; 
Wells  V.  Rodger s,  50  Mich.  294 ;  15 
N.  W.  462. 

But  see  King  v.  Marshall,  33 
Beav.  565;  Morris  v.  Cheney,  51 
111.  451. 

«  Smith  V.  Law,  21  N.  Y.  296, 
298-299 ;  Commissioners  of  Craven 
V.  Atlantic,  etc.  R.  R.  Co.,  77  N.  Car. 
289;  Rockwell  v.  Elkhorn  Bank,  13 
Wise.  653 ;  Barnes  v.  Ontario  Bank, 
19  N.  Y.  152,  156  (headnote  inade- 
quate) ;  Commonwealth  v.  Smith,  10 
Allen  (Mass.),  448;  87  Am.  Dec. 
672;  Curtiss  v.  Leavitt,  15  N.  Y.  1 
(where  the  giving  of  certain  forms 
of  evidences  of  indebtedness  was 
prohibited  by  statute). 

'  Fidelity  Trust  Co.  v.  Louisville 
Gas  Co.,  81  S.  W.  927,  26  Ky.  L.  Rep. 
401 ;  Davis  v.  West  Saratoga  Bldg. 
Union,  32  Md.  285;  Union  Bank  v. 
Jacobs,  6  Humph.  (Tenn.)  515; 
Mead  v.  Keeler,  24  Barb.  (N.  Y.) 
20 ;  Fifth  Ward  Sav.  Bank  v.  First 
Nat.  Bank,  48  N.  J.  Law  513  ;  7  Atl. 
318;    Ward  v.  Johnson,  95  111.  215. 


C'\ 


§  31-§  102]  powEruS  IMPLIED  §  74 

it  is  held  that  in  general  no  corporation  has  the  power  to  issue 
nei'otiable  paper  unless  expressly  so  authorized  by  statute  or 
by  its  memorandum  of  association;  although  to  this  rule  an 
exception  exists  ex  necessitate  ret,  in  the  case  of  companies  en- 
gaged in  trade.'  But  in  America  the  reasoning  of  these  decisions 
has  been  criticised,  and  the  rule  adopted  that  every  corporation 
that  has  power  to  borrow,  whether  it  be  organized  for  trading 
purposes  or  not,  has  power  to  evidence  the  debt  by  its  promis- 
sory note,  bill  of  exchange,  or  other  negotiable  instrument.  Ac- 
cordinf^lv,  we  are  relieved  from  considering  the  numerous  de- 
cisions  in  England  and  the  British  colonies  upon  the  question 
whether  certain  corporations  are  entitled  to  emit  negotiable 
paper  or  not.  Where  an  express  statute  gives  power  to  a  rail- 
way companv  to  borrow  money  for  construction  of  its  road  and 
to  secure  the  debt  by  mortgage  of  its  property  and  franchises, 
it  may  i.ssue  mortgage  bonds  as  security  for  an  indebtedness 
antecedently  incurred  for  that  purpose.-  Where  a  corporation 
has  power  to  borrow  by  a  sale  of  its  bonds,  it  may  borrow  by 
pledge  of  the  bonds.^ 

§  74.  Power  to  issue  Irredeemable  Bonds  or  Debentures.  — 
The  power  to  "borrow"  on  perpetual  or  irredeemable  bonds 
or  other  securities  cannot  readily  be  implied.  In  England,  it 
is  held  that  perpetual  debenture-stock  ••  cannot  be  issued  with- 
out express  authority  in  the  company's  memorandum  of  asso- 
ciation. Indeed,  a  clause  in  the  memorandum  of  association 
expressly  authorizing  the  company  to  borrow  money  by  the  issue 
of  debentures  or  debenture-stock  will  not  justify  the  issue  of 
irredeemable  debenture-stock;  and  *  hence  the  issue  of  such 
security  is  ultra  vires  even  though  expressly  sanctioned  by 
articles  of  association  adopted  and  recorded  contemporaneously 
with  such  a  memorandum.*  The  word  "borrow"  implies  that 
the  money  borrowed  is  sooner  or  later  to  be  repaid.     In  Penn- 

Note,    however,    that   autliority    to         '   1    Lindley   on   Companies,   6th 

.Tn  agent  to  borrow  money  docs  not  cd.,  242,  243. 

(tn power  him  to  execute  a  ncpoti-         -  Duntomb  v.  New  York,  etc.  R.  R. 

r.ble   instrument   in    the    principal's  Co.,  84  N.  Y.  190,  200. 
rame    for    the    amount    borrowed;         '  Farmers'  L.  d-  T.  Co.  v.  Toledo^ 

I'-angs  v.  Nat.  Macaroni  Co.,  15  N.  ete.  R.  R.  Co.,  54  Fed.  759. 
Y.  App.  Div.   522;  44  N.  Y.  Supp.         •*  See  infra,  §  1687. 
546.      Cf.   Hatch   v.  Coddington,  95         '  Soiithern  Brazilian,  etc.  Ry.  Co. 

V.  S.  48.  (1905),  2  Ch.  78. 

67 


§  75  THE    INCORPORATION    PAPER  [ChAP.  II 

svlvania,  on  the  other  hand,  it  has  been  held  that  irredeemable 
bonds  may  be  issued  without  express  authority.^ 

§  75- §  76.     Power  to  acquire  and  hold  Property. 

§  75.  In  general.  —  The  power  to  acquire  and  hold  such 
real  and  personal  property  as  may  be  advantageous  for  the 
company's  business  is  sufficiently  implied  by  the  law  without 
express  mention  either  in  the  incorporation  act  or  in  the  incor- 
poration paper,-  The  amount  of  property  which  the  company 
may  acquire  and  hold  is  not  at  all  limited  by  the  nominal 
amount  of  its  capital.^  The  power  extends  to  the  acquisition 
and  holding  of  property  in  the  customary  and  most  beneficial 
manner.  Thus,  a  corporation,  the  period  of  whose  existence  is 
limited  to  a  term  of  years,  may  acquire  the  fee-simple  title  to 
land.^  And  a  railway  corporation  having  occasion  to  take  a 
lease  of  real  estate  for  its  use  may  make  the  usual  covenant  to 
insure  the  premises,  and  if  it  fail  to  do  so  may  be  held  respon- 
sible in  case  of  fire  for  the  amount  of  the  loss.^  To  be  sure, 
the  Statute  of  Wills,®  which  first  permitted  testamentary  dispo- 
sition of  legal  title  to  real  estate,  by  its  express  terms  excepted 
devises  to  corporations  so  that  such  devises  remained  void  as 
at  common  law.^  Although  this  exception  was  maintained  in. 
some  of  the  early  statutes  of  wills  in  the  United    States,^  it 

'  Philadelphia,  etc.  R.  R.  Co.'s  Ap-  shares  in  other  companies,  Bee  infra, 

peal,  4  Am.  &  Eng.  R.  R.  Cases,  118  §  81-§  84. 

(Pa.).  '  Infra,  §  577. 

Contra:    Taylor  v.  Philadelphia,  *  Infra,  §  116. 

etc.  R.  R.  Co.,  7  Fed.  386.       •  "  Jacksonville,    etc.    Ry.    Co.    v. 

^Central    Ohio    Natural    Gas    &  Hooper,  160  U.  S.  514;   16S.  Ct.  379. 

Fuel  Co.  V.  Capital,  etc.  Dairy  Co.,  As  to  the  power  of  corporations  to 

60  Ohio  St.  96;    53  N.   E.  711;    64  make  the  usual  covenants  in  leases, 

L.  R.  A.  395  (manufacturing  com-  see  Abby   v.  BUlups,  35   Miss.  618; 

pany  held  to  have  power  to  purchase  72  Am.  Dec.  143  (covenant  to  repair 

entire  business  of  an  existing  concern  and  to  rebuild  in  case  of  fire), 

including  a  claim  for  damages  for  a  *  34  Hen.  VIII,  c.  5. 

tort);    Jamieson   &   McFarland   v.  '  Grant  on  Corporations,  112. 

Heim  (Wash.),  86  Pac.  165  (power  *  McCartee    v.    Orphan    Asylum 

to     purchase     commercial     paper);  Soc,  9  Cow.  (N.  Y.),  437  (holding 

Brown  v.  Winnisimmet  Co.,  11  Allen  that  statutory  power  to  "purchase" 

(Mass.),    326    (ferry    company    au-  land  does  not  confer  power  to  take 

thorized  to  acquire  boats  not  needed  by  devise) ;  Downing  v.  Marshall,  23 

for  present  use) ;  Mallett  v.  Simpson,  N.  Y.  366  (holding  also  that  express 

94  N.  Car.  37  (real  estate).  statutory  power  to  acquire  land  by 

As    to    the    power    to    purchase  "purchase  or  otherwise"   puts  the 
{                              68 


§  31-  §   102]  POWERS    IMPLIED  §  70 

has  been  omitted  in  the  Eiif^hsh  Wills  Act  of  1837  '  and  <jener- 
ally  in  the  statutes  of  wills  now  in  force  in  America,-  so  that 
corporations  are  now  as  competent  to  acquire  land  by  devise  as 
in  any  other  way.  The  restriction  upon  devises  to  corpora- 
tions wherever  it  exists  is  ai)solute  and  could  hardly  be  de- 
feated even  by  an  express  clause  in  the  incorporation  paper 
mentioning  the  accjuisition  of  real  estate  by  devise  as  one 
of  the  objects  of  the  company.  Indeed,  the  incapacity  under 
the  Statute  of  Wills  was  not  so  much  that  of  the  corporation 
as  of  the  testator.  Equitable  interests  in  real  estate  have 
always  been  devisable  ^  without  the  aid  of  any  statute,  and 
therefore  might  always  be  devised  to  corporations ;  *  and  so 
also  personal  property  including  chattels  real  might  always  be 
bequeathed  to  corporations. 

§  70.  Power  to  hold  as  Joint-tenant  or  in  Common.  —  It 
is  generally  supposed  that  at  common  law  a  corporation  could 
not  hold  property  in  joint  tenancy  either  with  another  corpora- 
tion or  with  an  individual.*  The  essential  characteristic  of  joint 
tenancy  —  namely  the  right  of  survivorship  —  cannot  exist  in 
the  case  of  corporations.  This  rule  has  been  abolished  in  Eng- 
land by  express  statute.^  Where  no  such  statute  exists,  it  would 
seem  useless  to  express  in  an  incorporation  paper  the  holding 
of  property  as  joint  tenant  as  one  of  the  objects  of  the  company. 
The  objection  is  inherent  in  the  nature  of  a  corporation,  and 
not  even  under  the  most  liberal  incorporation  laws  can  a  com- 
pany be  incorporated  for  the  purpose  of  doing  what  the  law  re- 
gards as  an  impossibility.    There  is  no  objection  to  a  corporation 


corporation  on  the  same  footing  as  tions,  §  178;    1  Morawetz  on  Priv. 

natural  persons  in  respect  to  capac-  Corps.,  §  331. 

ity  to  take  by  devise).  '  Law  Gimrantee  Soc.  v.  Bank  of 

As  to  the  effect  of  such  provisions  England,  24  Q.  B.  D.  406 ;  Bacon 
upon  devises  of  land  in  a  state  whose  Abr.  Tit.  "Joint-tenants  and  Ten- 
laws  permit  devises  to  corporations  ants  in  Common,"  B ;  DeWitt  v. 
which  are  authorized  to  take,  see  San  Francisco,  2  Cal.  289,  297 
Starkweather  v.  Am.  Bible  Soc,  72  (semble) ;  Telfair  v.  Howe  (S.  Car.), 
111.  50 ;  Thompson  v.  Swoope,  24  Pa.  3  Rich.  Eq.  235 ;  55  Am.  Dec.  637 ; 
St.  474.  Freeman   on  Cotenancy  and   Parti- 

'  1  Vict.,  c.  26.  tion,  2d  ed.,  §  15  (questioning  reason 

-  Stimson's    Am.    Stat.    Law,    §  of  rule). 
2610.  «  "Bodies  Corporate  Joint  Ten- 

3  1  Sanders  on  Uses,  64.  ancy  Act,   1899,"  62  and  63  Vict., 

*  Cf.  Angell  &  Ames  on  Corpora-  c.  20. 

69 


I  77  THE   INCORPORATION    PAPER  [ChAP.  II 

owning  property  as  tenant  in  common/  Indeed,  in  America, 
it  is  not  uncommon  for  a  trust  company  to  become  a  co-trustee 
with  an  individual,-  and  upon  the  death  of  the  individual  trustee 
the  trust  is  generally  supposed  to  devolve  exclusively  upon  the 
corporation  by  sur\avorship. 

§  77- §  79.     Power  of  Alienation. 

§  77.  In  general.  —  Except  in  the  case  of  public-service  cor- 
porations ^  the  implied  powers  of  alienation  are  ample  without 
anv  supplement  from  express  provisions.*  The  only  qualifica- 
tion to  this  statement,  with  respect  to  ordinary  industrial  cor- 
porations, is  the  case  of  a  sale  of  the  entire  property,  business, 
and  undertaking  of  the  company ;  and  this  case  has  been  con- 
sidered above  at  some  length  ^  and  will  be  further  treated  pres- 
ently.®  The  implied  power  to  alienate  extends  to  the  most  usual 
method  of  transfer.  Thus,  a  corporation  which  holds  negotiable 
paper  may  transfer  the  same  by  indorsement,  and  a  fortiori  may 
couple  the  sale  with  an  express  guarantee  of  payment.'  So,  a 
corporation  on  assigning  a  mortgage  may  guarantee  payment 
of  the  mortgage  debt.^    Moreover,  a  corporation  may  lease  its 

^  De    Witt    V.    San  Francisco,  2  *  KingsburijCollieries  and  Moore's 

Cal.  289;   Estell  v.  University  of  the  Contract  (1907),  2  Ch.  259;  Binney's 

South,  12  Lea  (Tenn.),  476;  Hackett  Case,  2  Bland  Ch.  (Md.)  99. 

V.  Multnomah  Ry.  Co.,  12  Oreg.  124;  «  Supra,  §  54-§55. 

6  Pac.  659 ;    53  Am.  Rep.  327  (co-  «  Infra,  §  78. 

ownership  of  a  ferry-franchise).  ^  People's  Bank  v.  National  Bank, 

Cf.  Calvert  v.  Idaho  Stage  Co.,  25  101  U.  S.  181  ;   Fidelity  Trust  Co.  v. 

Oreg.  412;   36  Pac.  24.  Louisville  Gas  Co.,  81  S.  W.  927;  26 

'  Cf.     Thompson     v.     Alexander  Ky.  L.  Rep.  401 ;  Roosevelt  v.  Nash- 

(1905),  1  Ch.  229  (holding  that,  in  vUle,  etc.  Ry.  Co.,  128  Fed.  465  (head- 

con.sequence  of  the  "Bodies  Corpo-  note  misleading);    Lloyd  &  Co.  v. 

rate  Joint  Tenancy  Act,"  a  corpora-  Matthews,    119     111.    App.    546    (in- 

tion    may   be   appointed    co-trustee  dorsement  of  note  of  debtor  for  the 

with    an    individual) ;      Crowley    v.  purpose   of   enabling   the   latter   to 

Sandhurst,  etc.  Co.,  23  Vict.  L.  R.  661  obtain  money  for  payment  of  debt 

(holding  that  corporation  may  act  by   negotiating   or   discounting   the 

as  co-trustee  with  individuals  in  con-  note),  affirmed  in  223  111.  477;    79 

sequence    merely    of   parliamentary  N.  E.   172;    7  L.  R.  A.,  n.  s.,  376; 

authority  to  act  as  trustee  and  with-  Broadway  Nat.  Bank  v.  Baker,  176 

out  any  authority  to  act  as  joint-  Mass.  294 ;  57  N.  E.  603. 

tenant).     Cf.    Pennsylvania   Co.  for  Cf.  infra,  §  91. 

Ins.  V.  Bauerle,  143  111.  459.  *  Blair   v.    Metropolitan  Savings 

'  As  to  this,  see  Baldwin's  Am.  Bank    (Wash.),    07    Pac.    609;     27 

Railroad  Law,  448  et  seq.  Wash.  192. 

70 


§  31-§   1C2]  POWERS    IM1>LIED  §  78 

surplus  real  estate  and  agree  to  pay  the  lessee  at  the  end  of  the 
term  the  reasonable  value  of  any  buildings  erected  by  him  on 
the  demised  premises.' 

§  7<S.  Sale  of  entire  Property  and  Business.  —  We  have  seen 
above  that  a  sale  of  the  entire  business  or  undertaking  and  of 
all  the  property  of  a  corporation  which  has  no  j)ublic  duties  to 
perform  is  a  lawful  purpose  and  may  therefore  properlv  be 
specified  as  one  of  the  objects  of  a  company  incorporated  under 
the  liberal  modern  laws."  It  would  seem  clear,  however,  that 
even  under  the  modern  liberal  general  incorporation  laws  a  sale 
of  the  company's  entire  business  (unless  it  be  necessary  to  secure 
creditors)  will  be  7dfra  vires  unless  the  incorporation  paper  speci- 
fies such  a  sale  as  one  of  the  objects  of  the  company.^  This 
conclusion  would  seem  to  follow  necessarily  from  the  well  estab- 
lished rule  that  companies  incorporated  by  special  acts  have 
no  implied  power  to  transfer  all  their  business  and  property  ex- 
cept for  the  benefit  of  creditors.  It  has  been  held  that  a  pro- 
vision in  an  incorporation  paper  authorizing  a  sale  of  all  the 
company's  property  will  not  justify  a  sale  of  all  the  company's 
property  and  "franchises"  except  the  franchise  to  be  a  corpora- 
tion.'' This  limitation  or  qualification  upon  the  general  implied 
power  of  alienation  is,  however,  very  narrowly  restricted,  for 
a  company  has  the  implied  power  to  sell  out  its  works  or  plant 
for  the  purpose  of  acquiring  others.^  Thus,  a  hotel  company 
has  the  implied  power  to  sell  its  hotel  and  purchase  another.® 

'  Hollywood   V.    First   Parish   in  sumers' Gas  Trust  Co.,  144  Fed.  640; 

Brockton,  192  Mass.  269,  277.  75  C.  C.  A.  442;   Anderson  v.  Shaw- 

'  Supra,  §  54-§55.  nee  Compress  Co.  (Okl.),  87  Pac.  315 

^  People   V.    Ballard,    134   N.    Y.  (lease  of  all  company's  property  held 

269;  32  N.  E.  54;    17  L.  R.  A.  737;  to    be    authorized    by    implication 

Parsons  v.  Tacoma  Smelting,  etc.  Co.  where  continuation  of  the  business 

65  Pac.  765 ;    25  Wash.  492  (lease  is  not  profitable), 
instead  of  .sale) ;    Hunt  v.  American         *  Coler  v.    Tacoma  Ry.,  etc.   Co. 

Grocery  Co.,  81   Fed.  532;   Bxjrne  v.  (N.  J.),  54  Atl.  413;    65  N.  J.  Eq. 

Schuyler,  etc.  Mfg.  Co.,  %5  Conn.  ^3&;  347;     103  Am.  St.  Rep.  786  (note 

31  Atl.  833;  28  L.  R.  A.  304.      Cf.  that   this   company    was   a   pubUc- 

Easun  v.   Buckeye  Brewing  Co.,   51  service  corporation). 
Fed.  156.  *  In  addition  to  cases  cited  below, 

But  see  Wilson  v.  Miers,  10  C.  B.,  see  Ritchie  v.  Vermillion  Mining  Co., 

N.   s.,   348;     Bartholomew   v.    Derby  4  Ont.   L.   R.   588   (sale  by  mining 

Rubber  Co.,  69  Conn.  521;    38  Atl.  company  of  its  mine). 
45;   61  Am.  St.  Rep.  57  (lease  with         *  Freeman  v.  Sea  View  Hotel  Co., 

privilege  of  purcha.se  su.stained).  57N.  J.  Eq.  68;  40  Atl.  218. 

Cf.  City  of  Indianapolis  v.  Con- 

71 


§   79  THE    INCORPORATION    PAPER  [ClIAP.   II 

So,  a  sale  by  a  steamboat  company  of  its  only  boat  is  infra  vires 
although  there  be  no  express  power  of  alienation.^  Moreover, 
as  already  intimated,  a  corporation  in  failing  circumstances 
has  implied  power  to  make  a  general  assignment  for  the  benefit 
of  creditors,-  or  may  sell  all  its  property  and  business  for  the 
purpose  of  obtaining  money  to  pay  creditors."* 

§  79.  Sale  of  Business  in  exchange  for  Shares  in  purchasing 
Corporation.  —  A  clause  authorizing  a  sale  of  the  company's 
business  and  undertaking  does  not  justify  a  transfer  of  the  busi- 
ness in  exchange  for  shares  in  the  purchasing  company,  certainly 
not  if  the  shares  are  to  be  issued  not  to  the  vendor  corporation 
but  to  its  several  members.*  Such  an  arrangement  is  not  a  sale 
but  is  more  in  the  nature  of  a  consolidation  or  amalgamation.^ 
Even  an  express  provision  in  an  incorporation  paper  authoriz- 
ing a  sale  of  the  company's  business  and  undertaking  in  ex- 
change for  shares  in  another  company  will  not  sustain  an 
agreement  whereby  the  sale  is  to  be  made  in  exchange  for  partly 
paid  shares  in  the  vendee  company  with  a  stipulation  that,  in 
the  event  of  a  winding-up  of  the  vendor  company  involving  a 
distribution  of  the  partly  paid  shares  among  the  shareholders  of 
the  old  company,  any  of  the  partly  paid  shares  which  should  be 
distributable  to  a  shareholder  in  the  vendor  company  and  which 
he  should  refuse  to  accept  should  be  sold  and  applied  in  pay- 
ment of  debts  of  the  vendor  company,  which  by  the  terms  of 
the  contract  the  purchasing  company  was  to  assume.** 


'  Leathers  v.  Janney,  41  La.  Ann.  the  transferee  company) ;    Taylor  v. 

1120;   6  So.  884;    6  L.  R.  A.  661.  Burlington    Cotton    Mills,     8     Hun 

2  Cf.  Dupuy  V.  Terminal  Co.,  82  (N.  Y.)  1 ;  Elyton  Land  Co.  v.  Doio- 
Md.  408.  See  also  infra,  §  1435,  as  to  de//,  113  Ala.  177  ;  20  So.  981;  59 
the  powers  of  directors  to  authorize  Am.  St.  Rep.  105. 

such  an  assignment.  But  see  Traer  v.  Lucas  Prospect- 

3  Phillips  V.  Providence  Steam  En-  ing  Co.,  99  N.  W.  290  ;  124  Iowa  107  ; 
gine  Co.,  21  R.  1.302.  Cf.  infra, §14.35.  Treadwell  v.  Salisbury  Mfg.   Co.,  7 

*  Dougan's  Case,  8  Ch.  540.  Gray  (Mass.)   393,  404-406;  66  Am. 

a.  Forrester  \.  Boston,  etc.  Mining  Dec.     490;      Metcalf    v.     American 

Co.,  21  Mont.  544,  560-564;  55  Pac.  School  Furniture  Co.,  122  Fed.  115. 
229,  353  ;   Easun  v.  Buckeye  Brewing         See  also  supra,  §  61. 
Co.,  56  Fed.   156;    Post  v.  Beacon,         *  See  supra,  §  61. 
etc.  Co.,  84  Fed.  371 ;  28  C.  C.  A.  431         »  Manners  v.  St.  Davids  Gold,  etc, 

(where     complainant     shareholders  Co.  (1904),  2  Ch.  593. 
had  waived  their  right  to  object,  by         Cf.  Fuller  v.   White  Feather  Re- 

subscribing,   though   under   protest,  ward  (1906),  1  Ch.  823;    Bisgood  v. 

to  their  proportion  of  the  shares  of  NUe  Valley  Co.  (1906),  1  Ch.  747. 

72 


§  31-§    102]  POWERS    IMPLIED  §  SI 

§  SO.  Power  to  abandon  some  of  Company's  Objects.  — 
Somewhat  akin  to  the  sale  of  a  company's  liusiiiess  is  the  al)an- 
donment  of  part  of  its  ol)jects  for  tlie  purpose  of  devoting  its 
funds  exclusively  to  the  remainder.  This  is  generally  permi.s- 
sible  even  without  any  explicit  autiiorization  in  the  incorpora- 
tion paper.'  Tims,  where  the  objects  of  a  company  were  stated 
to  be  tiie  erection  and  maintenance  of  a  brewery  or  breweries 
in  Brighton  and  also  the  purchase  of  a  brewery  known  as  the 
North  Street  Brewery,  the  company  may  purchase  a  brewery 
known  as  the  Brighton  Brewery,  although  the  consummation 
of  such  purchase  will  so  deplete  its  funds  as  to  preclude  forever 
the  purchase  of  the  North  Street  Brewery.-  On  the  other  hand, 
a  corporation  which  was  formed  under  a  special  act  for  the  pur- 
pose of  constructing  a  railway  from  E.  to  P.  and  which  was  con- 
templating constructing  only  a  small  portion  of  that  line  — 
namely,  from  E.  to  L.  — was  enjoined,  on  a  shareholder's  bill, 
from  applying  its  funds  to  the  construction  of  that  portion  only, 
—  that  is,  without  any  intention  of  completing  the  whole  line.' 
Moreover,  a  corporation  cannot  by  contract  bind  itself  not  to 
exercise  powers  conferred  upon  it  by  its  incorporation  paper :  * 
to  do  so  would  limit  and  therefore  alter  the  incorporation  paper. 
If  any  such  contract  were  clearly  authorized  by  the  incorpora- 
tion paper  itself,  this  objection  would  vanish;  unless  indeed 
such  a  provision  should  be  held  invalid  under  the  principle  that 
a  clause  in  the  incorporation  paper  authorizing  the  company 
to  alter  the  instrument  otherwise  than  as  by  statute  allowed  is 
void.^ 

§81- §84.     Power  to  become  Member  of  another  Corporation  — 
to  purchase  Shares  in  another  Company. 

§81.  In  general.  —  Another  power  which  it  is  often  de- 
sirable to  exercise  and  about  the  existence  of  which  question 

'  Illinois  Trust,  etc.  Co.  v.  Doud,  Cf.   Hodgson  v.  Powis,   12  Beav. 

105  Fed.  123,  128-129;    44  C.  C.  A.  392;  Graham  v.  Birkenhead,  etc.  Ry. 

389;  52  L.  R.  A.  481  ;   Thclbtssonv.  Co.,  2  Mac.  &  G.  146;    Bagshawe  v. 

Viscount  Valentia  (1906),  1  Ch.  480,  Eastern   Union  Ry.  Co.,  2  Mac.    & 

affirmed  in  (1907),  2  Ch.  1.  G.  389. 

*  Syers  v.  Brighton  Brewery  Co.,  *  Foster  v.   Borax  Co.   (1901),   1 

13  W.  R.  220.  Ch.  326,  342  (semble) ;   per  Vaughan 

^  Cohen  v.  Wilkinson,  1  Mac.  &  Williams,  L.  J. 

G.  481.  *  See  infra,  §  144. 

73 


§  82  THE    INCORPORATION    PAPER  [ChAP.   II 

is  often  raised  is  the  power  to  acquire  and  hold  shares  in  another 
corporation.  AUhough  the  cases  on  this  subject  are  far  from 
harmonious,  yet  certain  principles  in  regard  to  it  are  established 
bv  the  substantial  consensus  of  authority.  We  have  seen  above 
that  this  power  may  lawfully  be  enjoyed  by  a  corporation,  and 
hence  mav  be  made  one  of  the  expressed  objects  of  incorpora- 
tion under  laws  which  allow  companies  to  be  incorporated  for 
any  lawful  purposes.  Whether  the  power  exists,  and  to  what 
extent,  is  entirely  a  question  of  construction  of  the  incorpo- 
ration paper. 

§  82.  When  the  Power  may  be  implied.  —  It  is  clear  that 
in  some  cases  the  power  may  be  implied  without  express  lan- 
guage. In  the  first  place)  any  corporation  having  power  to  lend 
money  may  accept  shares  in  another  corporation  as  collateral 
security,^  and  may  in  order  to  render  the  security  as  effective  as 
possible  become  the  registered  holder  of  the  shares  either  before  ^ 
or  after  ^  default  on  the  borrower's  part.  Secondly,  any  cor- 
poration may  accept  shares  in  another  company  in  discharge 
of  a  debt  for  which  satisfaction  can  be  obtained  in  no  other  way,* 
and  that  too  even  though  a  statute  expressly  prohibits  the  pur- 

^  Royal  Bank  of  India,  4  Ch.  252 ;  Cf.    Franklin    Co.    v.    Lewiston 

National  Bank  V.  Case,  99  \J.S.  628,  Institution,    68    Me.    43;     28    Am. 

633  (headnote  inadequate) ;  Knowles  Rep.  9. 

\.  Sandercock,    107    Cal.   629,    643;  ^  National  Bank  v.  Case,  99  U.  S. 

40    Pac.    1047    (semble) ;     Calumet  628  (headnote  irjadequate). 

Paper  Co.  v.  Investment  Co.,  96  Iowa  *  First  Nat.    Bank    v.   Nat.    Ex- 

147  ;  64  N.  W.  782  ;  59  Am.  St.  Rep.  change    Bank,    92    U.    S.    122,    128 

362 ;    Shoemaker  v.  Nat.  Mechanics  (semble) ;   Fidelity  Insurance  Co.  v. 

Bank,  2  Abb.  (U.  S.)  416.  German  Savings  Bank,  127  Iowa  591 ; 

But  there  is  a  presumption  103  N.  W.  958 ;  Westminster  Nat. 
against  any  intent  on  the  part  of  the  Bank  v.  New  England  Electric  Works, 
creditor  corporation  to  make  itself  62  Atl.  971 ;  73N.  H.  465;  111  Am. 
owner  of  the  hypothecated  shares :  St.  Rep.  637 ;  Howe  v.  Boston  Car- 
Robinson  V.  Southern  Nat.  Bank,  180  pet  Co.,  16  Gray  (Mass.)  493;  Lati- 
U.  S.  295 ;  21  S.  Ct.  383.  mer  v.  Citizens'  State  Bank,  102  Iowa 

A  bank  on  making  a  loan  cannot  162;     71    N.    W.    225;     First   Nat. 

accept  shares  as  a  bonus:    Nassau  Bank  of  Charlotte  v.  Nat.  Exchange 

Bank  v.  Jones,  95  N.  Y.  115 ;  47  Am.  Bank,  39  Md.  600. 

Rep.  14.  See    also    Lands    Allotment    Co. 

2  Royal  Bank  of  India,  4  Ch.  252;  (1894),   1  Ch.  616;   Merchants'  Nat. 

Calumet  Paper  Co.  v.  Stotts   Invest-  Bank  v.  Wehrmann,  202  U.  S.  295; 

ment  Co.,  96  Iowa  147;    64  N.  W.  26  S.  Ct.  613. 

782  ;  59  Am.  St.  Rep.  362 ;  Victorian  But  see  First  Nat.  Bank  v.  Con- 

Mtge.,  etc.  Bank  V.  Australian  Finan-  verse,    200    U.    S.    425;     26    S.    Ct. 

cial,  etc.  Co.,  19  Vict.  L.  R.  680.  306. 

74 


§  31-§   162]  POWERS    IMPLIED  §  83 

chasing  of  stock  in  other  corporations.'  Moreover,  in  com- 
promise of  a  (]is{)ute(l  claim  any  corporation  may  pay  a  larger 
3um  than  would  otherwise  be  exacted  in  consideration  of  the 
transfer  to  it  of  shares  in  another  company,  that  arrangement 
being  reasonably  deemed  the  most  advantageous  settlement 
practicable.^  Moreover,  a  corporation  has  incidental  or  implied 
power  to  insure  its  property  with  a  mutual  insurance  company 
and  thus  become  a  member  of  the  latter  corporation.^  So,  too, 
a  corporation  may  perhaps  have  power  to  invest  any  surplus 
funds  in  some  safe  stocks,  not  for  sj)eculation,  but  merely  for 
safe-keeping  at  a  fair  interest.*  For  if  a  company  has  on  hand 
surplus  funds  which  for  the  time  being  are  not  needed  in  its 
business,  is  it  bound  to  keep  them  on  deposit  at  its  bankers? 
May  it  not  invest  them  temporarily  in  any  safe  securities? 
And  if  so,  why  not  in  shares  of  stock  in  other  corpora- 
tions? The  only  reason  that  can  be  assigned  is  that  the 
transition   to   mere   speculation    is   so   easy. 

§  83.  When  not  implied.  —  Except  in  the  instances  above 
enumerated,  and  in  similar  cases,  the  power  to  purchase  shares 
in  other  companies  is  not  readily  implied.  According  to  some 
courts,  if  their  language  is  to  be  construed  literally,  the  power 
does  not  exist  unless  conferred  by  express  language;^   but  this 

'  Holmes,  etc.  Mfg.  Co.  V.  Holmes,  American  Bank,   132  Fed.  658;    65 

etc.  Metal  Co.,  127  N.  Y.  252;    27  C.  C.  A.  620;    affirmed  short  in  199 

N.  E.  831;   24  Am.  St.  Rep.  448.  U.  S.  603;    26  S.  Ct.   750;     Scho- 

*  First  Nat.  Bank  v.  Nat.  Ex-  field  v.  Goodrich  Bros.  Banking  Co., 
change  Bank,  92  U.  S.  122.  98  Fed.  271 ;    39  C.  C.  A.  76;    Bank 

'  St.  Paid  Trust  Co.  v.  Wampach  of  Commerce  v.  Hart,  37  Nebr.  197 ; 

M/j?.  Co.,  50  Minn.  93;  52N.W.  274.  55  N.   W.   631;    40  Am.   St.   Rep. 

*  Cf.  Joint  Stock  Discount  Co.  v.  479 ;  20  L.  R.  A.  780 ;  Citij  of  Good- 
Brown,  3  Eq.  139,  147-148;  Pear-  land  v.  Bank  of  Darlington,  74  Mo. 
son  v.  Concord  li.  R.  Co.,  62  N.  H.  App.  365  (sembie).  People  v.  Chi- 
537,  549;  13  Am.  St.  Rep.  590;  cayo  Gas  Trusi  Co.,  130  111.  268.  283- 
Burland  v.  Earle  (1902),  A.  C.  83,  284;  22N.  E.  798;  17  Am.  St.  Rep. 
95-97  (headnote  inadequate) ;  Booth  319;  8  L.  R.  A.  497;  Concord  First 
V.  Robinson,  55  Md.  419,  433;  Nat.  Bank  v.  Hawkins,  174  U.  S. 
Knowles    v.    Sattdercock,     107     Cal.  364 ;    19  Sup.  Ct.  739. 

029,  643 ;    40  Pac.   1047 ;    Rohotham  «  Knowles  v.  Sandercock,  107  Cal. 

V.  Prudential  Im.  Co.,  64  N.  J.  Eq.  629,   642;     40   Pac.    1047;     Holmes, 

673,    687-689,    696;     53    Atl.    842;  etc.  Mfg.  Co.  v.  Holmes,  etc.  Metal 

Farmers'  L.   &   T.  Co.  v.   Perry,  3  Co.,  127  N.   Y.  252,257;  27  N.  E. 

Sandf.   Ch.    (N.   Y.)   339,   347-348;  831;  24  Am.  St.  Rep.  448;  Commer- 

Hodgcs  V.  New  England  Screw  Co.,  cial  Fire  Ins.  Co.  v.  Board  of  Revenue 

1  R.  I.  312,  347.  Montgomery  County.  99  Ala.   1  ;    14 

But   see   Shaw  v.   Nat.   German-  So.  490;   42  Am.  St.  Rep.  17  ;   Byrne 


§83 


THE    IXCORPORATIOX    PATER 


[ClIAP.   II 


view  seems  to  lay  undue  stress  on  mere  phraseology,  and  is  op- 
posed to  the  weight  of  authority.  Thus,  where  one  of  a  com- 
pany's objects  is  to  assist  in  forming  other  corporations,  it  may 
furnish  assistance  by  purchasing  shares  of  their  capital.'  Some 
cases  seem  to  go  to  the  extent  of  holding  that  any  corporation 
(unless  positively  prohibited)  may  purchase  shares  in  other 
companies  having  the  same  or  connected  objects ;  -  but  the 
weight  of  authority  does  not  support  this  extreme  position.^ 
Indeed,  it  has  been  held  that  power  to  purchase  the  business  of 
other  companies  does  not  include  power  to  accept  a  transfer  of 


V.  Schuyler,  etc.  Mfg.  Co.,  65  Conn. 
336;  31  Atl.  833;  28  L.  R.  A.  304; 
Oelbermann  v.  New  York,  etc.  Ry. 
Co.,  11  Hun  (N.  Y.),  332;  29  N.  Y. 
Supp.  545. 

Authority  to  purchase  "the  capi- 
tal stock"  of  certain  corporations 
includes  authority  to  purchase  shares 
of  stock  in  those  companies.  People 
V.  Chicago  Gas  Trust  Co.,  130  111.  268, 
281  (semble) ;  22  N.  E.  798 ;  17  Am. 
St.  Rep.  319 ;  8  L.  R.  A.  497. 

1  Peruvian  Ry.  Co.,  19  L.  T.  803. 

2  Booth  V.  Robinson,  55  Md.  419; 
Davis  V.  U.  S.  Electric,  etc.  Co.,  11 
Md.  35 ;  25  Atl.  982 ;  Joseph  Ban- 
croft &  Sons  Co.  V.  Bloede,  106  Fed. 
396 ;  45  C.  C.  A.  354 ;  52  L.  R.  A. 
734 ;  Canada  Life  Ass.  Co.  v.  Peel 
Gen.  Mfg.  Co.,  26  Grant  (Can.)  477. 

Cf.  HUl  V.  Nisbet,  100  Ind.  341 ; 
Rochester,  etc.  R.  R.  Co.,  110  N.  Y. 
119,  125;    17  N.  E.  678. 

As  to  purchasing  the  stock  of  a 
rival  company  to  prevent  competi- 
tion, see  Ellerman  v.  Chicago  Junc- 
iion  Rys.,  etc.  Co.,  49  N.  J.  Eq.  217, 
245, 246 ;  23  Atl.  287  and  supra,  §  60, 
and  infra,  §  302. 

^  California  Bank  v.  Kennedy, 
167  U.  S.  362 ;  17  Sup.  Ct.  831 ;  De 
La  Vergne,  etc.  Co.  v.  German  Sav- 
ings Institution,  175  U.  S.  40;  20 
Sup.  Ct.  20 ;  People  v.  Chicago  Gas 
Trust  Co.,  130  III.  268;  22  N.  E. 
798;  17  Am.  St.  Rep.  319;  8  L.  R. 
A.  497  (stated  supra,  §  52) ;  Pearson 
V.  Concord  R.  R.  Co.,  62  N.  H.  537; 
13  Am.  St.  Rep.  590 ;   Central  R.  R. 


Co.  v.  Collins,  40  Ga.  582  ;  Easun  v. 
Buckeye  Brewing  Co.,  51  Fed.  156; 
Lester  v.  Bemis  Lumber  Co.,  74  S.  W. 
518 ;  71  Ark.  379  ;  Schofield  v.  Good- 
rich Bros.  Banking  Co.,  98  Fed.  271 ; 
39  C.  C.  A.  76;  Berry  v.  Yates,  24 
Barb.  (N.  Y.)  199,  210-213;  Mil- 
bank  v.  New  York,  etc.  R.  R.  Co.,  64 
How.  Pr.  (N.  Y.)  20;  Marble  Co.  v. 
Harvey,  92  Tenn.  115 ;  20  S.  W.  427 ; 
18  L.  R.  A.  252 ;  New  Orleans,  etc. 
S.  S.  Co.  V.  Ocean  Dry  Dock  Co.,  28 
La.  Ann.  173  ;  26  Am.  Rep.  90 ;  Peo- 
ple ex  rel.  Moloney  v.  Pullman  Car 
Co.,  175  111.  125;  51  N.  E.  664;  64 
L.  R.  A.  366 ;  Newland  Hotel  Co.  v. 
Lowe  Furniture  Co.,  73  Mo.  App. 
135  ;  Ex  parte  Liquidators  of  British 
Nation  Life  Ass.  Ass'n,  8  Ch.  D.  679, 
704  ("The  more  or  less  similarity  of 
the  objects,  or  even  the  absolute 
identity  of  the  objects,  does  not 
affect  the  principle"). 

Cf.  Mackintosh  v.  Flint,  etc.  R.  R. 
Co.,  34  Fed.  582,  614-615. 

See  also  Hazlehurst  v.  Savannah, 
etc.  R.  R.  Co.,  43  Ga.  13,  57-58  (hold- 
ing that  a  company  organized  to 
construct  and  operate  a  railway  from 
M.  to  B.  has  no  implied  power  to 
purchase  shares  in  a  railway  having 
different  termini) ;  Pauly  v.  Coro- 
nado  Beach  Co.,  56  Fed.  428  (com- 
pany formed  to  develop  real  estate 
no  power  to  subscribe  to  shares  in  a 
manufacturing  company) ;  Nassau 
Bank  v.  Jones,  95  N.  Y.  115 ;  47  Am. 
Rep.  14  (bank  without  power  to  sub- 
scribe to  shares  of  railway  company). 
76 


§  31 -§    102]  POWERS    IMPLIED  §  84 

their  shares.'  On  the  other  lumd,  a  power  to  effect  a  "tem- 
porary or  permanent"  consolidation  with  any  railway  com- 
pany justifies  a  purchase  of  all  the  shares  of  capital  stock  of  a 
railway  company.-  Moreover,  an  express  power  to  assist  and 
participate  in  linancial,  commercial,  and  industrial  ojK-rations 
and  undertakings  both  singly  and  in  connection  with  other 
persons,  firms,  comj)anies,  and  corporations  will  authorize  the 
purchase  of  shares  in  other  companies.^  A  bank  has  no  power 
to  aid  in  the  incorporation  of  a  correspondent  l)y  subscribing  to 
its  shares,  although  thereby  it  is  hoped  to  benefit,  indirectly,  the 
subscribing  bank  by  increasing  the  prosperity  of  the  correspond- 
ent.' A  corporation  which  has  power  to  borrow  money  has  no 
implied  power  to  subscribe  to  stock  in  a  building  and  loan  asso- 
ciation for  the  purpose  of  obtaining  a  loan.^  Probably,  all  au- 
thorities agree  that  a  corporation  cannot  engage  in  speculation 
in  stocks,  unless  such  speculation  is  one  of  the  expressed  objects 
for  which  the  company  is  incorporated.^  From  these  various 
cases,  it  is  apparent  that  a  wise  draftsman  of  an  incorporation 
paper  will  often  insert  a  clause  mentioning  the  purchase  of 
shares  in  other  companies  as  one  of  the  express  objects  of  the 
company. 

§  84.  Effect  of  Clause  specifying  Acquisition  of  Shares  in  other 
Corporations  as  one  of  Objects.  —  Even  an  express  power  to 
purchase  shares  in  other  companies  must  be  confined  to  the 
purchase  of  shares  from  their  former  owners  and  will  not  au- 
thorize a  subscription  to  new  shares.^     If  the  corporation  has 

'  British  Nation  Life  Ass.  Ass'n,  Royal  Bank  of  India's  Case,  4  Ch. 

8  Ch.  D.  679.  252,   262  (semble) ;    Peshtigo  Co.  v. 

^  Tod  V.  Kentucky  Union  Ry.  Co.,  Great  Western  Tel.  Co.,  50  111.  App. 

57  Fed.  47 ;   62  Fed!  335 ;  6  C.  C.  A.  624 ;    Xew  Orleans,  etc.  S.  S.  Co.  v. 

47,  Ocean  Dry  Dock  Co.,  28   La.   Ann. 

^  Financial  Corp.,  28  W.  R.  760.  173;    26  Am.    Rep.   90;    Nebraska 

*  Joint  Stock  Discount  Co.  v.  Shirt  Co.  v.  Morton,  93  N.  W.  225; 
Brown,  3  Eq.  139  (headnote  inade-  3  Nebr.  (Unof.)  888;  Sumner  v. 
quale),  affirmed  8  E(].  381.  Marcy,  3  Woodb.  &  M.  105 ;  Knowles 

Cf.  Pauly  V.  Coronado  Beach  Co.,  v.  Sandercock,  107  Cal.  629;  40  Pac. 

56  Fed.  428.  1047. 

*  Mutual  Savings,  etc.  Ass'n  v.  Cf.  Talinage  v.  Pell,  7  N.  Y.  328 
Meridan  Agency  Co.,  24  Conn.  159.  (dealing  by  a  bank  in  public  stocks). 

•  First   Nat.    Bank    v.    Nat.    Ex-  '   Robntham    v.     Prudential     Ins. 

change  Bank,  92  U.  S.  122.  128  (sem-  Co.,  64  N.  J.  Eq.  673.  685-687,  696; 
ble);  California  Bank  v.  Kennedy,  53  Atl.  842;  Commercial  Fire  Ins. 
167   U.   S.  362;     17  Sup.  Ct.   831;    Co.  v.  Board  of  Revenue  Montgomery 

77 


§  85  THE    INCORPORATION    PAPER  [ChAP.  II 

power  to  subscribe  for  or  in  any  way  acquire  shares  in  another 
company,  it  may  subscribe  for  or  purchase  shares  to  which  a 
liabiHty  is  attached/  and  consequently  a  shareholder  cannot 
enjoin  the  company  from  subscribing  for  shares  to  be  issued 
as  fully  paid  upon  payment  of  less  than  the  par  value.-  A  power 
to  purchase  shares  or  to  "take  stock"  in  other  companies  does 
not  authorize  a  sale  of  the  entire  business  to  another  corporation 
in  exchange  for  shares  in  the  latter  company  to  be  distributed 
pro  rata  among  the  shareholders  of  the  former  company.^  The 
power  to  acquire  shares  carries  with  it  the  power  to  exercise 
such  rights  of  ownership  as  the  right  to  vote.*  But  it  does  not 
authorize  such  manipulation  of  the  subsidiary  company  as  will 
make  it  the  dominant  or  holding  company,^  nor  does  it  author- 
ize the  acquisition  of  shares  in  pursuance  of  a  scheme  to  create 
a  monopoly.^ 


§  85.  Power  to  Promote  other  Corporations,  —  Somewhat  akin 
to  the  power  to  purchase  or  subscribe  for  shares  in  other 
companies  is  the  power  to  promote  other  corporations.''  The 
latter  power  may  be  implied  from  authority  to  engage  in  general 
monetary  or  financial  enterprises,*  or  perhaps  from  the  expres- 
sion of  dealing  in  securities  of  other  companies  as  one  of  the 
objects  of  the  corporations ; "  but  the  part  of  caution  is  to  men- 
tion it  expressly  among  the  objects  of  the  company,  if  its  exercise 

County,  99  Ala.  1 ;   14  So.  490 ;   42  ^  Bigelow  v.  Calumet,  etc.  Mining 

Am.  St.  Rep.  17  (where  the  power  Co.,  155  Fed.  869.     And  see  supra, 

was  to  invest  in  stocks).  §  60,  and  infra,  §  302. 

But  see  Rubino  v.  Pressed  Steel  ''  McAlester  Mfg.  Co.  v.  Florence 

Car  Co.  (N.  J.),  53  Atl.  1050.  Cotton,  etc.  Co.,  128  Ala.  240  ;    30  So. 

*  Mason    v.    Motor    Traction    Co.  632  (as  to  becoming  an  original  sub- 

(1905),  1  Ch.  419;    Bisgood  v.  Nile  scriber  for  shares  in  a  new  corpor- 

VaUey  Co.   (1906),    1   Ch.   747,   758  ation). 

(semble),  per  Kekewich,  J.  *  Lomlon     Financial     As.s'n     v. 

'  Rubino  V.  Pressed  Steel  Car  Co.  Kelk,  26  Ch.  D.  107. 

(N.  J.),  53  Atl.  1050.  But  see  Cause  v.  Commonwealth 

^  Elyton  Land  Co.  V.  Dowdell,  US  Trust    Co.,    106    N.    Y.    Supp.    288 

Ala.    177;  20  So.  981 ;  59  Am.   St.  (where  a  contract  in  the  nature  of  a 

Rep.  105.    Cf.  supra,  §  79  and  §  61.  contract  of  underwriting   was   held 

*  Infra,  §  1231.  ultra  vires  of  a  trust  company). 

*  Robinson  v.  Holhrook,  148  Fed.  '■'  Ridnno  v.  Pressed  Steel  Car  Co. 
107,  stated  infra,  §  85.  (N.  J.),  53  Atl.  1050.   Cf.  supra,  §  84. 

78 


§  31-§    1G2]  POWERS    IMPLIED  .       §  86 

is  thought  (lesirahle.  A  corporation  formed  for  the  purpose  of 
miinufucturing  uiul  of  selHug  its  {)ro(lucts,  and  authorized  to 
hold  shares  in  other  corporations,  may,  it  has  heen  held,  organize 
subsidiary  corporations  to  act  as  distriWuting  agencies.'  The 
opinion  has  been  judicially  expressed  that  a  power  to  accpiire 
shares  in  another  corporation  does  not  justify  the  use  of  the 
controlling  interest  in  a  subsidiary  C(irj)oration  for  the  j)urpose 
of  largely  increasing  the  capital  of  the  sul)sidiary  company  hy 
the  issue  of  new  shares  to  be  offered  to  the  shareholders  of  the 
controlling  company  in  exchange  for  their  shares  in  the  latter 
company:-  the  elfect  of  consummating  the  scheme  would  be  to 
convert  the  subsidiary  company  into  a  holding  company  and  to 
vest  in  it  the  control  of  the  originally  dominant  company. 

§  86.  Power  to  become  Member  of  Partnership.  —  The 
power  to  become  a  member  of  a  partnership  is  one  which  in 
general  is  foreign  to  the  nature  of  a  corporation ;  for  the  other 
partner  would  have  the  power  to  bind  the  corporation  in  the 
course  of  its  business  and  thus  virtually  to  supersede  the  ma- 
chinery provided  by  law',  consisting  of  directors,  officers,  and 
shareholders,  for  the  management  of  the  corporate  business. 
Consequently,  one  may  well  doubt  whether  even  under  the 
most  liberal  incorporation  laws,  a  clause  specifying  the  forma- 
tion of  partnerships  as  one  of  the  objects  of  the  company  would 
be  legal.  At  any  rate,  without  clear  affirmative  authority,  no 
corporation  has  p>ower  to  become  a  member  of  a  partnership,^ 

'  Ditmann    v.    Distilling    Co.,  54  Canal  Co.  v.  Fulton  Bank,  7  Wend. 

Atl.  Rep.  570  (N.  J.  Ch.).  (N.  Y.)  412  (semble) ;   Sabine  Tram 

But  cf.  Lagrone  v.   Timmerman,  Co.  v.  Bancroft  &  Sons,  16  Tex.  Civ. 

46  S.  Car.  372,  410-411;    24  S.  E.  App.  170;    40  S.  W.  837;    Ex  parte 

290.  Liquidators   of   British   Nation   Life 

'  Robinson  v.  Ilolbrook,  148  Fed.  Ass.  Ass'n,  8  Ch.  D.  679,  704;   Peo- 

107.  pie  V.  North  River  Sugar  Refinery, 

»  Whittenton  Mills  v.    Upton,   10  121    N.  Y.  582;    24  N.  E.  834;    18 

Gray    (Mass.)    682;     71    Am.    Dec.  Am.  St.  Rep.  843 ;   9  L.  R.  A.  33. 

681 ;    Mallory  v.  Hanaur  Oil  Works,  Cf.  Charlton  v.  Newcastle,  etc.  Ry. 

86Tenn.  598;  8S.  W.  396;  Gunnv.  Co.,  5  Jur.  N.  S.    1096;    Butler  v. 

Central  R.  R.,  etc.  Co.,  74  Ga.  509;  Am^ican    Toy    Co.,    46    Conn.    136 

Marine  Bank  v.  Ogden,  29  111.  248;  (where  the  corporation  was  author- 

Bishop  V.  American  Preservers  Co.,  ized  to  form  the  partnership  by  the 

157  111.  284;   41  N.  E.  765;   48  Am.  special  act  of  incorporation);    Cleve- 

St.    Rep.    317;     Boyd   v.    American  land  Paper  Co.   v.   Courier  Co.,  67 

Carbon  Black  Co.,  182  Pa.  St.  206;  Mich.  152;    34  N.  W.  556  (where  it 

37  Atl.  937;    Burke  v.  Concord  Rail-  was  said  that  "a  corporation  may, 

road,  61  N.  H.  160;   New  York,  etc.  in  furtherance  of  the  object  of  its 

79 


§87 


THE   INCORPORATION    PAPER 


[Chap.  II 


or  to  accept,  even  in  satisfaction  of  a  debt,  shares  in  an  unin- 
corporated company,  which  in  the  eye  of  the  law  is  a  mere  part- 
nership.^ These  objections  do  not  apply  to  a  temporary 
partnership  formed  by  the  creditors  of  an  insolvent  debtor  for 
the  purpose  of  minimizing  their  loss  by  carrying  on  the  debtor's 
business  so  as  to  realize  as  much  as  possible  from  his  assets,^  or 
to  an  agreement  for  pooling  of  earnings  and  expenses,^  or  to  a 
mere  joint  contract  in  a  single  transaction,*  or  to  a  contract  to 
trive  an  employee  a  share  in  the  company's  profits  in  lieu  of 
salary.^ 

§  87-§  90.     Power  to  contribute  to  Public  Objects,  recognize 
Moral  Obligations,  etc. 

§  87.  In  general.  —  As  all  business  corporations  are  formed 
for  the  acquisition  of  gain,  they  have  no  power,  out  of  ;iiere  gen- 
creation,  contract  with  an  indivici- 
ual,  though  the  effect  of  the  contract 
may  be  to  impose  upon  the  com- 
pany the  habiUty  of  a  partner"); 
Ontario  Salt  Co.  v.  Merchants  Salt 
Co.,  18  Grant  Ch.  (Up.  Can.)  540 
(agreement  between  manufacturing 
companies  to  sell  exclusively  to 
trustees  of  a  syndicate  held  not 
vltra  vires) ;  Allen  v.  Woonsocket 
Co.,  11  R.  I.  288;  Calvert  v.  Idaho 
Stage  Co.,  25  Oreg.  412;  36  Pac.  24 
(holding  that  a  corporation  has  im- 
plied power  "to  become  a  co-owner 
with  an  individual  in  a  business  or 
enterprise  within  the  scope  of  its 
corporate  powers");  Hackett  v. 
Multnomah  Ry.  Co.,  12  Oreg.  124; 
6  Pac.  659;  53  Am.  Rep.  327  (joint 
ownership  and  operation  of  a  ferry) ; 
Breinig  v.  Sparrow  (Ind.),  80  N.  E. 
37  (as  to  liability  to  third  persons) ; 
Roedde  v.  News- Advertiser  Pub.  Co., 
4  Brit.  Columb.  7  (where  only  one 
of  the  judges  held  that  a  partner- 
ship was  ultra  vires). 

A  fortiori,  a  corporation  has  no 
power  to  enter  into  a  partnership 
for  carrying  on  a  business  that  would 
be  ultra  vires  if  conducted  by  the 
corporation  itself.  Central  R.  R., 
etc.  Co.  V.  Smith,  76  Ala.  572;  52 
Am.  Rep.  353. 


•  Merchants^  Nat.  Bank  v.  Wehr- 
niann,  202  U.  S.  295;  26  Sup.  Ct. 
613. 

Cf.  Ex  parte  Liquidators  of  Brit- 
ish Nation  Life  Ass.  Ass'n,  8  Ch. 
D.  679. 

=>  Kelleij  V.  Biddle,  180  Mass.  147 ; 
61  N.  E.  821. 

But  cf.  First  Nat.  Bank  v.  Con- 
verse, 200  U.  S.  425 ;  26  Sup.  Ct.  306. 

^  White  Star  Line  v.  Star  Line 
(Mich.),  105  N.  W.  135;  141  Mich. 
604  ;   113  Am.  St.  Rep.  551  (semble). 

Cf.  Catskill  Bank  v.  Gray,  14 
Barb.  (N.  Y.)  471 ;  Bates  v.  Coro- 
nado  Beach  Co.,  109  Cal.  160,  162- 
163;  41  Pac.  855. 

*  Marine  Bank  v.  Ogden,  29  111. 
248  (semble). 

Cf.  Bates  v.  Coronado  Beach  Co., 
109  Cal.  160,  162-163;  41  Pac.  855; 
Chicago,  etc.  Ry.  Co.  v.  Ayres,  140 
111.  644 ;  30  N.  E.  687  (indebted- 
ness contracted  jointly  by  connect- 
ing railways) ;  New  York,  etc.  Canal 
Co.  V.  Fulton  Bank,  7  Wend.  (N.  Y.) 
412  (deposit  in  bank  in  joint  names 
of  two  corporations) ;  Johnston  For- 
eign Patents  Co.  (1904),  2  Ch.  234 
(where  three  companies  undertook 
to  issue  joint  debentures). 

"  Belch  V.  Big  Store  Co.  (Wash.), 
89  Pac.  174. 


80 


§  31-§   102]  POWERS    IMPLIED  §  87 

erosity  or  public  spirit,  to  expend  their  funds  for  charitable  or" 
philanthropic  objects;  and  this  is  true  although,  as  from  a 
casting  of  their  bread  upon  the  waters,  a  hoj)e  of  indirect  benefit 
to  the  company  is  indulged/  Thus,  it  is  ultra  vires  of  a  railway 
company  to  make  a  donation  to  a  fair  or  pui)lic  exhibition  to  l)e 
set  up  along  its  line,  although  the  establishment  will  increase 
the  traffic  over  the  line.-  But  although  business  cor|X)rations 
cannot  contribute  to  charity  or  benevolence,  yet  they  are  not 
required  always  to  insist  on  the  full  extent  of  their  legal  rights. 
They  are  not  forbidden  from  recognizing  moral  obligations  of 
which  strict  law  takes  no  cognizance.  They  are  not  prohibited 
from  estal)lishing  a  reputation  for  broad,  liberal,  equitable 
dealing  which  may  stand  them  in  good  stead  in  competition 
with  less  fair  rivals.  Thus,  an  incorporated  fire  insurance  com- 
pany whose  policies  except  losses  from  explosions  may  never- 
theless pay  a  loss  from  that  cause  when  other  companies  are 
accustomed  to  do  so,  such  liberal  dealing  being  deemed  con- 
ducive to  the  prosperity  of  the  corporation.^ 

The  extent  of  this  power  of  corporations  has  been  questioned 
most  frequently  with  respect  to  gifts  and  gratuities  to  servants 
and  agents.  It  is  settled  that  a  corporation  may  bestow  reason- 
able gratuities  on  its  employees  in  addition  to  the  compensation 
to  which  they  may  be  legally  entitled.*  Thus,  a  manufacturing 
company  may  give  a  gratuity  of  one  week's  extra  pay  to  each  of 
its  laborers  who  have  worked  for  the  company  faithfully  for  more 

1  But    cf.    Whetstone    v.    Ottawa  140  111.  248;   29  N.  E.  1044  (where 

University,  13    Kan.   320  (donation  an  hotel  company  was  held  to  have 

to  procure  erection  of  a  school  near  power  to  contribute  to  the  expense  of 

company's  land).  a  public  gathering);  Merchants'  Bldg., 

As  to  power  to  dedicate  property  etc.  Co.  v.  Chicago  Exchange  Bldg.  Co., 

of  the  corporation  as  a  highway,  see  106  111.  App.  17  ;  210  111.  2(j ;  71  N.  E. 

Stacy  V.  Glen  Ellyn  Hotel,  etc.  Co.,  79  22 :  102  Am.  St.  Rep.  145(holdingthat 

N.  E.  133 ;  223  111.  546.  a  corporation  owning  a  large  office 

*  Tomkin.'ion    v.     South    Eastern  building  may  contribute  to  a  fund  to 

Ry.  Co.,  35  Ch.  D.  675 ;  Davis  v.  Old  secure  the  location  of  the  public  stock 

Colony  R.  R.  Co.,  131  Mass.  258;  41  exdiange  in  that  vicinity). 

Am.  Rep.  221;    Western  Md.  R.  R.  ^  Taunton  v.   Rorjal   /«s.   Co.,   2 

Co.  V.  Blue  Ridge  Hotel  Co.,  102  Md.  Hem.  &  Mill.  135. 

307;  62  Atl.  351;    HI  Am.  St.  Rep.  *  Cf.  Rainford  v.  James  Keith  & 

362  (railway  company  without  power  Blackman    Co.    (1905),    2    Ch.    147 

to  contribute  to  erection  of  a  sum-  (where  the  gratuity  took  the  shape 

mer  hotel  on  its  line).  of  a  loan  to  the  employee). 

But   .«:ee    Richelieu   Hotel    Co.    v.  But   see   Jones   v.    Morrison,   31 

International,  etc.  Encampment  Co.,  Minn.  140;    16  N.  W.  854. 
VOL.  I.  —  6                                     SI 


§  88  THE    INCORPORATION    PAPER  [ChAP.  II 

than  a  year.*  So,  a  bank  may  grant  a  five  years'  pension  to  the 
family  of  one  of  its  officers.-  In  all  cases  of  these  sorts,  the 
amount  of  the  gratuity  rests  entirely  within  the  discretion  of  the 
company,^  unless  indeed  it  be  altogether  out  of  reason  and  fitness. 
But  where  the  company  has  ceased  to  be  a  going  concern,  this 
power  to  make  gifts  or  presents  is  at  an  end.  Thus,  where  a 
company  has  sold  out  its  business  and  undertaking,  and  is 
about  to  be  wound-up,  a  general  meeting  has  no  power  to  vote 
a  portion  of  its  funds  to  its  directors,  officers,  and  servants,  in 
consideration  of  their  past  services  and  loss  of  positions.*  The 
reason  for  this  is  that  where  the  company  is  about  to  discontinue 
its  business  those  interested  in  it  cannot  be  benefited  by  such 
gratuities,  for  no  reputation  for  fair-dealing  and  generosity  can 
further  advantage  them.  As  many  American  courts  would  say, 
the  assets  have  become  a  "trust-fund"  for  the  benefit  of 
creditors  and  shareholders.  Lord  Bowen,  with  a  homely  Shake- 
spearean phrase,  has  tersely  indicated  the  reason  of  the  law 
thus:  "The  law  does  not  say  that  there  are  to  be  no  cakes  and 
ale,  but  there  are  to  be  no  cakes  and  ale  except  such  as  are 
required  for  the  benefit  of  the  company."  ^ 

§  88.  Gratuities  to  Directors.  —  The  same  principles  apply 
where  the  directors  are  the  recipients  of  the  company's  bounty 
as  in  the  case  of  inferior  agents  and  servants,"  except  that  the 
gift  must  be  made  or  approved  by  the  shareholders;  for  of 
course  the  directors  have  no  right  to  make  themselves  a  present 
with  the  company's  money.^  The  question  whether  or  not  the 
gift  should  be  authorized  should  be  fairly  and  distinctly  sub- 
mitted to  the  shareholders.^  Indeed,  some  American  cases 
seem  to  hold  that  the  giving  of  a  pure  gratuity  to  directors  is 
vltra  vires  of  the  corporation,  so  that  it  could  not  be  legalized 

'  Hampson  v.  Price's  Patent  Can-  to  gratuities  paid  by  a  receiver  of  a 

die  Co.,  45  L.  J.  Ch.  437.  company). 

*  Henderson  v.  Bank  of  Austral-  ^  Button  v.  West  Cork  Ry.  Co.,  23 
asia,  40  Ch.  D.  170.  Ch.  D.  654,  673. 

'  Henderson  v.  Bank  of  Austral-        *  Cf.  St.  Louis,  etc.  R.  R.  Co.  v. 

asia,  40  Ch.  D.  170,  181  (headnote  Tiernan,    37    Kan.     606;     15    Pac. 

inadequate).  544. 

*  Hutton  V.  West  Cork  Ry.  Co.,  23  ^  See  Doe  v.  Northwestern  Coal, 
Ch.  D.  654;    Stroud  v.  Royal  Aqua-  etc.  Co.,  78  Fed.  62. 

rium,  etc.  Soc.,  89  L.  T.  243.  *  Kaye    v.     Croydon     Tramways 

Cf.  Missouri  Pac.  Ry.  Co.  v.  Co.  (1898),  1  Ch.  358;  Jackson  v. 
Texas,  etc.  Ry.  Co.,  33  Fed.  701  (as    Munster  Bank,  13  L.  R.  Ir.  118. 

82 


§  31-§   102]  POWERS    IMPLIED  §  90 

even  by  the  approval  of  the  shareholders;  hut  this  position  has 
no  sound  reason  to  support  it,  and  is  opposed  to  tlie  weiglit  of 
authority.' 

§  89.  Payment  of  Gratmties  out  of  Capital.  —  There  seems 
on  principle  no  reason  to  ch)uljt  tliat  gilts  or  gratuities  wherever 
they  are  lawful  may  be  paid  out  of  capital  as  well  as  out  of 
profits.  For  the  theory  on  which  they  are  allowed  is  that  they 
are  proper  payments  in  the  prosecution  of  the  company's  busi- 
ness. Nevertheless,  in  an  iMiglish  case,  it  was  said  that  although 
a  corjK)ration  by  a  majority  of  its  members  in  general  meeting 
could  make  a  present  to  its  managing  director  for  the  mainte- 
nance of  his  private  residence  on  the  theory  that  the  support  of 
his  social  position  would  benefit  the  company,  yet  such  a  pres- 
ent could  be  made  only  out  of  profits  wliich  might  be  divided 
among  the  shareholders,  and  not  out  of  capital.^  It  is  doubtless 
true  that  if  all  the  shareholders  consent,  money  that  might  be 
divided  among  them  as  dividends  may,  instead,  be  applied  to 
that  or  any  other  innocent  purpose  under  the  sun ;  but  no  reason 
is  perceived  why  any  payment  to  which  the  majority  may  bind 
the  minority  may  not  be  made  out  of  capital  as  well  as  out  of 
accumulated  profits. 

§  90.  Whether  desirable  to  supplement  implied  Powers  of 
this  kind  by  express  Provisions.  —  Enough  has  been  said  to 
show  that  the  implied  powers  of  a  corporation  to  give  gratuities 
to  its  servants  and  officers,  as  well  as  to  strangers,  are  ample, 
so  that  there  is  therefore  no  need  to  supplement  them  by  express 
provisions.  Indeed,  any  express  power  to  make  gifts  or  gratui- 
ties that  should  go  beyond  the  power  implied  by  the  law  would 
be  very  dangerous.  Possibly,  it  might  be  well  in  some  cases  to 
confer  expressly  the  power  to  make  donations  to  fairs,  exhibi- 
tions and  similar  enterprises  that  may  be  thought  likely  in- 
directly to  benefit  the  company. 


*  Huffaker  v.  Krieger's  Assignee,  *  George  Newman  &  Co.  (1895), 
53  S.  W.  Rep.  288;  107  Ky.  200;  1  Ch.  074,  686,  per  Lindley,  L.  J., 
46  L.  R.  A.  384.  approved  in  Paton's  Case,  5  Ont.  L. 

Cf.    National    Loan,    etc.    Co.    v.    R.  392. 
Rockland  Co.,  94  Fed.  335;  36  C.  C. 
A.  670. 

83 


§91 


THE    INCORPORATION    PAPER 


[Chap.  II 


§  91.  Power  to  Guarantee.  —  The  power  to  guarantee 
performance  of  contracts,  etc.,  by  customers  of  the  company 
mav  often  be  found  convenient  in  practice  to  exercise.  It  is 
not  a  power  easily  implied,^  and  yet  to  insert  as  one  of  the 


^  Sturdevant  v.  Farmers',  etc. 
Bank,  87  N.  W.  156;  62  Nebr. 
472 ;  95  N.  W.  819 ;  69  Nebr.  220 
(bank  acting  as  surety  for  cus- 
tomer on  a  replevin  bond) ;  Bailey 
V.  Farmers'  Xat.  Bank,  97  111.  App. 
66;  National  Bank  of  Brunsmick 
V.  Sixth  Nat.  Bank,  212  Pa.  St. 
238;  61  Atl.  889  (bank  guarantee- 
ing drafts  on  customer  for  latter's 
accommodation) ;  Ba7ik  of  Barnwell 
V.  Sixth  Nat.  Bank,  28  Pa.  Super. 
Ct.  413  (same  point) ;  J.  G.  Brill  Co. 
V.  Norton,  etc.  Street  Ry.  Co.,  189 
Mass.  431 ;  75  N.  E.  1090  (accom- 
modation endorsement  by  railway 
company  of  note  of  contractor) ; 
Greene  v.  M iddlesborough  Town  and 
Lands  Co.  (Ky.)  89  S.  W.  228  (at- 
tempt by  a  company  formed  for  de- 
veloping and  dealing  in  real  estate 
to  guarantee  dividends  on  stock  of 
investment  company) ;  First  Nat. 
Bank  v.  American  Nat.  Bank,  173 
Mo.  153 ;  72  S.  W.  1059  (guarantee 
by  bank  of  draft  on  customer) ; 
Bowen  v.  Needles  Nat.  Bank,  94 
Fed.  925;  36  C.  C.  A.  553  (agree- 
ment by  bank  to  honor  overdrafts 
by  third  person) ;  Park  Hotel  Co.  v. 
Fourth  Nat.  Bank,  86  Fed.  742 ;  30 
C.  C.  A.  409 ;  Commercial  Nat.  Bank 
V.  Pirie,  82  Fed.  799;  27  C.  C.  A. 
171  (bank  guaranteeing  account  of 
customer  with  a  merchant) ;  Rogers 
V.  Jewell  Belting  Co.,  184  111.  574 
(where  the  surety  corporation  was 
composed  of  the  same  shareholders 
as  the  principal  corporation) ;  Best 
Brewing  Co.  v.  Klassen,  185  111.  37 ; 
57  N.  E.  20 ;  76  Am.  St.  Rep.  26 
(appeal  bond) ;  M.  V.  Monarch  Co. 
V.  Farmers'  etc.  Bank  (Ky.),  49  S.  W. 
317 ;  20  Ky.  L.  Rep.  1351  (accommo- 
dation paper) ;  Madison,  etc.  Co.  v. 
Watertown,  etc.  Co.,  7  Wise.  59; 
Preston  v.  Northwestern  Cereal  Co. 


(Nebr.),  93  N.  W.  136;  67  Nebr. 
45 ;  Louisville,  etc.  Ry.  Co.  v.  Louis- 
ville Trust  Co.,  174  U.  S.  552,  567- 
568;  19Sup.  Ct.  817(semble);  Pros- 
pect Worsted  Mills,  126  Fed.  1011; 
Kelley,  Maus  and  Co.  v.  O'Brien 
Varnish  Co.,  90  111.  App.  287  (ex- 
ecuting appeal  bond  as  surety) ; 
Gilbert  v.  Seatco  Mfg.  Co.,  98  Fed. 
208  (attempt  by  corporation  to  be- 
come surety  for  a  transferee  of  its 
shares  for  repayment  of  money  ad- 
vanced to  enable  him  to  purchase 
them);  Western  Md.  R.  R.  Co.  v. 
Blue  Ridge  Hotel  Co.,  102  Md.  307; 
62  Atl.  351;  111  Am.  St.  Rep.  362 
(railway  company  guaranteeing  in- 
terest on  bonds  and  dividends  on 
sliares  of  a  company  erecting  a  sum- 
mer hotel  on  the  Une  of  railway) ; 
Washington  Mill  Co.  v.  Sprague 
Lumber  Co.,  52  Pac.  1067 ;  19  Wash. 
165  (guaranty  of  debt  of  a  share- 
holder concurred  in  by  the  other 
shareholders) ;  Appleton  v.  Citizens' 
Central  Nat.  Bank,  116  N.  Y.  App. 
Div.  404;  101  N.  Y.  Supp.  1027 
(guaranty  of  promissory  note  by  a 
national  bank) ;  National  Bank  of 
Newport  v.  H.  P.  Snyder  Mfg.  Co., 
102  N.  Y.  Supp.  478  (accommodation 
paper  issued  by  manufacturing  com- 
pany) ;  Cook  V.  Am.  Tubing,  etc.  Co. 
(R.  I.),  65  Atl.  641  (accommodation 
paper  issued  by  manufacturing  com- 
pany for  benefit  of  an  agent) ;  Hum- 
boldt Milling  Co.  v.  Am.  Mfg.,  etc. 
Co.,  62  Fed.  356;  10  C.  C.  A.  415 
(company  formed  to  manufacture 
iron  work  for  mines  guaranteeing 
contract  for  erection  of  mining  plant 
for  prospective  customer) ;  Evans  v. 
Johnson,  149  Fed.  978 ;  79  C.  C.  A. 
488. 

But  see  Murphy  v.  Arkansas,  etc. 
Imp.  Co.,  97  Fed.  723  (where  all  the 
shareholders  assented). 


84 


§  31-§  1G2] 


r<)Wf:n.s  implied 


§91 


company's  ol)jec'ts  acting  as  surety  for  other  persons  wouKl  he 
very  hazardous,'  and  niight  moreover  subject  the  corporation 
to  burdensome  reguhitions  appHcable  to  surety  companies. 
Moreover,  in  some  cases,  the  power  is  impHed  as  incidental.- 
We  have  seen  above  that  any  corporation  owning  a  bill  of  ex- 
change or  promissory  note  or  coupon-bond  and  desiring  to 
assign  the  same  may,  by  endorsement  or  otherwise,  guarantee 
payment.^  So,  it  has  been  held  that,  a  company  engaged  in 
manufacturing  and  selling  lumber  may  become  surety  on  the 
bond  of  a  contractor  to  whom  it  furnishes  building  material 
and  who  is  required  to  give  bond  to  secure  performance  of  a 
contract.'  Similarly,  a  brewery  company  may  go  surety  for  a 
publican  upon  a  bond  necessary  to  secure  him  a  license  to  sell 
the  surety's  licjuors.''  It  has  even  been  held  that  a  manufacturing 
company  may  lend  its  credit  to  a  debtor  who  is  in  embarrassed 
circumstances,"  a  decision  which  certainly  goes  to  the  extreme 
limit  of  the  law.     It  has  also  been  held  that  a  company  when 

'  But  Sir  F.  B.  Palmer  recom-  erty  against  loss  by  fire  while  it  is  on 
mends  mentioning  as  one  of  the  the  premises  of  the  first  company), 
company's  objects  the  exercise  of  "a  ^  See  supra,  §  77. 
power  to  lend  money  and  guarantee  Cf.  Roosevelt  v.  Nashville,  etc.  Ry. 
the  performance  of  contracts  by  cus-  Co.,  128  Fed.  465  (where  the  trans- 
tomers  and  others."  "These  loan  action  was  held  a  sale  so  far  as  the 
and  guarantee  transactions,"  he  truly  purchaser  of  the  bonds  was  con- 
says,  "are  constantly  called  for  in  cerned  so  as  to  entitle  him  to  hold 
business  and  yet  the  power  is  one  the  guarantor  company,  although 
not  easily  imjjlied."  Palmer's  Com-  the  guarantor  immediately  trans- 
pany  Law,  3d  ed.,  47.  mitted  the  proceeds  of  sale  to  the 

-  Central  R.  R.,  etc.  Co.  v.  Farmers'  principal  tlebtor). 
L.  cfc  T.  Co.,  114  Fed.  263;   52  C.  C.         "  Wheeler   v.    Everett   Land   Co., 

A.  149  (guarantee  by  railway  com-  14  Wash.  630;  45Pac.  316;  Central 

pany  with  banking  powers  of  bonds  Lumber  Co.  v.  Kelter,  201  111.  503. 
of  a  railway  in  which  the  first  com-         Cf.     Interior    Woodwork    Co.     v. 

pany     owned    a    majority    of    the  Prassar,  108  Wise.  557;    84  N.  W. 

shares) ;    Central    Trust    Co.   v.   Co-  833. 

lumbus,    etc.    Ry.   Co.,  87    Fed.  815         But    see    contra,    S.    P.    Smith 

(mortgage     of    land    to   guarantee  Lumber  Co.,  132  Fed.  620. 
bonds  of  subsidiary  company) ;  John         *  Horst  y.  Lewis  (Nebr.),  98  N. 

Bridge  tfc  Co.  v.  Magrath.  A^ew  So.  W.  1046;   103  N.  W.  460. 
Wales  State  Rep.  441  (guarantee  by         Cf.    Aaronson    y.    David    Meyer 

company  of  wool   brokers  of  bank  Brewing  Co.,  26  N.   Y.   Misc.   655; 

account  of  constituent).  56  N.   Y.   Supp.   387   (guaranteeing 

Cf.  Schaeffer  Piano  Mfg.   Co.   v.  payment  of  rent  by  customer). 
Nat.  Fire  Extinguisher  Co..  148  Fed.  "  Hess  v.  Sloane,  66  N.  Y.  App. 

159;    78  C.  C.  A.  293  (holding  that  Diy.    522;     73   N.   Y.   Supp.    313; 

manufacturing  company  may  agree  affirmed  173  N.  Y.  616;    66  N.  E. 

with  contractor  to  insure  his  prop-  1110. 

85 


§  92  THE    INCORPORATION    PAPER  [ClIAP.  II 

purchasing  property  has  implied  power  as  part  of  the  considera- 
tion to  indorse  or  guarantee  notes  of  the  vendor,'  but  this  decision 
overlooks  the  fact  that  the  objection  to  guarantees  by  corpora- 
tions does  not  he  merely  in  the  fact  that  the  company  receives  no 
benefit,-  but  also  in  the  fact  that  a  corporation  has  no  implied 
power  to  speculate  upon  the  ability  or  inability  of  a  third  person 
to  meet  his  obligations.^  It  has  been  held  that  a  company 
which  has  power  to  purchase  shares  in  another  corporation 
mav,  as  part  of  the  consideration  for  the  purchase,  agree  to 
guarantee  dividends  on  other  stock  of  the  second  company,* 
a  decision  which  is  likewise  rather  questionable.  Of  course 
when  the  corporation  is  in  fact  the  principal  debtor,  there 
is  no  legal  objection  to  the  execution  of  commercial  paper 
w'herebv  the  company  appears  in  form  as  an  accommodation 
indorser.^  An  express  power  to  aid  other  corporations,  by  sub- 
scription to  their  stock  or  otherwise,  confers  power  to  guarantee 
their  bonds.*' 

§  92.  Power  to  Lend.  —  The  power  to  lend  money  is  closely 
akin  to  the  power  to  lend  credit  by  executing  a  guarantee,^  and 
like  the  latter  poww  is  not  readily  implied.^  Nevertheless,  a 
company  formed  for  the  purpose  of  "brewing  and  selling  beer" 
was  held  to  have  implied  power  to  lend  money  to  a  saloon- 
keeper for  the  erection  of  a  saloon  at  which  the  company's  beers 
should  be  sold.'-*    A  loan  may  be  a  proper  form  of  investment  for 

1  National  Bank  of  Commerce  v.  *  Beacon    Trust    Co.    v.    Souther, 

Allen,  90  Fed.  545;  33  C.  C.  A.  169.  183  Mass.  413;   G7  N.  E.  345. 

Cf .    Ellerman    v.    Chicago    Junction  *  Zabriskie  v.  Cleveland,  etc.  R.  R. 

Rys.,  etc.  Co.,  49  N.  J.  Eq.  217,  246-  Co.,  23  How.  381. 

248  ;  23  Atl.  287.  ''  Cf .  Holmes  v.   Willard,  125  N. 

'^'Cf.  Beaton  Grocery  Co.  v.  Inter-  Y.  75;   25  N.  E.  1083;    11  L.  R.  A. 

national  Harvester  Co.  (Tex.)  105  S.  170. 

W.  556.     But  see  Lyon  v.  First  Nat.  *  Grand  Lodge  v.  Waddill,  36  Ala. 

Bank,  85  Fed.  120;   29  C.  C.  A.  45.  313;    Chambers  v.  Falkner,  65  Ala. 

3  Of    course,    a    corporation    on  448,   454;     Beach   v.    Fulton   Bayik, 

purchasing  property  has  power  to  3    Wend.     (N.    Y.)     573,    582-583 

assume  the  payment  of  a  mortgage  (semble). 

thereon,  as  was  done  in  Beaver  Knit-  »  Kraft    v.     West    Side    Brewery 

ting  Mills,  154  Fed.  320;   Panhandle  Co.,  219   111.   205;    76  N.    E.   372. 

Nat.  Bank  v.  Emery,  78  Tex.  498;  For   other   cases   where   the   power 

15  S.  W.  23 ;  but  tliis  is  very  differ-  to  lend  has  been  implied,  see  Holmes 

ent  from  guaranteeing  payment.  v.  Willard,  125  N.  Y.  75 ;   25  N.  E. 

*  Windmuller    v.    Standard    Dis-  1083;     11   L.   R.   A.    170;    Western 

tilling  Co.,  106  N.  Y.  App.  Div.  246;  Boatmen's,  etc.  Ass'n  v.  Kribben,  48 

94  N.  Y.  Supp.  52.  Mo.    37,    43 ;    Union   Water   Co.    v. 

86 


§  31-§   1G2]  POWERS    IMPLIED  §  94 

sucli  corporations  as  insurance  companies,'  and  indeed  it  has 
been  held  that  a  inaiuifacturing  eonipuny  has  inipUed  power  to 
lend  its  surplus  funds  temporarily.''  Of  course,  any  corporation 
may  deposit  money  with  its  bankers,  and  yet  an  ordinary  bank 
deposit  is  a  loan  to  tiie  i)ank.  Moreover,  a  company  may  lend 
money  to  a  faithful  employee  as  an  indirect  method  of  giving  him 
a  gratuity.^  The  power  to  lend  necessarily  implies  the  power  to 
take  any  reasonable  security  that  is  not  prohibited.'  But  an 
express  power  to  lend  on  bond  and  mortgage  so  far  from  imply- 
ing rather  negatives  any  power  to  lend  without  security  or  on 
some  different  security.^ 

§  93.  Power  to  advertise.  —  The  power  to  advertise  is 
incidental  to  all  business  companies,"  and  need  never  be  expressly 
mentioned  in  the  incorporation  paper. 

§  94.  Power  to  promote  or  oppose  Bills  in  the  Legislature.  — 
Sometimes,  the  majority  of  the  shareholders  resort  to  the  legisla- 
ture for  assistance  in  dealing  with  an  (as  they  think)  obstreperous 
minority,  and  undertake  to  defray  the  expense  of  applying  for 
the  legislative  aid  out  of  the  company's  funds.  This  is  ulira 
vires  of  the  corporation  ;  and,  therefore,  although  citizens  cannot 
be  enjoined  from  applying  to  the  legislature  for  an  amendment 
to  their  act  of  incorporation  or  for  redress  of  any  grievances, 
real  or  fancied,  yet  the  expenditure  of  moneys  of  the  corporation 
for  that  purpose  will  be  restrained  by  a  court  of  equity  at  the  in- 
stance of  any  shareholder.'  Indeed,  it  is  held  that  a  corporation 
should  content  itself  with  the  existing  law,  and  has  therefore 
no  power  to  expend   its  funds  in  promoting  a  bill  in  parlia- 

Murphy's  Flat,  etc.  Co.,  22Cal.  620;  35  Am.  Rep.  531;    Pratt  v.  Eaton, 

Madison,  etc.  Co.  v.  Watertown,  etc.  79  N.  Y.  449. 

Co.,  5  Wise.  173.  5  Life  ct  Fire  Ins.  Co.  v.  Mechanic 

'  Fariners'  L.  &  T.  Co.  v.  Perry,  Ins.  Co.,  7  Wend.  (N.  Y.)  31. 
3  Sandf.   Ch.   (N.  Y.)    339;    North         «  See    Colorado    Springs    Co.    v. 

Carolina  R.  R.  Co.  v.  Moore,  7  N.  American   Publishing   Co.,    97    Fed. 

Car.    6    (railway    company) ;     Life  843 ;  38  C.  C.  A.  433. 
Ass'n  V.   Levy,   33   La.   Ann.    1203;         ^  Caledonian  Ry. Co.  v. Solway  Ry. 

Farmers'  L.  A  T.  Co.  v.  Clowes,  3  Co.,  49  L.  T.  52G;    Stevens  v.  South 

N.  Y.  470.  Devon  Ry.  Co.,  20  L.  J.Ch.491 ;  Great 

^  Garrison  Canning  Co.  v.  Stanley  Western  Ry.  Co.  v.  Rushout,  5  De  G. 

(Iowa),  110  N.  W.  171.  &Sm.290.     It  is  otherwise,  however, 

'  Rain  ford    v.    James    Keith    A  if  the  amendatorj'act  has  been  passed. 

Blackman  Co.  (1905),  2  Ch.  147.  Huttcrsley  v.  Shelburne,  31  L.  J.  Ch. 

*  Deloach  v.  Jones,  18  La.  447.  873,  SS3-884 ;    White  v.   Carmathan 

Cf.  Pratt  V.  Short,  79  N.  Y.  437;  Ry.  Co..  1  Hem.  &  Miller  786. 


§  95  THE   INCORPORATION    PAPER  [ChAP.  II 

ment  for  any  purpose,  however  beneficial  to  the  company's 
business  its  passage  might  be.*  However,  it  would  seem  clear 
that  a  corporation  may  devote  a  part  of  its  funds  to  defeating 
anv  bill  which  it  deems  on  reasonable  grounds  to  be  inimical  to 
its  interests.-  And  where  a  corporation  may  be  organized 
for  anv  lawful  purpose,  no  reason  is  perceived  why  its  incorpora- 
tion paper  may  not  by  express  provision  empower  it  to  promote 
bills  in  the  legislature;  but  it  may  well  be  doubted  whether 
even  an  express  provision  in  the  incorporation  paper  could 
authorize  the  majority  of  the  company  to  use  the  corporate 
funds  to  secure  legislative  aid  in  their  controversies  with  the 
minority.  The  question  is  of  less  importance  in  the  United 
States  than  in  England,  not  only  because  constitutional  limita- 
tions on  the  power  of  the  legislature  afford  some  protection  to 
the  minority,  but  also  because  the  legitimate  expenses  of  pro- 
curing an  act  of  the  legislature  are  much  smaller  in  America 
than  in  Great  Britain. 

§  95.  Power  to  inform  Shareholders  of  Facts  likely  to  in- 
fluence their  Votes.  —  Although  a  company  has  no  power  to 
participate  in  factional  disputes  between  its  members,  yet  it 
may  always,  even  without  express  authorization  employ  its 
funds  in  giving  any  information  to  its  shareholders  that  may 
affect  their  interests  or  influence  their  conduct  as  members. 
For  example,  a  corporation  has  power  to  expend  its  funds  in 
order  to  inform  its  shareholders  of  a  proposition  to  give  stock 
in  a  rival  company  in  exchange  for  their  shares,  thus  effecting  a 
virtual  amalgamation.^  The  court  said :  "When  it  comes  to  the 
knowledge  of  a  board  of  directors  that  some  scheme  is  on  foot 
to  induce  a  majority  of  the  stockholders  to  part  with  their 
stock  to  a  rival  corporation,  the  directors  are  not  only  authorized 
to  advise  the  stockholders  thereof,  but  it  is  their  duty  to  do  so. 
.  .  .  Undoubtedly  individual  stockholders  receive  a  benefit 
in  being  notified  of  what  is  going  on,  but,  in  our  opinion,  the 
corporation  itself  also  receives  a  benefit  in  having  its  stockholders 
at  all  times  fully  advised  as  to  everything  which  concerns  its 
condition,  or  which  may  be  expected  to  alter  that  condition. 

'  Munt    V.   Shrewsbury,  etc.    Ry.         ^  Attorney-General    v.    Mayor    of 

Co.,  13  Beav.  1 ;    Maunsell  v.  Mid-  Brecon,  10  Ch.  D.  204. 
land,  etc.  Ry.  Co.,   1   Hem.   &  Mill.         ^  Rascover   v.    American   Linseed 

130.  Co.,  135  Fed.  341;  68  C.  C.  A.  11. 


§  31-§   1G2]  POWERS    IMl'LIED  §  96 

We  would  not  hesitate  to  hold  it  a  legitimate  charge  against  a 
corporation  if  directors  should  send  to  every  stockholder  a 
printed  copy  of  a  report  as  to  its  condition,  or  even  as  to  general 
conditions  of  the  industry  in  which  it  operated,  so  that  all  might 
be  advised  as  to  what  environment,  favorable  or  adverse, 
surrounded  it,  in  the  hope  that  some  of  them  might  thereby  be 
stimulated  to  thought  and  suggestion  by  which  the  corporation 
might  itself  be  profited."'  This  being  the  law,  "whether  the 
notice  shall  be  long  or  short,  in  what  form  of  words  it  shall  l)e 
couched,  whether  it  shall  be  sent  by  mail  or  advertisement  in 
newspapers,  are  matters  of  detail,  which  should  be  left  to  the 
directors";  and  therefore  a  claim  against  a  company  for  over 
$20,000  for  the  expense  of  advertising  such  a  notice  in  newspapers 
has  been  sustained.-  So,  too,  the  directors  may  properly  expend 
the  company's  funds  in  sending  out  to  each  shareholder  a 
circular  setting  out  the  facts  with  reference  to  certain  fjuestions 
of  policy  in  the  management  of  the  company  and  also  advocating 
their  own  views  and  asking  the  support  of  the  several  share- 
holders.^ On  the  other  hand,  it  has  been  held  that  the  funds  of 
the  corporation  cannot  be  used  in  publishing  a  reply  to  a  circular 
issued  by  an  officer  in  an  effort  to  prevent  the  re-election  of  the 
directors.^ 

§  90.  Power  to  take  Measures  to  bring  out  full  Vote  at 
Shareholders'  Meeting.  —  The  directors  may  also  adopt  any 
appropriate  measures  for  the  purpose  of  bringing  out  a  full  and 
fair  vote  at  a  shareholders'  meeting,  and  may  consequently 
send  out  to  the  shareholders  stamped  proxy  papers  containing 
the  names  of  some  of  their  own  number  as  proxies,  with  a 
stamped  cover  for  return.-^  The  difference  of  judicial  opinion 
which  has  existed  with  respect  to  this  latter  point  illustrates 
the  difficulty  in  drawing  the  line  between  acts  which  are  a 
legitimate  effort  to  support  policies  deemed  to  be  beneficial 
to  the  company  and  acts  which  are  an  improper  endeavor  to 

'   135  Fed.  341,  343-344.  *  Peel  v.   London  tt  .V.   TT'.   Ry. 

-  Rascover   v.    American   Linseed  Co.  (1907),  1  Ch.  5  (overruling  S^uti- 

Co.,  135  Fed.  341 ;   68  C.  C.  A.  11.  dcrt  v.  Grosvcnor,  33  Ch.  D.  528). 

3  Peel  V.  London  &  X.   W.   Ry.         Cf.  Jackson  v.  Munster  Bank,  13 

Co.  (1907),  1  Ch.  5.  L.  R.  Ir.  118;  Loivyers'  Advertising, 

*  Lawyers'     Advertising     Co.     v.  etc.  Co.  v.  Consolidated  Ry.,  etc.  Co..- 

Consolidated  Rij.,  etc.  Co.,  80  N.  E.  80  N.  E.  199;  187  N.  Y.  395. 
199;    187  N.  Y.  395. 

89 


§  97  THE    INCORPORATION    PAPER  [ChAP.   II 

perpetuate  the  power  of  the  faction  which  happens  to  be  in 
control  of  the  company  for  the  time  being.  It  has  been  held 
in  New  York  that  while  directors  may  properly  send  out  proxies 
to  the  shareholders  yet  they  must  not  use  the  company's  funds 
in  urging  the  shareholders  to  return  the  proxies  in  order  to  keep 
themselves  in  office.' 

§  97.  Power  to  pay  Counsel-fees  in  internal  Contest.  —  A 
corporation  may  expend  its  funds  in  paying  the  fees  of  defendant's 
counsel  in  a  suit  to  oust  some  of  the  officers  of  the  company.^ 
So  to  do  is  not  deemed  unlawful  participation  in  a  factional 
dispute  between  members  of  the  corporation. 

§  98-§  102.     Power  to  make  the  Best  of  a  Situation. 

§  98.  In  general.  —  As  the  limitations  upon  the  powers  of 
corporations  are  not  intended  as  mere  vexatious  impediments, 
but  are  designed  as  helps  rather  than  hindrances  to  the  business, 
the  powers  should  not  be  so  construed  as  to  prevent  corporations 
from  extricating  themselves  in  the  most  practicable  way  from 
any  difficulties  by  which  without  their  fault  they  may  be  beset. 
This  principle  may  lead  a  company  into  transactions  that 
seem  far  removed  from  the  objects  of  its  creation,  but  neverthe- 
less they  are  not  ultra  vires.  Although  prima  facie  beyond  its 
powers,  yet  they  are  seen  on  a  thorough  examination  of  the 
attendant  circumstances  to  be  in  fact  reasonably  incidental  to 
the  successful  prosecution  of  the  company's  undertaking,  and 
therefore  intra  vires.  "Take,  for  instance,"  said  Lord  Justice 
Selwyn,  "the  common  case  of  a  banker  advancing  money  upon 
the  security  of  a  ship  and  the  freight.  Nothing,  probably,  would 
be  further  from  the  notion  of  the  banker  than  entering  into  any 
transaction  respecting  the  sailing  of  the  ship,  or  receiving  the 
freight  in  respect  of  that  ship.  But  if  he  is  obliged  to  foreclose 
his  security,  if  he  is  obliged  to  take  possession  of  the  ship,  then, 
as  a  prudent  man,  he  would  necessarily  become  involved  in  the 
management  of  the  sailing  of  the  ship  and  receiving  the  freight  as 
constituting  the  only  means  by  which  he  could  recover  the 
money  he  had  advanced.     I  may  mention  one  very  familiar 

'  Lawyers'  Advertising,  etc.  Co.  v.         ^  Stendell  v.  Longshoremen's,  etc. 
Consolidated  Ry.,  etc.  Co.,  80  N.  E.     Ass'n,  116  La.  974;  41  So.  228. 
199 ;   187  N.  Y.  395. 

90 


§  31 -§   102]  POWERS    IMPLIED  §  99 

instance,  known  to  us  jill,  that  of  a  well-known  insurance  com- 
pany. Having  lent  inoney  upon  the  security  (jf  a  UKjrtgage  of 
land  in  Galway,  and  having  been  obliged  to  foreclose  that 
mortgage,  they  bi'came  dealers  of  land  in  (lalway  on  a  very 
large  scale."  '  This  inherent  power  of  every  corj)oration  to  make 
the  best  of  a  situation  and  to  protect  itself  from  loss  is  far- 
reaching  and  might  be  illustrated  by  many  examples,-  and  ind<'ed 
instances  of  it  have  been  already  given  more  than  once.  Further 
examples  are  mentioned  below. 

§  00.  Power  to  utilize  surplus  Property.  —  For  instance,  a 
corporation  is  not  bound  to  let  its  surplus  property  lie  idle,  but 
may  put  it  to  the  most  profitable  use  practicable.-'  Thus,  a  rail- 
way company  having  power  to  maintain  a  ferry  in  connection 
with  its  line  may  employ  the  ferry-boats,  when  not  in  use  for 
their  proper  purpose,  in  carrying  passengers  for  hire  on  excur- 
sions.* So,  a  railway  company  may  rent  out  its  machines  for 
weighinc:  coal  whenever  it  is  not  using  them.'"     An  hotel  com- 

DO  O 

pany  may  let  to  a  government  department  a  large  part  of  its 
hotel  while  it  is  in  course  of  construction ; "  or  a  brewery  com- 
pany, having  need  of  an  office,  may  lease  an  entire  house  and 
sublet  all  except  the  ground-floor.^  According  to  the  same 
principle,  if  a  company  has  surplus  funds  in  its  hands,  for  the 
time  being  not  needed  in  its  business,  it  is  not  bound  to  keep 
them  in  its  safe  or  even  at  its  bankers,  but  may  invest  them  in 


>  Royal    Bank    of    India's    Case,  ing  a  mortgage  may  buy  in  prior 

4  Ch.  252,  260-261.  mortgage  to  prevent  foreclosure). 

^  In  addition  to  cases  cited  below,         '  People  ex  rel.  Maloney  v.  Pull- 

see  Mahoney  v.  Butte  Hardware  Co.,  man  Car  Co.,  175  111.  125;    51  N.  E. 

27  Mont.  463  ;   71  Pac.  674  ;   Fidelity  664  ;  64  L.  R.  A.  366. 
Ins.   Co.   V.   German  Savings   Bank,         *  Forrest  v.  Manchester,  etc.   Ry. 

127    Iowa   591;     103    N.    W.    958;  Co.,  30  Beav.  40  (affirmed  on  other 

Westminster  Nat.  Bank  v.  Neiv  Eng-  grounds  in  4  De  G.  F.  &  J.  125).    Cf. 

land   Electric   Works,    62   Atl.    971;  Brown  v.   Winnisimmet  Co.,   11   .\1- 

73  N.   H.  465;    111   Am.  St.  Rep.  len  (Mass.)  326  (ferry  company  may 

637;   Cockrill  v.  Abeles,  86  Fed.  505;  let  out  boat  which  is  not  needed  for 

30  C.   C.   A.   223;    Attorney-General  present  use). 

v.  Mersey  Ry.  Co.  (1907),  i  Ch.  81;         "  London   &   N.   W.    Ry.   Co.   v. 

State  Security  Bank  v.  Iloskit^s,  106  Price,  11  Q.  B.  D.  485. 
N.  W.   764;     130   Iowa  339   (bank         »  Simpson  v.  Westminster  Palace 

accepting    conveyance    of    farm    in  Hotel  Co.,  8  H.  L.  C.  712. 
satisfaction  of  debt) ;   Mayor,  etc.  of         ''  Horsey's  Claim.  5  Eq.  561,  562  n 

Baltimore  v.  Baltimore    A-    0.  R.  R.  (headnote  inadequate). 
Co.,  21    Md.   50   (corporation   hold- 

91 


§  100  THE   INCORPORATION    PAPER  [ChAP.  II 

any  sound  securities,  not  of  course  for  speculation  but  purely 
as  an  investment,  to  prevent  the  money  from  lying  idle.' 

§  100.  Power  to  Compromise.  —  Moreover,  a  corporation 
has  power  to  compromise  any  claim  against  it  on  the  best  terms 
it  can  obtain,-  and  this  is  true  although  thereby  a  reduction  of 
capital  or  some  other  result  ordinarily  ultra  vires  is  brought 
about.  Thus,  where  a  claim  is  made  against  a  company  on 
account  of  an  alleged  illegal  issue  of  shares,  a  compromise  may 
be  entered  into  whereby  the  shares  in  question  are  to  be  can- 
celled, although  in  point  of  fact  the  shares  were  valid.^ 

§  101.  Limits  of  Powers  to  make  the  best  of  a  Situation.  —  A 
limit  of  course  exists  to  the  powers  of  the  sort  considered  in  the 
last  few  paragraphs ;  and  in  some  cases  the  limit  has  been  drawn 
perhaps  too  closely.  Thus,  where  a  building  society  which  had 
made  a  loan  upon  security  of  a  second  mortgage  of  real  estate, 
in  order  to  prevent  a  sale  of  the  premises  at  a  sacrifice  under 
the  first  mortgage,  agreed  to  guarantee  the  payment  of  the  same, 
the  House  of  Lords  held  that  the  guarantee  was  ultra  vires  of  the 
association,  and  therefore  unenforceable."  Moreover,  where  a 
bank  has  obtained  title  to  real  estate  in  payment  of  a  debt, 
although  it  may  lay  out  money  for  ordinary  and  reasonable 
repairs,  yet  it  has  no  power  to  spend  its  funds  in  prospecting 
for  ore  on  the  land.^  Similarly,  a  corporation  which  owns  shares 
in  another  company  cannot  extend  pecuniary  assistance  to  the 
latter  even  in  order  to  prevent  its  ruinous  failure.'* 

§  102.  Whether  desirable  to  supplement  these  Powers.  —  These 
cases,  and  others  of  a  similar  sort,  show  that  too  great  reliance 
can  easily  be  placed  upon  a  company's  inherent  powers  of  mak- 
ing the  best  of  a  bad  situation.  Sometimes,  it  may  be  well  in 
drawing  up  an  incorporation  paper  to  supplement  the  powers 
that  would  be  implied,  by  express  provisions  covering  such  diffi- 
culties as  can  be  anticipated.      Thus,  an  English    text-^^Titer, 

*  Cf.  supra,  §  82.  securities  of  other  corporations,  see 
'  Cf.  supra,  §  82.  Marbury  v.  Kentucky  Union  Land 
»  Bath's  Case,  8  Ch.  D.  .334.  Co.,  62  Fed.  335.  As  to  power  to 
See  infra,  §  637.  guarantee     in     general,    see    supra, 

*  Small  v^  Smith,  10  A.  C.  119.  §  91. 

a.  West  of  England  Bank,  U  Ch.         ^Cooper   v.    Hill,   94   Fed.    582; 
D.  317 ;  Stark  Bank  v.  U.  S.  Pottery   36  C.  C.  A.  402. 
Co.,  34  Vt.  144.  ®  Salomons   v.    Laing,    12   Beav. 

As   to   the   power   to   guarantee    339. 

92 


§  31-§  162]  GENERAL   STATEMENTS    OF    OBJECTS  §   104 

having  in  mind,  possil)ly,  the  decision  of  the  House  of  Lords 
stated  in  the  last  paragraph,  recommends  that  the  incorpora- 
tion paper  contain  a  clause  empowering  the  company  to  "guar- 
antee the  performance  of  contracts  by  customers  and  others";' 
but,  as  already  pointed  out,^  this  seems  a  rather  dangerous 
power  to  confer  without  restriction.  Perhaps,  in  general,  it  is 
better  to  rely  on  the  implications  of  the  law.  At  all  events,  in 
deciding  this  question,  the  draftsman  of  an  incorporation  paper 
should  be  influenced  largely  by  the  peculiar  circumstances,  so 
far  as  they  can  be  foreseen,  of  the  particular  company,  and 
needs  business  foresight  as  well  as  legal   knowledge  and  skill. 


§  103.  Provisions  prohibiting  Exercise  of  Powers  that  might 
otherwise  be  implied.  —  Finally,  it  is  always  possible  by  positive 
prohibition  to  exclude  the  existence  of  powers  that  would  other- 
wise be  implied.  To  be  sure,  the  powers  which  are  incidental 
to  corporate  existence  and  which  the  statutes  usually  affirma- 
tively declare  that  all  companies  organized  under  them  shall 
have  —  such  as  the  power  to  sue  and  be  sued,  to  have  con- 
tinuous succession,  to  have  and  use  a  common  seal,  and  the 
like  —  cannot  be  excluded.  But  any  powers  that  are  implied 
merely  as  appropriate  means  towards  attaining  the  expressed 
objects  may  by  positive  prohibition  be  denied  to  the  company. 
For  only  such  powers  are  implied  as  are  reasonably  necessary 
to  the  accomplishment  of  the  ends  of  the  company's  existence 
and  as  are  not  expressly  prohibited. 

§   104-§  108.      GENERAL   STATEMENTS    OF    OBJECTS. 

§  104.  Particularity  requisite  in  stating  Objects.  —  The  in- 
tent of  every  general  incorporation  law  being  that  the  objects 
of  the  proposed  company  shall  be  specified  in  its  incorporation 
paper,  a  statement  that  its  objects  shall  be  the  prosecution  of 
any  business  that  the  company  may  see  fit,  or  other  words  to 
that  effect,  would  certainly  fail  to  satisfy  the  statute.  The  ob- 
jects must  be  specified  or  mentioned,  and  a  declaration  that  the 
objects  shall  be  whatsoever  the  corporation  may  choose  could 

'  Palmer's  Company  Law,  3cied.,  47.  '  Supra,  §  91. 

93 


§   104  TDE   INCORPORATION    PAPER  [ChAP.  II 

not  possibly  be  deemed  a  compliance  with  the  law.'  Thus 
Lord  O'Hagan  in  a  leading  case  in  the  House  of  Lords  said : 
"That  Act  (the  Companies  Act  of  1862)  gave  certain  privileges 
and  imposed  certain  conditions,  and  one  of  them  was,  that  the 
memorandum  of  association  should  specify  the  objects  of  men 
seeking  to  trade  with  limited  liability,  for  the  manifest  purpose 
that  those  objects  should  be  clear  and  definite,  and  known  pre- 
cisely to  all  who  might. have  dealings  with  the  company.  But 
if  in  a  case  like  this,  it  were  competent  for  persons  making  and 
registering  a  memorandum  to  segregate  particular  words,  as 
'contractor'  and  'merchant,'  and  insist  that  their  generality 
should  be  confined  not  by  the  declared  purposes  of  the  forma- 
tion of  the  company,  nor  even  by  the  manifest  reason  of  the 
thing,  the  purpose  of  the  Act  would  be  defeated,  and  the  favor 
given  by  it  would  be  enjoyed  without  fulfilment  of  the  condi- 
tion properly  imposed  for  the  public  benefit."  ^  So,  a  provision 
that  the  object  of  the  company  should  be  to  do  any  and  all  acts 
tending  to  increase  the  value  of  its  shares  would  certainly  be  too 
indefinite.^ 

To  be  sure,  it  is  very  difficult  to  say  precisely  what  degree  of 
particularity  is  requisite.*  Thus,  a  statement  that  the  company 
is  organized  "for  the  purpose  of  manufacturing"  has  been  held 

'  Croion   Bank,   44   Ch.   D.   634  ;  ment  of  objects  was  held  too  vague ; 

Re  Journalists  Fund  of  Philadelphia,  West   v.    Bullskin   Prairie   Ditching 

8  Phila.  272;  Welshach  Incandescent  Co.,    32    Ind.    138    (description    of 

Gas  Light  Co.  (1904),   1  Ch.  87,  99  drain  to  be  constructed  by  a  drain- 

(semble).  age   company   held   too  indefinite) ; 

CL  State  V.  Central  Ohio,  etc.  Ass'n,  O'Reiley  v.  Kankakee  Valley  Drain- 

29  Oiiio  St.  399  (statement  that  the  ing  Co.,  32  Ind.  169,  192-195  (similar 

manner  of  carrj'ing  on  the  business  point   to   that   in   preceding   case) ; 

shall  be  such  as  the  company  may  Crawford  v.   Prairie  Creek  Ditching 

from  time  to  time  prescribe  by  rules  Ass^n,  44   Ind.   361    (same  point  — 

and    regulations,    held    not    a    com-  commencement,     course     and     ter- 

pliance  with  a  requirement  that  the  minus  of  ditch  required  to  be  stated); 

incorporation  paper  must  show  the  Monroe    Republican     Club,     6     Pa. 

"manner  of  carrying  on   the  busi-  Dist.  R.  515  ("social  enjoyment"); 

ness  of  said  association").  Lafayette  Club,  21  Pa.  Co.  Ct.  Rep. 

^  Ashbury  Ry.,  etc.  Co.  v.  Riche,  243    ("mutiial    improvement    intel- 

L.  R.  7  H.  L.  653,  690-691.  lectually,  and  social  enjoyment"). 

'  Ellerman    v.    Chicago    Junction         In  the  following  cases,   in  addi- 

Rys.,  etc.  Co.,  49  N.  J.  Eq.  217,  239  tion  to  those  cited  below,  the  state- 

(semble) ;  23  Atl.  287  ;  Peel's  Case,  ment  of  objects  was  held  to  be  suffi- 

2  Ch.  674  (semble).  ciently     particular:      Seyberger     v. 

*  In  the  following  cases  in  addi-  Calumet  Draining  Co.,  33   Ind.  330 

tion  to  those  cited  below,  the  state-  (description    of    drain    to    be    con- 

94 


§  31-§    1G2]  GENERAL    STATEMENTS    OF    OBJECTS  §    104 

to  be  a  compliance  with  law;'  and  the  same  is  true  of  a  state- 
ment that  the  objects  of  the  company  shall  be  the  manufacture 
and  sale  of  dat^uerreotype  matting  and  preservers,  and  all  other 
articles  made  of  brass,  silver,  gold,  iron,  or  other  metals  or  any 
compounds  thereof,"  and  of  a  statement  that  the  objects  of  the 
company  are  "the  mining  of  gold,  silver  and  lead  in  the  terri- 
tory of  Utah."  ^  According  to  a  recent  Wisconsin  case,  a  state- 
ment that  the  "business  or  purposes"  of  the  corporation  will 
be  "to  construct  and  operate  street  railways  in  the  citv  of  Mil- 
waukee and  elsewhere  in  the  State,  and  to  extend  its  lines  into 
or  tliiough  any  village  or  town  of  the  State"  is  good,  without 
mentioning  the  termini  of  the  railways/  AVhere  an  incorpora- 
tion paper  provided  that  the  company's  objects  should  be  to 
buy  and  sell  shares  in  a  certain  other  corporation,  "to  exercise 
in  respect  to  said  shares  any  and  all  the  rights,  powers  and  {)rivi- 
ieges  of  owners  of  shares  of  said  capital  stock,  to  do  any  and  all 
things  tending  to  increase  the  value  of  the  shares  of  the  capital 
stock  of  said  company,"  the  words  in  quotation  marks  were 
held  to  be  sufficiently  definite  as  a  specification  of  the  objects 
of  the  corporation.^    On  the  other  hand,  a  statement  that  the 

stnicted  by  drainage  company  suffi-  powers  which  it  may  exercise  when 
cientlydefinite) ;  Cullender  v.  Paines-  duly  incorporated.  It  is  sufficient 
ville  &  Hudson  R.  R.  Co.,  11  Ohio  if  they  designate  in  general  terms 
St.  516  (description  of  route  of  rail-  the  purposes  for  which  the  corpora- 
way)  ;  Baile  v.  Calvert  College  Edu-  tion  is  organized  ") ;  Cayuga  Lake 
cational  Sac,  47  Md.  117,  122  ("to  R.  R.  Co.  v.  Kyle,  64  N.  Y.  18') 
erect  and  maintain  an  educational  (wliere  a  railway  company  was  held 
society");  Bowman  Dairy  Co.  v.  a  corporation  t/e /acto  notwitlistand- 
Mooney,  41  Mo.  App.  665,  672  (where  ing  a  lack  of  definiteness  in  stating 
the  court  said,  obiter,  "would  it  be  the  termini). 

a  sufficient  compliance  .  .  .  to  state         '  Hughes  v.   Antietam  Mfg.   Co., 

that  the  plaintiff  intended  to  em-  34  Md.  316  (hcadnote  inadequate), 
bark  in   some   business   not   other-         But  see  Glenwood  Coal  Co.,  6  Pa. 

wise  specially  provided  for  by  the  Co.  Ct.  Rep.  575. 
corporation  law  of  tlie  State?     We         *  Bird  v.  Dagett.  97  Mass.  494. 
think  not ") ;  New  York,  etc.   R.  R.         ^  People  ex  rel.  Belknap  v.  Beach, 

Co.  V.  O'Brien,  106  N.  Y.  Supp.  909  19  Hun  (N.  Y.)   259. 
(under  statute  requiring  termini  of         *  Milwaukee  Light,  Heat  ^i^  Trac- 

proposctl    railway    to    be    specified,  <ion  Co.  (Wise),  112  X.  \V.  663,  669. 

held  sufficient  to  mention  the  towns  Note  that  the  rule  would  be  different 

or  villages  which  are  the  termini).  under  some  statutes.     See  cases  col- 

Cf.  Wendel  v.  State,  62  Wise.  300,  lected  supra,  p.  94,  note  4. 
304-305;    22    N.     W.     435    (where         *  Ellcrman    v.    Chicago   Junction 

the  court  said,  "It  is  not  necessary  Rys.,etc.  Co.,  49  N.  J.  Eq.  217,  238- 

that  the  articles  of  association  shall  241;  23  Atl.  287. 
designate  with  particularity  all  the 

95 


§  105  THE    INCORPORATION    PAPER  [ChAP.   II 

corporation  is  formed  for  charitable  purposes,  has  been  held 
too  vague  as  a  specification  of  the  objects  of  incorporation.* 
Similarly,  where  the  law  requires  the  objects  of  the  company 
to  be  specified,  a  company  cannot  be  incorporated  for  the  "pro- 
motion of  literature  and  the  cultivation  of  friendly  feelings."  - 
Lord  Lindley  has  expressed  the  opinion  that  consistently  with 
honestv  no  company  could  be  formed  with  objects  so  general 
as  "  working  mines  of  any  kind  in  any  part  of  the  world."  ^  In 
some  cases,  the  name  of  the  company  may  render  sufficiently 
particular  a  statement  of  objects  that  would  otherwise  be  too 
indefinite.*  If  the  company  is  expected  to  enjoy  the  franchise 
of  condemning  private  property,  the  need  of  particularity  in 
the  specification  of  the  objects  is  the  greater. 

§  105-§  108.     Construction  of  General  Words  accompanied  by 

Particulars. 

§  105.  Particular  Words  followed  by  General  Words  which 
standing  alone  would  be  too  indefinite.  —  Very  often  the  ob- 
ject clause  of  the  incorporation  paper,  after  mentioning  certain 
particular  objects,  concludes  with  general  authority  to  do  any- 
thing else  that  the  company  may  choose,  or  may  deem  inci- 
dental to  the  particularized  purposes,  or  the  like.  In  all  such 
cases,  the  concluding  general  words  are  not  to  be  construed 
literally ;  for  if  so,  according  to  the  principles  stated  in  the  last 
paragraph,  the  instrument  would  not  be  in  legal  form.  The 
maxim,  noscitur  a  sociis,  should  be  applied.  For  instance,  where 
the  objects  of  a  company  are  stated  to  be  to  make  and  sell  rail- 
way carriages  and  machinery  and  to  carry  on  the  business  of 
"general  contractors,"  the  latter  words  do  not  confer  a  general 
power  of  making  contracts  without  regard  to  their  subject- 
matter,  but  will  be  confined  in  their  application  to  such  con- 
tracts as  are  incidental   to  the  more  explicit  objects  of    the 

1  Re  Devaux,  54  Ga.  673  (head-         *  National  Literary  Ass'n,  30  Pa. 

note  inadequate).  St.     150.       Cf.     Nether    Providence 

Cf.     McKees    Rocks,    etc.    Relief  Ass'n,     12    Pa.    Co.    Ct.    Rep.    666 

Ass'n,  6  Pa.  Dist.  Rep.  477  (attempt  ("social  enjoyment"), 
to    form  a  corporation    for    "bene-         ^  Coolgardie  Gold  Mines,  7GL.T., 

ficial  or  protective  purposes  to   its  n.  s.,  269,  271. 

members      from      funds      collected         *  Cf.  Van  Pelt  v.  Home  Bldg.,  etc. 

therein").  ^ss'n,  79  Ga.  439;   4  S.  E.  501. 

96 


§  31-§   102]  GENERAL    STATEMENTS    OF    OBJECTS  §   1(J7 

company.'  So,  a  provision  that  the  corporation  may  do  any- 
thing; tliat  the  directors  or  a  majority  of  the  sliareholders  deem 
conducive  to  its  ol)iects  does  not  make  their  judgment  conclusive 
as  to  whetiier  or  not  a  certain  transaction  is  conducive  thereto, 
hut  autliori/.es  the  (h)inff  of  such  things  only  as  are  bona  fide  and 
reasonably  comiected  with  the  objects  to  be  attained :  ^  such 
sweeping  general  words  add  little  or  nothing  to  the  powers  which 
the  law  would  imply  without  them,  .1  fortiori,  a  provision  that 
the  corporation  may  do  whatever  is  incidental  or  coirtJucive  to 
its  expressed  objects  merely  declares  and  emphasizes  a  well- 
settled  rule  of  legal  interpretation. •' 

§  IOC).  General  Words  followed  by  Particulars.  — ■  The  same 
rule  will  be  applied  where  the  general  expressions  precede  in- 
stead of  following  the  particular  objects.  Thus,  a  provision  in 
an  incorporation  paper  that  the  company  shall  possess  the  same 
powers  as  an  individual  in  respect  to  making  contracts,  etc.,  is 
limited  by  a  subsequent  provision  defining  the  business  of  the 
company  as  developing  and  dealing  in  real  estate,  to  such  con- 
tracts as  are  fairly  incidental  to  the  business  of  the  company 
as  thus  defined.* 

§  107.  General  Words  which,  although  accompanied  by  Par- 
ticulars, are  not  too  indefinite  to  stand  alone,  —  The  prin- 
ciple by  which  general  words  will  be  confined  in  scope  to  things 
ejusdem  generis  with  the  more  particular  terms  by  which  they 
are  accompanied  will  be  applied  not  only  where  the  general 
words  are  so  very  general  that  no  other  interpretation  would  be 
permissible,  but  also  in  any  case  where  the  court  can  see  that  the 
company  was  designed  to  have  certain  definite  objects  to  which 

'  Ashbury  Ry.,  etc.  Co.  v.  Riche,  authorize  a  two  thirds  majority  of 

L.  R.  7  H.  L.  653,  the  shareholders  to  add  to  or  amend 

'  Joint    Stock    Discount    Co.    v.  the  deed,  and  generally  to  do  any- 

Brovm,  3    Eci.   139,   150-151   (head-  thing  tliat  the  company  or  all  the 

note  inadequate) ;   Guinness  v.  Land  shareholders  by  unanimous  consent 

Corporation,  22  Ch.  D.  349,  373.  might  do. 

Cf.    London    Financial    Ass'n    v.  ^  Kingsbury  Collieries  and  Moore's 

Kelk,  26  Ch,  D.  107,  137-138;  Peru-  Contract  (1907),  2  Ch.  259  (headnote 

vian    Rys.    Co.    v.    Thames,    2    Ch.  inadequate). 
617.  But  see,  as  to  such  provisions, 

See     also     Feather stonebaugh     v.  Simpson  v.  Westminster  Palace  Hotel 

Lee  Moor,  etc.  Co.,  1  Eq.  318,  where  Co.,  8  H.  L.  Cas.  712;    liaglan  Hall 

the  court  considered  a  provision  in  Colliery  Co.,  5  Ch.  346.  356. 
a  deed  of  settlement  under  tlie  Com-         *  Greene  v.  M iddleborough  Tovm 

panies  Act   of    1844,  purporting   to  A  Lands  Co.  (Ky.),  89  S.  W,  228. 
VOL.  I. —  7                                      97 


§  107 


THE    INCOKrOKATION    I'APEK 


[Chap.  II 


everything  else  should  be  ancillary.'  Thus,  where  a  company 
was  formed  to  engage  in  mining  and  "more  particularly"  to 
carry  out  an  agreement  for  the  purchase  of  a  certain  mine  in 
New  Zealand,  it  was  held  that  the  intended  grantors  of  the  mine 
having  been  proved  to  be  without  title  thereto,  the  company  had 
no  power  to  engage  in  mining  elsewhere."  So,  where  a  coinpany 
was  organized  to  acquire  and  work  a  German  patent  for  manu- 
facturing a  substitute  for  coffee,  and  any  modifications  and  im- 
provements thereof,  and  to  acquire  any  other  inventior.s  for 
similar  purposes,  and  to  import  and  export  all  descriptions  of 
produce  for  the  purpose  of  food,  it  was  held  that  the  latter  clause 
should  be  construed  as  merely  ancillary  to  what  preceded,  and 
that,  the  German  government  having  refused  to  grant  the  patent, 
there  remained  no  business  in  which  under  the  true  construc- 
tion of  the  incorporation  paper  the  company  could  hu\  fully 
engage.^  So,  where  an  incorporation  paper  stated  that  the  ob- 
jects of  the  company  were  to  acquire  the  assets  and  liabilities  of 


*  In  addition  to  cases  cited  be- 
low, see  Moore  v.  Rawlins,  6  C.  B., 
N.  s.,  289;  Stephens  v.  Mysore  Reefs 
Mining  Co.  (1902),  1  Ch.  745  (an 
extreme  case,  which  has  lately  been 
criticised  and  distinguished  in  Pedlar 
V.  Road  Block  Gold  Mines  (1905), 
2  Ch.  427) ;  Haskell  v.  Worthington, 
94  Mo.  560,  569;  7  S.  W.  481  (head- 
note  inadequate) ;  Coolgardie  Gold 
Mines,  76  L.  T.,  n.  s.,  269  ("Where a 
company  puts  in  the  forefront  of 
its  memorandum  of  association  a 
special  object,  as  to  which  definite 
information  can  be  obtained  by 
intending  subscribers  for  shares,  and 
the  subsequent  clauses  of  the  mem- 
orandum contain  a  list  of  general 
objects,  the  reasonable  mode  of  con- 
struing the  memorandum  in  ordi- 
nary cases  is  to  say  that  the  object 
first  stated  is  the  paramount  object 
of  the  company  and  that  the  other 
objects  are  ancillary  and  subservient 
to  that  object")- 

But  see  Stern  v.  McKee,  70  N.  Y. 
App.  Div.  142;   75  N.  Y.  Supp.  157. 

'■'  Haven  Gold  Mining  Co.,  20  Ch. 
D.  151. 


3  German  Date  Coffee  Co..  20  Ch. 
D.  169.  Said  Jessel,  M.  R. :  "It 
appears  to  me  that  this  memoran- 
dum when  fairly  read,  and  notwith- 
standing the  rather  loose  use  of 
general  words,  is  simply  to  buy  tlds 
patent  and  to  work  it  either  v>ith  or 
without  improvements."  20  Ch.  D. 
185.  Lindley,  L.  J.,  said:  "In  con- 
struing this  memorandum  of  asso- 
ciation or  any  other  memorandum 
of  association  in  which  there  are 
general  words,  care  must  be  taken 
to  construe  those  general  words  so 
as  not  to  make  them  a  trap  for  un- 
wary people.  General  words  con- 
strued literally  may  mean  anything ; 
but  they  must  be  taken  in  connec- 
tion with  what  are  shown  by  the 
context  to  be  the  dominant  or  main 
objects.  It  will  not  do  under  general 
words  to  turn  a  company  for  manu- 
facturing one  thing  into  a  company 
for  importing  something  else,  how- 
ever general  the  words  are."  20 
Ch.  D.  188. 

See  also  to  substantially  the  same 
effect :  Consolidated  Copper  Co.  v. 
Pcddie,  5  Rettie  393,  400. 


9f 


§  31-§   102]  GENERAL    STATEMENTS    OF    OBJECTS  §   108 

certain  otlier  C'()rj)()rati()ns  t'orincd  for  dealing  in  scats  and  ac- 
commodations for  the  Diamond  Jubilee  of  (^ueen  \  ictoria,  and 
also  "to  carry  on  all  kinds  of  promotion  business,"  'to  act  as 
house-agents,  surveyors,  and  builders,"  and  to  deal  in  {)lae('S  of 
observation  for  any  procession  or  spectacle,  the  court  held  that 
from  the  whole  instrument  the  primary  object  of  the  company 
appeared  to  be  sj)eculation  in  seats  for  the  Diamond  Jul^ilee 
and  that  everything  else,  in  spite  of  the  generality  of  the  language 
used,  was  merely  subordinate  thereto,  so  that,  the  Diamond 
Jubilee  having  taken  place,  there  remained  nothing  for  the 
company  to  do.'  Upon  the  same  principle,  a  clause  in  the  in- 
corporation paper  of  a  sawmill  company  purporting  to  authorize 
the  corporation  to  own  or  lease  railways  and  tramways  has  been 
declared  to  apply  only  to  such  railways  or  tramways  as  are  inci- 
dental to  the  operation  of  a  sawmill.^  In  determining  what  is 
the  main  object  of  the  company  within  the  meaning  of  these 
decisions,  the  corporate  name  may  furnish  a  guide. '^ 

The  same  principle  will  apply  to  the  construction  of  general 
words  following  more  particular  and  limited  statements  of 
objects  even  where  the  incorporation  paper  provides  that  the 
objects  specified  in  each  paragraph,  or  subdivision,  of  the  objects 
clause  "shall  be  in  nowise  limited  or  restricted  by  reference  to 
or  inference  from  the  terms  of  any  other  paragraph  or  the  name 
of  the  company."  * 

§  108.  Limits  of  Maxim  Noscitur  a  sociis.  —  On  the 
other  hand,  the  principle  of  noscitur  a  sociis  must  receive  a  rea- 
sonable application.  For  instance,  it  cannot  be  applied  so  as  to 
effect  a  virtual  deletion  of  the  words  "and  elsewhere"  in  an 
incorporation  paper  specifying  as  the  objects  of  the  company, 
in  addition  to  taking  over  as  a  going  concern  a  certain  named 
mine,  the  acquisition  and  development  of  gold  mines  and  other 
mining  rights  "in  Mysore  and  elsewhere."  ^  So,  where  an  incor- 
poration paper  states  as  the  purposes  of  the  company  the  pur- 

'  Amalgamated  Syndicate  (1897),  ing  Co.    (1902),    1   Ch.   745   (liistin- 

2  Ch.  600  (headnote  inadequate).  guishcd    and    in    some    particulars 

'  People    ex    rel.    Loy    v.    Mount  criticised   in   Pedlar   v.   Road   Block 

Shasta  Mfg.  Co.,  107  Cal.  256,  258;  Gold  Mines  (1905),  2  Ch.  427). 
40  Pac.  391.  *  Pedlar    v.     Road    Block    Gold 

^  Re  Croim  Bank,  44  Ch.  D.  634.  Miiies  (1905),  2  Ch.  427. 

See  also  infra,  §  462.  But  see  Coolgardie  Consol.  Gold 

*  Stephens  v.  Mysore  Reefs  Min-  Mines,  76  L.  T.  269. 

99 


§   109  THE    INCORPORATION    PAPER  [ChAP.  II 

chase  and  operation  of  a  certain  mine  in  New  South  Wales  and 
also  the  purchase  of  other  mines  in  New  South  Wales  or  else- 
where, it  was  held  that  upon  the  exhaustion  of  the  mine  first 
named  the  company  had  power  to  acquire  other  lands  in  New 
South  Wales  believed  to  be  coal  bearing.' 

§  109-§  113.     The  Capital  Clause. 

§  109.  Statement  of  Amount  of  Capital  and  Number  of 
Shares. —  Second  only  in  importance  to  the  objects  clause  is 
the  capital  clause  of  the  incorporation  paper.  This  it  is  which 
defines  the  amount  of  the  capital  and  the  number  and  amount 
of  the  shares  into  which  it  is  divided.  The  amount  of  the  capital 
must  be  stated  in  the  body  of  the  instrument,"  as  the  court  cannot 
infer  the  amount  of  the  capital  from  the  number  of  shares  sub- 
scribed for  by  the  incorporators  at  the  foot  of  the  paper.^  An 
incorporation  act  providing  that  the  memorandum  of  association 
shall  state  the  amount  of  the  company's  capital  "divided  into 
shares  of  a  certain  fixed  amount"  requires  the  amount  or  par 
value  of  the  shares  to  be  stated  in  the  incorporation  paper.* 
Care  should  be  taken  to  avoid  any  inconsistency  between  the 
statement  of  the  aggregate  amount  of  the  capital  and  the  state- 
ment of  the  number  and  par  value  of  the  shares.  In  a  Maryland 
case,  an  incorporation  paper  stated  that  the  capital  stock  of  the 
company  should  consist  of  $150,000  divided  into  "five  hundred 
shares  at  $100  per  share."  The  court  held  that  five  hundred 
was  a  clerical  error  for  fifteen  hundred,  and  that  therefore  the 
instrument  was  legal ;  ^  but  this  conclusion  could  hardly  have 
been  reached  but  for  the  fact  that  appended  to  the  paper  was 
a  subscription  for  "fifty  shares  five  thousand  dollars." 

'  Wickham     &     Bullock     Island  ing  one  thousand,  and  the  par  value 

CoaZ  Co.,  5  New  So.  Wales  State  Rep.  thereof,  the  court  held  that  an  in- 

36.5.  corporation    paper   which    provided 

^  But    cf.    Lord    v.    Essex    Bldg.  that   the   number  of  shares   should 

Ass'n,    37  Md.  320,  326-327  (head-  be  indefinite  was  effective  to  create 

note    inadequate),    where    under    a  a  corporation. 

statute  providing  for  the  formation  '  State   ex   rel.    Howe   v.    Shelby- 

of   building  societies   and   declaring  ville,    etc.     Turnpike    Co.,    41     Ind. 

that  any  corporation  formed  there-  151. 

under  should   have  power  to  state  *  Financial    Corporation,    2    Ch. 

in     the     incorporation     paper     the  714,  732  (headnote  inadequate), 
number  of  shares  of  which  its  capi-         *  Hughes  v.  Antietam   Mfg.  Co., 

tal  stock  should  consist,  not  exceed-  34  Md.  316. 

100 


§  31-§   102]  THE    CAPITAL    (  LAUSE  §   112 

§  110.     Division    of    Shares    into    Preferred  and   Common,   etc. 

—  Another  matter  often  regulated  In  the  cajjital  ehai.se  of 
the  incorporation  paper  is  the  classification  of  the  shares  into 
"preferred"  and  "common"  or  "ordinary."  The  manv  and 
dilHcult  questions  that  arise  in  connection  with  tliis  sul>ject  are, 
however,  by  reason  of  their  importance  reserved  for  separate 
and  detailed  treatment  hereafter.' 

§  111.  Statement  as  to  Liability  of  Shareholders.  —  In 
England  and  in  some  of  the  United  States,  the  incorporation 
paper  must  contain  a  statement  whether  the  liability  of  the  mem- 
bers is  to  be  limited  or  unlimited,  or  if  limited  to  what  extent  it  is 
to  be  confined.-  In  Colorado,  where  the  statute  provided  that 
the  incorporation  paper  should  state  whether  the  stock  is  to  be 
"assessable"  or  "non-assessable,"  it  was  held  that  a  total  omis- 
sion from  an  incorporation  paper  of  any  statement  upon  this 
point  did  not  prevent  the  corporation  from  attaining  at  least  a 
de  facto  existence.^ 

§  112.     Statement  of  Time  and  Manner  of  Payment  for  Shares. 

—  Some  statutes  require  the  time  and  manner  of  payment  for 
the  shares  to  be  specified  in  the  incorporation  paper.*  A  state- 
ment that  the  stock  shall  be  paid  for  in  cash  and  that  no  share- 
certificate  shall  issue  until  payment  be  made  satisfies  such  a 
requirement;  ^  and  the  same  is  true  of  a  statement  that  payment 
shall  be  made  at  such  times  and  in  such  amounts  as  the  directors 
may  deem  best.®  A  statute  requiring  an  affidavit  to  be  endorsed 
upon  the  incorporation  paper  attesting  the  payment  of  five  per 
cent  of  the  minimum  capital  of  the  company  is  repealed  by  a 
subsequent  statute  which  expressly  repeals  the  provision  re- 
quiring the  payment  of  five  per  cent  of  the  minimum  sub- 
scription, but  does  not  in  express  terms  dispense  with  the 
affidavit.^ 

Ordinarily,  and  in  the  absence  of  an  explicit  statutory  require- 

'  Infra,     Chapter    X,    §  525    et  the  stock,  see  Buffalo,  etc.  R.  R.  Co. 

seq.  V.  Hatch,  20  N.  Y.  157. 

^  Cf.  Garey  v.  St.  Joe  Mining  Co.         *  Xew  Orleans,   etc.  R.  R.  Co.  v. 

(Utah),  91  Pac.  369.  Frank,  39  La.  Ann.  707 ;    2  So.  310. 

^  Humphreys  v.  Mooney,  5  Colo.  *  Baltimore,  etc.  Tel.  Co.  v.  Mor- 

282.  286-288.  gan's,  etc.  Co.,  37  La.  Ann.  883. 

'  As  to  a  requirement  tliat  the         ^  Belfast,  etc.  Plank  Road  Co.  v. 

paper    must    show    tliat    a    certain  Chamberlain,  32  N.  Y.  651,  654-655, 

amount   has  alrcaily   been   paid   on  per  Brown,  J. 

101 


§  113  THE   INCORPORATION    PAPER  [ChAP.  II 

ment,  the  incorporation   paper  need   not  state   the  terms  and 
conditions  of  payment  for  the  stock. ^ 

§  113.  Combination  of  joint-stock  Plan  with  non-stock  Plan.  — 
One  and  the  same  incorporation  law  often  provides  for  the 
formation  not  merely  of  companies  organized  on  the  ordinary 
joint-stock  plan  but  also  of  corporations  having  no  capital 
stock,  such  as  mutual  insurance  companies.-  This  is  the 
case,  for  instance,  under  the  English  Companies  Act  of  1862. 
Under  such  laws,  no  legal  obstacle  prevents  the  formation  of  a 
corporation  on  a  combination  of  the  two  plans  —  for  example, 
an  insurance  company  having  two  classes  of  members,  share- 
holders and  holders  of  mutual  policies.^ 


§  114.  Chief  Office  or  Place  of  Business  Clause.  —  Gen- 
eral incorporation  laws 'usually  require  that  the  incorporation 
paper  shall  contain  certain  particulars  regarding  the  company's 
office  or  place  of  business.^  The  English  law  provides  that  the 
memorandum  of  association  shall  specify  in  what  part  of  the 
United  Kingdom  —  that  is,  whether  in  England,  Scotland,  or 
Ireland  — the  company's  "registered  office"  is  to  be  situate.^ 
The  precise  location  of  this  office  must  be  recorded  from  time  to 
time  by  the  public  registrar.*'  In  front  of  the  office,  a  sign  must 
be  conspicuously  displayed  bearing  the  name  of  the  company  in 
letters  easily  legible.^  The  list  of  members  and  the  register  of 
incumbrances  on  the  company's  property  must  be  kept  at  this 
office ;  ^  and  there  any  summons  or  notice  requiring  service  on 
the  company  may  be  served.**  The  main  features  of  this  law 
have  been  copied  in  New  Jersey  and  other  states.  The  statutes 
of  almost  every  state  in  the  American  Union  require  that  the 

'  Brinkley  Car,  etc.  Co.  v.  Curf-         *  Compare  the  ancient  doctrine 

man  (Iowa),  114  N.  W.  12.  that  a   royal  charter  of  incorpora- 

-  As  to  the  presumption  that  a  tion  must  give  the  corporation  some 
cori)oration     organized     for     indus-  definite  locality.     Button  v.   Wight- 
trial  purposes  is  formed  on  the  joint-  man,  Cro.  Eliz.  338  ;    Sutton's  Hos- 
Btock   plan,   see   Skinner  Dry   Dock  pital  Case,  10  Co.  1,  23,  29  et  seq. 
Co.   V.   Mayor,  etc.  of  Baltimore,  96         *  Companies  Act,  1862,  §  8. 
Md.  32,  42  (headnote  inadequate) ;         Md.  §  40. 
53Atl.  416.  '  Id.  §41,  §42. 

3  Winstone's    Case,    12    Ch.    D.         «  Id.  §  32,  §  43. 

239.  "  I'l-  ^  '■•-'■ 

102 


§  31-§  162]    CHIEF  OFFICE  OR  PLACE  OF  BUSINESS    §  114 

location  of  the  company's  chief  office  or  place  of  business  in  the 
state  shall  he  specified  in  the  incorporation  paper,'  A  provision 
that  the  incorporation  paper  shall  specify  the  company's  "prin- 
cipal place  of  business"  is  not  satisfied  by  a  statement  that  "the 
operations  of  the  company  are  to  be  carried  on  "  in  such  and 
such  a  place:  the  operations  of  the  company  might  be  carried 
on  in  one  locality  and  its  principal  office  or  place  of  business  be 
in  a  different  region.^  And  conversely  a  requirement  that  the 
place  of  business  be  specified  is  not  satisfied  by  mentioning  the 
location  of  the  chief  office.'  On  the  other  hand,  to  specify  a  cer- 
tain locality  as  the  company's  place  of  business  would  seem  to 
comply  with  a  recjuirement  that  the  principal  place  of  business  be 
specified/  Where  the  statute  requires  that  the  "names  of  the 
city  or  town  and  county  "  in  which  the  principal  place  of  busi- 
ness is  to  be  located  shall  be  specified,  the  giving  of  the  name  of 
a  county  without  mentioning  any  city  or  town  is  not  a  compliance 
with  law.^  ^Yhere  the  law  requires  that  the  incorporation  paper 
shall  specify  both  the  city  or  town  in  which  the  chief  office  or 
place  of  business  shall  be  located  and  the  place  at  which  the 
officers  shall  be  elected,  nevertheless  an  instrument  which  gives 


*  As  to  an  effect  of   a  provision  the  incorporation  paper  as  the  prin- 

for  the  transaction  of  business  by  cijial  place  of  business,  see  Dressel 

the  company  in  a  foreign  state,  see  v.  North  State  Lumber  Co.,  107  Fed. 

Pinney  v.  Nelson,    183   l'.   S.    144;  255;    Montgomery     v.    Forbes,     148 

22  Sup.  Ct.  52.  Mass.  249. 

As  to  the  effect  of  moving  the         '  Harris  v.  McGregor,  29  Cal.  124 

company's  chief  office  or  place  of  (headnote  inadeciuate). 
business  from   the   place   named   in         '  Enterprise  Mut.  Beneficial  Ass'n, 

the     incorporation     paper     without  10   Phila.    380;     Kemiett   v.    Wood- 

duly   altering  that   instrument,   see  loorth-^fason    Co.,    68    N.    H.    432 

Uptegrove     v.     Schwarzwaelder ,     46  (headnote  inadequate) ;  39  Atl.  535. 
N.  Y.  App.  Div.  20;   61  N.  Y.  Supp.  Cf.    Bernstein    v.    Kaplan    (Ala), 

623,  affirmed  short,  167  N.  Y.  587;  43  So.  581  (where  the  incorporation 

60  N.  E.   1121.     Cf.  Firestone  Tire,  act    was    held    to    use    "principal 

etc.   Co.   V.    Vehicle   Equipment  Co.,  office "  and  " principal  place  of  busi- 

155  Fed.  676  (holding  that  for  the  ness"  as  synonyms). 
purpose  of  detcnniiiing  the  federal         *  Spring  Valley  Water  Works,  17 

judicial  district  in  which  a  corpora-  Cal.  132. 

tion  is  suable,  it  is  to  be  deemed  an         *  Harris    v.    McGregor,    29    Cal. 

inhabitant   or   resident   of   the   tlis-  124  (headnote  misleading), 
trict  in  whicli  its  chief  office  as  desig-         As  to  the  degree  of  precision  to 

nated  in  the  incorporation  paper  is  satisfy  rccjuireinents  as  to  the  com- 

situatcd).  pany's   office   or  place   of  business, 

As  to  carrying  on  business  at  a  see   also   People  ex  rel.    Belknap  v. 

different  place  from  that  named  in  Beach,  19  Hun  (N.  Y.)  259. 

103 


§   115  THE    INCORPORATION    PAPER  [ChAP.  II 

the  location  of  the  company's  chief  office  but  makes  no  mention 
of  the  place  for  the  election  of  officers  complies  with  the  law ;  ' 
for  it  will  be  presumed  that  the  officers  are  to  be  elected  at  the 
chief  office.  The  location  of  the  chief  office,  even  when  not 
fixed  by  the  company's  incorporation  paper  or  special  act,  is 
often  a  matter  of  considerable  importance  in  determining  the 
courts  in  w^hich  the  corporation  is  liable  to  suit,  and  so  forth ; 
and  consequently,  even  in  such  cases  the  location  of  the  office 
when  once  fixed  by  custom  cannot  be  changed  by  the  com- 
panv's  administrative  officers  without  the  assent  of  the  directors 
or  shareholders.^  The  incorporation  law  may  be  deemed  so 
far  colorably  complied  with  that  the  company  may  be  incor- 
porated de  facio,  although  the  incorporation  paper  fails  to  state 
distinctly,  as  required  by  law,  the  company's  place  of  business.^ 
§115.  Directors  Clause.  —  Not  infrequently,  incorporation 
laws  require  that  the  incorporation  paper  shall  fix  the 
number  of  the  directors,  and  shall  state  the  names  of  the  first 
directors.'*  This  requirement,  although  of  less  importance  than 
the  objects  clause  and  the  capital  clause  is  nevertheless  manda- 
tory and  a  total  failure  to  comply  therewith  renders  the  incor- 
poration open  to  attack.^  So,  a  blank  left  for  the  names  of  the 
first  directors  is  deemed  a  material  blank.^  So,  wdiere  the  statute 
provides  that  the  number  of  the  directors  stall  be  not  less  than 
three,  an  instrument  which  fixes  two  as  the  number  of  the  di- 
rectors is  fatally  defective.^    In  one  case,  a  requirement  that 

'  Mc  Chesney  v.    Batman   (Ky.),         *  Reed  v.  Richmond  Street  R.  R. 

89  S.  W.  198.  Co.,  50  Ind.  342. 

'  Frick  Co.  v.  Norfolk,  etc.  R.  R.         Cf.  Dutchess,  etc.  R.  R.  Co.  v.  Mab- 

Co.,  86  Fed.  725;   32  C.  C.  A.  31.  bett,  58  N.  Y.  397;    People  v.  Sel- 

3  Finnegan     v.     Noere?iberg,     52  fridge,    52    Cal.    331    (a    failure    to 

Minn.   239,  245;    53  N.  W.    1150;  state,  as  required  by  statute,  that 

38  Am.  St.  Rep.  552.  a  majority  of  the  members  of  the 

But  see  Harris  v.   McGregor,  29  association  were  present  and  voted 

Cal.  124.  at  the  choice  of  directors  held  fatal) ; 

*  As  to  a  provision  attempting  St.    Ladislaus    Beneficial    Ass'n,    19 

to  vest  the  exclusive  management  Pa.  Co.  Ct.  Rep.  25. 
of  the  company  for  a  period  of  years         But  see  Mead  v.  Keeler,  24  Barb, 

in  the  first  directors,  see  infra,  §  122.  (N.   Y.)   20   (where  the  court  said 

Of  course,  it  is  not  necessary  to  that    the     statute    was     directory 

state  in  the  incorporation  paper  the  merely). 

names  of  the  first  directors  unless         *  Dutchess,  etc.  R.  R.  Co.  v.  Mab- 

the  statute  requires  it  to  be  done;  bett,  58  N.  Y.  397. 
Miller  V.  WUd  Cat  Gravel  Road  Co.,         ^  Germania   Sangerbund,    12    Pa. 

52  Ind.  51,  57.  Co.  Ct.  Rep.  89. 

104 


§  31-§   102]  DURATION    OF    EXISTEN'CE  §    110 

the  names  of  the  first  (hrectors  shouKl  be  stated  in  the  paper 
was  held  to  be  satisfied  if  the  directors  were  chosen  at  the 
nieetint^  of  tlie  incorporators  at  whicli  the  paper  was  adopted;  * 
but  tliis  case  certainly  goes  to  the  verge  of  the  law,  and  is  justly 
discredited  by  later  decisions  in  the  same  state.-  A  statement 
that  the  affairs  of  the  company  shall  be  under  the  control  of  the 
president,  the  vice-president,  and  the  secretary,  does  not  satisfy 
a  requii;ement  that  the  number  of  directors  and  the  names  of 
those  who  are  to  act  for  the  first  year  must  be  stated.^  The  di- 
rectors named  in  an  incorporation  paper  in  pursuance  of  a  statu- 
tory direction  have  the  same  powers  as  directors  elected  by  the 
shareholders.'*  Whether  provisions  requiring  directors  to  be 
shareholders  apply  to  directors  named  in  an  incorporation  paper 
has  been  the  subject  of  some  debate.^  It  has  been  held  that 
every  person  named  as  director  in  the  incorporation  paper  must 
be  a  corporator,  that  is,  must  sign  the  incorporation  paper ;  * 
but  this  conclusion  was  deduced  from  the  premisses  that  as 
directors  they  were  required  to  be  shareholders  and  that  they 
could  not  be  shareholders  without  executing  the  incorporation 
paper,  and  yet  the  former  premiss  is  by  the  weight  of  authority 
false.''  A  statutory  provision  that  an  incorporation  paper  shall 
state  "the  number  of  directors  and  their  names  who  shall  manage 
the  company  for  the  first  year "  does  not  require  the  number 
of  directors  to  be  fixed  permanently  at  the  number  stated  in  the 
incorporation  paper  but  applies  only  to  the  first  directors.^ 

§  110.  Duration  of  Corporate  Existence  Clause. —  The  period 
of  time  during  which  the  corporate  existence  is  to  con- 
tinue must  also,  under  the  statutes  in  force  in  many  states,  be 
mentioned  in  the  incorporation  paper.  At  common  law,  a  cor- 
poration was  "immortal,"  that  is,  was  never  dissolved  by  mere 
lapse  of  time.     But  after  the  Dartmouth  College  Case  had  es- 

'  Eakright  v.  Logansport,  etc.  R.  R.  487,  .506-509.     People  ex  rel.  Gales  v. 

Co.,  13  Ind.  404.  McDorwugh,    28    N.    Y.    Misc.   652 

'  See    Reed    v.    Richmond   Street  (lieadnote   inadequate) ;    60   N.    Y. 

R.  R.  Co.,  50  Ind.  342;    Busenback  Supp.  45. 
V.  Attica,  etc.   Gravel  Road  Co.,  43         '  See  infra,  §  1420. 
Ind.  265.  *  Renn   v.    United  States  Cement 

3  Bates  V.  Wilson,  14  Colo.  140;  Co.   (Ind.),  73  N.  E.  269.      As   to 

24  Pac.  99.  changing   tlie   number  of  directors, 

*  Infra,  §  168.  see  Westchester  Trust  Co.,  186  N.  Y. 

*  See  infra,  §  1420.  215. 
'  Dancy  v.  Clark,  24  App.  D.  C. 

105 


§   116  THE    INCORPORATION    PAPER  [ChAP.  II 

tablished  the  irrepealability  of  legislative  charters  of  incorpora- 
tion, this  attribute  of  immortality  was  seen  to  be  especially 
dangerous,  and  accordingly  the  custom  sprang  up  of  prescrib- 
ing in  acts  of  incorporation  some  limit  to  the  company's  exist- 
ence. This  custom  to  some  extent  survived  after  the  occasion 
for  it  had  been  removed  by  the  usual  reservation  to  the  state 
of  the  right  to  repeal  charters  of  incorporation.  Some  of  the 
less  liberal  general  incorporation  laws  still  in  force  in  the  United 
States  provide  that  the  period  of  existence  of  compariies  or- 
ganized under  them  shall  not  exceed  a  certain  limit.  Where 
the  statute  provides  that  the  incorporation  paper  shall  state  the 
time  during  which  the  corporate  existence  is  to  continue,  doubt 
has  been  expressed  whether  a  statement  that  the  company's 
existence  is  to  be  perpetual  satisfies  the  law;  but  all  doubt 
could  be  obviated  and  at  the  same  time  practically  perpetual 
existence  attained  by  stating  that  the  corporation  shall  continue 
for,  say,  two  thousand  years.  A  statement  that  the  corporate 
existence  shall  "not  exceed  the  term  of  forty  years"  is  suffi- 
ciently definite.'  Indeed,  even  the  fact  that  an  incorporation 
paper  provides  for  a  longer  period  of  corporate  existence  than 
that  allowed  by  the  statute  will  not  prevent  the  company  from 
becoming  incorporated  de  jure;^  for  the  courts  will  construe 
the  instrument  as  providing  for  as  long  a  period  of  corporate 
existence  as  allowed  by  law,  rejecting  as  surplusage  the  pro- 
vision for  a  continuance  of  corporate  life  for  a  further  period. 

A  provision  that  the  corporation  shall  have  "perpetual  suc- 
cession" does  not  necessarily  mean  that  its  existence  shall 
continue  without  limit,  but  rather  that  it  shall  have  continuous 
succession  during  such  period  of  time  as  may  be  limited  by 
other  provisions  of  the  incorporation  paper  or  of  the  statute.^ 
On  the  other  hand,  a  provision  that  the  company  shall  have 
"perpetual  succession  forever"  does  amount  to  a  provision  for 
perpetual  corporate  existence.* 

A  company  whose  existence  is  limited  to  a  term  of  years  is  not 
on  that  account  debarred  from  taking  a  conveyance  of  land  in 

'  Hughes  v.   Antietam  Mfg.  Co.,  *  State  v.  Scott  County,  etc.  Road 

34  Md.  316.  Co.  (Mo.),  105  S.  W.  752,  757  ;  State 

»  People  ex  rel.  Bernard  v.  Cheese-  ex    rel.    Walker  v.   Payne,    129   Mo. 

men,  7  Colo.   376,  379-380;    3  Pac.  468;  31  S.  W.  597;  33  L.  R.  A.  576. 

716,  «  State  V.  Stormont,  24  Kan.  686. 

106 


§  31-§   102]  THE    NAME    CLAUSE  §   117 

fee  simple,'  or  from  contracting  for  the  use  of  property  at  an 
annual  rental  for  a  longer  term  -  even  though  the  lease  contain 
a  clause  prohibiting  an  assignment  without  the  consent  of  the 
lessor.^ 

Usually,  statutory  provision  is  made  for  extending  the  period 
of  corporate  existence.* 

§  117.  Name  Clause. — The  name  of  the  proposed  cor- 
poration must  certainly  be  stated;  and  the  name  thus  stated 
will  be  the  lawful  name  of  the  company'' unless  it  be  altered  in 
some  legal  mode.  If  the  statute  requires  the  incorporation 
paper  to  set  forth  the  name  of  the  company,  an  instrument 
which  mentions  no  corporate  name  is  fatally  defective  even 
though  the  words  "Fairview  Turnpike"  are  placed  at  the  head 
of  the  paper."  Indeed,  the  name  is  a  matter  of  considerable 
importance.  Hence,  where  the  incorporation  law  requires  the 
name  of  the  proposed  company  to  be  published  by  advertise- 
ment in  some  newspaper,  a  variation  between  the  name  as  pub- 

*  Nicoll  V.  New  York,  etc.  R.  R.  *  National  Lead  Co.  v.  Dickinson, 
Co.,  12  N.  Y.  121;  Detroit  v .  Detroit  57  Atl.  138;  70  N.  J.  Law  596, 
Citizens'  Rij.  Co.,  184  U.  S.  368,  394-  affirmed  short,  62  Atl.  1135  (stated 
395;    22  Sup.  Ct.  410.  infra,  §  151);  Commonwealth  y.  Lick- 

Cf.   Blair  v.   Chicago,  201   U.   S.  ing  Valley  Bldg.  Ass' n,  82  S.V/.  435; 

400 ;  26  Sup.  Ct.  427.  26  Ky.  Law  Rep.  730 ;   Mayor,  etc. 

*  Union  Pac.  Ry.  Co.  v.  Chicago,  of  Jersey  City  v.  North  Jersey,  etc. 
etc.  Ry.  Co.,  163  u".  S.  564,  592;   16  Ry.  Co.  (N.  J.),  63  Atl.  906. 

Sup.  Ct.  1173  ;  Brown  v.  Schleier,  118         Cf.  Frostburg  Mhiing  Co.  v.  CuTn- 

Fed.  981,  affirmed  in  194  U.  S.  18;  berland,  etc.  R.  R.  Co.,  81  Md.  28; 

2i  Sup.  Ct.  55S;  Consolidated  GasCo.,  31   Atl.   698   (special  act  extending 

106  N.  Y.  Supp.  407  (franchise  to  lay  or  reviving  corporate  existence  held 

gasmainsinstreetsof  city  not  limited  not  to   create  a  new  corporation); 

to  period  of  corporate  existence).  Clement  v.  U.  S.,  149  Fed.  305  (as 

Cf.  Hill  V.  Atlantic,  etc.  R.  R.  Co.  to    conclusiveness    of    comptroller's 

(N.  Car.),  55  S.  E.  854;    Rockwith  certificate    of   renewal   of   existence 

ex  rel.  Kerns  v.  State   Road  Bridge  of  national  bank). 
Co.  (Mich.),  108  N.  W.  785  (grant         *  Cf.  Town  of  East  Rome  v.  City 

of  a  bridge  franchise  held  to  expire  of  Rome  (Ga.),  58  S.  E.  854  (holding 

on    the   termination    of    the   period  that    where    charter    provides    that 

fixed    for    the    termination    of    the  the   corporation    "  shall    be    known 

grantee's       corporate       existence) ;  and  calletl  the  town  of  E.  R."  and 

Union  Bank    v.  Ridgely,  I    H.  &  G.  that    the    corporate   name  shall   be 

(Md.),  324,  433-434  (bond  to  secure  the  "  Mayor  and  City  Council  of  the 

fidelity  of  employee  limited  to  time  town  of   E.    R.,"  the  latter  is  the 

of   corporate   existence   as   fixed   in  only  legal  corporate  name), 
epecial  act  of  incorporation).  *  Piper  v.   Rhodes,  30  Ind.  309; 

»  Weeks    v.     Iidernatinnal    Trust  Rhodes  v.  Piper,  40  Ind.  369. 
Co.,  125  Fed.  370,  373-374;   60  C. 
C.  A.  236. 

107 


I   118  THE    INCORPORATION    PAPER  [CuAP.  II 

lished  and  the  name  as  given  in  the  incorporation  paper  will 
justify  a  refusal  to  approve  or  register  the  instrument.^  On  the 
other"  hand,  where  a  statute  requires  the  consent  of  municipal 
authorities  to  the  incorporation  of  a  water-works  company,  the 
consent  need  not  mention  the  precise  corporate  name  stated 
in  the  incorporation  paper :  -  the  consent  recjuired  is  a  consent 
to  the  formation  of  the  corporation  by  the  persons  who  sign  the 
instrument  and  not  a  consent  to  the  adoption  of  the  proposed 
corporate  name.  The  matter  of  corporate  names  is  the  subject 
of  a  separate  chapter.^ 

§  118.  Indebtedness  Clause.  —  Some  incorporation  laws  re- 
quire that  every  incorporation  paper  shall  fix  the  highest  amount 
of  indebtedness  to  which  the  company  is  at  any  time  to  be  sub- 
ject." Such  a  provision  is  mandatory,  and  a  failure  to  comply 
therewith  is  a  substantial  defect.^  It  has  been  held  that  such 
a  provision  is  complied  with  by  stating  that  the  amount  of  the 
company's  indebtedness  shall  not  exceed  a  certain  named  sum 
"except  by  a  majority  vote  of  the  stockholders  present  at  a 
called  or  annual  meeting."  ^  The  court  said  that  the  paper  did 
fix  the  maximum  amount  of  indebtedness,  and  that  the  pro- 
vision of  a  method  by  which  that  maximum  might  be  increased 
did  not  alter  this  fact ;  but  this  reasoning  is  far  from  satisfactory, 
since  the  provision  in  question  amounts  to  no  more  than  a  pro- 
vision that  the  company  shall  not  incur  indebtedness  in  excess 
of  the  amount  named  unless  it  chooses  to  do  so.  A  statute  for- 
bidding the  borrowing  of  money  in  excess  of  "one  half  of  the 
par  value  of  the  capital  stock"  has  been  held  to  refer  to  the 
paid-up  capital  rather  than  to  the  authorized    capital;^  and 

1  St.  Ladislaus,  etc.  Ass'n,  19  Pa.  debts   of   the   company   in   case   of 

Co.  Ct.  Rep.  25.  failure    to    "comply    substantially" 

"  Kemble   v.    Milville,    G9   N.    J.  with  the  statute). 
Law  637;   56Atl.  311.  '  Thornton   v.    Balcom,   85   Iowa 

»  Infra,  Chapter  VIII.  198;  52  N.  W.  190. 

*  As  to  the  power  of  corporations         Cf.  Park  v.  Zwart,  92  Iowa  37  ; 

to  borrow  where  the    incorporation  60  N.  W.  220. 

paper   is  not  required  to   and  does         '  Commonwealth    v.   Lehigh   Ave. 

not  contain    any  provision    on  the  Ry.   Co.,   129  Pa.  St.  405;    18  Atl. 

subject,  see  supra,  §  09.  414,  498;  5  L.  R.  A.  367. 

«  Heuer  v.   Carmichael,  82   Iowa         As  to  what  is  to  be  taken  as  the 

288;    47  N.  W.  1034  (holding  that  amount   of   the   capital   within   the 

non-compliance  renders  shareholders  meaning  of  such  provisions  limiting 

liable    under    a    statute    subjecting  the  amount  of  authorized  indebted- 

their    individual    property    to    the  ness,  see  further,  Poole  v.  West  Point 

108 


f  31-§    1G2]  THE    IXDEBTEDXESS    CLAUSE 


^N    lis 


the  court  which  pronounced  that  (Iccisioii  would  doubtless  con- 
strue a  similar  provision  in  an  incorporation  j^aper  in  the  same 
way.  A  provision  that  the  company  shall  not  become  indebted 
to  an  amount  exceeding  its  capital  stock  except  upon  debts  of 
a  certain  character  will  not  prevent  the  company  from  borrow- 
ing to  the  amount  of  its  capital  irrespective  of  the  amount  for 
which  it  may  have  become  indebted  for  debts  of  the  excepted 
class.' 

A  clause  in  an  incorporation  paper  limiting  the  amount  of 
indebtedness  which  the  company  may  incur  would  seem  to  be 
mandatory  and  not  directory  merely."  Consequently,  to  incur 
any  indebtedness  in  excess  of  the  limit  is  ultra  vires.  In  Eng- 
land, the  indebtedness  in  excess  of  the  limit  would  perhaps  be 
void,^  whereas  in  the  United  States  after  the  ultra  vires  con- 
tract is  fully  executed  on  one  side  by  the  advance  of  the  money, 
the  company  would  be  liable  for  the  amount  of  the  loan  either 
on  the  express  contract  or  qimsi  ex  contractu.* 

Butter,  etc.  Co.,  30  Fed.  513;   Cun-  limitation  on  the  amount  of  author- 

ningham  v.  German  Ins.  Bank,  101  ized  indebtedness,  see  supra,  §  70. 

Fed.  977  ;  41  C.  C.  A.  609  ;  Farmers'  »  See  infra,  §  1031. 

L.  &  T.  Co.  V.  Toledo,  etc.  Ry.  Co.,  But  as  to  the    rights  of  a  bona 

67  Fed.  49,  56-58.  fid^   purchaser  of  a  negotiable   in- 

'  Weber  v.   Spokane  Xat.    Bank,  strument    without    knowledge    that 

64  Fed.  208  (construing  U.  S.  Rev.  the   limit   had  been    exceeded,   see 

Stats.,  §  5202,  as  to  national  banks).  Gordon   v.  Sea  Fire  Life  Ass.  Sac, 

'  Bell    &    Coggeshall   Co.    v.    Ky.  1  H.  &  N.  599,  and  infra,  §  1705. 

Glass  Works  Co.  (Ky.),  50  S.  W.  2 ;  *  -Sioux  City  Terminal,  etc.  Co.  of 

20  Ky.  Law  Rep.  1684;    First  Nat.  North    America,    82    Fed.    124;     27 

Bank  v.  D.  Kieffer  Co.,  95  Ky.  97;  C.  C.  A.  73;    Garrett  v.  Burlington 

23  S.  W.  675;    Wenlock  v.  River  Dee  Plow  Co.,  70  Iowa  697;    29  N.  W. 

Co.,    10    A.    C.    354    (construing    a  395;    59  Am.  Rep.  461   (where  the 

special  act).  creditor  was  a  director) ;     Warfield 

But  cf.  Weber  v.  Spokane  Nat.  v.  Marshall  County  Canning  Co.,  72 
Bank,  64  Fed.  208  (stated  infra,  Iowa  666;  34  N.  W.  467;  2  Am. 
§  1070) ;  Sherman  Center  Town  Co.  St.  Rep.  263  (creditor  a  director) ; 
V.  Morris,  43  Kan.  282  ;  23  Pac.  569  ;  Beach  v.  Wakefield,  107  Iowa  567; 
19  Am.  St.  Rep.  134  (declaring  that  76  N.  W.  688;  78  N.  W.  197  (apply- 
where  statute  does  not  require  the  ing  the  same  rule  to  debts  secured 
incorporation  paper  to  fix  a  limit  to  by  mortgage  contracted  by  a  rail- 
the  indebtedness  to  be  incurred  by  way  company  in  excess  of  a  statu- 
the  company  a  clause  naming  such  a  tory  limit) ;  Union  Trust  Co.  v. 
limit  has  no  more  force  tlian  a  by-  Mercantile  Library  Hall  Co.,  189 
law  and  is  merely  directory) ;  Ossi-  Pa.  St.  263 ;  42  Atl.  129. 
pee,  etc.  Mfg.  Co.  v.  Canney,  54  N.  H.  Cf.  Poole  v.  West  Point  Butter, 
295  (statute  limiting  indebtedness  etc.  Ass'm,  30  Fed.  513 ;  Vanderveer 
declared  to  be  directory).  v.  Asbury  Park,  etc.  Ry.  Co.,  82 
For    a    method     of    evading    a  Fed.  355 ;   Kraniger  w  People's  Bldg. 

109 


§  119 


THE   INCORPORATION    PAPER 


[CUAP.   II 


§  110.  Effect  of  Failure  to  state  all  Particulars  required  by 
Law.  —  All  the  legal  requirements  must  be  complied  with.  If 
any  of  the  matters  required  by  the  statute  to  be  stated  is  omitted, 
the  instrument  is  fatally  defective ; '  and  even  if  the  attempt 
to  incorporate  be  not  wholly  void,  the  company  will  be  at  best 
a  dc  facto  corporation.  Thus,  where  a  statute  provides  that  an 
incorporation  paper  shall  prescribe  regulations  for  transfers  of 
shares,  the  instrument  should  not  attempt  to  delegate  to  the 
directors  the  power  to  enact  regulations  or  by-laws  on  that  sub- 
ject.' The  only  room  for  difference  of  opinion  is  upon  the  ques- 
tion whether  a  given  provision  of  the  incorporation  law  in  respect 
to  the  contents  of  the  incorporation  paper  is  mandatory  or 
directory,  and  upon  the  question  whether  a  failure  to  comply 
with  some  mandatory  requirement  is  such  a  serious  defect  as 
to  prevent  the  company  from  attaining  the  status  of  a  de  facto 
corporation.^ 


Soc,  60  Minn.  94;  61  N.  W.  904 
(holding  that  a  loan  which  extends 
beyond  the  limit  is  valid  up  to  the 
limit  but  is  void  as  to  the  excess 
where  the  money  was  not  applied 
for  the  company's  benefit) ;  Bell  & 
Coggeshall  Co.  v.  Ky.  Glass  Works 
Co.  (Ky.),  50  S.  W.  2 ;  20  Ky.  Law 
Rep.  1684  (holding  that  a  claim 
which  exceeds  the  amount  of  the 
limit  is  valid  up  to  the  limit  but 
void  beyond  as  regards  other  credi- 
tors wlio  contracted  their  claims 
wthout  notice  that  the  limit  had 
been  exceeded) ;  First  Nat.  Bank 
V.  D.  Kieffer  Milling  Co.,  95  Ky. 
97;  23  S.  W.  675  (similar  to  last 
case) ;  Humphrey  v.  Patrons'  Mer- 
cantile Ass'n,  50  Iowa  607  (holding 
that  the  company  is  liable  for  the 
excess  "at  least  to  the  extent  of 
the  consideration  received");  Con- 
necticut River  Sav.  Bank  v.  Fiske, 
60  N.  H.  363  (where  the  court  said 
it  was  immaterial  whether  or  not 
the  loan  was  ultra  vires) ;  Inter- 
naiifjnal  Trust  Co.  v.  Davis,  etc.  Mfg. 
Co.,  46  Atl.  1054;  70  N.  H.  118 
(holding  that  where  a  mortgage  is 


executed  to  secure  an  issue  of  bonds 
the  aggregate  of  which  exceeds  the 
limit,  bonds  issued  before  the  limit 
is  reached  are  well  secured) ;  Auer- 
bach  V.  Le  Sueur  Mill  Co.,  28  Minn. 
291;  9  N.  W.  799;  41  Am.  Rep. 
285  (note  issued  for  loan  in  excess 
of  limit  fixed  by  incorporation  paper 
valid  in  hands  of  bona  fide  pur- 
chaser) ;  Wood  V.  Corry  Water  Works 
Co.,  44  Fed.  146  {bona  fide  pur- 
chasers entitled  to  enforce  bonds 
issued  in  excess  of  two  thirds  of 
capital  paid  in). 

See  also  infra,  §  1705,  as  to  nego- 
tiable instruments  issued  in  excess 
of  the  limit. 

'  Williams  v.  Hewitt,  47  La.  Ann. 
1076. 

*  Bank  of  Attica  v.  Manufac- 
turers, etc.  Bank,  20  N.  Y.  501. 

'  See  infra,  §  289,  and  the  present 
chapter  passim. 

Cf.  Cayuga  Lake  R.  R.  Co.  v. 
Kyle,  64  N.  Y.  185  (company  held  a 
corporation  de  facto  notwithstanding 
indefiniteness  in  stating  location  of 
proposed  railway). 


110 


§  31-§  1G2]  UNNECESSARY    PROVISIONS  §  120 

§  120-§  122.     Insertion  of  Provisions  in  Addition  to 
those  required  by  Law. 

§  1 20.  Right  to  insert  Additional  Provisions.  —  The  law 
should  not  prohibit  the  insertion  in  an  incorporation  paper  of 
other  provisions  over  and  above  the  matters  recjuired  to  be 
stated ;  for  the  instrument  is  not  merely  a  statutory  form  but  is 
al.so  an  agreement  like  articles  of  partnership.  That  such  addi- 
tional provisions  may  be  inserted  in  the  incorporation  paper 
and  when  inserted  therein  become  part  of  the  company's  funda- 
mental constitution,  is  settled,  in  England  at  least.  Hence,  any 
additional  provisions  so  inserted,  although  not  recjuired  to  be 
stated,  cannot  be  altered  except  in  the  mode,  if  any,  provided  for 
altering  the  essential  parts  of  the  instrument, •  unless  infleed  the 
incorporation  paper  itself  authorizes  alterations  of  these  addi- 
tional provisions.-  Although  there  is  no  reason  why  the  privi- 
lege of  inserting  in  the  company's  incorporation  paper  and 
embedding  in  its  constitution  particulars  that  are  not  required 
by  law  to  be  stated  in  the  instrument  should  not  be  held  to  exist 
in  America  ^  as  well  as  in  England,  yet  the  privilege,  even  when 
expressly  conferred  by  statute  (as  is  sometimes  the  case)  is  not 

*  Ashbury  v.  Watsoji,  30  Ch.  D.  But  see  Stevedore's  Beneficial 
376  (headnote  inadequate,  —  over-  Ass'n,  14  Phila.  130;  Indiana  Bond 
ruling  dicta  in  Guinness  v.  Land  Co.  v.  Ogle,  22  Ind.  App.  593,  595; 
Corporation,  22  Ch.  D.  349,  364,  54  N.  E.  407 ;  O'Brien  v.  Cummings, 
211,  and  Winstone's  Case,  12  Ch.  D.  13  Mo.  App.  197  (holding  a  clause 
239,  251,  and  distinguishing  Duke's  in  an  incorporation  paper  limiting 
Case,  1  Ch.  D.  620) ;  Stevedore's  the  number  of  shares  which  one  per- 
Beneficial  Ass'n,  14  Phila.  (Pa.)  130  son  might  hold  of  no  greater  effect 
(semble).  than    a    mere    by-law) ;      Renn    v. 

But  see  Oban  <fc   A rdt more-Glen-  United  States  Cement  Co.  (Ind.),  73 

livet  Distilleries,  5  Fraser  (Sc.)  1140.  N.  E.  269  (provision  purporting  to 

'  Underwood    v.    London    Music  fix  number  of  directors  held  alter- 

^a/i  (1901),  2  Ch.  309;     Welsbach  able  by  a  mere  by-law). 
Incandescent  Gas  Light  Co.    (1904),  In    Sherman,    etc.    Town    Co.    v. 

1  Ch.  87.  Morris,  43  Kan.  282 ;   23  Pac.  569 ; 

Cf.    Nelson  v.  Keith-O'Brien  Co.  19  Am.  St.  Rep.  134,  it    v,-as    said, 

(Utah),   91    Pac.    30    (stated    infra,  obiter,  tliat  a  provision  in  an  incor- 

§  144  note).  poration  paper  fixing  a  limit  to  the 

*  Cf.  Mohawk  Xat.  Bank  v.  Sche-  amovmt  tliat  the  company  is  au- 
nectady  Bank,  78  Hun  (N.  Y.)  90;  thorized  to  borrow  has,  where  the 
28  N.  Y.  Supp.  1100;  Gibbs  v.  Long  law  does  not  require  such  Hmit  to 
Island  Bank,  83  Hun  (N.  Y.)  92;  be  stated,  the  force  of  a  by-law  only. 
31  N.  Y.  Supp.  406;  Bent  v.  Under-  In  Grangers'  Life,  etc.  Ins.  Co.  v. 
down.  156  Ind.  516;   60  N.  E.  307.  Kamper,   73   Ala.   325,   341,   it   was 

111 


§    121  THE    INCORPORATION    PAPER  [ChAP.   IT 

verv  often  availed  of  on  this  side  of  the  Atlantic.  Indeed,  Ameri- 
can lawyers  have  scarcely  begun  to  appreciate  the  scope  that  is 
o-iven  for  legal  ingenuity  in  drawing  incorporation  papers.  By 
means  of  this  right  of  adding  to  the  indispensable  provisions 
of  these  instruments,  it  may  be  possible  to  secure  some  of  the 
advantages  of  the  elasticity  and  freedom  of  regulation  that  the 
Eno-lish  system  of  "articles"  or  recorded  by-laws  affords. 

§  121.  Unauthorized  as  distinguished  from  Unnecessary  Pro- 
visions —  Effect  of  inserting.  —  Of  course,  care  must  be  taken 
that  anv  additional  provisions  inserted  in  the  incorporation 
paper  over  and  above  the  particulars  required  to  be  stated  shall 
not  be  contrary  to  law.  For  provisions  which  are  expressly  or 
impliedly  prohibited,  as  distinguished  from  merely  unnecessary 
provisions,  are,  if  inserted,  ineffective.  To  be  sure, even  prohibited 
provisions  do  not  have  the  effect  of  invalidating  the  whole  in- 
strument provided  all  that  is  required  by  law  to  be  stated  is 
found  therein.^  Utile  per  inutile  non  vitiatur.  The  prohibited 
provisions  are  void,  but  they  do  not  vitiate  the  rest  of  the  in- 
strument. Thus,  where  the  statute  requires  the  assent  of  the 
shareholders  to  any  increase  of  capital,  a  provision  in  the  in- 
corporation paper  purporting  to  authorize  an  increase  of  capital 
by  the  directors  alone,  although  of  course  itself  void,  does  not 
prevent  the  company  from  being  legally  incorporated.^  So,  a 
provision  purporting  to  limit  or  diminish  the  shareholders' 
legal  liability  to  creditors  is  simply  void.^  Similarly,  where  the 
law  authorizes  incorporation  for  certain  purposes,  an  incorpora- 
tion paper  which  besides  specifying  those  purposes  adds  others 
not  warranted  by  law,  the  company  is  validly  incorporated,  but 

said  that  "there  is  no  authority  of  lating   transfers   of   shares   are   un- 
law   for    introducing    more    into    it  authorized;     Bullard    v.    Bank,    18 
(the    incorporation    paper),    and    if  Wall.  589  (headnote  inadequate), 
more  be  introduced  it  is  mere  sur-         '  See  in  addition  to  cases  cited 
plusage,  not  adding  to  or  detracting  below,    Becket    v.    Uniontown    Bldg. 
from  the  force  of  the  declaration."  Ass'n,  88  Pa.  St.  211;    Albright  v. 
The    National    Banking    Act    pro-  Lafaijette,  etc.  Ass'n,  102  Fa.  St.  ill. 
vides  that  the  incorporation  paper         '  Eastern    Plank     Road    Co.     v. 
of  a  national  bank  may  in  addition  Vaughan,  14  N.  Y.  546. 
to  the  required  particulars  contain  Cf.    Grangers'    Life,  etc.    Ins.    Co. 
other  provisions  for  the  regulation  v.  Kamper,  73  Ala.  325. 
of  its  affairs;    and  it  has  been  held  ^  Van  Pelt  v.  Gardner,  54  Nebr. 
that  under  this  statute  provisions  701 ;    75  N.  W.  874.     See  also  infra, 
in  the  articles  of  incorporation  regu-  §  122. 

112 


§  31 -§  1G2] 


UNNECESSARY    PROVISIONS 


§  121 


cannot  exercise  the  additional  powers  unwarrantably  sought  to 
be  conferretl  upon  it.'  It  has  recently  been  held  in  England 
that  where  a  statute  authorizes  a  reduction  of  capital,  if  pro- 
vided for  in  the  articles  or  by-laws,  a  clause  in  the  incorpora- 
tion puj)er  providing  for  a  reduction  does  not  have  the  same 
effect  as  a  similar  clause  in  the  articles,  but  is  wholly  void.^ 
This  decision  is  technical,  and  on  principle  one  would  have 
thought  that  any  provision  which  is  permissii)le  and  effective  if 
found  in  the  by-laws  or  articles  should  be  legal  and  effective  if  in- 
serted in  the  incorporation  paper  or  memorandum  of  association. 
If  the  law  requires  the  paper  to  l>e  approved  by  a  judge 
or  other  public  officer,  he  may  withhold  his  approval  if  the 
paper  contains  any  prohibited  provisions;^  and,  indeed,  even 
a  mere  registrar  charged  with  ministerial  functions  may 
refuse  to  record  an  instrument  which  contains  any  illegal  provi- 


'  Heck  V.  McEwen,  12  Lea 
(Tenn.)  97;  Shick  v.  Citizens'  En- 
terprise Co.,  15  Ind.  App.  329;  57 
Am.  St.  Rep.  230  (distinguished  in 
Williams  v.  Citizens'  Enterprise  Co., 
25  Ind.  App.  851,  354;  57  N.  E. 
581);  Cowell  v.  Springs  Co.,  100 
U.  S.  55,  60  (headnote  inadequate) ; 
Tennessee,  etc.  Lighting  Co.  v.  Massey, 
56  S.  W.  35  (Tenn.) ;  Shoun  v.  Arm- 
strong, 59  S.  W.  790  (Tenn.) ;  Humph- 
reys V.  Mooney,  5  Colo.  282,  292. 

But  see  State  ex  rel.  Lederer  v. 
International  Investment  Co.,  88 
Wise.  512  ;  60  N.  W.  796 ;  43  Am.  St. 
Rep.  920  (where  the  unauthorized 
object  was  thought  to  be  the  pri- 
mary purpose  and  the  authorized  ob- 
jects merely  subordinate  purposes 
of  the  incorporation). 

Cf.  Bayou  Cook,  etc.  Co.  v.  Doullat, 
35  So.  ?29;  111  La.  517;  David 
Bradley  Mfg.  Co.  v.  Chicago,  etc. 
Traction  Co.  (111.),  82  N.  E.  210 
(held,  that  where  a  corporation  is 
incorporated  to  operate  a  "street 
railway"  under  a  law  providing  for 
the  incorporation  of  commercial 
interurban  railways  only,  the  word 
"street"  should  be  regarded  as  ex- 
punged from  the  incorporation 
paper  and  the  company  deemed  a 
VOL.  I.  —  8  1 


commercial  railway) ;  Saunders  v. 
Farmer,  62  N.  H.  572  (held  a  cor- 
poration de  facto). 

Quaere,  what  would  be  the  effect  if 
some  of  the  objects  be  not  merely 
unauthorized  but  actually  illegal  or 
immoral.     Cf.  infra,  Chapter  V. 

In  some  cases  a  clause  in  an  in- 
corporation paper  has  been  thought 
to  constitute,  so  to  speak,  color  of 
authority  for  the  e.xercise  of  powers 
therein  conferred  even  though  those 
powers  be  not  authorized  by  the 
incorporation  law :  Prairie  Lodge 
V.  Smith,  58  Miss.  301  (headnote 
inadequate) ;  Carson  City  Sav.  Bank 
V.  Carson  City  Elevator  Co.,  90  Mich. 
550 ;  51  N.  W.  641 ;  30  Am.  St.  Rep. 
454. 

^  Dexine  Patent  Packing  &  Rubber 
Co.,  88  L.  T.  791. 

'  Butchers'    Beneficial    Ass'n,    35 

Pa.    St.    151;     Agudath    Hakehiloth, 

18  N.  Y.  Misc.  717;   42  X.  Y.  Supp. 

985 ;    Benevolent  Society,    10    Phila. 

(Pa.)    19;    Woodberry   v.   McClurg, 

78  Miss.  831;  29  So.  514;  Miller  v.. 

Tod,  67  S.  W.  483;    95  Tex.  404; 

People  V.  Rose,  188  111.  268 ;  59  N.  E. 

432. 

Cf.    Medical   College  of  PhUadd- 

phia,  3  Whart.(Pa.)  445. 
13 


§   122  THE    IN'CORPORATION    PAPER  [ChAP.  II 

sions.^  But  on  the  other  hand  the  action  of  a  ministerial  officer 
in  recording  the  instrument  does  not  preclude  judicial  inquiry 
into  the  legality  of  any  of  its  provisions.* 

§  122.  What  Provisions  are  unauthorized.  —  The  existing  au- 
thorities do  not  all'ord  much  aid  in  determining  what  provisions 
in  an  incorporation  paper  are  illegal  and  void,  where  a  provision 
is  not  deemed  illegal  merely  because  it  is  not  required.  Any 
provision  that  is  contrary  to  express  or  implied  statutory  regula- 
tions of  course  cannot  stand.^  Thus,  where  the  purchase  by 
a  corporation  of  its  own  shares  is  deemed  to  be  illegal,  a  clause 
in  an  incorporation  paper  purporting  to  authorize  the  company 
to  purchase  its  own  shares  would  doubtless  be  void.*  So,  a 
clause  purporting  to  vest  in  the  directors  a  discretion  to  declare 
dividends  at  any  time,  whereas  a  statute  requires  the  dividend 
days  to  be  fixed,  would  be  void.^  A  federal  judge  sitting  in 
Louisiana  has  held  that  a  provision  in  an  incorporation  paper 
purporting  to  give  the  company  a  lien  on  its  shares  for  debts 
owing  by  the  holders  is  void;'    but  this  decision  appears  to 

»  Dancy  v.  Clark,  24  App.  D.  C.  Whalen,  104  N.  Y.  Supp.  555 ;   Lin- 

487;  State  ex  rel.  Gorman  v.  Nichols  coin  Bldg.,  etc.  Ass'n  v.  Graham,  7 

(Wash.),   82   Pac.    741;     People   ex  Nebr.   173  (headnote  inadequate  — 

rel.    Barney  v.   Whalen,    104   N.   Y.  clause  purporting  to  authorize  lend- 

Supp.   555;   Rex  v.   Registrar  Joint  ing  at  usurious  interest). 

Stock  Companies   (1904),  2   Ir.   634  *  Infra,  §  627.     Cf.  §  624. 

(where  the  name  of  the  company  ^  Marquand  v.  Federal  Steel  Co., 

contained  a  false  statement) ;    Peo-  95  Fed.  725. 

pie  ex  rel.  Blossom  v.  Nelson,  46  N.  "  New     Orleans     Nat.      Banking 

Y.  477  (attempt  to  form  a  corpora-  Ass'n  v.  Wiltz,  10  Fed.  330  (head- 

tion  for  business  purposes,  in  addi-  note  inadequate), 

tion   to   the   purpose   of   promoting  Cf.  O'Brien  v.  Cummings,  13  Mo. 

the    temporal    interests    of    others,  App.  197;    Lyman  v.  State  Bank  of 

under   a   statute   for   formation    of  Randolph,  81  N.  Y.  App.  Div.  367; 

benevolent  and  charitable  corpora-  80  N.  Y.  Supp.  901,  affirmed  short 

tions);    People    ex    rel.    Barney    v.  179N.  Y.  577;   72  N.  E.  1145. 

Whalen,  106  N.  Y.  Supp.  434.  The  decision  in  Third  Nat.  Bank 

Cf.  People  V.  Eose,  219  111.  46;   76  v.    Buffalo    German    Ins.    Co.,    193 

N.    E.    42    (where    the    instrument  U.  S.  581,  that  a   provision  in  the 

adopted  the  same  name  as  an  ex-  "articles  of  association"   of  a  na- 

isting  company) ;    State  ex  rel.  Os-  tional    bank,    which    perform    some 

borne    v.    Nichols,    38    Wash.    309 ;  of  the  functions  of  an  incorporation 

•80  Pac.  462.  paper,  purporting  to  give  the  bank 

^  People  ex  rel.  Peabody  v.  Chicago  a  lien  on  its  several  shares  for  debts 

Gas  Trust  Co., 130  111.  268,  22  N.  E.  owing  by  the  respective  holders,  can 

798,  17  Am.  St.  Rep.  319;  8  L.  R.  A.  be  explained  by  the  fact  that  the 

497.     Cf.  infra,  §  267.  national  bank  act  expressly  forbids 

'  Cf.    People   ex   rel.    Barney   v.  banks   to  lend   on   the   security  of 

114 


§  31-§   102]  UNNECESSARY    PROVISIONS  §   122 

have  been  ill  considered,  and  was  reached  by  assimilating  an 
incorporation  paper,  or  so-called  charter,  to  mere  by-laws, 
without  adverting  to  the  cardinal  distinction  between  them  in 
that  the  one  is  matter  of  record  so  that  all  who  deal  with  the 
company  have  constructive  notice,  while  mere  by-laws  rest  in 
pais:  Accordingly,  the  Supreme  Court  of  Iowa  in  a  well-reasoned 
judgment,  while  recognizing  that  wiiere  a  mere  by-law  confers 
upon  the  corporation  a  lien  upon  its  shares  for  debts  due  from 
the  shareholders,  bona  fide  purchasers  of  a  share-certificate  are 
not  affected  thereby,  nevertheless  held  that  a  similar  provision 
contained  in  an  incorporation  paper  creates  a  lien  which  is 
effective  against  all  the  world,  because  everybody  has  construc- 
tive notice  of  the  contents  of  the  incorporation  paper.'  In 
Indiana,  a  provision  declaring  that  shares  may  be  issued  at  a 
discount  has  been  held  effective,-  but  the  opposite  result  was 
reached  by  the  Supreme  Court  of  Ohio  in  a  case  relating  to 
a  West  Virginia  corporation.^  A  Vice-Chancellor  of  New 
Jersey  has  expressed  the  opinion  that  a  clause  in  an  incorpora- 
tion paper  authorizing  the  directors  to  bind  the  company  without 
a  board  meeting  is  void  although  the  New  Jersey  law  expressly 
authorizes  the  insertion  in  an  incorporation  paper  of  "any 
provision  creating,  defining,  limiting  and  regulating"  the  powers 
of  directors ;  *  but  this  expression  of  opinion,  although  sup- 
ported by  an  elaborate  statement  of  reasons,  was  not  strictly 
necessary  to  the  decision,  and  is  submitted  to  be  so  narrow  and 
unjust  that  the  New  Jersey  Court  of  Errors,  which  is  distin- 
guished for  breadth  and  sanity  of  judgment  in  matters  of 
corporation   law,   is   unlikely   to   reach   the   same   conclusion.^ 


their  own   shares   and   by   tlie   fact  '  Security     Trust    Co.     v.     Ford 

—  which  seems  to  have   had  more  (Ohio),     79    N.    E.    474.     Accord: 

weight  with  the  court  —  that  Con-  Twigg  v.  Thunder  Hill  Mining  Co., 

gress,  by  repeahng  the  express  pro-  3  Brit.  Columb.  101. 

vision  in  the  Act  of  1863  for  such  *  Audenried  v.  East  Coast  Milling 

liens,  had  indicated  a  legislative  in-  Co.  (N.  J.),  59  Atl.  577. 

tent  that  the  shares  sliould  be  ahen-  *  Cf.    Bell    &    Coggeshall   Co.    v. 

able  without  any  such  restriction.  Ky.  Glass  Works  Co.,  50  S.    W.  2; 

'  Dempster  Mfg.  Co.  v.  Down,  126  20   Ky.   Law  Rep.    1684    (enforcing 

Iowa  80  (headnote  inadequate) ;   101  a  clause  in  an  incorporation  paper 

N.  W.  735;    106  .\m.  St.  Hop.  340.  which    vested    the    management    of 

*  Bent   V.    Underdown,    156    Ind.  the   company   in   executive   officers 

516 :  60  N.  E.  307.    Cf.  Street  &  Co.  who  were  to  act  without  a  meeting), 
17  Vict.  L.  R.  717. 

115 


§  123  THE    INCORPORATION    PAPER  [ChAP.  II 

One  of  the  inferior  courts  in  Pennsylvania  has  even  gone  so 
far  as  to  hold  that  a  provision  in  an  incorporation  paper  of  a 
social  club  providing  that  a  member  shall  have  as  many  votes  at 
elections  of  officers  as  he  holds  shares  is  void ;'  and  this  decision 
is  the  more  remarkable  because  a  similar  provision  in  mere 
by-laws  is  by  the  weight  of  authority  quite  valid.-  A  clause  in 
an  incorporation  paper  vesting  the  exclusive  control  of  the 
company  in  the  first  directors  for  a  period  of  years,  and  provid- 
ing that  until  the  expiration  of  that  time  the  shareholders  should 
have  no  right  to  vote  or  hold  meetings  (except  in  an  advisory 
capacity),  has  been  held  by  a  federal  judge  to  be  valid  and  not  in 
conflict  with  statutory  provisions  for  annual  and  other  meetings 
of  shareholders,  which  provisions  were  construed  to  apply  only 
to  those  companies  whose  incorporation  papers  contain  no 
stipulation  to  the  contrary.^  This  decision  is  remarkable  among 
American  cases  in  that  it  errs,  if  at  all,  on  the  side  of  a  liberal  and 
elastic  construction  of  the  law.  Accordingly,  one  is  not  sur- 
prised to  find  that  an  Indiana  court  upon  very  similar  facts 
has  reached  a  diametrically  opposite  conclusion.* 


§  123.  Incorporation  of  other  Documents  into  Instrument 
by  Reference.  — ■  By  analogy  to  accepted  principles  relating  to 
deeds  of  real  estate  and  similar  instruments,  an  incorporation 
paper  may  refer  to,  and  by  reference  incorporate,  any  existing 
recorded  paper,''  but  not  an  unrecorded  document  or  a  document 
not  at  the  time  in  existence.  Thus,  a  reference  in  the  incorpora- 
tion paper  to  by-laws  to  be  subsequently  adopted  by  the  com- 
pany will  not  make  such  by-laws  part  of  the  company's  recorded 

*  Commonwealth  ex  rel.  Nicker-  copies  of  each  other,  but  each  signed 
son  V.  Conover,  30  Leg.  Int.  (Pa.)  by  different  persons) ;  Monroe  Re- 
200.  publican  Club,  6  Pa.    Dist.    R.   515 

*  See  infra,  §  1216.  (application  for  charter  typewritten 
'  Union  Trust  Co.  v.  Carter,  139    upon  several  sheets  of  paper  joined 

Fed.  717.  together    with    eyelets,    instead    of 

*  State  ex  rel.  Ross  v.  Anderson,  being  written  upon  one  single  sheet, 
67N.  E.  207;   31  Ind.  App.  34.  eaid    to    be    irregular);     Stevedore's 

*  Cf.  Lake  Ontario,  etc.  R.  R.  Co.  Beneficial  Ass'n,  14  Phila.  (Pa.)  130 
V.  Mason,  16  N.  Y.  451  (where  arti-  (similar  point  to  last  case);  Re- 
ticles of  incorporation  consisted  of  countants'  Ass'n,  5  Pa.  Dist.  Rep. 
several  separate  instruments,  exact  699  (similar  point  to  last  two  cases). 

116 


§  31-§  1G2] 


EXECUTION    OF    INSTRUMENT 


§  124 


constitution  nor  charge  persons  who  may  afterwards  deal  with  the 
company  with  notice  of  their  existence  and  contents.' 


§  124-§  131.     Execution  of  Instrument. 

§  124.  In  general  —  Signature  —  Number  of  Subscribers,  etc. — 
An  incorporation  paper  must  of  course  be  signed;  if  unsigned, 
it  is  a  nulhty.^  Moreover,  it  must  be  signed  by  the  number  of 
subscribers  required  by  law.  This  is  an  essential  point. ^  'I'hus, 
if  the  law  requires,  say,  five  or  more  subscril)ers,  a  paper  signed 
by  three  only  is  invalid.'  On  the  other  hand,  where  the  law 
requires  three  subscribers,  two  of  the  three  may  be  husband  and 
wife;^  baron  and  feme  are  not  nowadays  for  this  purpose 
regarded  as  one  person.  Signature  by  a  mark  is  sufficient." 
A  fortiori,  a  subscriber  need  not  sign  his  full  name :  a  signature 
designating  a  subscriber's  Christian  name  by  an  initial  merely 
is  sufficient.^  If  the  statute  provide  that  the  places  of  residence 
of  the  subscribers  shall  be  stated,  the  provision  is  mandatory ;  a 
failure  to  give  the  place  of  residence  of  each  of  a  number  sufficient 
to  perfect  the  organization  cannot  be  deemed  disregard  of  a 
mere  directory  provision.** 


'  Royal  Bank  of  India's  Case,  4 
Ch.  252. 

*  Laivrie  v.  Silsbjj  (Vt.).  5fi  Atl. 
1106 ;  76  Vt.  240 ;  104  Am.  St.  Rep. 
927;  Unihj  Ins.  Co.  v.  Cram,  43 
N.  H.  636  (explained  in  Ossipee,  etc. 
Mfg.  Co.  V.  Canney,  54  N.  H.  295, 
313). 

Cf.  Kaiser  v.  Laurence  Savings 
Bank,  56  Iowa  104  (headnote  in- 
adequate); 8  N.  W.  772;  41  Am. 
Rep.  85. 

»  See  infra,  §  1084. 

*  Helping  Hand  Marriage  Ass'n^ 
15  Phila.  644  (headnote  inade- 
quate) ;  Rhoads  v.  Hnernerstown 
Bldg.,  etc.  Ass'n,  82  Pa.  St.  180; 
Hamilton  Road  Co.  y.  Toumsend, 
13  Ont.  Rep.  534 ;  People  e.r  rel. 
Weatherly  v.  Golden  Gate  Lodge, 
(Cal.),  60  Pac.  865;  128  Cal.  257; 
State  e.v  rel.  Clapp  v.  Critchett,  37 
Minn.  13  ;   32  N.  ^Y.  787. 

Cf.    Johnson    v.    Okcrstrom,    70 

1 


Minn.  303,  310;  73  N.  W.  147 
(paper  signed  by  less  than  required 
number  of  persons  held  colorable 
compliance  with  law  sufficient  to 
give  rise  to  incorporation  de  facto) ; 
Duggan  v.  Colorado  Mtge.,  etc.  Co., 
11  Colo.  113,  117  (headnote  inade- 
quate, —  holding  that  forgery  of 
one  of  the  re<iuisite  minimum  num- 
ber of  .signatures  is  not  ground  for 
collateral  attack  on  validity  of 
incorporation). 

'  Good  Land  Co.  v.  Cole  (Wise"), 
110  N.  W.  895. 

"  Board  of  Trustees  of  Seventh 
Street,  etc.  Church  v.  Campbell,  48 
La.  Ann.  1543 ;   21  So.  184. 

^  State  e.v  rel.  Callings  v.  Beck, 
81  Ind.  500. 

*  Busetiback  v.  Attica,  etc.  Gravel 
Road  Co.,  43  Ind.  265.  As  to  such 
provisions,  see  also,  Steinmetz  v. 
Versailles,  etc.  Turnpike  Co.,  57  Ind. 
457. 
17 


§125 


THE    INCORPORATION    PAPER 


[ClIAP.   II 


§  125.  Sealing  of  Instrument.  —  The  in.strument  need  not 
be  under  the  seals  of  the  subscribers  unless  the  statute  so  re- 
quires ;  but  a  provision  that  the  paper  shall  be  under  seal  can- 
not be  deemed  directory  merely.^  As  more  fully  explained 
below,  a  provision  that  the  paper  "shall  bind  the  company 
and  each  member  to  the  same  extent  as  if  each  member  had 
signed  his  name  and  affixed  his  seal  thereto,"  does  not  require 
the  instrument  to  be  sealetl  by  the  subscribers." 

§120.  Acknowledgment  of  Instrument. —  A  provision  that 
the  instrument  shall  be  acknowledged  as  well  as  signed  is  manda- 
tory ;3  but  a  magistrate's  certificate  that  the  paper  was  "sub- 
scribed and  sworn  to"  before  him  sufficiently  shows  that  it  was 
acknowledged.*  Where  the  instrument  is  required  to  be  acknowl- 
edged before  a  clerk  of  court  or  justice  of  the  peace  it  is  invalid 
if  acknowledged  before  a  notary  public,^  even  though  the  notary 


'  Griffin  v.  Clinton  Line.  etc.  R.  R. 
Co.,  11  Fed.  Cas.  27. 

Cf.  Warner  v.  Callender,  20  Ohio 
St.  190. 

'  Whitleij  Partners,  32  Ch.  D. 
337.     See  infra,  §  131. 

^  Greenbrier  Industrial  Exposi- 
tion V.  Rodes,  37  W.  Va.  738;  17 
S.  E.  305;  Doyle  v.  Mizner,  42 
Mich.  332;  3  N.  W.  968;  People 
ex  rel.  Long  Island  R.  R.  Co.  v. 
Board  of  R.  R.  Commrs.,  75  N.  Y. 
App.  Div.  106 ;  77  N.  Y.  Supp.  380 
(holding  acknowledgment  by  each  of 
the  required  number  of  signatories 
to  be  requisite) ;  People  v.  Monte- 
cito  Water  Co.,  97  Cal.  276;  32 
Pac.  236;  33  Am.  St.  Rep.  172; 
Kaiser  v.  Lavyrence  Savings  Bank, 
56  Iowa  104  (headnote  inadecjuate) ; 
8  N.  W.  772;  41  Am.  Rep.  85. 

Cf.  Wall  V.  Mines,  1.30  Cal.  27; 
62  Pac.  386  (provision  for  verifica- 
tion by  affidavit  held  mandatory) ; 
First  Xat.  Bank  v.  Rockefeller,  195 
Mo.  15  (headnote  misleading) ;  93 
S.  W.  761 ;  Duggan  v.  Colorado 
Mortgage,  etc.  Co.,  11  Colo.  113; 
17  Pac.  105  (lack  of  acknowledg- 
ment held  not  to  prevent  such 
coloraVjle  compliance  with  law  as 
to  give  rise  to  a  corporation  de  facto 

1 


—  headnote  inadequate) ;  Danne- 
broge  Gold,  etc.  Co.  v.  Ailment,  26 
Cal.  286  (acknowledgment  by  one 
of  subscribers  by  attorney  held, 
not  ground  for  collateral  attack  on 
validity  of  incorporation  where  a 
statute  forbade  such  attack  if  the 
company  claims  in  good  faith  to  be  a 
corporation) ;  Franke  v.  Mann,  106 
Wise.  1 18 ;  81  N.  W.  1014  ;  48  L.  R.  A. 
856  (lack  of  acknowledgment  no  bar 
to  incorporation  de  facto) ;  Stout  v. 
Zulick,  48  N.  J.  Law  599  (headnote 
inadequate);  7  Atl.  362  (formal 
defect  in  certificate  of  acknowledg- 
ment no  bar  to  incorporation  de 
facto) ;  Central  Agricultural,  etc. 
Ass'n,  V.  Ala.  Gold  Life  Ins.  Co.,  70 
Ala.  120  (lack  of  acknowledgment 
not  fatal  to  corporate  existence 
de  facto). 

As  to  the  conclusiveness  of  a 
magistrate's  certificate  of  acknowl- 
edgment, see  infra,  §  283. 

*  Cuykendall  v.  Douglas,  19  Hun 
(N.  Y.  )  577. 

*  Shields  v.  Clifton  Hill  Land 
Co.,  94  Tenn.  123;  28  S.  W.  668; 
45  Am.  St.  Rep.  700;  26  L.  R.  A. 
509. 

Cf.  First  Baptist  Soc.  v.  Rapalee, 
16  Wend.  (N.  Y.)  605  (acknowledg- 
18 


§  31-§    102]  EXECUTION    OF    INSTRUMENT  §    129 

is  l)y  anotlier  statute  authorized  in  general  terms  to  take  acknowl- 
edgmentspf  all  written  instruments.'  An  aeknowledgment  taken 
by  one  of  the  subscribers  of  the  paper  in  his  capacity  as  notary  is 
void.^  The  ofHcer  taking  the  acknowledgment  need  not  certify 
that  the  persons  who  acknowledged  the  instrument  are  [x.'rsonally 
known  to  him  unless  such  is  the  express  retjuirement  of  the 
statute,  even  though  as  to  acknowledgments  of  deeds  of  real 
estate  such  a  certificate  is  required.^  And,  of  course,  a  provision 
that  the  paper  shall  be  "subscribed  by  five  or  more  persons  .  .  . 
and  acknowledged  by  each"  is  not  satisfied  by  a  paper  signed 
by  five  persons  but  acknowledged  by  four  of  them  only/ 

§  127.  Place  of  Execution.  -  An  incorporation  paper  may 
be  both  subscribed  and  acknowledifed  in  a  foreign  state. ^ 

§  1 28.  Execution  of  Duplicate  Instruments.  —  The  New  York 
Court  of  Appeals  in  1857  decided  that  "articles  of  associa- 
tion "  might  consist  of  several  distinct  papers,  exact  copies  or 
transcripts  of  each  other  with  the  exception  of  the  signatures ;  * 
but  this  case  can  hardly  be  relied  upon  as  approving  such  a 
practice  under  modern  incorporation  laws,  unless  each  of  the 
duplicates  is  signed  by  the  requisite  minimum  number  of 
subscribers. 

§  129.  Execution  and  Delivery  in  Escrow.  —  It  has  been  held 
that  an  incorjx)ration  paper  cannot  be  executed  and  delivered 
in  escrow.  That  is  to  say,  if  such  a  paper  is  signed  and  delivered 
to  some  person  with  the  understanding  that  it  shall  not  be  used 

ment  before  commissioner  of  deeds  ^  People  ex  rcl.  Bernard  v.  Cheese- 

ineffective  when  statute  requires  ac-  man,  7  Colo.  376;  3  Pac.  716;  John- 

knowledgment  before  a   judge,  —  a  ston    v.    Ewing    Female    University, 

decision  which  is  criticised  in  Bw/Ja/o,  35  111.  518. 

etc.  R.  R.  Co.  V.  Cary,  26  N.  Y.  75,  *  People  v.  Montecito  Water  Co., 

78,   as   overlooking   the   distinction  97  Cal.  276;   32  Pac.  236;   33  Am. 

between  incorporation  de    jure  and  St.  Rep.  172. 

de  facto);  linger  man  v.  Ohio  Bldij.,  '  Humphreys  v.  Mooney,  5  Colo. 

etc.  Ass'n  25  Ohio  St.  186,  200-201  282,  293. 

(acknowledgment  before  notary  in-         Cf.  Re  Charter  Acknowledgments, 

stead   of  justice   of   the   peace   not  28  Pa.   Co.    Ct.   Rep.    187    (Op.   of 

ground  for  collateral  attack  on  cor-  Atty.-Gen.) ;     Dooley     v.     Cheshire 

porate  existence).  Glass  Co.,  15  Gray  (Mass.)  494. 

'  State  ex  rel.  Attorney-General  v.  ^  Lake  Ontario,  etc.  R.  R.  Co.  v. 

Lee,  21  Ohio  St.  662.  Mason.  16  N.  Y.  451. 

»  People  ex  rcl.  Erie  R.  R.  Co.  v.        Cf.  Sodus  Bay,  etc.   R.  R.   Co.  v. 

Board    of    Railroad    Commissioners,  Hamlin,  24  Hun  (N.  Y.)  390. 
105  N.  Y.  App.  Div.  273 ;   93  N.  Y. 
Supp.  584. 

119 


§  130  THE   INCORPORATION    PAPER  [ChaP.  II 

except  upon  the  performance  of  a  certain  condition,  nevertheless, 
if  in  viohition  of  these  instructions  the  paper  is  recorded  pres- 
ently, no  objection  can  be  made  on  account  of  the  non-perform- 
ance of  the  condition.' 

§  130.  Who  may  act  as  Subscriber.  —  Unless  some  positive 
restriction  is  found  in  the  statute  any  person  may  act  as  a  sub- 
scriber of  an  incorporation  paper.  Thus,  the  subscribers  are 
often  required  to  be  citizens,^  but  in  absence  of  such  a  provision 
a  non-resident  or  alien  may  be  a  subscriber.^  Even  an  infant,  it 
has  been  held,  may  be  a  subscriber,  and  although  he  may  dis- 
affirm any  agreement  to  take  shares,  vet  such  disaffirmance  will 
not  invalidate  his  subscription  of  the  incorporation  paper  after 
riffhts  have  vested  in  reliance  thereon,  and  will  not  render  the 
incorporation  void  ab  initio;  *  but  on  the  other  hand,  in  Canada 
it  has  been  held,  upon  reasoning  certainly  not  less  forcible,  that 
the  incorporation  laws  contemplate  as  corporators  only  persons 
sui  juris  and  not  infants.^  Indeed,  in  a  Canadian  case,  the  opin- 
ion was  expressed  that  a  married  woman  could  not  be  a  cor- 
porator ; "  but  under  modern  statutes  removing  the  common 
law  disabilities  of  coverture,  the  rule  on  this  point  is  different^ 
Coke  in  commenting  on  the  general  statute  of  39  Eliz.,  c.  5,  for 
incorporation  of  hospitals,  says  that  the  act  "enables  not  persons 
within  age,  or  feme  coverts  without  their  husbands,  of  no)i  compos 

'  Rehbein  v.  Rahr,  109  Wise.  136 ;  Moxie  Nerve  Food  Co.  v.  Baumbach, 

85  N.  W.  315.  32  Fed.  205;    Central  R.  R.  Co.  v. 

But  see  Corey  &  Co.  v.  Morrill,  Pennsylvania  R.  R.  Co.,  31  N.  J.  Eq. 

61  Vt.  598;   17  Atl.  840.  475;    Demarest  v.  Flack,  128  N.  Y. 

2  As  to  the  effect  of  signature  by  205 ;  28  N.  E.  645 ;   13  L.  R.  A.  854 ; 

a  person  falsely  stated  to  be  a  citi-  Humphreys  v.  Mooney,  5  Colo.  282. 

zen,  see  American  Salt  Co.  V.  Heiden-  *  Laxon  &  Co.  (2),  (1892),  3  Ch. 

heimer,  80  Tex.  344  ;    15  S.  W.  1038  ;  555. 

26  Am.  St.  Rep.  743,  and  infra,  §  283.  Cf.     Nassau    Phosphate    Co.,    2 

As    to    whether    the    instrument  Ch.  D.  610. 

itself   must   show   on   its   face   that  ®  Hamilton,     etc.     Road     Co.     v. 

the  subscribers  are  citizens,  see  St.  Townsend,  13  Ont.  App.  534. 

Ladislaus,  etc.  Ass'n,  19  Pa.  Co.  Ct.  Cf.   Globe  Mutual   Benefit  Ass'n, 

Rep.  25;    Enterprise  Mutual  Bene-  135  N.  Y.  280;    32  N.  E.  122;    17 

ficial    Ass'n,    10    Phila.    (Pa)    380;  L.  R.  A.  547. 

H albert    v.    San    Saba,    etc.    Ass'n  *  Hamilton    Road   Co.    v.    Town- 

(Tex.),  34  S.  W.  636  (holding  that  send,  13  Ont.  534. 

citizensliip  need   not  appear).     Cf.  ^  Good  Land  Co.  v.  Cole  (Wise), 

Sword  V.  Wickersham;  29  Kan.  746.  HON.  W.  895;    Opinion  of  Attorney- 

As   to    stating   the   residence   of  General,  18  Pa.  Co.  Ct.  Rep.  492  (over- 

Bubscribers,  see  further,  supra,  §  124.  ruling  Re  Application  of  Charter,  27 

»  Reuss  V.  Bos,  L.  R.  5  H.  L.  176 ;  Wkly.  Notes  Cas.  (Pa.)  399). 

120 


§   31 -§    102]  EXECUTION    OF    INSTRUMENT  §    131 

mentis,  or  any  other  persons  disabled  In*  law,  to  found,  etc."  ' 
An  English  text-writer  expresses  the  opinicjn  that  a  corporation 
with  the  requisite  power  would  be  sufficient  as  a  subscriber  of 
a  memorandum  of  association;'-  but  it  is  sulnnitted  that  the 
modern  incorporation  acts  contemplate  that  natural  {>ersons 
only  shall  subscribe  the  incorporation  paper,  and  accordingly 
it  has  been  held  in  America  not  only  that  all  corporators  must 
be  natural  persons,^  but  even  that  a  corporation  should  be  re- 
strained by  injunction  from  forming  a  subsidiary  corporation 
through  its  agents  and  officers,  acting  not  individually  but  on 
behalf  of  their  company."  A  signature  in  a  firm  name  has  been 
thought  to  be  sufficient,^  and  perhaps  such  a  signature  may  be 
treated  as  a  subscription  by  the  several  partners  and  so  valid;' 
but  the  question  is  on  principle  open  to  doubt.  Where  the 
statute  requires  the  incorporation  paper  to  be  signed  by  certain 
officers  of  the  projected  company,  it  is  sufficient  if  the  paper  is 
signed  by  the  persons  who  are  in  fact  those  oflficers,  although 
their  official  character  does  not  appear  from  the  instrument  in 
question.^  Conversely,  if  the  statute  require  that  the  sub- 
scribers to  shares  must  sign,  signature  by  the  directors  of  the 
projected  company  is  insufficient.* 

§  131.  Signature  by  Agent  or  Attorney.  — The  English  Court 
of  Appeal  has  held  that  a  signature  by  agent  or  attorney  com- 
plies with  the  statute,  and  that  the  agent's  authority  may 
be  oral  merely  and  need  not  appear  of  record.^    But  in  that  case 

'  2  Coke  Inst.  722.  Junction  Ry.  Co.,  43  Ark.  Ill  (head- 

2  Palmer's  Company  Law,  3d  ed.,  note    inadequate);     Day   v.    Postal 
19.    It  has  been  held  that  a  corpora-  Tel.  Co.,  66  Md.  354  ;    7  Atl.  608. 
tion  may  found  and  incorporate  a  '  Ogdensburgh,  etc.  R.  R.  Co.  v. 
hospital  under  the  stat.  39  EUz.,  c.  Frost,  21  Barb.  (N.  Y.)  541. 

5  :  Mcrjar  of  Newcastle-upon-Tyne  v.  »  Rehbein  v.  Rahr,  109  Wise.  136 ; 

Attorney-General,  12  CI.  &  Fin.  402,  85  N.  W.  315  (where  the  subscrip- 

foUowing  2  Coke  Inst.  722.  tion  was  held  to  be  the  act  of  those 

3  Central  R.  R.  Co.  v.  Pennsyl-  partners  only  who  signed  the 
vania  R.  R.  Co.,  31  N.  J.  Eq.  475;  instrument). 

Factors,  etc.  Ins.  Co.  v.  Harbor  Pro-  '  St.    Louis,    etc.    R.    R.    Co.    v. 

teclion  Co.,  37  La.  Ann.  233;  Denny  Southwestern  Tel.,  etc.  Co.,  121  Fed. 

Hotel  Co.  V.  Schrajn,  6  Wash.    134,  276;    58  C.  C.  A.  198. 

137;  32  Pac.  1002;  36  Am.  St.  Rep.  *  Valk  v.  Cra?idall,  1  Sandf.  Ch. 

130.  (N.  Y.)  179. 

«  Central  R.   R.   Co.   v.   Pennsyl-  »  Whitley  Partners,  32  Ch.  D.  337. 

vania    R.    R.    Co.,    31     N.    J.    Eq.  But    see    Re    Charter    Acknowl- 

475.  edgnicnts,  28    Pa.   Co.  Ct.  Rep.  187 

But  see  Niemeyer  v.  Little  Rock  (Op.  of  Atty.-Gen.). 

121 


§  132  THE    INCORPORATION    PAPER  [ChAP.  II 

the  instrument  was  signed  personally  by  seven  other  persons  — 
the  minimum  number  prescribed  by  the  statute  —  so  that  in 
strictness  the  only  question  before  the  court  was  whether  the 
sio-nature  by  attorney  was  a  binding  subscription  to  the  number 
of  shares  written  after  the  name ;  for  even  if  the  doubtful  signa- 
ture had  been  rejected,  the  instrument  being  still  signed  by  the 
requisite  number  of  persons,  the  incorporation  would  have  been 
valid.  New  York  Court  of  Appeals  has  gone  even  further  and 
held  that  some  of  the  minimum  number  of  subscribers  required 
bv  the  statute  may  sign  by  attorney  and  that  the  authority  of  the 
agent,  although  not  apparent  of  record,  will  be  presumed.^ 
Statutes  sometimes  provide  that  the  instrument  shall  be  exe- 
cuted and  acknowledged  like  a  deed  of  real  estate ;  and  in  that 
case,  of  course,  no  execution  by  proxy  could  avail  unless  the 
power  of  attorney  were  under  seal  and  recorded.  But  a  pro- 
vision that  the  instrument  shall  "bind  the  company  and  each 
member  to  the  same  extent  as  if  each  member  had  signed  his 
name  and  affixed  his  seal  thereto  "  -  does  not  require  the  sub- 
scribers to  seal  the  paper  and  does  not  make  the  instrument  a 
deed  so  as  to  require  a  power  of  attorney  to  execute  it  to  be  under 
seal.^ 


§  132.  Function  of  Subscribers  as  Shareholders  or  otherwise. 
—  The  English  Companies  Act  and  most  of  the  more  modern 
American  incorporation  laws  require  each  subscriber  to  every 
incorporation  paper  to  subscribe  for  at  least  one  share,  writing 
after  his  name  the  number  of  shares  he  takes.*  But  if  there  be  no 
such  affirmative  requirement  —  and  this  was  the  case  with  many 

>  New    York,    Lackawanna,    etc.  For  a  full  statement  of  the  law 

Ry.  Co.,  99  N.  Y.  12  ;    1  N.  E.  27.  respecting  subscriptions  to  shares  by 

2  Companies  Act,  1862,  §  11.  signing   the   incorporation   paper  of 

3  Whidey  Partners,  32  Ch.  D.  337.  a  company,  see  infra,  §  238-§  248. 

*  Where  an  incorporation  paper  In    Valk    v.    Crandall,    1    Sandf. 

is  signed  by  three  persons  and  con-  Ch.   (N    Y.)   179,  where  the  statute 

tains  a  statement  that  the  stock  is  required  the  incorporation  paper  to 

to    be    "divided    half-and-half    be-  be    signed  by   the  shareliolders,   an 

tween  the  parties,"  each  subscriber  instrument  signed  by  the  directors 

takes  one-third  of  the  shares.     Bates  and  giving  the  names  of  other  share- 

V.  Wilson,  etc.  Co.,  14  Colo.  140;  24  holders,  but    not    signed    by  them, 

Pac.  99.  ^^^^  ^^^^*^  invalid. 

122 


§  31-§   1G2]  REGISTRATION    OF    INSTRUMENT 


§  133 


of  the  earlier  American  statutes,  some  of  wliich  are  still  in  force 
—  the  signatories  of  the  incorporation  jjaper  were  not  necessarily 
shareholders.'  Their  functions  and  powers  are  the  subject  of 
detailed  consideration  below. - 


§  133-§  137.     Registration  of  Instrument. 

§  133.  Necessity  for  Registration.  —  The  registration  of  the 
incorporation  paper  is  a  matter  of  the  utmost  importance. 
By  means  of  the  registry,  the  public  is  informed,  constructively 
if  not  actually,  of  the  objects  of  the  company,  of  the  amount  of 
its  nominal  capital,  and  of  the  other  particulars  respecting  the 
enterprise  re(juired  by  law  to  be  stated.  Hence,  without  regis- 
tration in  the  office  of  the  proper  official  or  registrar,  the  com- 
pany cannot  be  deemed  incorporated  even  de  jacto.^    It  has 


'  Coyote,  etc.  Co.  v.  Ruble,  8  Oreg. 
284 ;  Densmnre  Oil  Co.  v.  Densmore, 
64  Pa.  St.  43,  o4  ;  Singer  Mfg.  Co.  v. 
Peck,  9  S.  Dak.  29;  67  N.  W.  947; 
Bristol,  etc.  Trust  Co.  v.  Jonesboro, 
etc.  Trust  Co.,  101  Tenn.  545;  48 
S.  W.  228. 

But  see  Dancy  v.  Clark,  24  App. 
D.  C.  487,  507-509  (where  the  sub- 
scribers of  the  incorporation  paper 
were  declared  to  be  shareholders 
from  the  incorporation  of  the  com- 
pany, although  apparently  no  stat- 
ute made  them  sucli). 

-  Infra,  §  165-§  167. 

^  Lusk  V.  Riggs,  97  N.  W.  1033 ; 
70  Nebr.  713;  Abbott  v.  Omaha 
Smelting  Co.,  4  Nebr.  416;  Field  v. 
Cooks,  16  La.  Ann.  153 ;  Bigelow  v. 
Gregory,  73  111.  197;  Childs  v.  Hurd, 
32  W.  Va.  66 ;  9  S.  E.  362 ;  Brad- 
dock  Boro'  V.  Penn  Water  Co.,  189 
Pa.  St.  379;  42  Atl.  15;  Elgin  Nat. 
Watch  Co.  V.  Loveland,  132  Fed.  41  ; 
Goodale  Lumber  Co.  v.  Shaiv,  41 
Oreg.  544;  09  Pac.  546;  Bergeron 
V.  Hobbs,  96  Wise.  641  ;  71  N.  W. 
1056 ;  65  Am.  St.  Rep.  85 ;  G^lckcrt 
V.  Hacke,  159  Pa.  St.  303:  28  Atl. 
249  (attempted  to  be  distinguished 
in  Pinkerton  v.  Pa.  Traction  Co., 
193  Pa.  229) ;  Garnett  v.  Richard.wn. 
35  Ark.   144;    Hurt  v.  Salisbury,  55 


Mo.  310;  Cresswell  v.  Oberly,  17  111. 
App.  281   (semble). 

But  see  Varineman  v.  Young,  52 
N.  J.  Law  403 ;  20  Atl.  53  (where  a 
statute  providing  that  upon  regis- 
tration of  the  instrument  the  com- 
pany should  be  incorporated  from 
the  date  mentioned  in  the  paper  for 
the  commencement  of  corporate  e.\- 
istence  seems  to  have  been  construed 
to  make  the  corporate  existence  upon 
recording  relate  back  to  the  date 
mentioned  in  tlie  instalment,  where 
the  registration  was  delayed  until  a 
later  date) ;  Pinkerton  v.  Pa.  Trac- 
tion Co.,  193  Pa.  St.  229 ;  44 Atl. 284 ; 
Merrick  v.  Reynolds  Engine,  etc.  Co., 
101  Mass.  381  (where statute  provided 
for  articles  of  agreement  which  were 
not  required  to  be  recorded,  and  for 
the  execution  of  a  certificate  by  the 
officers,  which  should  state  the  pur- 
poses of  the  company,  etc.,  and  was 
required  to  be  recorded,  theexecution 
and  record  of  the  certificate  were  held 
to  be  conditions  subsecjuent  rather 
than  precedent  to  incorporation) ; 
Harrod  v.  Hamer,  32  Wise.  1G2  (same 
point  as  that  of  last  case). 

As  to  the  effect  of  recording  the 
paper  .surreptitiously,  without  the 
authority  of  the  suiiscribers.  Bee 
Ricker  v.  Larkin,  27  111.  App.  G25. 


123 


§  134  THE   INCORPORATION    PAPER  [ChAP.  II 

been  said  that  the  execution  of  an  incorporation  paper  is  anal- 
ogous to  the  execution  of  a  deed  of  real  estate,  and  that  the  in- 
strument is  devoid  of  legal  effect  until  registration,  which  is  the 
equivalent  of  delivery/ 

§  134.  What  must  be  registered  —  Copy  or  Original.  —  If 
the  statute  requires  a  copy  of  the  instrument,  verified  by  the 
afhdavit  of  two  or  more  subscribers,  to  be  recorded,  it  has  been 
held  that  the  law  is  not  satisfied  by  the  recording  of  the  original 
instrument,-  although  the  court  seems  to  have  thought  that  the 
recording  of  the  original  paper  might  form  such  colorable  com- 
pliance with  the  statute  as  to  give  rise  to  a  corporation  de  facto. 
If  the  statute,  as  is  usually  the  case,  requires  registration  of  the 
original,  there  might  be  a  difficult  question  whether  registration 
of  a  copy  would  amount  even  to  colorable  compliance  with  law. 

§  135.  What  amounts  to  Registration.  —  The  essential  ele- 
ment in  recording  is  the  act  of  depositing  the  paper  with  the 
proper  officer.^  An  averment  in  a  pleading  that  an  incorpora- 
tion paper  had  not  been  filed  with  the  recorder  is  a  sufficient 
allegation  that  it  had  not  been  recorded ;  *  and,  conversely,  an 
allegation  that  it  had  been  recorded  necessarily  implies  that  it 
was  filed.^     Consequently,  an  error  of  the  registrar  in  endorsing 

1  Humphreys  v.  Mooney,  5  Colo.  111.    67,    73    (headnote  inadequate) 

282,  293.  27  N.  E.  596  (holding  an  allegation 

2'  Slocum  V.  Head,  105  Wise.  431 ;  that    a   certificate   of   incorporation 

81  N.  W.  673;  50  L.  R.  A.  324.  had    not    been    recorded    to    be  an 

3  See    San    Diego    Gas    Co.     v.  insufficient  denial  of  incorporation. 

Frame,  137  Cal.  441;  70  Pac.  295;  as  the  instrument  might  have  been 

Pittston  Engine,  etc.  Co.,  11  Pa.  Co.  filed    for   record  and    not    actually 

Ct.  Rep.  182.  recorded). 

But  cf.  Byronville  Creamery  Ass'n         *  Wood  v.   Union  Gospel  Church 

V.  Ivers,  100  N.  W.  387 ;   93  Minn.  8  Bldg.  Ass'n,  63  Wise.  9 ;    22  N.  W. 

(where  the  paper  was  duly  filed  for  756. 

record  but   was  never  actually   re-         *  Vawter  v.  Franklin  College,  53 

corded) ;    Johnson  v.  Okerstrom,  70  Ind.  88. 

Minn.    303,    310;     73    N.    W.    147         But   see   Bergeron   v.   Hobbs,   96 

(semble,    similar   point   to   that   of  Wise.    641;     71    N.    W.    10.56;     65 

last  case).  Am.   St.   Rep.   85   (holding  that  to 

See  also  State  ex  rel.  O'Brien  v.  leave  the  paper  with  the  registrar 
Bethlehem,  etc.  Gravel  Road  Co.,  32  temporarily  for  the  {)urpose  of  being 
Ind.  357  (holding  an  allegation  that  recorded  and  then  withdrawn  is  not 
the  paper  had  not  been  filed  "with  compliance  with  a  statute  reciuiring 
the  recorder,"  not  to  be  a  sufficient  it  to  be  filed) ;  Bushnell  v.  Con- 
averment  that  it  had  not  been  filed  solidated  Ice  Machine  Co.,  138  111. 
in  his  office,  sed  quoere) ;  Bushnell  v.  67,  73 ;  27  N.  N.  596  (stated  supra, 
Consolidated   Ice   Machine  Co.,    138  note  3). 

124 


§  31-§   162]  REGISTRATION    OF    INSTRUMENT  §   137 

upon  the  paper  an  incorrect  date  as  the  date  of  fihng  in  no 
respect  affects  the  vahdity  of  the  incorporation ; '  and  the  same 
is  true  of  an  error  in  recording  tlie  paper  in  a  wrong  book.- 

§  136.  Powers  and  duties  of  Registrar.  — The  registrar  may 
refuse  to  record  u  paper  which  on  its  face  compHes  with  law  if  he 
has  independent  knowledge,  or  finds  from  extraneous  evidence 
that  some  of  the  requirements  of  law  have  not  in  fact  been  com- 
plied with  —  for  example,  if  some  of  the  subscribers  required 
by  law  to  be  citizens  are  in  fact  non-residents,^  a  fortiori,  the 
registrar  may  refuse  to  record  any  paper  which  on  its  face  is 
irregular,  for  example,  if  the  instrument  contain  in  addition 
to  the  matters  required  by  law  further  and  illegal  provisions.* 
Although  the  registrar  may  and  indeed  should  examine  an  in- 
strument offered  for  record  and  if  it  fail  to  comply  with  law  re- 
fuse to  receive  it,^  yet  if  his  determination  in  that  regard  be 
erroneous,  he  may  be  compelled  by  mandamus  to  register  it.' 
The  effect  of  an  erroneous  determination  by  the  registrar,  or  by 
any  other  official  to  whom  the  instrument  is  submitted,  that  the 
paper  is  entitled  to  record  is  considered  below.^ 

§  137.  Registration  in  more  than  one  Office.  —  Sometimes 
the  instrument,  or  a  duplicate  or  copy,  is  required  to  be  registered 
in  several  different  offices,  e.  g.,  in  the  office  of  a  county  clerk, 
and  in  the  office  of  the  secretary  of  state.     In  such  cases,  refer- 

'  State  ex  rel.  Padgett  v.  FoiUkes,         *  People  ex  rel.  Davenport  v.  Rice, 

94  Ind.  493,  496.  68  Hun  (N.  Y.)  24 ;  22  N.  Y.  Supp. 

=  San  Diego  Gas  Co.   v.  Frame,  631  (approval  of  paper  by  a  judge  to 

137  Cal.  441;   70  Pac.  295;  Walton  whom  a  statute  required  it  to  be 

V.  Riley,  85  Ky.  413;   3  S.  W.  605.  subnaitted    held  not  to  be    conclu- 

^  American  Salt   Co.    v.   Heiden-  eive  on  the  registrar) ;   People  ex  rel. 

heimer,  80  Tex.  344,  347 ;    15  S.  W.  Blossom  v.  Nelson,  46  N.  Y.  477. 
1038;  26  Am.  St.  Rep.  743  (semble).         •  American  Salt  Co.   v.   Heiden- 

But  see  State  ex  rel.  Home  Bldg.,  heimer,  80  Tex.  344,  347;    15  S.  W. 

etc.  Ass'n  v.  Rotwitt,  17  Mont.  537;  1038;  26  Am.  St.  Rep.  743  (semble) ; 

43  Pac.  922  (holding  that  the  regis-  People  ex  rel.  U.  S.  Grand  Lodge  v. 

trar  is  confined  to  the  face  of  the  Payn,  161  N.  Y.  229;  55  N.  E.  849; 

paper  and  cannot  go  into  the  mo-  McChesney    v.     Batman    (Ky.),    89 

tives  of  the  subscribers).  S.  W.  198;   State  v.  Taylor,  55  Ohio 

As  to  refusal  to  record  an  instru-  St.  61 ;   44  N.  E.  513. 
ment  because  the  proposed  corpo-         Cf.    State   ex   rel.   Hutchinson   v. 

rate  name  is  unduly  similar  to  that  McGrath,  92  Mo.  355;    5  S.  W.  29, 

of  another  corporation,   see   People  Illiru)is  Watch  Case  Co.  v.  Pearson ; 

ex  rel.  Felter  v.  Rose,  80  N.  E.  293  ;  140  111.  423  ;  31  N.  E.  400 ;   16  L.  R. 

225  HI.  496.    See  also  infra,  §  449.  A.  429. 

♦  See  supra,  §  121.  '  §  266-§  270. 

125 


§  137  TUE    INCORPORATION    PAPER  [ChAP.  II 

ence  must  be  had  to  the  terms  of  the  particular  statute  in  question 
in  order  to  determine  the  relative  importance  of  the  filing  with 
the  local  officer  and  the  filing  with  the  state  officer. 

For  example,  under  some  statutes,  the  most  important  point 
is  the  tiUng  of  the  instrument  with  the  state  officer,  and  the 
statutory  provision  for  filing  a  duplicate  or  copy  with  a  county 
officer  is  construed  as  directory  merely,  or  at  any  rate  non- 
compliance therewith  is  regarded  as  a  breach  of  condition  sub- 
sequent to  be  availed  of  only  by  the  state  on  direct  proceedings 
to  declare  the  corporate  existence  forfeited  ^  or  as  a  mere  irregu- 
larity which  when  the  company  goes  into  operation  as  a  corpor- 
ation de  facto  will  not  justify  a  collateral  attack  on  its  existence.^ 
Under  such  statutes,  the  corporation  never  comes  into  existence 
even  de  facto  where  the  instrument  is  recorded  in  the  county 
office  but  not  with  the  state  officer.^ 

On  the  other  hand,  the  terms  of  the  statute  may  show  that  the 
all-important  step  is  the  filing  of  the  instrument  with  the  county 
officer  *  and  that  the  provision  for  filing  a  duplicate  or  copy  with 
the  state  officer  is  directory  merely,^  or  a  condition  subsequent  to 
incorporation,*^  or  a  requirement  such  that  disregard  of  it  will 
not  prevent  the  company  from  becoming  a  corporation  de  facto.'' 
Under  such  statutes  the  fact  that  the  instrument  is  recorded  in 
the  wrong  county  is  a  serious  irregularity  and  prevents  the  com- 
pany from  becoming  a  corporation  de  jure  even  though  a  copy  is 
duly  filed  with  the  secretary  of  state,  a  copy  of  whose  certificate 

^  Jhons  V.  People,  25  I\Iich.  499.  «  First  Nat.  Bank  v.  Davies,  43 

'  Bushnell  v.  Consolidated  Ice  Ma-  Iowa  424  ;    Mokelumne  Hill  Mining 

chine  Co.,  138  111.  67,  73;    27  N.  E.  Co.  v.  Woodbury,    14   Cal.   424;    73 

596;    Curtis  v.  Meeker,  62  111.  App.  Am.  Dec.  658;    Portland,  etc.  Turn- 

49  (with  which  compare  Loverin  v.  pike  Co.  v.   Bobb,  88  Ky.  226;     10 

McLaughlin,  161  HI.  417;    44  N.  E.  S.  W.  794;  Rassbeck  v.  Desterreicher, 

99);   Humphreys  v.  Mooney,  5  Colo.  55  How.  Pr.  (N.  Y.)  516;    4  Abb. 

282,  295.  N.  C.  444 ;    Walton  v.  Riley,  85  Ky. 

»  Card  V.  Moore,  68  N.  Y.  App.  413;   3  S.  W.  605. 
Div.    327 ;     74    N.    Y.    Supp.     18,         '  Hyde  v.  Doe,  4  Sawy.  133 ;  Fan- 
affirmed  short,   173   N.   Y.   598  (re-  neman  v.  Young,  52  N.  J.  Law  403; 
lating  to  the  law  of  Connecticut).  20  Atl.  53 ;   Grand  River  Bridge  Co. 

*  Childs  V.  Hurd,  32  W.  Va.  66;  9  v.  Rollins,  13  Colo.  App.  4  ;   21  Pac. 

S.E.  362  (relating  to  law  of  N.Y.)  897;     Tarbell   v.   Page,   24    111.   46; 

'  Garnett  v.  Richardson,  35  Ark.  Leonardsville    Bank    v.    Willard,    25 

144  (headnote  inadequate) ;   Cross  v.  N.  Y.  574  ;   Central  Agricidtural,  etc. 

Pinckneyville  Mill  Co.,  17  111.  54,  56.  Ass'n  v.  Ala.  Gold  Life  Ins.  Co.,  70 

Cf.  Bartlett  v.  Wilbur,  53  Md.  485  Ala.  120  (headnote  inadequate), 
(relating  to  law  of  New  York). 

12G 


§  31-§   162]  PUBLICATION    IN    NEWSPAPER  §   138 

of  incorjioration  is  recorded  in  the  county  where  the  original 
incorporation  paper  ought  to  liave  been  recorded.' 

.  Still  other  statutes  have  been  construed  to  make  both  the  filing 
with  the  county  ofiicer  and  with  the  state  officer  of  equal  im- 
portance and  both  indispensable  to  the  creation  of  even  a  de 
facto  corporation.'-  Even  under  such  statutes,  if  the  instru- 
ment is  duly  filed  with  the  secretary  of  state,  the  fact  that  a 
certified  copy  of  the  incorporation  paper,  or  even  the  secretary  of 
state's  certificate  of  incorporation,  instead  of  a  duplicate  original 
of  the  incorporation  paper,  is  recorded  in  the  county  ofhce,  is 
not  deemed  so  serious  an  irregularity  as  to  prevent  the  company 
from  becoming  a  de  facto  corporation.^ 

Of  course,  where  the  instrument  is  duly  registered  both  in  the 
county  office  and  in  the  state  office,  failure  to  observe  a  statutory 
requirement  for  registration  in  any  other  county  in  which  the 
company  may  transact  business  can  be  no  more  than  a  cause  of 
forfeiture  of  corporate  existence.* 


§  IBS.  Publication  in  Newspaper.  —  Publication  of  the  in- 
corporation paper,  or  of  extracts  or  abstracts  thereof,  in  some 
newspaper  is  sometimes  required,  and  performs  somewhat  the 
same  function  as  the  registration  of  the  instrument.^  Neverthe- 
less, such  publication  even  when  required  has  been  held  not  to 
be  a  condition  precedent  to  incorporation.* 

^  Martin  v.  Deetz,    102  Cal.  55;  *  Anderson  v.  Railroad,  91  Tenn. 

36  Pac.  368;    41  Am.  St.  Rep.  151  44;    17  S.  W.  803. 

(note  that  the  court  conceded  that  Cf.    Young    Reversible    Lock-Xut 

if  the  company  had  transacted  busi-  Co.  v.  Young  Lock-Xtd  Co.,  72  Fed. 

ness  as  a  corporation  it  would  have  62  (as  to  a  New  York  statute). 

been  a  corporation  dc  facto).  *  See   Church  of  the  Holy  Com- 

2  Indianapolis,  etc.  Co.  v.  Herki-  munion,  14  Phila.  121;  Seaton  v. 
mer,  46  Ind.  142  ;  Brewer  v.  State,  7  Grimm,  1 10  Iowa  145 ;  81  N.  W.  225 ; 
Lea  (Tenn.)  682;  Lusk  v.  Riggs,  97  Sweney  Bros.  v.  Talcott,  85  Iowa  103, 
N.  W.  1033;  70  Nebr.  713;  Sim^  v.  110;  52  N.  W.  106. 
Comnwnwealth.  7 1  S.W.  929;  114  Ky.  "  Holmes  v.  Gilliland,  41  Barb. 
827  ;  Hurt  v.  Salisbury,  55  Mo.  310.  (X.  Y.)  568  ;   Walton  v.  Riley,  85  Ky. 

Cf.   Loverin  v.   McLaughlin,    161  413;   3  S.  W.  605. 

111.417;   44  N.  E.  99.  Cf.    Wood  v.    Wiley  Construction 

3  Huntington  Mfg.  Co.  v.  Scho-  Co.,  56  Conn.  87,  97-98;  13  Atl. 
field,  62  N.  E.  106;  28  Ind.  .\pp.  95  ;  137  ;  Dooley  v.  Cheshire  Glass  Co.,  15 
Williamson  v.  Kokomo  Bldg.,  etc.  Gray  (Mass.)  494,  Harrod  v.  Hamer, 
Ass'n,  89  Ind.  389.  32  Wise.  162. 

127 


§  139  THE    INCORPORATION    PAPER  [ChAP.  II 

§  139-§  142.     Submission    of  Instrument  to  Public  Ojficer  for 

Approval. 

§  139.  Examination  of  Instrument  by  Registrar  when  paper 
filed  for  Record.  —  General  incorporation  acts  often  provide 
that  each  incorporation  paper  must  be  submitted  to  some  pub- 
lic official  for  his  approval.  As  we  have  seen,  a  mere  registrar 
charged  with  the  duty  of  recording  the  instrument  may  refuse 
to  receive  for  record  a  paper  which  does  not  comply  with  the 
statutory  requirements ;  ^  and  thus  he  may  be  said  to  be  in  a 
certain  sense  invested  with  the  duty  of  passing  upon  and  ap- 
proving the  instrument.  But  under  statutes  of  this  class,  the 
officer's  approval  is  a  mere  incident  in,  or  part  of,  the  registra- 
tion, and  does  not  constitute  a  distinct  step  in  the  process  of 
incorporation. 

§  140.  Submission  to  some  other  Officer  before  filing  for 
Record.  —  Other  statutes  provide  that  every  incorporation 
paper,  before  it  is  filed  for  record  with  the  registrar,  must  be 
submitted  to  a  judge  or  to  some  administrative  official  and  be 
indorsed  with  a  certificate  of  his  approval.^  Under  statutes  of 
this  class,  the  approval  of  the  judge  is  a  preliminary  to  registra- 
tion. Although  the  indorsement  of  approval  by  the  court  or 
officer  does  not  preclude  the  registrar  from  refusing  to  record  the 
paper  if  he  find  upon  inspection  that  it  does  not  comply  with 
the  law,"  nevertheless  he  ought  not  to  record  any  instrument 
offered  for  registration  unless  it  bear  the  official  indorsement  of 
approval.  If  he  do  so,  the  incorporation  would  seem  to  be  irreg- 
ular even  though  the  instrument  may  in  fact  in  all  its  terms 
comply  with  law.  Perhaps,  however,  the  irregularity  would  not 
be  deemed  such  as  to  prevent  the  company  from  attaining  a 
de  facto  existence.* 

But  see  Bigelow  v.  Gregory,  73  111.  ing  (Iowa)  111  N.  W.  974;  Berkson, 

197;    Clegg  v.  Hamilton,  etc.  Co.,  61  Hughes    &    Co.    v.    Anderson,    115 

Iowa  121 ;    15  N.  W.  865 ;  Heinig  v.  Iowa  674  ;  87  N.  W.  402. 

Adams,  etc.  Mfg.   Co.,  81   Ky.  300  '  Supra,  §  136. 

(overruled) ;     Eisfeld   v.    Kenworth,  '  Cf.  Richmond  Factory  Ass'n  v. 

50  Iowa  389  ;   Unity  Ins.  Co.  v.  Cram,  Clarke,  61  Me.  351. 

43  N.  H.  636.  ^  People  ex  rel.  Davenport  v.  Rice,  68 

As  to  what  is  a  newspaper  "as  Hun  (N.Y.)24;  22  N.Y.  Supp.  631. 

convenient    as    practicable    to    the  *  As    to   the   effect   of   fraud  in 

principal    place    of    business,"    see  procuring  the   approval,  see    infra, 

Clinton  Novelty  Iron  Works  v.  Neit-  §  267. 

128 


§  31-§  102]  OFFICIAL    APrHr)VAL  §   142 

§  141.  Submission  by  way  of  Petition  to  Officer  for  Issue  of 
Charter.  —  Still  other  statutes  provide  that  the  iiieorporatioii 
paper  shall  be  in  the  nature  of  a  petition  addressed  to  a  court, 
or  to  the  governor  of  the  state  or  other  executive  officer;  and 
that  thereupon  the  court  or  official  to  whom  the  petition  is 
addressed  shall,  if  he  find  that  the  same  complies  with  law, 
issue  a  "charter"  or  "certificate  of  incorporation  "  incorporating 
the  applicants  according  to  the  prayer  of  the  petition.  Under 
statutes  of  this  class,  the  submission  of  the  petition  or  incorpora- 
tion paper  to  the  judge  or  other  officer  is  an  integral  and  essential 
part  of  the  incorporation,  and  without  such  submission  and 
approval  there  can  be  no  corporation  at  all  —  not  even  a  corpora- 
tion de  facto.'  The  application  for  is.sue  of  the  "charter"  or 
decree  of  incorporation  is  an  ex  parte  proceeding,  and  no  third 
person  has  any  right  to  intervene  and  object  to  the  granting  of 
the  application.-  Under  some  such  statutes,  the  officer  to  whom 
the  application  is  addressed  is  invested  with  a  considerable 
degree  of  discretion,  and  may,  for  example,  refuse  an  application 
where  the  proposed  corporate  name  is  likely  to  cause  confusion 
even  though  it  do  not  amount  to  an  infringement  of  any  legal 
rights.^ 

§  142.  Issue  of  Certificate  of  Approval  after  Registration.  — 
Still  other  statutes,  for  example,  the  English  Companies  Act  of 
1862,  provide  that  after  the  instrument  has  been  recorded,  the 
registrar  or  some  other  official  shall  issue  a  certificate  stating 
that  the  instrument  has  been  recorded  and  that  the  company  is 
incorporated.  If  the  language  of  the  statute  show  that  the 
incorporation  is  to  date  from  the  approval  by  the  registrar,  or 
other  public  official,  and  the  issue  of  his  certificate,  there  can 
be  no  corporation  —  not  even  a  corporation  de  facto  —  until 
such  approval  be  secured  and  the  certificate  issued.*    But  in  the 

»  As  to  the  effect  of  fraud  in  pro-  charter  were  heard) ;    Bradley  Ferti- 

curing  the  official  approval,  and  the  lizer  Co.,  19  Pa.  Co.  Ct.  271. 
question    whether    the    officer    may         ^  Polish  Nat.  Cath.  Church,  31  Fa.. 

revoke  his  approval,  see  infra,  §  267.  Super.  Ct.  87;    Philadelphia  Lying- 

2   Young  Women's  Christian  Ass'n  in  Charity  v.  Maternity  Hospital,  29 

V.     St.     Louis     Women's     Christian  Pa.  Super.  Ct.  420. 
Ass'n,  115  Mo.  App.  228;  91  S.  W.         *  Cf.  Stowe  v.  Flagg,  72  III.  397; 

171.  First  Xat.  Bankx.  Rockefeller,  195 Mo. 

But     cf.     Po?w/i     Nat.     Cattwlic  15,  41-42  (semble) ;   93  S.  W.  761 ; 

Church,  31  Pa.  Super.  Ct.  87  (where  Sexton  v.  Snyder,  119  Mo.  App.  668 

the  opponents  to  the  granting  of  the  (headnote  inadequate) ;  94  S.  W.  562. 
VOL.  I. —  9                                     129 


§  143  THE    INCORPORATION    PAPER  [ChAP.  II 

absence  of  an  explicit  provision  making  the  issue  of  the  certificate 
a  condition  precedent  to  incorporation  —  and  a  fortiori  where 
the  hiw  provides  that  the  subscribers  of  the  incorporation  paper 
shall  be  incorporated  from  the  registration  of  the  instrument  — 
the  certificate  is  of  only  evidentiary  value,  and  is  needed  only  as 
convenient  proof  that  the  law  has  been  complied  with.'  In  such 
cases,  the  failure  to  submit  the  instrument  to  the  proper  oflicial, 
or  an  omission  to  secure  the  certificate  of  incorporation,  is  at 
most  a  breach  of  a  condition  subsequent,  to  be  availed  of  by  the 
state  alone.^ 


§  143.  Alteration  of  Instrument  after  Execution  and  before 
Registration.  —  If  any  material  alteration  be  made  in  the  incor- 
poration paper  after  its  execution  and  before  its  registration, 
without  the  assent  of  all  the  subscribers,  the  paper  in  its  altered 
form  is  certainly  not  binding  upon  the  parties.^  The  effect  of 
recording  the  document  as  altered,  under  statutes  making 
registration  conclusive  evidence  of  compliance  with  law,  will  be 
considered  hereafter.*  Lord  Cairns  once  expressed  the  opinion 
that  any  alteration  of  this  sort  would,  like  a  fraudulent  alter- 
ation in  a  deed  or  promissory  note,  render  the  whole  instru- 
ment altogether  void,  so  that  it  would  no  longer,  in  its  unaltered 
form,  be  binding  upon  the  subscribers.^  Although  an  incorpora- 
tion paper  is  not  a  sealed  instrument  unless  expressly  required 
to  be  under  seal,  still  Lord  Cairns's  dictum  corresponds  wnth 
the  policy  of  the  law.  For  whether  or  not  the  document  is  a 
technical  common  law  specialty,  it  is  certainly  a  very  formal  and 
peculiar  instrument,  and  should,  in  this  respect,  for  the  preven- 
tion of  frauds,  be  governed  by  the  same  rules  as  a  deed.  So,  it 
has  been  held  that  where  an  incorporation  paper  when  signed 
by  one  of  the  subscribers  contains  material  blanks,  there  is  no 

'  Sparks  v.   Woodstock  Iron,  etc.  lion  v.  Rodes,  37  W.  Va.  738;    17 

Co.,  87  Ala.  294,  298;   6  So.  195.  S.  E.  305. 

2  As  to  the  effect  of  fraud  in  pro-  As  to  immaterial  alterations,  see 

curing  the  certificate,  and  as  to  the  Union    Agricultural,    etc.    Ass'n    v. 

question  whether  the  officer  grant-  Neill,  31  Iowa  95. 

ing  the  certificate   may  revoke  liis  *  See  infra,  §  268-§  270. 

determination,  see  infra,  §  267.  '  Peel's  Case,  2  Ch.  674,  681. 

'  Greenbrier     Industrial    Exposi- 

130 


§  31-§   102]         ALTERATION-    AFTER    REGISTRATION  §   144 

aiitlioritv  without  the  suhseqiuMit  consent  of  that  subscril)er  to 
fill  up  the  blanks.'  In  Maryland,  it  was  held  that  where  a 
subscriber  to  an  incorporation  paper,  which  had  been  materially 
altered  after  he  had  signed,  sui)se(|uently  acknowledged  the 
instrument  in  ignorance  of  the  alteration,  he  was  not  estop[)ed 
from  relying  on  the  alteration  as  a  defense  to  an  action  on  his 
agreement  to  accept  and  pay  for  shares  in  the  company;-  but 
this  decision  goes  to  the  very  verge  of  the  law,  for  where  the 
rights  of  innocent  third  parties  may  accrue  on  the  faith  of  the 
acknowledgment,  the  subscribers  should  not  in  general  be 
allowed  to  plead  ignorance  of  what  they  were  doing.  Po.ssibly, 
in  such  a  case,  although  the  alteration  may  be  a  defense  to  an 
action  upon  tlie  subscriber's  agreement  to  take  shares,  it  may 
not  annul  the  incorporation  of  the  company.  Indeed,  that 
seems  to  have  been  the  view  of  the  Maryland  court  in  the  case 
last  cited.  It  would  seem  that  an  incorporation  paper  may 
always  be  altered,  with  the  unanimous  consent  of  the  sub- 
scribers, at  any  time  before  it  is  recorded.^ 


§   144-§  ICO.       ALTERATION    AFTER    REGISTRATION. 

§  144.  Alteration  after  Recording  generally  impossible  with- 
out enabling  Statute.  —  The  general  scheme  of  the  incorpora- 
tion laws  contemplates  that  each  memorandum  of  association 
or  incorporation  paper  shall  from  the  time  of  registration  be  the 
unalterable  constitution  of  the  company.^  This  policy  of  the 
law  cannot  be  circumvented  by  inserting  a  clause  authorizing 
the  company  to  alter  the  provisions  of  the  instrument  at  pleasure ; 
for  such  a  clause  would  be  void  as  regards  any  matters  required 
by  law  to  be  fixed  and  determined  in  the  incorporation  paper.^ 

»  Dutchess,  etc.  R.  R.  Co.  v.  Mab-  Co.  (1904),  1  Ch.  87  (semble) ;  Dexine 
Lett,  58  N.  Y.  397.  Patent  Packing  ifc  Rubber  Co. ,88  Lr.  T. 

*  Hughes  v.   Antietam  Mfg.   Co.,    791. 

34  Md.  316.  But  see  Thornton  v.   Balcom,  85 

3  Cf.   Gade  v.   Forest  Glen   Brick  Iowa  198;    52  N.  W.  190  (criticised 

To.,  165  III.  367;   40  N.  E.  286.  supra,     §118);    Nelson    v.    Keith- 

*  Cf.  Xew  York  Cable  Ry.  Co.,  109  O'Brien  Co.  (Utah),  91  Pac.  30 
N.  Y.  32 ;  15  N.  E.  882  (where  an  (where,  in  a  rather  cloudy  opinion, 
attempt  was  made  to  amend  an  in-  the  court  appears  to  hold  that  under 
etrument  which  in  its  original  form  :i  statute  providing  that  no  altera- 
vas  fatally  defective).  tion  in  the  incorporation  paper  shall 

*  Welsbach  Incandescent  Gas  Light  change   tlic   liability   of    holders    of 

131 


§  145  THE    INCORPORATION    PAPER  [ChAP.  II 

We  have  seen  above  that  this  rule  that  an  incorporation  paper 
cannot  be  altered  applies  even  to  matters  not  required  to  be 
stated  in  the  instrument/  except  that  the  paper  itself  may 
pro\'ide  otherwise.-  An  unauthorized  attempt  to  amend  the 
incorporation  paper  is  void,  and  of  course  therefore  the  corpo- 
rate existence  and  power  of  the  company  to  carry  on  business 
under  the  original  instrument  is  not  affected.^ 

§  145.  Reformation  for  Mistake.  —  Not  even  a  court  of 
equity  has  power  to  rectify  a  mistake  in  an  incorporation  paper 
after  it  has  been  duly  recorded.  This  conclusion  was  reached  in 
regard  to  the  articles  of  association  of  an  English  company/  and 
a  fortiori  the  same  principle  would  apply  to  a  memorandum  of 
association  or  incorporation  paper.  The  blunder  is,  therefore, 
beyond  remedy  unless  the  statute  provides  some  means  of  alter- 
ing the  instrument. 

§  146.  Historical  Outline  of  Statutes  authorizing  Alterations. 
—  The  English  Companies  Act  of  1862  in  its  original  form 
provided  no  mode  for  altering  the  memorandum  of  association 
except  in  respect  to  increasing  the  capital  of  the  company  and 
to  changing  its  name.^  By  an  act  of  1S67,  the  power  of  reducing 
the  capital  was  conferred  subject  to  certain  conditions."  By  a 
still  later  act,^  a  power  is  conferred  of  altering  the  object  clause 
of  the  memorandum  whenever  "it  appears  that  the  alteration  is 
required  in  order  to  enable  the  company  (1)  to  carry  on  its 
business  more  economically  or  efficiently,  or  (2)  to  attain  its 
main  purpose  by  new  or  improved  means,  or  (3)  to  enlarge  or 
change  the  local  area  of  its  operations,  or  (4)  to  carry  on  some 
business  or  businesses  which  under  existing  circumstances 
may  conveniently  or  advantageously  be  combined  with  the 
business  of  the  company,  or  (5)  to  restrict  or  abandon  any  of 
the  objects  specified"  in  the  original  instrument.    In  each  case 

paid-up  shares  without  unanimous  Bank,  75  Minn.  196,  205  (headnote 

consent,  a  clause  in  an  incorporation  inadequate) ;    77  N.  W.  822. 

paper  authorizing  alterations  in  the  *  Evans  v.  Chapman,  86  L.  T.  381. 

instrument  by  majority  vote  is  suf-  *  Companies  Act,  1862,  §  12  and 

ficient  warrant  for  an  alteration  by  §  13. 

mere  majority  vote  changing  in  some  *  Companies  Act,  1867  (30  and  31 

respects  the   liability  of  holders  of  Vict.,  c.  131). 

paid-up  shares).  '  Companies     (Memorandum     of 

'  Supra,  §  120.  Association)  Act,   1890  (53  and  54 

"  Supra,  §  120.  Vict.,  c.  62). 

*  Richards     v.     Minnesota    Sav. 

132 


§  31-§    1G2]        ALTERATION    AFTER    REGISTRATION  §   147 

the  proposed  ulteration  must  receive  the  approval  of  the  court, 
which  is  not  to  be  given  witliout  affording  to  (hssenting  share- 
holders and  to  creditors  an  opportunity  to  be  heard  in  opposition 
to  the  alteration. 

In  most  of  the  United  States,  the  statutes  provide  a  method 
of  making  some  alterations  in,  or  amendments  to,  incorporation 
papers;  and  not  infrequently  a  power  is  conferred,  unlimited 
in  terms,  of  making  any  alterations  that  may  be  desired. 

§  147-§  149.     What  Alterations  are  authorized  by  enabling 

Statutes. 

§  147.  In  general.  —  Even  where  statutes  confer  a  power 
of  alteration  broadly,  without  any  express  limitation  whatsoever, 
nevertheless,  it  is  submitted  that  no  complete  and  radical  change, 
creating,  in  substance,  a  new  corporation,  could  be  made  against 
the  opposition  of  any  shareholder.'  For  instance,  a  joint-stock 
insurance  company  cannot  amend  its  incorporation  paper  so  as 
to  give  the  policy-holders  the  right  to  vote  at  meetings  of  the 
company,  and  thus  virtually  convert  the  company  from  a  joint- 
stock  company  into  a  mutual  company.-  A  fortiori,  where  the 
statute  expressly  provides  that  no  amendment  shall  "change 
substantially  the  purposes"  of  the  company,  a  corporation 
formed  for  the  purpose  of  manufacturing  gas  and  electricity 

'  But  see  Mercantile  Statement  Co.  substantially  the    purposes   of   the 

V.  Kneal,  51  Minn.  263;    53  N.  W.  organization,   a  gas    company   was 

632 ;     David    Bradley   Mfg.    Co.   v.  allowed  to  amend  its  incorporation 

Chicago,  etc.   Traction  Co.   (111.),  82  paper  so  as  to  acquire  power  to  fur- 

N.    E.    210    (amendment    changing  nish  electric  light). 
object  of  company  from  construe-         As  to  whether  the  alteration  may 

tion  of  a  street  railway  or  tramway  authorize   an    abandonment   of   the 

to    construction    of    an    interurban  original  chief  object  of  the  company, 

commercial  railway   held   vahd).  compare      Thellusson     v.      Vdlentia 

As  to  what  is  a  substantial  change  (1907),  2  Ch.  1  (where  the  "rules" 

in  the  objects  of  the  company,  see  of  an   imincorporated    club,    which 

State  V.  Taylor,  55  Ohio  61  ;  44  N.  E.  originally  provided  for  pigeon-shoot- 

513  (stated  infra) ;  Commonwealth  v.  ing  and  which  by  amendment    had 

Licking  Valley  Bldg.  Ass'n,  82  S.  W.  been  enlarged  so  as  to  include  other 

435 ;  26  Ky.  L.   Rep.  730  (where  a  sports,  were  permitted  to  be  further 

so-called    amendment   was    held   to  amended  so  as    to  provide    for  dis- 

havc  created    a    new   corporation) ;  continuing    pigeon-shooting    at    the 

Picard  v.  Hughey,  58  Ohio  St.  577 ;  club). 

51     N.     E.     133    (where,    imder    a         -  Lord  v.  Equitable  Life  Ass.  Soc, 

statute   expre.ssly    prohibiting    any  96  N.  Y.  Supp.  10 ;    109  N.  Y.  App. 

amendment    which    should    change  Div.  252. 

133 


§  147  THE    INCORPORATION    PAPER  [ChAP.  II 

for  light,  heat,  or  power  cannot  amend  its  incorporation  paper 
so  as  to  add  to  its  objects  the  operation  of  a  street  railway.^ 
Even  where  the  power  of  amendment  is  in  terms  unHmited,  the 
company  may  not  make  an  alteration  reducing  the  rate  of  the 
preferential  dividend  on  the  preferred  shares  as  fixed  in  the  original 
instrument,-   or   avoiding  valid  contracts  of  the  corporation.' 

On  the  other  hand,  the  statutory  power  of  amendment,  un- 
less in  terms  restricted,  applies  to  all  the  clauses  of  the  original 
instrument,*  such,  for  example,  as  the  clause  fixing  a  limit  to 
the  period  of  corporate  existence,^  or  determining  the  corporate 
name,®  or  the  clause  marking  out  the  objects  of  the  company,^ 
except  possibly  the  clause  fixing  the  amount  of  the  capital.^  Stat- 
utory power  to  alter  the  nature  of  the  business  carried  on  by 
the  company  authorizes  a  change  in  the  place,  as  specified  in  the 
incorporation  paper,  at  which  the  business  is  to  be  carried  on, 
even  though  the  character  of  the  business  is  not  altered.^  Where 
a  railway  company  has  power  to  alter  its  incorporation  paper 
for  the  purpose  of  correcting  an  informality  or  defect  in  the 
original  instrument,  an  amendment  which  makes  a  change  in 
the  proposed  route  is  not  permissible. '" 

*  State  V.  Taylor,  55  Ohio  St.  Gl ;  As  to  alterations  in  the  voting 
44  N.  E.  513.  rights  of  the  shareholders,  see  Loe- 

'  Pronick  v.   Spirits  Distributing  wenthal    v.    Rubber   Reclaiming   Co., 

Co.,  58  N.  J.  Eq.  97;   42  Atl.  586.  52  N.  J.  Eq.  440;  28  Atl.  454  (where 

Cf.  infra,  §  672-§  674.  the  statute  authorizing  amendments 

'  Cf.   Brown  v.  Grand  Fountain,  was  passed  after  the  execution  of  the 

28  App.  D.  C.  200.    See  also  infra,  original  incorporation  paper). 
§  722-§  724.  8  Fort  Pitt  B.  &  L.  Ass'n  v.  Modd 

*  Cf.  Bernstein  v.  Kaplan  (Ala.),  Plan  B.  &  L.  Ass'n,  159  Pa.  308; 
43  So.  581  (headnote  inadequate —  28  Atl.  215. 

construing  a  statute  which  after  em-  '  Mercantile     Statement     Co.     v. 

powering  the  corporation  to  alter  the  Kneal,    51    Minn.    263;    53   N.    W. 

instrument    in    certain    particulars  632. 

concluded     by     authorizing     "such         *  Continental  Varnish,  etc.  Co.  v. 

other     alteration,    amendment,     or  Secretary  of  State,   87   N.   W.   901 ; 

change  of  its  charter  as  may  be  de-  128  Mich.  621.     As  to  increase   or 

sired");    Fidelity  Mut.   Aid  Ass'n,  reduction  of  capital,  see  further  infra, 

12  Wkly.  Notes  Cas.  (Pa.)  269,  271  Cliaptor  XI. 

("A  general  power  to  alter  or  amend         "  Meredith   v.   New  Jersey  Zinc, 

a  charter  is  a  power  to  alter  or  amend  etc.  Co.,  59  N.  J.  Eq.  257  (headnote 

any  part  of  the  charter").  inadequate) ;  44  Atl.  55. 

*    People  ex  rel.    Ward  v.   Green,        '"  Riverhead,  etc.  R.  R.  Co.,  36  N. 

116  Mich.  505;   74  N.  W.  714;  Ovid  Y.  App.  Div.  514;  55  N.  Y.  Supp. 

Elevator  Co.  v.  Secretary  of  State,  90  938. 
Mich.  466;   51  N.  W.  536. 

134 


§  31-§   162]       ALTERATION    AFTER    REGISTRATION  §   148 

§  148.     Under    British    Act    of    1890    and    similar    Statutes.  — ■ 
The  British  courts  have  often  been  called  upon  to  decide  whether 
proposed    changes    in    a    company's    oi)jects    can    be    brought 
within  the  power  of  alteration  conferred   by  the  Act  of   Ib'.K), 
which  has  been  already  referred  to.'     In  order  to  come  within 
the  clause  authorizing  an  alteration  in  the  objects  which  may 
enable  the  company  to  carry  on  its  business  more  economically 
or  efficiently,  the  proposed  alteration  must  "leave  the  business 
of  the  company  substantially  what  it  was  before,  with  only  such 
changes  in  the  mode  of  conducting  it  as  will  enaijle  it  to  be 
carried   on    more   efficiently."  -     Neither   that   clause   nor  the 
clause  authorizing  an   alteration   for  the   yjurpose  of  enabling 
the  company  to  carry  on  some  business  that  may  be  conven- 
iently or  advantageously  combined  with  the  old  business  will 
warrant  a  change  whereby  a  club  of  cyclists  is  converted  into 
a  club  to  which  tourists  of  any  kind,   particularly  motorists, 
may  be  admitted.'     In  one  case,  where  it  was  sought  to  make 
an   alteration   which   merely   amplified   the   description   of   the 
company's  objects  by  re-writing  the  object-clause  and  putting 
it  in   modern  form,  Cozens-Hardy,  J.,  expressed   disapproval, 
saying,  "  I  do  not  think  it  is  within  the  scope  of  the  statute  simply 
to  improve  the  language  of  a  memorandum  of  association  —  if 
it   be  an   improvement  —  by  re-writing  the  memorandum   in 
modern    form,    and    to    enable    a    company  to   adopt    one    of 
Mr.  Palmer's  modern  forms;"  ^   but  it  is  understood  that  in  a 
number  of  unreported  cases  precisely  such  changes  were  con- 
firmed.*   It  has  been  held  in  Newfoundland  under  an  exactly 
similar  statute  that  none  of  the  clauses  of  the  act  —  not  even 
the  clause  authorizing  an  amendment  "to  restrict  or  abandon 
any  of  the  objects"  specified  in  the  original  instrument  —  will 
justify  a  clause  to  provide  for  a  sale  of  the  company's  entire 
property,  undertaking,  and  goodwill."    In  Australia,  an  amend- 
ment to  the  memorandum   of  association   of  a  life  insurance 
company  vastly  enlarging  the  classes  of  securities  in  which  the 


*  Supra,  §  146.  Accord:    Australian   Widou^s'  Fund 
==  Cyclists'    Touring   Club    (1907),  Life  Ass.  Soc,  24  Vict.  L.  R.  613. 

1  Ch.  269,  274.  '■  1  Palmer's  Company  Precedents, 

'  Cyclists'    Touring   Club   (1907),  9th  ed.,   1154-1155. 
1  Ch.  269.  «  St.    John's    Electric    Light    Co. 

*  ConsettlronCo.  (1901),  1  Ch.236.  (1897-1903),  Newfoundland  440. 

135 


§   149  THE    INCORPORATION    PAPER  [ChAP.   II 

company's  funds  might  be  invested  was  disapproved.^  British 
judges  have  confirmed  the  following  amen(hnents  among  others, 
—  an  amendment  enabling  a  marine  insurance  company  to 
engage  in  fire,  life,  and  accident  insurance  in  connection  with 
marine  risks;-  an  amendment  enabling  a  boiler  insurance  com- 
pany to  insure  against  other  risks -.^  an  amendment  enabling  a 
company  formed  for  the  purpose  of  investing  in  government 
securities  to  invest  in  other  securities;''  and  an  amendment  em- 
powering the  company  to  issue  debentures.^ 

§  140.  Amended  Provision  must  be  such  as  might  be  inserted 
in  an  Original  Instrument  at  Time  of  Amendment.  —  As  a  rule  no 
provision  can  be  injected  by  amendment  into  an  incorporation 
paper  that  could  not  at  the  time  of  the  making  of  the  amendment 
be  inserted  in  the  incorporation  paper  of  a  new  company.  Thus, 
where  a  statute  provides  that  no  company  "  hereafter  organized  " 
under  any  other  statute  shall  have  the  word  "trust"  as  part  of 
its  name,  a  company  previously  organized  under  another  law 
cannot  subsequently  amend  its  incorporation  paper  by  inserting 
the  word  "trust"  in  the  corporate  name.® 


§  150.  Necessity  for  accompanjring  Amendment  by  Change  of 
Name  when  old  Name  would  be  Misleading.  —  Where  the  statute 
reposes  in  some  court  or  officer  a  discretion  to  confirm  or  dis- 
allow a  proposed  amendment,  it  seems  that  the  judge  or  officer 
should  exact  as  a  condition  of  his  approval  a  change  in  the  cor- 
porate name  where  use  of  the  old  name  as  applied  to  the  new 
business  might  be  misleading.'  At  least,  this  seems  to  be  the 
practice  under  the  British  Companies  (Memorandum  of  Associa- 
tion) Act  of  1890.^     Where  the  old  name  indicates  the  locality 

'  National   Mut.    Life   Ass'n,    26         But  cf.  Governments  Stock  Invest- 

Vict.  L.  R.  490.  ment  Co.  (1891),  1  Cli.  649. 

2  Alliance  Marine  Ass.  Co.  {18^2),         '  Reversionary  Interest  Soc.  (1892), 

1  Ch.  300.  1  Ch.  615. 

*  National  Boiler  Ins.  Co.  (1892),  "  State  ex  rel.  Osborne  v.  Nichols, 
1  Ch.  306.  38  Wash.  309  ;   80  Pac.  462. 

*  Foreign  &  Colonial  Government  ''  As  to  the  illegality  of  mislead- 
Trust  Co.  (1891),  2  Ch.  395 ;  Govern-  ing  corporate  names,  see  supra,  §  62, 
ments  Stock  Investment   Co.,   No.    2  and  infra,  §  305,  §  450. 

(1892),  1  Ch.  597.  ^  Foreign  &  Colonial  Government 

136 


§  31-§    162]        ALTEFJATIOX    AFTER    REGISTRATION  §    152 

in  which  the  company's  business  is  carried  on,  the  court  in  con- 
firming an  alteration  in  the  memoraiuhnn  of  lussociation  enhirg- 
ing  the  area  of  its  operations  exacted  as  a  condition  that  the 
name  should  be  changed  so  as  no  longer  to  suggest  that  the 
operations  were  to  be  confined  to  the  place  mentioned  in  the 
old  name;'  l)ut  in  a  somewhat  similar  case  a  Scotch  court 
decided  tiiat  no  change  of  name  was  necessary.- 

§  If)].  Fees  payable  on  Amendment. — The  fees  payable  on 
filing  of  the  amended  instrument  are  usually  if  not  always 
regulated  by  statute.  Where  one  section  of  a  statute  prescribes 
one  fee  for  filing  any  amended  incorporation  paper  and  another 
section  provides  that  on  an  extension  or  renewal  of  corporate 
existence  the  same  fees  shall  be  payable  as  are  required  for  an 
original  incorporation,  a  corporation  wishing  to  prolong  its 
corporate  existence  so  that  instead  of  being  fifty  years  as  fixed 
in  the  certificate  of  incorporation  the  corporate  existence  shall 
be  perpetual,  cannot  by  filing  an  amended  certificate  with  an 
alteration  in  the  clause  relating  to  the  period  of  corporate 
existence  escape  with  payment  of  merely  such  fees  as  are  required 
for  filing  of  an  amendment  to  the  incorporation  paper,  but  must 
pay  the  much  heavier  fees  required  for  filing  a  certificate  of 
extension  of  corporate  existence.^ 

§  152.  Effect  of  Amendment  on  Instrument  originally  void 
or  on  previous  invalid  Amendment.  —  While  an  instrument 
originally  void  cannot  be  made  valid  by  an  amendment  duly 
executed  and  filed,^  yet  in  such  a  case  what  was  intended  as  an 
amended  instrument  may,  if  it  contain  all  the  statutory  requi- 
sites, operate  as  an  original  incorporation  paper. ^  An  amend- 
ment   attempted    to    be   made  at  a  time  when  no  power  of 

rrus<  Co.  (1891),  2  Ch.  395;   Govern-         '  People  ex  rel.   New    York,   etc. 

merits  Stock  Investment  Co.  (No.  2),  R.  R.  Co.  v.  Railroad  Comm'rs,  81 

(1892),  1  Ch.  597  ;    Alliarice  Marine  N.  Y.  .\pp.  Div.  242  ;  81  N.  Y.  Supp. 

Ass.  Co.  (1892),  1  Ch.  300;  National  20,  affirmed  short,  67  N.  E.  1088. 
Boiler  Ins.  Co.  (1892),  1  Ch.  306.  This  was  recognized  in  State  ex 

'  Indian    Mechanical    Gold    Ex-  rel.  Clapp  v.  Criichett,  37  Minn.  13, 

trading  Co.  (1891),  3  Ch.  538.  14  ;   32  N.  W.  787. 

'  Kirkcaldy  Steam  Laundry  Co.,  6         Cf.  Valk  v.  Crandall,  1  Sandf.  Ch. 

Fraser  (Sc.)  778.  (N.  Y.),  179;  State  ex  rel.  Thompson 

^  National  Lead  Co.  v.  Dickinson,  v.  Colias  (.\la.)  43  So.  190  (where  a 
57  Atl.  138;  70  N.  J.  Law  596;  af-  statute  expressly  authorized  the  cur- 
firmed  .short,  62  Atl.  1135.  ing  of  defects  in  the  original  paper 

*  State  ex  rel.  Clapp  v.  Critchett,  by  filing  a  supplement  thereto). 
37  Minn.  13 ;  32  N.  W.  787. 

137 


§  153  THE    INCORPORATION    PAPER  [ChAP.  II 

amendment  existed  may  be  recognized  and  validated  by  a  sub- . 
sequent  amendment  adopted  after  a  passage  of  a  statute  author- 
izinir  amendments  to  be  made.' 

§  153.  Alteration  against  Opposition  of  Minority  Share- 
holders. —  A  power  of  altering  the  incorporation  paper  or  any 
clause  thereof,  such  as  the  clause  fixing  a  limit  to  the  period  of 
corporate  existence,  if  conferred  by  law  when  the  original  in- 
corporation paper  is  executed,  should  be  read  into  the  contract 
between  the  several  shareholders  without  any  express  reference 
thereto,  so  that  the  power  may  be  exercised  against  the  opposi- 
tion of  individual  shareholders.^  Indeed,  it  would  seem  that 
the  statutory  power  of  alteration  would  exist  even  in  spite  of  an 
express  clause  in  the  original  paper  attempting  to  exclude  its 
application. 

§  154.  Statute  allowing  Alteration  unless  prohibited  in  origi- 
nal Instrument.  —  Where  a  statute  authorizes  an  alteration  of 
the  incorporation  paper,  unless  otherwise  provided  in  that  in- 
strument itself,  there  must  in  order  to  preclude  alteration  be  an 
express  prohibitory  clause  in  the  instrument.^ 

§  155.  Formalities  required  in  making  Alteration.  —  Unless 
otherwise  provided  by  statute,  an  amendment  to  an  incorpora- 
tion paper  must  be  acknowledged  and  recorded  in  the  same  way 
as  the  original  instrument.^    Where  an  amendment  is  required 

^  People  exrel.  Ward  V.Green,  116  52-53;    17  S.  W.  803  (holding  that 

Mich.  505  •   74  N.  W.  714.  amendment  is  not  effective  until  re- 

Cf.  Spinning  v.  Home  Building,  corded  not  only  in  county  record  of- 

etc.  Ass'n,  26  Ohio  St.  483.  fice  but  also  with  the  secretary  of 

'  Smith  V.  Eastwood  Wire  Mfg.  state). 
Co.,  58  N.  J.  Eq.  331 ;   43  Atl.  567;         Cf.  Lamb  &  Sons  v.  Dobson,  90 

Port  Edwards,  etc.  Ry.  Co.  v.  Arpin,  N.  W.  607;    117  Iowa  124. 
80  Wise.  214;  49  N.  W.  828  (holding         But  see  Boca,  etc.  R.  R.  Co.  v. 

dissenting  shareholders  not  released  Sierra  Valleys  Ry.  Co.  (Cal.),  84  Pac. 

from    obligation    to    pay    calls    by  298,  301 ;    Jackson  v.  Crown  Point 

amendment  increasing  capital  in  pur-  Mining  Co.,  21  Utah  1 ;  59  Pac.  238 ; 

Buance  of  statute  in  force  at  time  of  81  Am.  St.  Rep.  651  (where  it  was 

incorporation).  held  that  although  an  amendment 

But  cf.   Pronick  v.   Spirits  Dist.  which  is  "fundamental"  is  not  effec- 

Co.,  42  Atl.  586;  58  N.  J.  Eq.  97.  tive  until  recorded  as  required  by 

»'  Meredith  v.  New  Jersey  Zinc,  statute,  yet  an  amendment  which  is 

e<c.  Co.,  59  N.  J.  Eq.  257  (headnote  not    " fundamental "  — such    as   an 

inadequate) ;   44  Atl.  55.  amendment  increasing  the  number 

*  Day  V.  Mill  Owners'  Mut.  Fire  of  directors  —  is  valid  although  not 

Ins.  Co.,  75  Iowa  694 ;  38  N.  W.  113 ;  recorded). 
Anderson  v.  Railroad,  91  Tenn.  44, 

138 


§  31-§   1G2]       ALTERATION    AFTER    REGISTRATION  §    157 

(o  be  recorded,  it  does  not  take  effect  until  recorded;  and  when 
recorded  it  does  not  relate  back  to  the  time  of  passage  of  the 
amendatory  resolution.'  A  statute  which  requires  as  a  con- 
dition to  the  niakiiiif  of  an  alteration  of  the  instrument  that  the 
"board  of  directors  shall  pass  a  resolution  declaring  that  such 
change  *  *  *  jg  desirable  and  calling  a  meeting"  of  the  share- 
holders to  take  action  accordingly,  is  satisfied  by  the  passage 
by  the  directors  of  a  resolution  calling  a  meeting  of  the  share- 
holders to  make  the  amendment,  but  without  in  terms  stating 
that  such  amendment  is  approved,  especially  where  the  meeting 
of  shareholders  is  attended  by  all  the  directors  (a  majority  of 
whom  vote  in  favor  of  the  resolution)  and  by  all  the  share- 
holders.^ Where  a  statute  provides  one  method  for  making  a 
change  in  a  particular  clause  or  paragraph  of  the  incorpo- 
ration paper,  a  subsequent  statute  providing  a  different  method 
for  making  alterations  in  any  part  of  the  incorporation  paper, 
repeals  the  former  statute,  so  that  the  method  therein  provided 
can  no  longer  be  pursued.^ 

§  150.  Whether  Alteration  should  be  made  by  Directors  or 
Shareholders.  —  Where  the  power  of  amending  the  incorpora- 
tion paper  is  conferred  upon  the  corporation,  and  not  expressly 
upon  the  directors,  it  can  only  be  exercised  by  the  shareholders;  * 
for  as  will  be  shown  below,  the  powers  of  directors  are  confined 
to  the  ordinary  business  of  the  company  and  cannot  be  extended 
to  any  alteration  of  the  company's  constitution.* 

§  157.  Irregular  Alteration  —  Acquiescence  in  Alteration  by 
unauthorized  Officers.  —  If  an  amendment  to  the  incorporation 
paper  is  adopted  by  the  officers  and  duly  recorded,  the  share- 
holders, after  being  thus  charged  with  constructive  notice 
thereof  and  after  acquiescing  for  a  number  of  years,  will  not 
subsequently  be  heard  to  assert  a  lack  of  authority  in  the  officers 

•  Westchester  Trust  Co.,  186  N.  Y.         »  Bernstein  v.  Kaplan  (Ala.),  43 

215.  So.  581. 

But    see    Humphrey    v.    Patrons'         '  Fort    Pitt    B.    &    L.    Ass'n    v. 

Mercantile  Ass'n,  50  Iowa  607  (hold-  Model  Plan  B.  &  L.  Ass'n,  159  Pa. 

ing  that  a  contract  permitted  by  the  St.  308;   28  Atl.  215. 
amended  but  not  by  the  original  in-         *  Cressona  Sav.  Fund,  etc.  Ass'n, 

corporation  paper,  and  entered  into  1  Leg.  Rec.  (Pa.)  245. 
after  the  execution  but  before  the         '  Infra,  §  1438. 
recording  of  the  amentled  instrument, 
cannot  be  attacked  as  ultra  vires  by 
the  corporation  itself). 

139 


§   158  THE    INCORPORATION    PAPER  [ChAP.  II 

who  adopted  the  amendment,  for  the  purpose  of  escaping 
the  payment  of  a  tax  to  whicli  the  amendment  subjected  the 
company.' 

Other  Irregularities.  —  Indeed,  the  existence  of  irregularities 
in  the  proceedings  whereby  the  amendment  is  made  will  not 
always  be  fatal  to  the  validity  of  the  amendment,  according  to 
some  American  authorities.-  Perhaps,  the  question  depends  to 
some  extent  on  the  nature  of  the  irregularities.  ]\Iinor  irregu- 
larities may  perhaps  be  cured  by  acquiescence.  But  a  total 
lack  of  compliance  might  render  the  amendment  void,  as  against 
any  person  not  concluded  by  estoppel.^ 

A  failure  properly  to  acknowledge  an  amendment  to  the  incor- 
poration paper,  or  other  irregularity  in  the  proceedings  for  mak- 
ing the  alteration,  does  not  work  a  dissolution  of  the  company, 
but  is  at  worst  a  cause  of  forfeiture  of  corporate  privileges  to  be 
taken  advantage  of  only  by  the  state.*  Indeed,  it  would  seem 
that  such  an  irregularity  should  not  even  be  a  cause  of  forfeiture,^ 
but  that  the  right  of  the  company  to  continue  under  the  original 
incorporation  paper  should  not  be  affected  by  the  abortive 
attempt  at  amendment.- 

§  158.  Amendments  not  retroactive.  —  An  amendment  has 
no  retroactive  effect.®  It  does  not  validate  any  previous 
transactions  which  were  ultra  vires  under  the  original  in- 
strument but  which  would  be  proper  under  the  amended  paper. 
For  example,  where  a  corporation  institutes  condemnation 
proceedings  to  acquire  land  for  a  line  of  railway  which  under 
its  incorporation  paper  it  has  no  power  to  construct,  an  amend- 
ment to  the  incorporation  paper  adopted  pending  the  proceed- 


>  Licking   Valley  Bldg.   Ass'n  v.  Cf.   Brown  v.  Wyandotte,  etc.  Ry. 

Commonwealth  (Ky.),  89  S.  W.  682.  Co.,  68  Ark.  134,  144. 

2  Po-pe  v.    Merchants'    Trust  Co.  ^  Cf.    Jackson    v.    Crown    Point 

(Tenn.),    103  S.   W.   792;     Interna-  Mining  Co.,  2\  Vtsih  \,  \2;   59  Pac. 

tional  Savings,  etc.  Co.  v.  Stenger,  31  238;  81  Am.  St.  Rep.  651. 

Pa.  Super.  Ct.  294  (as  to  a  change  «  Cf.  Colgate  v.  U.  S.  Leather  Co. 

of  corporate  name).    And  see  infra,  (N.  J.),  67  Atl.  657,  662  (construing 

§  592  and  §  645.  an  express  statutory  provision  "that 

^  See  Fort  Pitt  B.  &  L.  Ass'n  v.  the  amended  certificate  shall  take 

Model  Plan  B.  &  L.  Ass'n,  159  Pa.  the  place  of  the  original  certificate 

St.  308;   28  Atl.  215.  of  incorporation  and  shall  he  deemed 

*  Philadelphia,  etc.  Ferry  Co.  v.  to  have  been  recorded  and  filed  on  the 

Intercity  Link  R.  R.  Co.  (N.  J.),  62  date  of  recording  and  filing  the  origi- 

Atl.  184.  nal  certificate  "). 

140 


§  31-§   162]        ALTERATION    AFTER    HECISTKATION'  §    loO 

ings  SO  as  to  authorize  the  construction  of  the  railway  will  not 
enable  those  proceedings  to  lie  maintained.' 

§  159.  Creation  of  new  Corporation  by  means  of  Amend- 
ment. —  What  is  in  form  a  mere  amendment  of  an  inc(jr|)(jration 
j)aper  may  in  some  cases  be  construed  as  creating  an  entirely 
new  corporation.-  It  has  l)een  said  to  be  a  question  of  intention 
whether  a  new  corporation  should  be  deemed  to  have  been 
created  or  not.'  The  mere  fact  that  the  amended  pa{)er  is 
in  form  a  new  instrument  is  immaterial  if  in  substance  the 
<Iiti'erences  between  the  two  are  not  such  as  to  make  in  effect  a 
new  corporation.'  An  amendment  merely  changing  the  corporate 
name  certainly  does  not  create  a  new  corporation.^ 

In  New  York,  a  statute  forfeiting  the  franchises  of  any  rail- 
way company  which  should  not  within  five  years  commence  its 
line  and  e.xpend  thereon  ten  per  centum  of  the  amount  of  its  cap- 
ital and  within  ten  years  after  the  filing  of  the  "certificate  of 
incorporation"  complete  the  road  and  put  it  in  operation,  was 
held  to  apply  to  an  extension  of  the  original  line  authorized  by 
an  amendment  to  the  certificate  of  incorporation,  or  incorpora- 
tion paper,  so  that  accordingly  the  periods  of  five  and  ten 
years  began  to  run  from  the  filing  of  the  amendment.®  This 
case  adopts  a  somewhat  forced  construction  of  the  statute,  but 


'  Boca,  etc.  R.   R.  Co.  v.  Sierra  ing  consolidation  with  other  corpora- 

Valleys  Ry.  Co.  (Cal.),  84  Pac.  298,  tions). 
302-303.  '  See  Allen  v.  North  Des  Moines 

Cf.    Westchester    Trust    Co.,    186  M.  E.  Church,  102  N.  \Y.  808;    127 

N.  Y.    215    (.stated   supra    §    155);  Iowa  96;    109    Am.  St.  Rep.  366; 

Brown  v.  Grand  Fountain,  28  App.  69  L.  R.  A.  255 ;   Brown  \ .  M aryland 

D.  C.  200.  Telephone  Co.,  101  Md.  574,  581-582 ; 

*  Commonwealth  v.  Licking  Valley  61  Atl.  338. 
Bldg.  Ass'n,  82  S.  W.  435;  26  Ky.  Cf.  Picard  v.  Hughey,  58  Ohio  St. 
L.    Rep.    730   (amendment    taxable  577,  594 ;  51  N.  E.  133. 
as    equivalent    to  creation   of    new         *  Grand  River  College  v.  Robert- 
corporation),  son,  67  Mo.  App.  329;   Glymont  Im- 

As  to  the  effect  of  an  amendment  provement,  etc.  Co.  v.  Toler,  80  Md. 

of  the  incorporation  paper  in  mak-  278,  290-291  (headnote  inadequate) ; 

ing  tlie  company  subject  to  burden-  30  .^tl.  651. 

some  laws  from  which  it  would  other-         *  Wright   Caesar    Tobacco   Co.    v. 

wise  have  been  exempt,  .'^ee  Senn  v.  .4.  Hoen  &  Co.  (Va.),  54  S.  E.  309; 

Levy  (Ky.),  63  S.  W.  776;    23  Ky.  Picard  v.  Hughey,  58  Ohio  St.  577, 

Law    Rep.    662,    1331;     Colgate    v.  594;   51    N.   E.    133    (semble).    See 

U.  S.  Leather  Co.  (N.  J.),  67  Atl.  657.  also  infra,  §  446. 
662  (where  the  amendment  made  the         '  Brooklyn,    Queens    County,    etc. 

company  subject  to  a  law  authoriz-  R.  R.  Co.,  185  N.  Y.  171,  183-184. 

141 


§   160  THE    INCORPORATION    PAPER  [ChAP.   II 

it  does  not  proceed  in  any  degree  upon  the  ground  that  the 
amendment  really  creates  a  new  corporation. 

§  160.  Legislative  Alteration.  —  The  alteration  considered  in 
the  last  paragraphs,  it  will  be  borne  in  mind,  is  an  alteration  in 
pursuance  of  statutes  existing  when  the  company  was  incorpo- 
rated. Of  course,  the  only  restraints  upon  the  power  of  the  legis- 
lature to  amend  an  incorporation  paper,  or  to  authorize  the 
company  to  amend  it,  by  legislation  passed  subsequent  to  the 
organization  of  the  company,  must  be  found  in  constitutional 
limitations.  The  question  of  the  validity  of  such  subsequent 
legislation  as  applied  to  pre-existing  corporations  is,  therefore, 
a  constitutional  one  and  accordingly  outside  our  present  sub- 
ject. But  in  every  case  of  such  legislation  not  merely  its  validity 
but  its  construction  must  be  passed  upon ;  and  it  is  submitted 
that  no  mere  generalities  should  ever  be  held  to  sanction  a  com- 
plete and  fundamental  change  in  the  company's  constitution.^ 

§   161-§   162.  —  Constructive  Notice  of  Contents  of  Instrument. 

§  161.  In  general.  —  Undoubtedly,  not  only  shareholders" 
but  also  all  creditors  and  persons  who  deal  with  a  corporation  ^ 
are  charged  with  constructive  notice  of  the  company's  incorpo- 
ration paper.  Of  course,  in  point  of  fact,  even  the  most  pru- 
dent of  them  rarely  has  actual  notice.  Business  would  be 
paralyzed  if  every  time  a  transaction  were  had  with  an  in- 
corporated company  examination  were  made  of  its  incorpora- 
tion paper.  But  each  person  who  deals  with  the  company  has 
the  opportunity  of  knowledge.  The  instrument  is  a  public 
document  recorded  in  the  office  of  a  public  official;  and  not 
only  legal  principle  but  public  policy  as  well  requires  that  the 
public  should   be  affected   with  constructive  knowledge  of  its 

'  Cf.   Brown  v.   Grand  Fountain,  Lumber  Co.,    52    Pac.    1067,    1070; 

28  App.  D.  C.  200;    Miller  v.  Insur-  19  Wash.  165;   Kraniger  v.  People's 

ance  Co.,  92  Tenn.  167.  Bldg.  Soc,  60  Minn.  94;    61  N.  W. 

^  Sewell's   Case,   3   Ch.    131,    140  904;  Bell   &  Coggeshall   Co.   v.   Ky. 

(headnote  inadequate).  Glass  Works  (Ky.),  50  S.  W.  2 ;   20 

^  Bent    V.    Underdown,    156    Ind.  Ky.  Law  Rep.  1684  ;  First  Nat.  Bank 

516  (headnote  inadequate) ;  60  N.  E.  v.    D.   Kieffer  Milling  Co.,   95   Ky. 

307 ;    Bank  of  Monroe  v.  Gijjord,  72  97 ;  23  S.  W.  675. 

Iowa,    750,    754    (headnote    inade-  Cf.   Webb  v.  Rockefeller,   195  Mo. 

quate);    32  N.  W.  669;    Canfield  v.  57,  63;    93  S.  W.  772;    Denver  Fire 

Gregory,  66  Conn.  9;    33  Atl.  536;  Ins.  Co.  v.  McClelland,  9  Colo.   11, 

Washington    Mill    Co.    v.     Sprague  22-23  ;  9  Pac.  771 ;  59  Am.  Rep.  134. 

142 


§  31-  §   162]  CONSTRUCTIVE    NOTICE  §  162 

contents.  If  the  law  were  otlierwi.se,  corporations  would  be- 
come little  more  than  {)artnerships.  After  all,  the  hardship  is 
more  apparent  than  real.  For  if  an  uimsual  transaction  or  one 
of  ^reat  magnitude  is  contemplated,  every  prudent  man  would 
examine  the  record;  and  in  ail  cases  of  minor  importance 
within  the  ordinary  course  of  the  company's  business  little  risk 
is  run  by  failing  to  flo  so. 

§  162.  Limits  of  Doctrine  of  Constructive  Notice.  —  The 
doctrine,  however,  of  constructive  notice,  sound  and  salutary 
though  it  be,  should  not  be  carried  too  far  or  be  perverted  into 
an  aid  in  the  successful  perpetration  of  fraud.  Thus,  a  mis- 
representation of  the  contents  of  the  incorporation  paper  is 
none  the  less  material  and  actionable  because  the  person  relying 
thereon  has  from  the  registry  constructive  notice  of  the  docu- 
ment. For  example,  where  a  prospectus  states  with  precision 
the  objects  of  an  intended  corporation,  and  the  incorporation 
paper,  which  is  subsequently  drawn  up  and  recorded,  confers 
much  wider  powers,  a  person  who  subscribed  to  shares  on  the 
faith  of  the  prospectus  cannot  be  charged  with  laches  in  failing 
to  have  his  name  removed  from  the  list  of  sharehold.ers  until  he 
acquires  actual  notice  of  the  variance  between  the  prospectus 
and  the  incorporation  paper:  mere  constructive  knowledge  of 
the  incorporation  paper  cannot  constitute  a  foundation  for  an 
inference  of  acquiescence  in  the  variation.^  So,  a  sale  of  shares 
in  a  company  which  is  represented  by  the  vendor  to  be  incorpo- 
rated is  voidable  for  misrepresentation  if  the  company  is  not 
in  truth  incorporated,  although  the  purchaser  by  investigation 
might  have  ascertained  the  facts.'  ^Moreover,  the  doctrine  of 
constructive  notice  cannot  be  extended  to  any  provisions  of  the 
incorporation  paper  which  it  w^as  unlawful  to  insert  therein. 
For  instance,  a  stipulation  that  subscribers  to  shares  shall  not 
be  liable  for  more  than  fifty  per  cent  of  the  par  value  of  their 
shares  is  illegal,  and  therefore  persons  who  may  subsequently 
become  creditors  will  not  be  afTected  with  constructive  notice  of 
such  a  provision  contained  in  the  company's  incorporation  paper.^ 

'  Stewart's  Case,  1  Ch.  574,  587;  =•  Security  Trust  Co.v.  Ford  (Ohio), 

Webster's  Case,  2  Eq.  741.  Cf.  infra,  79  N.  E.  474  (headnote  inadequate), 
§  216.  Cf.  supra,  §  122. 

'  Bolton    V.    Prather    (Tex.),    80 
S.  W.  666 ;    35  Tex.  Civ.  App.  295. 

143 


CHAPTER  III 

ORGANIZATION   AND    ISSUE   OF   SHARES 

Section 

When  corporate  existence  begins ;    •    •      ^^"^ 

Status  of  signers  of  incorporation  paper  from  the  moment  of  incor- 
poration            164-167 

Under  laws  which  require  signers  to  take  one  or  more  shares     .      164 
Under  laws  which  do  not  require  signers  to  agree  to  take  shares      165 

Mode  of  action  by  corporators      166 

Clerks  and  other  subordinates  as  corporators 167 

The  first  directors 168 

Allotment  and  issue  of  shares 169-176 

Issue  of  shares  necessary  to  complete  organization 169 

Who  are  shareholders  — what  necessary  to  constitute  an  issue  of 

shares     170-174 

Statement  of  question 170 

Issue  of  share-certificate  not  necessary 171 

Entry  on  register  necessary  in  England 172 

American  rules  as  to  entry  on  register 173 

Payment  for   shares   not   necessary  before   subscriber   can 

become  a  shareholder 174 

When  issue  of  shares  becomes  equivalent  to  payment  of  value  by 

company 175 

Allotment  of  shares 176 

When  shares  may  be  allotted  and  issued,  —  when  business  may  be 

commenced 177 

First  meeting  of  corporation 178 

Agreements  to  take  shares 179-260 

Scope  of  treatment ".    '.   ■      ^^^ 

The   name,    "subscriptions,"  —  nature  of    agreement  —  distin- 
guished from  the  act  of  becoming  a  shareholder  and  from 

agreements  for  purchase  of  shares 180 

Classification  of  agreements  to  take  shares  —  scheme  of  treatment     181 

Agreements  made  after  incorporation 182-238 

Application  of  general  principles  of  law  of  contracts  and  of 

agency 182 

Which  party  is  deemed  to  be  the  offerer 183 

Cases  where  offer  is  made  by  the  subscriber 184-191 

Acceptance  of  offer,  or  allotment 184-189 

In  general 184 

Written  offer  as  affected  by  parol  qualification       185 
Allotment  incomplete  until  made  known  to  ap- 
plicant      186 

Whether  notice  of  allotment  must  be  direct 

and  formal 187 

Time  for  acceptance  or  allotment 188 

Acceptance  without    any  indication  on  the  com- 
pany's books 189 

144 


SYNOPSIS 

Agreements  to  take  shares  (continued)  Section 

Retraction  of  offer  to  take  shares 190 

Offer  or  promise  to  take  shares  under  seal  of  promisor      191 

Where  offer  is  made  by  company      192-196 

Contract  complete  on  acceptance  by  subscriber.  .  .  .  192 
Offers  of  shares  to  existing  shareholders  pro  rata  .  .  .  193 
Counter-offers     made    by    introducing    new    terms   in 

attempting  to  accept  apphcation  of  subscriber  .      194 

Time  for  acceptance  of  company's  offer 195 

Application  for  sliares  in  ignorance  of  company's  offer 

not  acceptance      196 

Implied  offers  and  acceptances      197 

Infants'  contracts  to  take  shares 198 

Application  of  Statute  of  Frauds 199 

Statutes  prescribing  forms  or  ceremonies  for  subscriptions  to 

shares 200 

Subscriptions  through  agents 201 

Subscriptions  by  agent  or  trustee  for  corporation  itself    .    .      202 

Subscriptions  by  executors 203 

Subscriptions  procured  by  fraud  or  misrepresentation.      204-219 
Defence  of  fraud  in  general  —  laches  of  subscriber    .    .     204 
English  rule  requiring  repudiation  of  the  shares  and 
institution  of  proceedings  for  removal  of   name 
from  share-register  before  beginning  of  winding- 
up  or  suspension  of  business 205 

American  rule  as  to  effect  of  winding-up  proceedings 

on  defence  of  fraud      206 

Election  to  keep  shares  notwithstanding  fraud  or  mis- 
representation   207 

Necessity  for  returning  shares  to  company 208 

Defence  of  fraud  available  either  at  law  or  in  equity .  .  209 
Recovering  back  money  paid  in  on  the  shares  ....  210 
Fraud  practised  on  original  subscriber  no  defence  to 

transferee 211 

Action  by  defrauded  subscriber  for  damages  for  deceit  212 
What  sufficient  fraud  or  misrepresentation  to  justify 

rescission 213-219 

In  general      213 

Misrepresentation  as  to  corporation  affairs      ...     214 

Misrepresentation  as  to  matters  of  law 215 

Misrepresentation  as  to  contents  of  incorporation 

paper      216 

Misrepresentation  unauthorized  by  the  corporation     217 
Misrepresentation  as  to  nature  of  transaction  218 
Misrepresentation  or  mistake  as  to  identity  of  com- 
pany    219 

How  contract  of  subscription  may  be  performed 220 

Conditional  agreements  to  take  shares 221-227 

Conditions  precedent 221-223 

In  general      221 

Underwriting  agreements 222 

Bonds  or  scrip  convertible  into  shares 223 

Conditions  subsequent 224-226 

VOL.  I.  —  10  145 


ORGANIZATION    AND    ISSUE    OF    SHARES 

Agreements  to  take  shares  {continued)  Section 

In  general      • 224 

Redeemable  shares 225 

Shares  convertible  into  bonds,  etc 226 

Whether  subscription  to  be  construed  as  absolute  or  con- 
ditional, and  whether  condition  to  be  construed  as 

precedent  or  subsequent 227 

Subscriptions  to  shares  on  special  terms      228 

Application  of  parol  evidence  rule  to  subscriptions  to  shares  .    .  229 

Subscriptions  in  excess  of  the  authorized  capital 230 

Rescission  or  modification  of  agreement  to  take  shares    ....  231 
Remedies  for  breach  of  executory  contracts  of  subscription     232-236 

Actions  at  law 232-233 

By  the  subscriber 232 

By  the  corporation 233 

Bills  for  specific  performance 234 

Statute  of  limitations  as  bar  to  remedy 235 

Laches  as  defence 236 

Scrip  and  scripholders 237 

Agreements  made  by  signing  incorporation  paper 238-248 

Peculiarity  of  such  agreements      238 

Withdrawal  of  subscriber  before  registration  of  instrument     .    .  239 
Effect  of  altering  instrument  before  registration  without  sub- 
scriber's consent 240 

Effect  of  registration  without  subscriber's  authority 241 

Subscriber  irrevocably  bound  when  instrument  is  duly  recorded.  242 

Whether  subscriber  can  avoid  subscription  for  fraud    .    .    .  243 

ObUgation  of  subscriber  in  other  respects 244-249 

In  general      244 

Special  agreements  with  company  as  to  time  and  mode  of 

payment 245 

Whether  shares  allotted  and  paid  for  after  incorporation 
satisfy  obligation  incurred  by  signing  the  incor- 
poration paper 246 

Whether  subscription  for  preferred  shares  satisfied  by  tak- 
ing and  paying  for  common  shares 247 

Subscription  of  incorporation  paper  for  shares  to  be  issued 

as  fully  paid  without  payment  in  full 248 

Agreements  made  prior  to  incorporation  otherwise  than  by  signing 

incorporation  paper 249-260 

Nature  and  effect  in  general  —  revocability 249 

Doctrine  that  such  agreements  are  irrevocable       250 

Subscriptions  before  incorporation  as  powers  of  attorney  to  apply 

for  and  accept  shares  after  incorporation 251 

Doctrine  that  subscriptions  made  before  incorporation  without 
subscribing   incorporation   paper   are  devoid   of  all   legal 

effect 252 

Attempt  of  promoters  to  release  subscribers 253 

Requisite  definiteness  in  subscription  made  before  incorporation  254 

Right  of  company  to  deposits  paid  to  promoter 255 

Effect  of  failure  of  company  to  allot  sliares  within  reasonable 

time  after  incorporation      256 

Subscription  voidable  for  fraud  of  promoter 257 

146 


§  163-§  260]      WHEN  corporate  existence  begins      §  1G3 

Agreements  made  prior  to  incorporation  etc.  (continued)  Section 

Effect  of  de|)arturc.s  from  original  .scheme 2o8 

Signer  of  proposed  incorporation  paper  not  bound  if  company 

incorporated  imder  a  different  instrument 259 

Whether  de  facto  corporation  can  enforce  subscription      ....      200 

§  103.  When  Corporate  Existence  begins. — The  execution 
and  registration  of  the  incorporation  jxij)er  is  the  fir.st  step 
in  the  incorporation  of  a  company  under  a  general  law;  and 
usually  upon  the  due  registration  of  the  incorporation  paper, 
corporate  existence  at  once  commences."  To  be  sure,  .some- 
times the  payment  of  some  tax  or  fee  is  made  an  additional 
condition  precedent  to  incorj)oration,-  and  sometimes  other 
conditions  precedent,  such  as  the  issuance  by  some  public  ofhcial 
of  a  certificate  of  due  incorporation,  are  prescribed.-'  But  while 
in  the  case  of  incorporation  by  special  act  some  acceptance  of 
the  act  by  the  corporators  is  a  condition  precedent  to  the  com- 
mencement of  the  corporate  life,  nothing  of  the  sort  is  requisite 
in  case  of  incorporation  under  a  general  law.  No  acceptance 
is  necessary  beyond  the  execution  of  the  incorporation  paper.* 
Nor  is  the  organization  of  the  corporation  by  election  of  officers 
or  otherwise  a  prerequisite  to  its  existence.^  Of  course,  the  per- 
fection of  the  organization  is  practically  essential  in  order  to 

'  Hunt  V.  Kanscifi,  etc.  Bridge  Co.,  In  such  cases,  ui)on  i)ayment  of 

11  Kans.  412;  Badger  Paper  Co.  v.  the  tax,  does  the  corporate  existence 
Rose,  95  Wise.  145;  70  N.  W.  302;  relate  back  to  time  of  recording  of 
37  L.  R.  A.  162;  Chicago,  etc.  R.  R.  the  instrument?  Cf.  Gill's  Adin'x 
Co.  V.  Stajjord  Co.,  36  Kans.  121 ;  12  v.  Ktj.,  etc.  Mining  Co.,  7  Bush  (Ky.) 
Pac.  593 ;  Atherton  v.  Sugar  Creek,  635,  639  (headnote  inadequate),  and 
etc.  Co.,  67  Ind.  334;  F ayetteville ,  the  Maryland  cases  cited  above. 
etc.  Ry.  V.  Aberdeen,  etc.  R.  R.  Co.  ^  See  supra,  §  142. 
(N.  Car.),  55  S.  E.  345;  Stokes  v.  ■•  Glymont,  etc.  Co.  v.  Toler,  80 
Findlay,A  McCrary  205;  Rose  Hill  Md.  278;  30  Atl.  651;  Benbow  v. 
&  Road  Co.  V.  People  ex  rel.  Law-  Cook,  115  N.  Car.  324;  20  S.  E.  453; 
less,  115  111.  133;   3  N.  E.  725.  44  Am.  St.  Rep.  454. 

Cf.  Braddock  v.  Penn  Water  Co.,  Cf.  Dorsey  Harvester  Revolving- 
189  Pa.  St.  379;  42  Atl.  15;  Hawes  Rake  Co.  v.  Marsh,  7  Fed.  Cas.  939, 
V.  Anglo-Saxon  Petroleum  Co.,  101  941-942;  Brooke  v.  Day  (Ga.),  59 
Mass.  385.  S.  E.  769. 

^  Maryland  Tube  Works  v.  West  *  Jttdahv.  Atnerican,  etc.  Ins.  Co., 
End  Imp.  Co.,  87  Md.  207;  39  Atl.  4  Ind.  333;  Ashtabula,  etc.  R.  R.  Co. 
620;  39  L.  R.  A.  810;  Cleaveland  v.  Smith,  15  Ohio  St.  328;  Middleton 
V.  Mullin,  96  Md.  598;  54  Atl.  665;  v.  Arastraville  Mining  Co.,  146  Cal. 
Jones  V.  Aspen  Hardivare  Co.,  21  219,222;  79  Pac.  889 ;  Atherton  v. 
Colo.  263;  40  Pac.  457;  52  Am.  St.  Sugar  Creek,  etc.  Co.,  67  Ind.  334; 
Kep.  220 ;  29  L.  R.  A.  143.  Drake  v.  Ila-7ulon{Ky.),'Jl  S.  W.  674. 

147 


§  164 


ORGANIZATION    AND    ISSUE    OF    SHARES      [ChaP.  Ill 


launch  the  company  on  its  career;  but  technically  it  springs 
at  once  into  existence  without  anything  of  the  sort.'  So,  while 
the  subscription  of  the  company's  capital  is  sometimes  made 
by  express  statute  a  condition  precedent  to  incorporation,^  yet 
in  the  absence  of  any  such  provision  the  corporation  may  come 
into  existence  before  its  capital  is  subscribed.^  A  fortiori,  pay- 
ment of  the  subscriptions  to  the  capital  is  not  a  condition  pre- 
cedent to  corporate  existence. 


§  164-§  167.     Status  of  Signers  of  Incorporation 
Paper  from  Moment  of  Incorporation. 

164.  Under  Laws  which  require  Signers  to  take  one  or  more 
Shares.  —  We  have  seen  above  that  some  incorporation  laws 
provide  that  each  subscriber  of  the  incorporation  paper  must 


But  see  Aspen  Water,  etc.  Co.  v. 
Aspen,  5  Colo.  App.  12 ;  37  Pac. 
728 ;  Wechselberg  v.  Flour  City  Nat. 
Bank,  64  Fed.  90;  12  C.  C.  A.  56; 
26  L.  R.  A.  470 ;  Lawrie  v.  Silsby, 
56  Atl.  1106;  76  Vt.  240;  104  Am. 
St.  Rep.  927  (depending  on  a  statu- 
tory provision  that  the  company 
"when  organized"  should  have 
power  to  sue  as  a  corporation) ; 
Cazelais  v.  Picotte,  18  Quebec  Sup. 
Ct.  538 ;  McVicker  v.  Cone,  21  Oreg. 
353 ;  28  Pac.  76 ;  Walton  v.  Oliver, 
49  Kans.  107 ;  33  Am.  St.  Rep.  355 ; 
30  Pac.  172;  Brooke  v.  Day  (Ga.), 
59  S.  E.  769. 

Said  the  court  in  Duke  v.  Ca- 
hawba  Nav.  Co.,  10  Ala.  82,  90;  44 
Am.  Dec.  472  :  "By  the  organization 
of  a  company,  we  understand  the 
meeting  of  individuals  claiming  to 
be  corporators,  and  their  action  in 
choosing  officers  and  agents." 

Note,  that  if  any  irregularity 
exist  in  the  incorporation  paper  or 
in  the  recording  of  the  same,  an 
organization  of  the  company  must 
be  proved  in  order  to  establish  a 
de  facto  corporate  existence :  Martin 
V.  Deetz,  102  Cal.  55 ;  36  Pac.  368 ; 
41  Am.  St.  Rep.  151.  See  infra,  §  290. 

'  "When    the    memorandum    is 


duly  signed  and  registered,  though 
there  be  only  seven  shares  taken, 
the  subscribers  are  a  body  corporate 
'  capable  forthwith '  to  use  the  words 
of  the  enactment,  'of  exercising  all 
the  functions  of  an  incorporated 
company.'  These  are  strong  words. 
The  company  attains  maturity  on 
its  birth.  There  is  no  period  of 
minority  —  no  interval  of  incapac- 
ity." Salomon  v.  Salomon  &  Co. 
(1897),  A.  C.  22,  51,  per  Lord 
Macnaghten.  But  now  see  Com- 
panies Act  of  1900,  §  6. 

^  Jersey  City  Gas  Co.  v.  Dwight, 
29  N.  J.  Eq.  242  (where  the  statute 
required  the  subscription  of  half 
and  the  payment  of  twenty  per 
cent  of  the  capital  before  the  regis- 
tration of  the  incorporation  paper) ; 
McVicker  v.  Cone,  21  Oreg.  353,  357 
(headnote  inadequate);   28  Pac.  76. 

Cf.  Belfast,  etc.  Plank  Road  Co.  v. 
Chamberlain,  32  N.  Y.  651,  654-655 
(stated  supra,   §  112). 

^  Nat.  Bank  of  Jefferson  v.  Texas 
investment  Co.,  74  Tex.  421,  435- 
436;  12  S.  W.  101;  Minor  v.  Me- 
chanics Bank  of  Alexandria,  1  Pet. 
46,  62-65 ;  Hunt  v.  Kansas,  etc. 
Bridge  Co.,  11  Kans.  412;  Willa- 
mette Freighting  Co.   v.  Stannus,  4 


148 


§  lG3-§  2()()]       STATUS  OF  CORPORATORS  §  1G4 

by  his  siil)scription  agree  to  take  at  least  one  share  in  the 
company,  the  j)recise  number  which  he  promises  to  take  being 
indicated  by  him  at  the  time.'  Under  sucli  hiws  —  and  the 
majority  of  recent  incorporation  laws  are  of  that  class  — 
there  may  be  a  nice  tjuestion  whether  the  signatories  of  the 
incorporation  paper  become  at  once  actual  shareholders  as 
distinguished  from  persons  who  have  agreed  to  become  share- 
holders. Of  course,  they  are  members  of  the  company  from 
the  very  moment  of  its  incorporation ;  and  no  further  act,  such 
as  entering  their  names  on  a  register  of  members  can  be  neces- 
sary in  order  to  constitute  them  members  of  the  corporation.^ 
But  although  they  are  members,  are  they  shareholders?  Are 
they  not  rather  persons  who  have  agreed  and  become  bound  to 
become  shareholders  and  who  constitute  the  corporation,  tem- 
porarily, for  the  purpose  of  setting  it  in  regular  motion  by  the 
allotment  and  issue  of  shares  ?  On  principle,  such  might  well  be 
their  position.  Nevertheless,  we  should  note  that  the  shares 
which  a  signer  of  an  incorporation  paper  agrees  by  his  subscrip- 
tion to  take  have  been  deemed  in  England  to  be  "issued" 
within  the  meaning  of  Section  25  of  the  Companies  Act  of  1S67 
as  soon  as  the  instrument  is  recorded  ;  ^  and  if  this  proposition  be 
logicallv  carried  out  it  would  seem  to  follow  that  the  signers 
of  the  incorporation  paper  are  shareholders  from  the  very  com- 
mencement of  corporate  existence.*  Moreover,  in  a  case  in  the 
District  of  Columbia  it  was  held  that  the  signers  of  an  incor- 
poration paper  are  shareholders  from  the  moment  of  incorpora- 
tion and  as  such  are  qualified,  and  the  only  persons  qualified,  to 

Oreg.  261 ;    Johnson  v.  Kessler,  76  entry  on  the  register  is  a  condition 

Iowa  411;    41  N.  W.  57;    Thornton  precedent,  in  the  case  of  subscribers 

V.  Balcom,  85  Iowa   198;    52  N.  W.  of  the  memorandum,  to  their  becom- 

190;   Jersey  City  Gas  Co.  v.  Dwight,  ing  members.     In  fact,  I  cannot  see 

29  N.  J.  Eq.  242  ;   Chicago,  etc.  R.  R.  how  it  can  possibly  be  so;    because 

Co.  V.  Stafford  Co.,  36  Kans.    121;  until    the    company    is    formed    no 

12  Pac.  593.  register    can    be    made,    and    until 

Butsce  Aspen  Water  Co.  V.  Aspen,  there  are  some  members  the  com- 

5  Colo.  App.  12;  37  Pac.  728;   Con-  pany  cannot  be  formed." 

tinental,  etc.  Paint  Co.  v.  Secretary  »  Jarvis's  Case  (1899),  1  Ch.  193 

of  State,  128  Mich.  621;    87  X.  W.  (semble) ;      Ebenezer     Timmins     & 

901.  Sons    (1902),    1    Ch.    238;     Dalton 

'  Supra,  §  132.  Tifne  Lock  Co.  v.  Dalton,  66  L.  T. 

=  Florence    Land,     etc.     Co.,    29  704. 

Cli.  D.  421,  445.     Said  Fry,  L.  J. :  *  See  also  Ilawes  v.  Anglo-Saxon 

"It   does   not   appear   to    me   that  Petroleum  Co.,  101  Mass.  385. 

149 


§   165  ORGANIZATION    AND    ISSUE    OF    SHARES     [ClIAP.   Ill 

be  directors.^  In  an  early  Indiana  case,  where  the  incorporation 
act  provided  that  the  subscribers  to  stock  should  subscribe  the 
incorporation  paper  and  that  the  first  directors  should  be 
elected  by  the  stockholders,  it  was  held  that  the  subscribers  of 
the  incorporation  paper  might  elect  the  directors  even  before 
the  recordintj  of  the   instrument.- 

§  165.  Under  Laws  which  do  not  require  Signers  of  Incor- 
poration Paper  to  agree  to  take  Shares.  —  As  stated  above, 
some  incorporation  laws  do  not  require  the  signers  of  the  in- 
corporation paper  to  agree  to  take  shares  in  the  company ;  ^ 
and  under  these  statutes,  of  course,  the  subscribers  of  that 
instrument  are  not  shareholders  but  are  mere  promoters 
whose  function  it  is  to  organize  the  company  and  set  it  in  mo- 
tion.^ Their  position  is  similar  to  that  of  "commissioners  to 
take  stock,"  who  were  often  appointed  in  special  acts  of  incor- 
poration for  the  purpose  of  organizing  the  company  by  allotting 
and  issuing  shares  and  of  turning  the  company  over  to  the 
shareholders,  its  permanent  proprietors.  The  duty  of  such 
commissioners  was  to  offer  the  shares  of  stock  for  public  sub- 
scription, and  their  connection  with  the  enterprise  terminated 
as  soon  as  the  corporation  could  be  turned  over  to  its  permanent 
constituents  and  proprietors,  namely,  the  shareholders.  Even, 
however,  where  the  general  incorporation  law  does  not  require 
the  signers  of  the  incorporation  paper  to  agree  to  take  shares 
in  the  company,  nevertheless  it  would  seem  that  until  shares  are 
allotted  and  issued,  the  signers  of  the  incorporation  paper  neces- 
sarily constitute  the  company,  and  are  for  the  time  being  the 
supreme  authority  in  corporate  affairs.^ 

Their  powers,  however,  come  to  an  end  as  soon  as  a  regular 


'  Dancy  v.  Clark,  24  App.  D.  C.  Bank,  64  Fed.  90;    12  C.  C.  A.  56; 

487,  506-509.  26  L.  R.  A.  470;    Ilaives  v.  Anglo- 

^  Covington,  etc.  Plank  Road  Co.  Saxon  Petroleum  Co.,  101  Mass.  385. 
V.  Moore,  3  Ind.  510.  But  see  Coyote,  etc.  Co.  v.  Ruble, 

3  Supra,  §  132.  8  Oreg.  284,  292-293 ;    Trammell  v. 

*  Coyote,  etc.  Co.  v.  Ruble,  8  Oreg.  Pennington,  45  Ala.  673  (holding 
284 ;  Densmore  Oil  Co.  v.  Densmore,  that  a  county  has  no  authority  to 
64  Pa.  St.  43,  54.  subscribe   for    stock    on  the    appli- 

*  Hunt  V.  Kansas,  etc.  Bridge  Co.,  tion  of  the  signers  of  the  incor- 
11  Kans.  412,  440;  Chase  v.  Lord,  poration  paper  and  before  the 
77  N.  Y.  1,  11;  Singer  Mfg.  Co.  v.  organization,  issue  of  shares  and 
Peck,  9  S.  Dak.  29 ;   67  N.  W.  947.  election  of  officers) ;   1  Moravvetz  on 

Cf.  Wechselberg  v.  Flour  City  Nat.  Priv.  Corps.,  2d  ed.,  §  33. 

150 


§    lG3-§  200]  STATUS    OF    COHl'OIiATORS  §   106 

orr^anization  is  efFected  by  issue  of  shares  and  appointment  of 
direetors.' 

As  was  said  by  Danforth,  J.,  in  a  New  York  case,  "The  cor- 
porators are  tlie  associates  who  are  the  getters-up  of  the  com- 
pany, and  whose  functions  cease  with  its  organization  *  *  *  * 
Corporators  exist  before  stockholders,  and  do  not  exist  with 
them.  When  stockhoklers  come  in,  corporators  cease  to  be."  ^ 
Under  this  system,  as  soon  as  tiie  necessary  number  of  shares  are 
subscribed,  and  the  sharehokJers  brought  together  and  organized, 
the  signers  of  the  incorporation  paper  simply  <h-op  out,  and  the 
shareholders  thenceforward  constitute  and  control  the  corpora- 
tion. Moreover,  it  has  been  held  that  if  the  corporators  carry 
on  business  without  issuing  stock  as  contemplated  in  the  incor- 
poration paper,  they  are  liable  as  partners  for  all  debts  so  con- 
tracted.^ This  decision  proceeds  upon  the  theory  that  until 
shares  of  stock  are  regularly  i.ssued  the  corporation  "can  only 
be  said  to  have  existence  in  a  very  limited  and  (jualified  sense," 
and  that  until  then  limited  liability  is  not  attained.  The  decision 
rested  largely  on  the  special  terms  of  a  Wisconsin  statute;  and 
moreover  its  authority  is  considerably  weakened  by  a  very 
vigorous  and  able  dissenting  opinion.  Accordingly,  the  South 
Dakota  court  refused  to  apply  the  principle  of  the  last  cited  de- 
cision to  asimilar  case  arising  under  the  South  Dakota  statutes.* 
Of  course  if  the  corporators  carry  on  business  before  recording 
the  certificate  or  performing  other  conditions  precedent  to  in- 
corporation, they  may  be  subject  to  a  partnership  liability  (unless 
the  company  can  be  deemed  a  de  facto  corporation)  as  members 
of  an  unincorporated  association.^ 

§  166.  Mode  of  Action  by  Corporators.  —  Action  taken  by 
subscribers  of  the  incorporation  paper,  being  corporate  action, 
should  be  taken  at  a  meeting  convened  upon  reasonable  notice 


'  FAlison  V.  Mobile,  etc.  R.  R.  Co.,  =  Chase    v.    Lord,    11    N.    Y.    1, 

36  Miss.  572;    Wechselberg  v.  Flour  11. 

Citij  Nat.  Bank,  64  Fed.  90,  97 ;    12  '  Wechselberg  v.  Flour  City  Nat. 

C.    C.    A.    56;   26    L.    R.    A.    470  Bank,  64  Fed.  90;    12  C.  C.  A.  56; 

(semble) ;    Chase  v.  Lord,  11  N.  Y.  26  L.  R.  A.  470. 

1,    11.  *  Singer    Mfg.    Co.    v.    Peck,    9 

Cf.  Wellersburg,  etc.  Plank  Road  S.  Dak.  29 ;  67  N.  W.  947. 

Co.  V.  Hoffman,  9  Md.  559,  568-569  «  Rijland  v.   Hollinger,   117   Fed. 

(as  to  the  functions  of  commissioners  216  (semble,  as  to    Missouri    law), 

to  take  stock).  Sec  also  infra,  §  293. 

151 


§   167  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

to  all  of  them.'  Indeed,  such  meetings  would  seem  to  be  gov- 
erned in  the  main  by  the  same  rules  of  law  as  shareholders' 
meetings.- 

§  167.  Clerks  and  other  Subordinates  as  Corporators,  —  Often, 
indeed  commouly,  the  incorporators  or  signers  of  the  incorpora- 
tion paper  are  not  the  substantial  promoters  of  the  enterprise, 
but  mere  clerks  or  dummies.  This  practice  has  been  judicially 
disapproved,  and  is  undoubtedly  foreign  to  the  intent  of  the 
incorporation  laws.^ 


§  168.  The  First  Directors.  —  Directors  for  the  first  year  of 
the  company's  existence  are  oftentimes  named  in  the  incorpora- 
tion paper  or  appointed  under  its  provisions ;  *  and  some  incor- 
poration laws  provide  that  the  subscribers  of  the  incorporation 
paper  shall  act  as  directors  during  the  first  year  of  the  company's 
existence.  Any  such  first  directors  have  the  same  powers  as 
directors  chosen  by  the  shareholders ;  ^  and  to  them  therefore 
are  usually  entrusted  the  practical  details  of  organization  and 
allotment  and  issue  of  shares.  Nevertheless,  it  would  seem  that 
the  signers  of  the  incorporation  paper,  constituting  as  they  do 

*  Cf.  Low  V.  Conn.,  etc.  R.  R.  Co.,  foreign  to  the  manifest  intent  of 
45  N.  H.  370,  379-380  (as  to  action  the  statute,  as  the  organization  is 
by  persons  named  as  corporators  in  placed  entirely  within  the  control 
a  special  act  of  incorporation) ;  of  the  signers,  and  without  their 
Woolf  V.  East  Nigel  Gold  Mining  Co.,  action  to  that  end  strangers  cannot 
21  Times  L.  R.  660  (notice  of  meet-  obtain  admission  as  stockholders." 
ing  of  corporators  sent  out  before  Wechselberg  v.  Flour  City  Nat. 
incorporation,  held  not  valid).  Bank,  64  Fed.  90,  97;    12  C.  C.  A. 

-  For  a  summary  of  the  English  56 ;  26  L.  R.  A.  470. 
cases  as  to  action  by  subscribers  of         *  See    supra,  §  115.      As   to    the 

the  incorporation  paper,   see  infra,  election    of    the    first    directors    by 

§  1466.  the  subscribers  of  the  incorporation 

*  "It  is  insisted  that  these  cor-  paper  before  the  instrument  is  re- 
porators  are  merely  nominal  parties,  corded,  see  Covington,  etc.  Plank 
and  should  not  be  regarded  as  con-  Road  Co.  v.  Moore,  3  Ind.  510; 
tractors  in  any  sense ;  that  it  has  Mailer  v.  Maclean,  1  Megone,  274. 
become  common  practice  to  take,  ^  Middleton  v.  Arastraville  Min- 
for  the  time  being,  any  persons  who  ing  Co.,  146  Cal.  219,  222;  79  Pac. 
may  be  convenient  for  the  purpose,  889 ;  Hamilton  Trust  Co.  v.  Clemes, 
leaving  the  real  projectors  to  come  163  N.  Y.  423;   57  N.  E.  614. 

in  with  the  subscription  for  stock.         But  see  Allman  v.  Havana,  etc. 
Such   view   or   practice   is   entirely    R.  R.  Co.,  88  111.  521,  524. 

152 


§   lG3-§  260]  ISSUE    OF    SHAKES  §  171 

for  the  time  being  the  members  of  the  corporation,  would 
necessarily  have  the  power,  if  they  should  choose  to  exercise  it, 
of  stepping  in  and  controlling  the  actions  of  these  directors,  to 
the  same  extent  as  shareholders  of  a  fully  organized  corporation 
may  step  in  and  control  the  actions  of  the  directors.'  (Jf  course, 
the  first  directors  that  are  chosen  by  the  shareholders  after 
shares  have  been  issued  do  not  differ  in  any  respect  from 
directors  chosen  after  the  company  has  been  actively  engaged 
in  business. 

§    169-§    176.       ALLOTMENT    AND    ISSUE    OF    SHARES. 

§  169.  Issue  of  Shares  necessary  to  complete  Organization. 
—  Even  where  the  subscribers  of  the  incorporation  paper  are 
shareholders  in  the  company,  and  a  fortiori  where  they  are  not, 
although  the  technical  incorporation  may  be  complete  on  the 
registration  of  the  paper,  yet  the  company  is  not  regularly  or- 
ganized until  shares  are  allotted  and  issued,  and  the  permanent 
organization  effected.  This  process  of  organization,  therefore, 
next  demands  attention. 


§  170-§  174.     Who  are  Shareholders — What  constitutes 
an   Issue  of  Shares. 

§  170.  Statement  of  Question.  —  In  the  first  place,  the  ques- 
tion must  be  considered  what  is  necessary  to  constitute  a  share- 
holder as  distinguished  from  a  person  who  has  merely  agreed 
to  become  a  shareholder.'  When  may  shares  be  said  to  be 
issued  ? 

§  171.  Issue  of  Share-Certificate  not  necessary.  —  At  the 
outset,  it  is  clear  that  the  issue  of  a  share-certificate  is  not  neces- 
sary in  order  to  make  a  person  a  shareholder.  A  certificate  is 
merely  convenient  evidence  of  his  title,  and  a  person  may  un- 
doubtedly be  a  shareholder  in  a  corporation  although  no  ccrtifi- 

'  As  to   tliese   powers   see   infra,  a  sharehokicr  at  a  future  time ;  and 

§  1191,  §  1440,  §  1441.  a  contract  to  become  a  shareholder 

'  "It  is  important  to  distinguish  at  a  future  time  must  again  be  dis- 
between  the  contract  of  member-  tinguisheti  from  a  contract  to  pur- 
ship  actually  existing  among  vhe  chase  shares  which  have  already 
shareholders  or  members  of  a  cor-  been  issued."  1  Morawetz  on  Priv. 
poration,  and  a  contract  to  become  Corps.,  2d  ed.,  §  46. 

153 


§171 


ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 


cate  has  ever  been  issued  to  him  *  or  although  his  certificate  may 
have  been  lost  or  stolen,  or  although  the  certificate  delivered  to 
him  leaves  a  blank  for  his  name.-  Hence,  in  an  action  by  a  cor- 
poration on  a  contract  of  subscription  to  its  shares,  while  the 
company  must  show  that  it  was  ready  and  able  to  carry  out  its 
part  of  the  contract  by  issuing  the  shares  as  agreed,^  yet  there 
is  no  necessity  for  proving  a  tender  of  a  share-certificate/  For 
the  same  reason,  where  land  is  conveyed  to  a  corporation  in 
consideration  of  an  issue  of  its  shares  to  the  grantor,  the  com- 
pany may  be  deemed  a  purchaser  for  value,  so  as  to  cut  off  un- 
disclosed equities,  even  before  any  share-certificate  is  issued.^ 
Hence,  too,  the  fact  that  no  certificate  is  to  be  issued  within  a 
year  after  the  subscription  does  not  bring  the  agreement  within 
the  clause  of  the  statute  of  frauds  as  to  contracts  not  to  be  per- 
formed within  a  year.^  So  also,  in  pleading,  as  for  example  in 
an  action  for  unpaid  dividends  by  a  holder  of  preferred  shares, 
the  share  certificates  are  not  of  the  substance  of  the  issue ;  ^  and 
if  the  pleader  chooses  to  set  them  out  in  the  pleadings  according 
to  their  tenor,  they  should  not  be  excluded  as  evidence  because 


'  Blyth's  Case,  4  Ch.  D.  140; 
Clark's  Case,  8  Ch.  D.  635  (semble) ; 
Hawley  v.  Upton,  102  U.  S.  314 
(where  the  court  used  "subscriber" 
in  the  sense  of  shareholder) ;  Smith 
V.  Gower,  63  Ky.  17 ;  San  Joaquin, 
etc.  Co.  V.  Beecher,  101  Cal.  70;  35 
Pac.  349 ;  Barron  v.  Burrill,  86  Me. 
66;  29  Atl.  939;  California,  etc. 
Hotel  Co.  V.  Callender,  94  Cal.  120 ; 
29  Pac.  859;  28  Am.  St.  Rep.  99; 
Mass.  Iron  Co.  v.  Hooper,  7  Cush. 
(Mass.)  183,  188  (headnote  inade- 
quate) ;  Agricultural  Bank  v.  Burr, 
24  Me.  256;  Burr  v.  Wilcox,  22 
N.  Y.  551 ;  Cotter  v.  Butte,  etc. 
Smelting  Co.,  77  Pac.  509  (headnote 
inadequate);  31  Mont.  139;  South 
Dakota  v.  North  Carolina,  192  U.  S. 
286;  24  Sup.  Ct.  269;  Corwith  v. 
Culver,  69  111.  502;  Pacific  Nat. 
Bank  v.  Eaton,  141  U.  S.  227,  230; 
11  Sup.  Ct.  984. 

But  see  Bush's  Case,  9  Ch.  554 ; 
Pietsch  V.  Krause,  93  N.  W.  9;  116 
Wise.    344    (the   words   "issue   any 


Btock"  and  "stock  issued"  held  to 
refer  to  the  issue  of  certificates). 

'  Sanger  v.  Upton,  91  U.  S.  56, 
63-64. 

^  Carter,  etc.  Co.  v.  Hazzard,  65 
Minn.  432;  68  N.  W.  74;  Oler  v. 
Baltimore,  etc.  R.  R.  Co.,  41  Md. 
583. 

^  Webb  V.  Baltimore,  etc.  R.  R.  Co., 
77  Md.  92  ;  26  Atl.  113  ;  39  Am.  St. 
Rep.  396;  Smith  v.  Goxver,  63  Ky. 
17 ;  Slipher  v.  Earhart,  83  Ind.  173 ; 
Fulgam  v.  Macon,  etc.  R.  R.  Co.,  44 
Ga.  597  {Qucere,  whether  the  reason- 
ing in  this  case  can  be  supported) ; 
Marson  v.  Deither,  49  Minn.  423 ; 
52  N.  W.  38 ;  2  Clark  &  Marsliall  on 
Priv.  Corps.,  §  462  d. 

Cf.  Hawlexj  v.  Upton,  102  U.  S. 
314. 

*  Frenkel  v.  Hudson,  82  Ala.  158 ; 
2  So.   758 ;    60  Am.  St.   Rep.   736.  ' 
Cf.  infra,  §  175. 

*  Reed  &  McCormick  v.  Gold 
(Va.),  45  S.  E.  868. 

'  But  sec  infra,  §  1360. 


154 


§  163-§  2G0]  ISSUE    OF   SHARES  §  173 

of  verbal  inaccuracies  in  the  description.'  As  a  certificate  is  of 
merely  evidential  value,  it  follows  that  certificates  issued  before 
the  incorporation  may,  if  recognized  by  the  company,  have  the 
same  effect  as  if  issued  after  incorporation. - 

§  172.  Entry  of  Shareholder's  Name  on  Register  necessary 
in  England.  —  In  England,  by  virtue  of  certain  provisions  in 
the  Coni{)anies  Act,  entry  on  the  company's  register  of  share- 
holders is,  with  the  possible  exception  of  subscribers  of  the  memo- 
randum of  association,^  a  condition  precedent  to  becoming  a 
shareholder.*  A  person  may  have  a  right  to  become  a  share- 
holder, but  unless  and  until  his  name  is  entered  on  the 
company's  register  of  shareholders  he  cannot  be  an  actual 
shareholder.  The  stubs  of  a  certificate  book  cannot  constitute 
a  register  of  shareholders  within  the  meaning  of  this  rule.^  On 
the  other  hand,  a  person  may  be  a  shareholder  although  the 
register  on  which  his  name  is  entered  does  not  in  all  respects 
comply  with  the  statutory  requirements."  But  while  entry  of 
one's  name  on  the  register  is  necessary,  it  is  not,  taken  l)y  itself, 
sufficient,  to  render  a  person  a  shareholder.  In  addition,  it 
must  be  shown  that  the  entry  was  with  his  knowledge  and 
assent  or  acquiescence.^ 

§  173.  American  Rules  as  to  Entry  on  Register.  — This  rule 
that  only  those  persons  w^hose  names  have  been  entered  on  the 
register  can  be  deemed  actual  shareholders,  as  distinguished 
from  persons  who  have  agreed  to  become  shareholders,  is  very 
convenient  in  practice.  For  it  is  very  desirable  to  have  some 
simple  criterion  for  determining  whether  a  person  is  a  share- 
holder or  not.  Nevertheless,  many,  perhaps  most,  American 
courts  would  hold  that  no  such  rule  can  be  enforced  unless 
affirmatively  laid  down  by  statute.*    According  to  this  view  of 

'  Bates  V.  Androscoggin,  etc.  R.  R.  1  Cli.  89  (note  the  argument  for  the 

Co.,  49  Me.  491.  liquidator).    Cf.  infra,  §  S64. 

-  Thorpe   v.    Pennock    Mercantile         ®  East  Gloucestershire  Ry.  Co.  v. 

Co.  (Minn.),  108  N.  W.  940.  Bartholomew,  L.  R.  3  Ex.  15. 

^  See /'7orf?ic<7  Land  Co.,  29  Ch.  D.         '  Arnot's  Case,  36  Ch.    D.   702; 

421;      Ebenezer    Timmins    &    Sons  Plinisoll's     Case,     24     L.     T.     653; 

(1902),    1    Ch.     238;     and     supra,  Welch  v.  Gillelen,  82  Fac.  248;    147 

§  164.  Cal.   571  (construing  a  statute  sim- 

*  Florence  Land  Co.,  29  Ch.   D.  ilar  to  the  British  law).      See  a.ho 

421 ;  MacDonald,  Sons  ct  Co.  (1894),  §  873. 
1  Ch.  89.  «  Cf.     Troy,    etc.    R.    R.    Co.    v. 

«  3/acDo«a.'(',  Sons  tfr  Co.  (1894),  Tibhits,     18    Barb.     (N.    Y.)    297; 

155 


§  173 


ORGANIZATION    AND    ISSUE    OF    SHARES     [ChaP.  Ill 


the  common  law,  all  that  is  necessary  to  constitute  a  person  a 
shareholder  is  a  present  intention  on  his  part  and  on  the  part 
of  the  company  that  the  relation  of  shareholder  and  corporation 
subsist  between  them.  When  once  that  intention  exists,  the 
relationship  is  codcm  instanti  established  without  the  necessity 
of  any  formality  whatsoever.'  The  same  rule  has  been  applied 
even  where  it  is  expressly  provided  that  the  shares  shall  be 
transferable  only  by  entry  in  the  company's  books;  for  that 
provision,  it  was  held,  does  not  refer  to  an  original  issue  of  shares 
but  only  to  transfers  from  one  shareholder  to  another.^  Never- 
theless, it  is  submitted  that  a  different  decision  would  have  been 
more  in  accord  with  the  spirit  of  the  provision  in  question.  A 
subscriber,  however,  who  is  in  default  in  payment  of  a  deposit 
payable  on  allotment  is  not  entitled  to  the  rights  of  a  share- 
holder,^ even  though  he  may  be  subject  to  the  burdens.  And 
sometimes  acts  of  incorporation  or  other  statutes  require  certain 
formalities  —  such  as  the  execution  of  a  formal  subscription 
paper  or  the  payment  of  a  deposit  by  way  of  earnest  —  as  con- 
ditions precedent  to  becoming  for  any  purpose  an  actual  share- 


Hussey  v.  Manufacturers'  Bank, 
10  Pick.  (Mass.)  415,  422  (headnote 
inadequate) ;  Manchester  St.  Ry.  Co. 
V.  Williams,  71  N.  H.  312,  317 
(headnote  inadequate) ;  52  Atl.  461 ; 
Welch  V.  Gillelen,  82  Pac.  248 ;  147 
Cal.  571  (where  a  statute  declared 
all  persons  shareholders  whose  names 
appeared  on  the  register) ;  Union 
Xat.  Bank  v.  Scott,  53  N.  Y.  App. 
Div.  65 ;  66  N.  Y.  Supp.  145  (where 
ratio  decidendi  was  that  a  statute 
making  the  stock-book  -prima  facie 
evidence  should  not  have  the  effect 
of  making  it  conclusive  evidence). 

'  "An  offer  to  become  a  share- 
holder, when  accepted  by  or  on 
behalf  of  the  members  of  the  com- 
pany, constitutes  the  offerer  a 
shareholder."  1  Morawetz  on  Priv. 
Corps.,  2d  ed.,  §  46,  p.  46. 

Accord :  Smith  v.  Gower,  63  Ky. 
17;  Wemple  v.  St.  Louis,  etc.  R.  R. 
Co.,  120  111.  196;  11  N.  E.  906; 
Spear  v.  Crawford,  14  Wend.  (N.  Y.) 
20,  24-25;  28  Am.  Dec.  513. 


Cf .  Butler  University  v.  Scoonover, 
114Ind.  381;  16N.  E.  642;  5  Am. 
St.  Rep.  627 ;  Nickum  v.  Burkhardt, 
30  Oreg.  464 ;  47  Pac.  788 ;  48  Pac. 
474;  60  Am.  St.  Rep.  822;  Flour 
City  Nat.  Bank  v.  Shire,  88  N.  Y. 
App.  Div.  401 ;  84  N.  Y.  Supp.  810; 
affirmed  short,  179  N.  Y.  587;  72 
N.  E.  1141;  Acadia  Loan  Corp.  v. 
Wentworth,  40  Nova  Scotia  525. 

In  Busey  v.  Hooper,  35  Md.  15,  31 ; 
6  Am.  Rep.  350,  the  court  said, 
"None  of  the  cases  decide  that  the 
mere  fact  of  subscribing  to  the  stock 
of  an  incorporated  company  con- 
stitutes the  subscriber  a  stockholder, 
but  that  such  subscription  puts  it  in 
his  power  to  become  a  stockholder, 
by  compelling  the  corporation  to 
give  him  the  legal  evidence  of  his 
being  a  stockholder,  upon  his  com- 
plying with  the  terms  of  the  sub- 
scription." 

2  Burr  v.  Wilcox,  22  N.  Y.  551. 

^  Btisey  V.  Hooper,  35  Md.  15;  6 
Am.  Rep.  350. 


156 


§  163-§  260]  ISSUE    OF    SHARES  §   174 

holder  as  distinguished  from  one  who  has  merely  agreed  to 
become  a  shareholder.' 

§  174.  Payment  for  Shares  not  necessary  before  Subscriber 
can  become  a  Shareholder.  —  It  goes  witliout  saying  tliat,  in 
general,  payment  for  the  shares  subscribed  for  is  not  necessary 
in  order  that  the  subscriber  may  become  a  shareholder.-  Indeed, 
frequently  in  England  and  sometimes  in  the  United  States,  cor- 
porations carry  on  business  for  years  although  only  a  fraction 
of  the  nominal  value  of  their  outstanding  shares  has  been  paid 
in.  On  the  other  hand,  where  an  established  corporation  in- 
creases its  capital,  some  courts  have  held  that  the  subscribers 
for  the  new  shares  do  not  become  members  of  the  corporation 
until  actual  payment  therefor.^  Perhaps  the  best  rule  is  that 
in  each  case  it  is  a  question  of  intention  (subject  to  any  formal 
requirements,  such,  for  example,  as  the  requirement  of  entry  on 
the  register  of  members);  and  that  much  slighter  evidence  of 
an  intention  that  shares  should  not  be  deemed  to  be  issued  until 
paid  for  would  be  required  in  the  case  of  shares  of  an  increase 
of  capital  than  in  the  case  of  the  original  or  formative  shares. 
It  is  difficult  to  say  that  as  an  unbending  rule  of  law,  new  shares 
created  by  way  of  increase  of  capital  can  never  be  issued  until 
paid  for.*  At  all  events,  in  England  there  is  certainly  no  such 
rule,  as  many  cases  attest  in  which  no  point  of  the  kind  was 
raised  or  thought  of. 


'  Charlotte,    etc.    R.    R.    Co.    v.  In  some  American  states,  statutes 

Blakely,  3  Strob.  (S.  Car.)  245.    See  forbid  the  issue  of  shares  except  for 

also  infra,  §  200.  money,  property,  etc.,  actually  re- 

Cf.  East  Gloucestershire  Ry.  Co.  v.  ceived.     See  infra,  §  798. 

Bartholomew,  L.  R.  3  E.\:.  15.  As  to  whether  a  shareholder  can 

*  Downing  v.  Potts,  23  N.  J.  Law  require  the  company  to  issue  a  share 

66 ;    Mass.   Iron  Co.   v.   Hooper,   7  certificate  before  he  has  paid  in  full, 

Cush.    (Mass.)    183,    188    (headnote  see  infra,  §  513. 

inadequate) ;    Curry  v.  Scott,  54  Pa.  ^  Baltimore  City  Pass.  Ry.  Co.  v. 

St.  270;  Waukon,  etc.  R.  R.  Co.  v.  Hambleton.il  Md.  341 ;  26  Atl.  279. 

Dwyer,  49  Iowa  121,  125;    Smith  v.  *  Cf.  infra,  §  591.     See  also  Booth 

Burns   Boiler   &   Mfg.   Co.    (Wise),  v.  Campbell,  37  Md.  522  (declaring 

111  N.  W.  1123,  1127  (semhle).  that    subscriber    to    shares    of    in- 

But   see   Chase  v.  Sycamore,   etc.  creased      stock     is     subject     to    a 

/2.  i?.  Co.,  38  111.  215,  218;   Coleman  statutory  liability  to  creditors   be- 

V.  Spencer,  5  Blackf.  (Ind.)  197.  fore  payment  in  full). 

157 


§   175  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

§  173.  When  Issue  of  Shares  becomes  equivalent  to  Payment 
of  Value  by  Company.  —  The  issue  of  shares  is  a  vahiahle  con- 
sideration, and  may  therefore  entitle  the  company  to  tlie  rights 
of  a  purchaser  for  vahie  as  to  any  property  transferred  in  pay- 
ment of  the  shares. *  In  one  case,  however,  it  was  held  that 
inasmuch  as  the  company  may  cancel  the  shares  so  long  as  they 
remain  in  the  hands  of  the  original  allottee  in  case  of  failure  of 
title  to  the  property  transferred  in  payment,  therefore  the  com- 
pany could  not  occupy  the  position  of  a  bona  fide  purchaser  for 
value  of  that  property  unless  the  shares  had  been  transferred  by 
the  allottee.^  The  issue  of  the  shares,  it  was  said,  was  no  more 
the  payment  of  value  than  the  giving  of  the  company's  note 
would  have  been.  The  analogy,  however,  is  far  from  complete ; 
since  an  issue  of  shares  is  more  nearly  equivalent  to  an  assign- 
ment of  property  than  to  the  creation  of  a  mere  obligation. 

§  17G.  Allotment  of  Shares.  —  The  term  allotment  is  often 
used  in  connection  with  the  issue  of  shares,  not  infrequently 
without  any  accurate  understanding  of  its  meaning.  The  word 
properly  denotes  an  acceptance  by  the  corporation  of  an  offer 
to  take  a  definite  number  of  its  shares.^  For  instance,  a  person 
applies  to  the  company  for,  say,  one  hundred  shares  or  such 
smaller  number  as  may  be  granted  to  him.  The  directors  reply, 
saying  that  they  accept  his  offer  for  one  hundred  shares  and 
agree  to  issue  them  to  him.  Their  action  is  an  allotment  of  the 
shares  —  an  appropriation  of  a  definite  number  of  shares  for 
a  particular  applicant.*    An  allotment  does  not  necessarily  in- 

'  Whiiile    V.    Vanderbilt    Mining  51 ;   Lake  Superior  Navigation  Co.  v. 

Co.,  83  Fed.  48;   Frenkel  v.  Hudson,  Morrison,  22  Up.  Can.  C.  P.  217. 

82  Ala.  158;   2  So.  758;   60  Am.  St.  *  "There  is  no  difference,  as  has 

Rep.  736.  been  often  pointed  out,  between  a 

-  Wyeth  V.  Renz-Bowles,  66  S.  W.  contract    to    take    shares    and    any 

825 ;  23  Ky.  Law  Rep.  2337.  other    contract.      What    is    termed 

*  The  term  is  also  sometimes  used  'allotment,'     is     generally      neither 

in   America   to    denote   the  appor-  more  nor  less  than  the  acceptance  by 

tionment  of  the  stock   of  a  corpo-  the   company   of  the   offer  to   take 

ration    among     subscribers     whose  shares.     To  take  the  common  case, 

subscriptions    exceed    in    aggregate  the  offer  is  to  take  a  certain  number 

amount     the      authorized     capital,  of  shares,  or  such  a  less  number  of 

See,  for  an  example,  1  Morawetz  on  shares  as   may  be   allotted.     That 

Priv.  Coryxs.,  2d  ed.,  §  58.  offer  is  accepted  by  the  allotment 

For  other  instances  of  uses  of  tlie  either  of  the  total  number  mentioned 

word  in  a  different  sense  from  that  in  the  offer  or  a  less  number  to  be 

defined  above,  see  Re  Barber,  15  Jur.  taken  by  the  person  who  made  the 

158 


§   163-§  260]     TIME    FOR    ALLOTMENT    AND    LSSUE  §   177 

elude  any  entry  on  the  eoinpany's  Ijooks;  and  even  if  an  entry 
is  made,  the  entry  on  tlie  books  is  not  the  allotment.  The  ac- 
ceptance of  the  apj)licant's  offer  is  the  allotment,  and  like  anv 
other  acceptance  is  n(jt  complete  or  eli'ective  until  communicated 
in  some  way  to  the  offerer.'  'I'here  may  be  an  allotment  without 
specifying  the  distinguishing  numbers  of  the  allotted  shares, 
even  where  as  in  Eng  and  every  share  has  its  own  denot  ng 
number.'-  The  term  is  not  equivalent  to  "issue:"  shares  may 
be  allotted  Ix-fore  they  are  issued.^  Indeed,  an  allotment  is  more 
properly  a  promise  to  issue  than  an  actual  issue  of  shares.  Of 
course,  however,  the  shares  may  be  issued  inunediately  after 
the  allotment  or  perhaps  even  simultaneously  therewith.  And 
in  those  of  the  United  States  in  which  a  mere  mutual  agreement 
between  the  corporation  and  an  applicant  for  shares  that  the 
relationship  of  shareholder  and  company  shall  thenceforth  sub- 
sist between  them  is  sufficient  to  constitute  the  applicant  an 
actual  shareholder  without  further  ceremony,  the  mere  allot- 
ment, completing  as  it  does  the  contract  between  the  parties, 
may  be  enough  to  establish  the  relationship.  Nevertheless,  that 
effect  is  accidental,  and  is  not  an  essential  part  of  the  allotment. 


§  177.  When  Shares  may  be  allotted  and  issued — When 
Business  may  be  commenced.  —  The  right  of  a  company  to 
perfect  a  regular  permanent  organization  by  the  issue  of  shares 

offer.      This    constitutes    a    binding  the  specified  number  of  shares,  and 

contract  to  take   that   number    ac-  under    which    the    person    who    lias 

cording  to  the  offer  and  acceptance,  made  the  offer  and  is  now  bound  by 

To    my    mind,    there    is    no    magic  the  acceptance  is  bound  to  take  that 

whatever  in  tlie  term  'allotment'  as  particular  number  of  shares."     Per 

used  in  these  circumstances.     It  is  Chitty,  J.,  in  Florence  Land  Co.,  29 

said  that  the  allotment  is  an  appro-  Ch.  D.  421,  426.     "The  term  'allot- 

priation    of    a    specific    number    of  ment '  is  a  popular  term  ;   it  is  not  a 

shares.     It  is  an  appropriation,  not  technical  term  occurring  in  the  Act 

of  specific  shares,   but  of  a  certain  of  Parliament  itself."    Id.,  p.  427. 
number    of    shares.      It    does    not,         '  See  infra,  §  186. 
however,  make  the  person  who  has         -  Adams'  Case,  13  Eq.  474,  483. 
thus   agreed   to   take   the   shares   a         Cf.  Xational  Ins.  Co.  v.  Egleson, 

member    from    that    moment ;    all  29  Grant  (Can.)  406. 
that  it  does  is  simply  this  —  it  con-         ^  Clarke's   Case,    8   Ch.    D.    635 ; 

Btitutes    a    binding    contract   under  Thomson's  Case,  4  DeG.  J.  &S.  749. 
which    the    company    is    bound    to         Cf.  Ea.^t  Gloucestershire  Ry.  Co.  v. 

make  a  complete  allotment  (sic)  of  Bartholomew,  L.  R.  3  Ex.  15. 

159 


§   177  ORGANIZATION    AND    ISSUE    OF   SHARES     [ChAP.   Ill 

must  be  distinguished  from  the  right  to  commence  business.  In 
the  absence  of  some  regulation  to  the  contrary  by  statute  or  other- 
wise, a  corporation  may  organize  by  the  allotment  and  issue  of 
shares  immediately  upon  the  registration  of  the  incorporation 
paper  or  as  soon  thereafter  as  persons  can  be  found  willing  to 
accept  the  shares. 

Statutes  sometimes  require  additional  conditions  to  be  com- 
plied with  before  the  company  may  begin  business.  Such  con- 
ditions, although  conditions  precedent  to  the  right  to  commence 
business,  are  merely  conditions  subsequent  to  incorporation.  As 
such,  breach  is  ordinarily  no  more  than  a  cause  of  forfeiture  to 
be  taken  advantage  of  by  the  state  alone. ^  One  such  condition 
has  been  thought  to  be  implied  from  the  very  nature  of  a  corpora- 
tion having  a  fixed  capital,  namely,  that  the  entire  capital  of 
the  company  be  subscribed.  To  be  sure,  in  England,  a  company 
may,  except  so  far  as  expressly  restrained  by  statute,^  commence 
business  immediately  upon  its  organization  notwithstanding  the 
fact  that  its  capital  has  not  been  fully  subscribed  and  in  spite 
of  the  opposition  of  a  minority  shareholder.^  In  America,  a 
company  may,  as  in  England,  allot  and  issue  shares  before  the 
authorized  capital  has  been  complete'y  subscribed,*  and  may  even 
begin  business  by  unanimous  consent  or  in  pursuance  of  a  pro- 
vision in  the  incorporation  paper ;  ^  but  it  is  generally  thought 
that  except  under  such  circumstances,  a  corporation  with  a  fixed 
limited  capital  has  no  right  to  commence  business  before  all  its 
shares  are  taken,"  so  that  any  shareholder  might  enjoin  the  trans- 

•  Hammond  v.  Straus,  53  Md.  1,  2  Hem.  &  Mill.  528.     But  cf.  Elder 

14-15.   See  also  infra,  §   265.     But  v.  New  Zealand  Co.,  30  L.  T.  285. 

cf.   Burns  v.  Beck,  etc.  Co.,  83  Ga.  See  also  infra,  §  754,  and  Laugier 

471 ;  10  S.  E.  121.  v.  Victorian,  etc.  Power  Co.,  16  Vict. 

'  The    Companies    Act    of    1900,  L.  R.  64. 

63  &  64  Vict.,  c.  48,   §  4,  requires  *  1  Morawetz  on  Priv.  Corps.,  2d 

certain  rather  burdensome  conditions  ed.,  §  57. 

to  be  met  before  the  first  allotment  ^  Sweney    Bros.    v.     Talcott,    85 

can  take  place,  and  if  an  allotment  Iowa  103 ;    52  N.  W.  106 ;    Nichols 

is  made  in  violation  of  these  condi-  v.  Burlington,  etc.  Plank  Road  Co., 

tions,    an    allottee    may    have    his  4  G.  Greene  (Iowa)  42. 

name  stricken  from  the  register  and  °  1  Morawetz  on  Priv.  Corps.,  2d 

his  depo.sit  returned.   Cf.   Mears  v.  ed.,   §  408.      I3ut    see    Johnson   v. 

Western   Canada   Pulp   Co.    (1905),  Kess/er,  76  Iowa  4 1 1 ;   41N.  W.  57; 

2    Ch.    353;     Finance    &    Issue    v.  Fayetteville,  etc.  Ry.  v.  Aberdeen,  etc. 

Canadian  Produce   Corp.  (1905),    1  R.  R.  Co.   (N.  Car.)  55  S.   E.  345; 

Ch.  37.  Newcastle,  etc.  Turnpike  Co.  v.  Bell, 

'  MacDougall  v.  Jersey  Hotel  Co.,  8  Blackf.  (Ind.).584. 

160 


§  lG3-§  200]  THE  Fii:.ST  meeting  §  178 

action  of  any  l)u.sines.s.  This  doctrine  is  indeed  the  basis  of  the 
all  but  universal  American  rule  pn^hibiting  any  calls  upon  share- 
holders before  the  authorized  capital  is  fully  taken.'  This  Ameri- 
can rule,  requiring  that  all  the  shares  be  subscribed  before  the 
company  conunences  business,  is  not  afl'ected  by  a  statutory 
provision  authorizing  the  company  to  commence  business  as 
soon  as  the  incorporation  paper  is  filed ;  for  such  a  provision  is 
construed  to  mean  that  the  company  may  begin  business  if  other- 
wise qualified. - 

§  17<S.  First  Meeting  of  Corporation.  —  The  first  or  organiza- 
tion meeting  of  a  corporation  is  of  much  less  importance  where 
the  company  is  formed  under  a  general  law  than  under  a  special 
act,  which  must  be  accepted  before  corporate  existence  com- 
mences. In  the  latter  case,  the  corporation  comes  into  being  at 
that  meeting,  while  in  the  former,  the  meeting  would  not  seem 
to  differ  greatly  in  kind  from  any  other  meeting  of  the  members 
of  an  existing  company.  For  instance,  a  failure  to  give  due 
notice  of  the  first  meeting  to  all  entitled  to  such  notice  will  not, 
where  the  company  is  being  organized  under  a  general  law, 
vitiate  the  corporate  existence,  at  least  as  against  one  who  par- 
ticipated in  the  proceedings;  ^  and  failure  to  give  a  formal  notice 
prescribed  by  statute  is  quite  immaterial  where  all  the  subscribers 
waive  the  statutory  notice.*  Whilst  the  organization  meeting  of 
a  company  incorporated  under  modern  general  incorporation 
laws  is  not  the  equivalent  of  the  meeting  of  the  incorporators  of 
a  company  incorporated  by  special  act  held  for  the  purpose  of 
accepting  the  charter,  so  that  the  cases  which  hold  that  accept- 
ance of  a  special  act  of  incorporation  must  take  place  within  the 
company's  home  state  ^  are  distinguishable ;    nevertheless,  the 

'  Infra,  §  754.  tors   can   be  legally   convened,   see 

*  Livesey  v.  Omaha  Hotel  Co.,  5  supra,  §  166,  and  infra,  §  1466. 
Nebr.    50    (headnote    inadequate).         *  J.  W.  Butler  Paper  Co.  v.  Cleve- 

Cf.  Masonic  Temple  Ass'n  v.  Chan-  land,  220  111.  128;  77  N.  E.  99. 
nell,  43  Minn.  353,  354;  45  N.  W.         *  Miller   v.    Ewer,   27    Me.    509; 

716.  46  Am.  Dec.  619;    Camp  v.  Byrne, 

'  Nickum  v.  Burkhardt,  30  Oreg.  41  Mo.  525  (semble) ;    Freeman   v. 

464;   47  Pac.  788;   48  Pac.  474;   60  Machias  Water,  etc.  Co.,  38  Me.  343; 

Am.  St.  Rep.  822.  Smith  v.  Silver  Valley  Mining  Co., 

Cf.  Packard  v.  Old  Colony  R.  R.  64   Md.  85 ;  20  Atl.   1032 ;   54  Am. 

Co.,  168  Mass.  92;    46  N.  E.  433;  Rep.  760. 
Walworth  v.  Brackett.  98  Mass.  98.  But  see  Heath  v.  Silverthorn,  etc. 

As  to  how  a  meeting  of  corpora-  Co..  39  Wise.  146. 
VOL.  I. —  11                                      161 


§   179  ORGANIZATION    AND    ISSUE    OF    SHAKES     [CuAP.   Ill 

first  or  organization  meeting  of  any  corporation  undoubtedly 
performs  a  corporate  function  in  the  strictest  sense  of  the  word 
and  therefore,  according  to  the  prevaiUng  rule,  cannot  be  held 
in  a  foreign  state.  ^ 


§  179-§  260.     AGREEMENTS  TO  TAIvE  SHARES. 

§  179.  Scope  of  Treatment.  —  The  matter  of  agreements  to 
take  shares  has  been  the  subject  of  a  vast  deal  of  litigation,  and 
has  received  elaborate  and,  on  the  whole,  full  and  satisfactory 
treatment  at  the  hands  of  text-^\Titers.  Consequently,  an  ex- 
haustive consideration  of  this  topic  is  unnecessary  here.  Suf- 
fice it  to  give  a  general  outline  of  the  law,  pursuing  a  somewhat 
different  scheme  and  approaching  the  subject  from  a  somewhat 
different  side  from  the  well-known  American  treatises,  making 
particular  reference  to  those  points  which  have  received  hitherto 
but  scant  attention  in  this  country. 

§  180.  The  Name,  "  Subscriptions "  —  Nature  of  Agree- 
ments —  distinguished  from  Act  of  becoming  a  Shareholder  and 
from  Agreements  for  Purchase.  —  Agreements  to  take  shares, 
especially  in  America,  are  often  called  subscriptions  to  shares  or 
subscriptions  to  stock.  The  word  "subscription"  in  that  con- 
nection must  not  be  taken  literally ;  for  it  denotes  any  agreement 
to  take  shares  whether  made  by  signing  or  subscribing  some 
document  or  otherwise.^  It  has  been  said  that  an  agreement  to 
"subscribe"  for  shares  means,  not  that  the  subscriber  will 
necessarily  take  the  shares  himself,  but  that  he  will  either  take 
them  or  find  some  one  else  to  take  them.^  The  term  subscription 
to  shares  is  sometimes  used  to  denote  the  so-called  contract  of 
membership  in  a  corporation  —  that  is,  the  act  of  becoming  a 

»  Duke  V.  Taylor,  37  Fla.  64 ;    19  19    Wall.    241.      But    see    Thames 

So.  172;  53  Am.  St.  Rep.  232;   31  Tunnel   Co.   v.  Sheldon,  6    B.  &  C. 

L.  R.  A.  484  (where  the  supposed  341. 

corporators     were     held     liable     as         As  to  the  meaning  of  the  terms 

partners;       sed     quaere,     was     this  "subscribe  for"  and  "agree  to  take" 

correct?).     For  explanation  of  this  with  reference  to  shares,  see  further 

case,  see  §  1212  note.  Sagonj  v.  Dubois,  3  Sandf.  (N.  Y.) 

Upon  the  whole  subject,  cf.  infra,  466 ;  Cheraw,  etc.  R.  R.  Co.  v.  White, 

§  1212.  14  S.  Car.  51. 

'  Henderson  v.  Lacon,  5  Eq.  249         ^  London     <fc     Colonial    Finance 

(semble) ;     Nugent    v.    Supervisors,  Corp.,  77  L.  T.  146. 

1G2 


§   163-§  2G0]  SUBSCRIPTIONS    TO    SHARES  §   181 

member  nitlier  than  a  contract  to  lieconie  a  member.'  This 
usage  is  probably  in  large  measure  due  to  the  fact,  which  has 
already  been  mentioned,  that  in  America  no  formality  is,  in 
general,  necessary  in  order  to  become  a  member  of  a  corpo- 
ration. The  usage  is,  however,  aj)t  to  leatl  to  confusion.  P'or 
it  is  imj)ortant  to  discriminate  siiarply  i)etween  a  contract  to 
become  a  member  and  the  act  of  becoming  a  member.  It  is 
the  same  difference  as  that  l)etween  an  executory  contract  of 
sale  and  a  present  transfer  of  title  or  between  a  contract  to 
marry  and  a  marriage. 

Moreover,  a  contract  to  take  shares  must  be  distinguished 
from  a  contract  to  purchase  shares.-  On  principle,  it  .seems 
clear  that  a  corporation  cannot  agree  to  sell  its  own  uni.ssued 
shares,^  although  it  may  sell  shares  which  have  once  been 
issued  and  which  by  forfeiture,  surrender,  or  otherwise  have 
revested  in  it. 

§  181.  Classification  of  Agreements  to  take  Shares  —  Scheme 
of  Treatment.  —  Agreements  to  take  shares  may  be  divided  into 
three  classes:  first,  agreements  entered  into  prior  to  the  incor- 
poration of  the  company  otherwise  than  by  signing  its  memoran- 
dum of  as.sociation  or  incorporation  paper;  second,  agreements 
entered  into  by  subscribing  the  incorporation  paper;  and,  third, 
agreements  made  after  incorporation.  These  three  classes  will 
be  considered  in  reverse  order,  becau.se  the  last  mentioned  class 
is  the  simplest,  and  is  governed  by  rules  of  law  more  nearly  ap- 
proximating the  ordinary  principles  of  the  law  of  contracts  than 
is  either  of  the  other  classes.    In  dealing  with  the  other  two 

"  E.  g.    2   Clark    &    Marshall   on  Co.,  100  N.  Y.  Supp.  878  (holding 

Priv.  Corps.,  §  442.  that  an  original  i.ssue  of  .shares  is  not 

'  Wemple  v.  St.  Louis,  etc.  R.  R.  subject  to  a  tax  as  a  "sale"  of  stock). 

Co.,    120   111.    196;    11    N.    E.   900;  But  see  Clark  v.  Continental  Imp. 

Ottawa,  etc.  R.  R.  Co.  v.  Black,  79  111.  Co.,  57  Ind.  135.    Cf.  Bates  v.  Great 

262;     Lincoln    Shoe    Mfg.    Co.    v.  Western  Tel.  Co.,   134  111.  536;    25 

Sheldon,  44  Nebr.  279  ;  02  N.  W.  480.  N.  E.  521. 

Cf.  Otter  v.  Brevnnrt  Petroleum  Co.,  Certainly,  the  subscription  to  or 

r>0  Barb.  (N.  Y.)  247;    Ilumaston  v.  purchase  of  shares,   even   preferred 

Telegraph    Co.,    20    Wall.     20,    29  shares,  cannot  be  regarded  as  in  the 

(declaring  that  in  the  case  of  a  con-  nature  of  a  loan  or  advance;  Grover 

tract  by  a  company  to  sell  its  own  v.  Caranangh  (Ind.),  82  N.  E.   104 

shares  it  may  go  into  the  market  and  (holding   that    oral    representations 

buy  shares  to  transfer  to  the  pur-  as  to  the  financial  condition  of  the 

chaser).  company    are    actionable    notwith- 

*  Cf.  People  V.  Dufjy-Mclnnerny  standing  Lord  Tenterden's  Act). 

163 


§   1S2  ORGANIZATION    ANT>    ISSUE    OF    SHARES     [ClIAP.   Ill 

classes  of  agreements,  it  will  be  necessary  to  advert  only  to  their 
peculiarities  —  to  the  points  in  which  they  differ  from  agree- 
ments made  after  incorporation. 


§  182-§  238.      AGREEMENTS  MADE  AFTER  INCORPO- 
RATION. 

§  1S2.  Application  of  general  Principles  of  Law  of  Contracts 
and  of  Agency.  —  In  general,  agreements  to  take  shares  in  a 
corporation  already  formed  are  governed  by  the  same  princi- 
ples as  other  contracts  in  respect  to  offer  and  acceptance,  con- 
sideration, and  similar  matters.'  Indeed,  it  so  happens  that 
many  of  the  leading  English  cases  upon  that  branch  of  the  law 
of  contracts  have  had  to  do  with  agreements  to  take  shares  in 
corporations.  So  too,  the  law  of  agency  applies  to  contracts  to 
take  shares  in  a  company.^ 

§  183.  Which  Party  to  be  deemed  the  Offerer.  —  The  offer 
may  in  theory  be  made  by  either  party  —  either  by  the  com- 
pany or  by  the  intended  shareholder.  In  practice,  the  con- 
tract is  usually  made  by  the  company's  acceptance  of  an  offer 
or  application  made  by  the  person  who  is  to  take  the  shares. 
Indeed,  the  company  is  rarely  the  offerer  except  in  cases  where 
on  an  increase  of  capital  the  new  shares  are  offered  to  the  old 
shareholders  in  proportion  to  their  former  holdings,  or  in  cases 
where  the  company  in  purporting  to  accept  an  offer  of  an  ap- 
plicant for  shares  introduces,  perhaps  inadvertently,  some  new 
term,  so  that  the  supposed  acceptance  is  in  legal  effect  a 
counter  offer.  To  be  sure,  corporations  often  solicit  subscrip- 
tions to  their  capital ;  but  such  solicitations  are  not  in  law  offers 
which  may  be  accepted  by  anybody  who  desires  so  to  do,^  but 
are  rather  advertisements  for  offers.  And  even  where  a  cor- 
poration offers  a  definite  number  of  shares  to  a  particular 
person,  the  transaction  will  if  possible  be  construed  as  a  mere 
solicitation  for  an  offer  to  take  so  many  shares.* 

'  See  supra,  p.  158  note  4.  *  Cf.    Re    Barber,    15    Jur.    51 ; 

«  See  infra,  §  201.  Wallace's   Case    (1900),    2   Ch.    671 

*  But  see  Greer  v.  Chartiers  Ry.    (stated  infra,  p.  170  note  3). 

Co.,  96  Pa.   St.  391,  42  Am.   Rep. 

548. 


164 


§   163-§  200]  OFFER    AND    ACCEPTANCE  §    184 

§    184-§    191.       CASES    WUERE   THE    OFFER    IS    M.\DE    BY   THE 
SUBSCRIBER. 

§  184-§  189.     Acceptance  of  Offer,  or  Allotment. 

§  184.  In  general.  —  As  shown  above,  the  company's  accept- 
ance of  an  uppHcation  for  shares  by  an  intended  shareholder 
is  what  is  known  as  an  allotment  of  shares.'  This  acceptance 
is  like  any  other  acceptance ;  and  must  be  of  precisely  what  was 
offered.  For  example,  an  application  to  take  a  definite  number  of 
shares  cannot  be  accepted  by  the  allotment  of  any  less  number ;  - 
and  for  this  reason,  applications  are  frequently  made  for  a  cer- 
tain number  of  shares  or  such  less  number  as  may  be  allotted. 
Likewise,  an  application  for  paid-up  shares  cannot  be  accepted 
by  an  allotment  of  shares  not  fully  paid.^  So,  an  application  for 
£20  shares  cannot  be  accepted  by  the  allotment  of  an  equivalent 
amount  in  £40  shares ;  *  and  an  offer  to  take  shares  to  be  issued 
by  way  of  increase  of  capital  cannot  be  accepted  by  an  allotment 
of  shares  in  the  original  capital  of  the  company.^  Indeed,  any 
new  term  sought  to  be  introduced  in  the  acceptance  vitiates  it. 
Thus,  where  the  letter  of  allotment  stated  that  unless  payment 
for  the  shares  should  be  made  on  the  day  named  for  payment 
in  the  application  the  shares  would  be  forfeited,  the  supposed 
acceptance  added  to  the  term  of  the  offer  so  that  there  was  no 
completed  contract.^  .1  fortiori,  an  application  for  shares  on 
the  terms  that  £2  per  share  shall  be  paid  on  allotment  is  not 
accepted  by  letter  of  allotment  which  states  that  payment  of 
the  allotment  money  must  be  made  before  a  certain  date ;  ^  the 
argument  that  the  naming  of  the  date  merely  fixed  a  reasonable 
time  and  so  did  not  depart  from  the  offer  did  not  prevail  with 
the  court. 

'  Supra,  §  176.      Of   course,    the  laches    in    not    making    a    prompt 

applicant  is  not  bound  until  allot-  objection  to  the  allotment) ;    Rand 

ment.     Infra,  §  190.  v.  Columbia  Xat.  Bank,  94  Fed.  349; 

^  Cf.  Ex  parte  Roberts,  1  Drewry  36  C.  C.  A.  292  (same  point  as  last 

204.  case). 

^  Wynne's  Case,  S  Ch.  1002.      Cf.  ^  AddineU's    Case,     1     Eq.    225; 

infra,  §  233,  §  778,  §  789.  Jackson  v.  Turquand,  L.  R.  4  H.  L. 

*  Gustard's  Case,  8  Eq.  438.  305. 

"  Stephens  v.  Follett,  43  Fed.  842.         Cf.    Oriental,    etc.    Steam    Co.    v. 

Cf.  Bailey  v.  nilinghast,  99  Fed.  Briggs,  4  De  G.  F.  &  J.  191. 
801,  811  ;   40  C.  C.  A.  93  (where  the         '  Pentelow's  Case,  4  Ch.  178. 
subscriber  was  held  estopped  by  his 

165 


§   ISo  ORG.^J^IZATION    AND   ISSUE    OF    SHARES      [ChAP.   Ill 

§  185.  Written  Offer  as  affected  by  Parol  Qualifications.  — 
On  the  other  hand,  a  written  application  may  be  accepted  as  it 
stands,  an  oral  qualification  thereof  being  disregarded ;  ^  but 
where  the  qualification  is  contained  in  a  writing  which  accom- 
panies the  formal  written  application,  the  accompanying  quahfi- 
cation  is  part  of  the  offer,  so  that  an  attempted  acceptance 
rejecting  the  qualification  is  nugatory.-  Moreover,  a  written 
application  dehvered  to  a  third  person  as  an  escrow  or  subject 
to  a  parol  condition  cannot  be  accepted  until  the  condition  is 
performed.^ 

§  180.  Allotment  incomplete  until  made  known  to  Applicant. 
—  An  allotment  of  shares,  being  an  acceptance  of  an  offer,  is, 
like  other  acceptances,  incomplete  until  communicated  to  the 
offerer.*  Hence,  although  the  company  may  vote  to  accept  the 
application  and  may  even  place  the  applicant's  name  on  the 
register  of  shareholders,  yet  if  notice  of  the  allotment  be  not  com- 
municated to  the  applicant,  he  will  not  be  bound.^  Of  course, 
notice  of  the  allotment  given  to  an  agent  of  the  applicant  author- 
ized to  receive  the  same  is  sufficient."  An  agent  who  is  authorized 
to  apply  for  shares  is  usually  competent  also  to  receive  notice 

'  Harrison's  Case,  3  Ch.  G33.  accepting  his  own  offer  to  subscribe 

Cf.  Scarlett  v.  Academy  of  Music,  to  its  shares,  see  Greer  v.  Chartiers 

46  Md.  132.  Ry.   Co.,   96  Pa.   St.   391 ;    42  Am. 

'^  Roger's  Case,  3  Ch.  633.  Rep.  548. 

^  Gilman  v.  Oross,  97  Wise.  224 ;  As  to  whether  notice  of  a  call  is 

72    N.     W.    885;      Ontario    Ladies  sufficient  notice  of  an  acceptance  of 

College  v.  Kendry,  10  Ont.  L.  R.  324.  tlie   application,   see   Canadian   Tin 

*  Cozart  V.  Herndon,  114  N.  Car.  Plate  Co.,  12  Ont.  L.  R.  594. 
252;    19  S.  E.  158;    Mallory's  Case,         *  Gunn's  Case,  3  Ch.  40;    Ward's 

3  Ont.  L.  Rep.  552.  Case,  10  Eq.  659  ;    Robinson's  Case, 

An  Illinois  case  holds  that  notice  4  Ch.  322 ;    Canadian  Tin  Plate  Co., 

of  the   corporation's   acceptance   of  12  Ont.  L.  R.  594,  638. 
an  offer  to  take  shares  is  not  neces-         Cf.    Sahlgreen    &    Carrall's   Case, 

sary.     Richelieu  Hotel  Co.  v.  Inter-  3  Ch.  323 ;   Shackleford' s  Case,  1  Ch. 

national,  etc.  Encampment  Co.,   140  567. 

111.  248,  266;     29    N.  E.   1044;   33         But   .see   Hawley   v.    Upton,    102 

Am.  St.  Rep.  234.     The  case  cannot  U.  S.  314  (note  that  this  case  came 

have  been   very  fully  argued,  since  up   on   a   certificate   of   division   of 

the  court  stated  that  no  authority  opinion   which   did   not   specifically 

to  the  contrary  had  been  cited.  call    upon    the    Supreme    Court    to 

Cf.  Bloxam's  Case,  33  Beav.  529 ;  answer  the  question  whether  notice 

New    Albany,    etc.    R.    R.    Co.    v.  of  acceptance  of  the  offer  was  neces- 

McCormick,   10   Ind.    499;    71  Am.  sary). 

Dec.  337 ;    Burke  v.  Lechmere,  L.  R.         *  Levita's  Case,  5  Ch.  489. 
6  Q.  B.  297.  Cf.  Dc  Rosaz's  Case,  21  L.  T.  10. 

As  to  an  agent  of  the  company 

166 


§   lG3-§  2G0]  OFFER    AND    ACCEPTANCE  §   187 

of  the  acceptance  of  the  appHcation ;  '  hut  he  is  not  necessarily 
so."  The  dehvery  of  a  notice  of  allotment  to  a  messenger  to  take 
to  the  allottee  is  not  a  sufhcient  communication  of  the  offer. ^ 
On  the  other  hand,  in  accordance  with  the  generally  established 
rule  as  to  acceptances  of  offers,  where  the  application  was  made 
through  the  mails,  the  posting  of  a  letter  of  allotment  properly 
addressed  makes  the  contract  complete  from  that  moment,  * 
even  though  the  letter  may  never  be  received.^  Even  if  the 
letter  of  allotment  is  misdirected  and  consequently  goes 
astray,  yet  if  the  error  is  due  to  the  applicant's  own  fault,  he 
cannot  take  advantage  of  the  delay  in  receipt  of  notice  of  allot- 
ment in  order  to  retract  his  offer.®  Where  post-office  regula- 
tions prohibit  postmen  from  receiving  letters  to  put  into  the 
mails,  delivery  of  a  letter  of  allotment  to  a  postman  for  that 
purpose  is  not  a  posting  thereof  within  the  meaning  of  the 
general  rule  stated  above.^  If  the  application  contemplates 
not  an  allotment,  or  counter-promise,  but  the  actual  issue  of 
shares  as  an  act  completing  a  unilateral  contract,  the  appli- 
cant may  be  bound  from  the  moment  of  the  issue  of  the 
shares  even  before  he  receives  notice  thereof.* 

§  187.  Whether  Notice  of  Allotment  must  he  Direct  and 
Formal.  —  The  acceptance  of  an  application  for  shares  must  be 
communicated  directly  from  the  company  to  the  applicant.  It 
is  not  enough  that  the  latter  may  obtain  knowledge  thereof  indi- 
rectly. Yet  the  communication  of  the  acceptance  need  not  be 
formal  or  express.  Anything  emanating  from  the  company 
which  indicates  to  the  applicant  that  the  shares  have  been 
allotted  to  him  will  be  sufficient.^  For  example,  although  no 
formal  notice  of  allotment  be  given,  still  if  the  shares  applied 
for  are  issued  to  the  applicant  and  he  acts  as  shareholder,  the 
contract  of  membership  is  complete. '°     So,  if  the  applicant  is 

'  Levita's  Case,  5  Ch.  489.  *  Perhaps,  it  is  upon  this  ground 

^  Robinson's  Case,  4  Ch.  322.  that  such  cases  as  Hawley  v.  Upton, 

="  Ilebh's  Case,  4  Eq.  9.  102  U.  S.  314,  and  Richelieu  Hotel 

*  Harris's  Case,  7  Ch.  587.  Co.  v.  International,     etc.     Encamp- 
^  Household,     etc.     Ins.     Co.  v.    men<  Co.,  140  111.  248,  266;  29  N.  E. 

Grant,  4  Ex.  D.  216;    Wall's  Case,  1044;    33  Am.  St.  Rep.  234,  which 

15  Eq.  18  (semble).  are    cited    above,    p.    166    note    5, 

Contra:      Finucane's     Case,     17  should  be  explained. 
W.  R.  813  (overruled).  »  Richards    v.    Home    Assurance 

•  Townscnd's  Case,  13  Eti.  148.  Ass'n.  L.  R.  6  C.  P.  591,  595. 

'  Exparte  Jones  {1900),  I  Ch.  •220.        "  Levita's  Case,  3  Ch.  36;  Craw 

lo7 


§   188  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP,   III 

present  at  the  meeting  of  the  directors  when  his  appHcation  is 
accepted,  no  further  communication  of  the  acceptance  is  neces- 
sary.^ So,  where  the  ownership  of  a  certain  number  of  shares 
is  made  a  quahfication  for  a  certain  person's  appointment  to  be 
a  director  or  other  officer,  and  where  the  candidate  for  the  office 
accordingly  appUes  for  the  requisite  number  of  shares,  notifica- 
tion of  his  appointment  to  the  office  may  in  some  circumstances 
be  a  sufficient  communication  of  the  company's  acceptance  of 
the  offer.^ 

§  188.  Time  for  Acceptance  or  Allotment.  —  An  apphcation 
for  shares  hke  any  other  offer  must  be  accepted,  if  at  all,  within 
a  reasonable  time  after  the  application/  unless  some  other  time 
be  fixed  by  the  applicant  at  which  the  offer  shall  expire. 

§  189.  Acceptance  without  any  Entry  on  Company's  Books. 
—  An  acceptance  of  an  offer  to  subscribe  for  shares  need  not  be 
evidenced  by  any  entry  in  the  company's  books  but  may  rest  in 
parol  merely.*  As  pointed  out  above,  entry  of  the  applicant's 
name  on  the  register  of  shareholders,  however  necessary  it  may 
be  in  order  to  make  him  an  actual  shareholder,  is  not  part  of  an 
allotment  or  acceptance  of  an  offer  to  take  shares,  and  is  there- 
fore not  necessary  in  order  to  complete  a  binding  executory  con- 
tract on  the  one  part  to  issue  and  on  the  other  part  to  accept 
shares.^ 


§  190.     Retraction    of    Offer  to   take    Shares.  —  An   offer   to 
take  shares  in  a  corporation  may  of  course  be  retracted  at  any 

ley's  Case,  4  Ch.  322.    These   cases         As  to  the  necessity  for  prompt 

might    also    be    supported    on    the  repudiation  of  the  shares  in  order  to 

ground  of  estoppel.  escape  Uabihty  because  of  unreason- 

*  Fletcher's  Case,  17  L.  T.  136.  able  delay  in  allotment  or  notifica- 

*  Richards    v.    Home    Assurance  tion  of  allotment,  see  Boi/Ze's  Case,  54 
Ass'n,  L.  R.  6  C.  P.  .591.     But  see  L.  J.  Ch.  550. 

Carmichael   and   Hewett's    Case,    30         *  Stuart  v.  Valley  R.  R.  Co.,  32 

W.  R.  742.    Cf.  infra,  §  1414,  et  seq.  Gratt.  (Va.)  146.    As  to  the  applica- 

^  Ramsgate  Victoria  Hotel  Co.  v.  tion  of  the  Statute  of  Frauds,  see 

Montefiore,  L.  R.  1  Ex.  109;  Carter,  infra,  §  199. 

etc.   Co.  V.  Hazzard,  65  Minn.  432;         ^  As  to  statutes   requiring  con- 

68  N.  W.  74.  tracts  of  subscription  to  shares  to  be 

Cf.  Gregg's   Case,    15   W.    R.  82  in  some  particular  form,  see  infra, 

(where  13  months  was  held  not  to  be  §  200. 
an  unreasonable  time). 

168 


§    103-§  2G0]  OFFER    AND    ACCEITANXE  §   191 

time  Ijefore  the  acceptance  is  communicated,  or  posted,  to  the 
applicant,  and  a  jortiitrl  at  any  time  before  allotment;  for  until 
acceptance  there  is  no  contract.'  This  right  of  withdrawal  is 
not  affected  by  the  fact  that  the  applicant  was  also  a  director, 
and  that,  as  such,  his  duty  was  to  see  that  the  offer,  if  advanta- 
geous for  the  company,  should  be  promptly  accepted.^  The  with- 
drawal is  not  complete  until  communicated  to  the  company,  but 
notice  thereof  given  to  the  clerk  in  charge  of  the  company's 
office  is  notice  to  the  corporation.^  The  retraction  need  not  be 
express,  or  communicated  directly  to  the  corporation.  For  in- 
stance, the  fact  that  an  applicant  for  shares  stops  payment  of  a 
cheque  given  in  payment  of  a  deposit  payable  thereon  is  suffi- 
cient to  charge  the  company  with  notice  that  the  offer  has  been 
withdrawn.*  The  retraction  may  be  oral  although  the  applica- 
tion was  in  writing.* 

§  191.  Offer  or  Promise  to  take  Shaxes  under  Seal  of  Prom- 
isor. —  If  a  promise  to  take  shares  is  made  under  the  promisor's 
seal,  and  if  the  paper  is  delivered  as  his  deed,  it  is  binding  forth- 
with, and  cannot  be  revoked  even  before  the  company  has  ac- 
cepted the  proposition.®  In  such  a  case,  the  allotment  and  issue 
of  the  shares  constitute  a  condition  which  must  be  performed 
within  a  reasonable  time  in  order  to  hold  the  promisor,^  but  the 
applicant  is  bound  beyond  his  power  to  escape,  from  the  time 
of  delivery  of  the  document. 


'  Wilson's  Case,  20  L.  T.  962 
Miles'  Case,  4  De  G.  J.  &  S.  471 
Gledhill's  Case,  3  De  G.  F.  &  J.  713 
Wallace's  Case  (1900),  2  Ch.  671 
Thomson's  Case,  34  L.  J.  Ch.  525 


3  Truman's  Case  (1894),  3  Ch. 
272. 

*  Truman's  Case  (1894),  3  Ch. 
272. 

'  Wilson's  Case,   20   L.   T.   962; 


Bristol  Creamery  Co.   v.    Tilton,   47  Ritso's  Case,   4   Ch.   D.    774;     Tru- 

Atl.  591;    70  N.  H.  239;    Canadian  jnan's  Case  (1894),  3  Ch.  272.     Cf. 

Tin  Plate  Co.,  12  Ont.  L.  R.  594;  MUes'  Case,  4  De  G.  J.  &  S.  471. 

Essex    Turnpike  Corp.  v.  Collins,  8  ^  Nelson   Coke   Co.    v.    Pellatt,    4 

Mass.  292;   Parker  v.  Northern  Cent.  Ont.  L.  R.  481. 

Mich.    R.    R.    Co..    33    Mich.    23;  Cf.    Hudson   Real   Estate   Co.  v. 

Northern  Cent.  Mich.  R.  R.   Co.  v.  Tower.   156  Mass.  82,  84 ;   30  N.  E. 

Eslow,  40  Mich.  222.  465 ;   32  Am.  St.  Rep.  434,  stated 

Cf.  Badger  Paper  Co.  v.  Rose,  95  infra,  .§  242. 

Wise.  145;  70  N.  W.  302;  37  L.  R.  ■  Provincial  Grocers,  Ld.,  10  Ont. 

A.  162.  L.  R.  705. 

=  Ritso's  Case,  4  Ch.  D.  774. 


169 


§  192  ORGANIZATION    AND    ISSUE    OF   SHARES      [ChAP.  Ill 

§  192-§  196.     Cases  where  the  Offer  is  made  hy  the  Company. 

§  192.  Contract  complete  on  Acceptance  by  Subscriber.  —  Of 
course,  where  a  corporation  offers  a  certain  number  of  shares 
to  a  certain  person  who  thereupon  accepts  the  offer,  the  contract 
is  complete  without  any  further  "allotment"  or  acceptance  on 
the  part  of  the  corporation.^  But,  as  already  stated,  in  doubtful 
cases  the  courts  incline  to  hold  solicitations  of  subscriptions  to 
shares  on  the  part  of  the  corporation,  by  prospectuses  and  other 
similar  means,  as  advertisements  for  offers  rather  than  as  offers.^ 
It  is  not  to  be  lightly  assumed  that  a  corporation  intends  to  offer 
its  shares  to  the  first  person  who  may  apply  for  them  without  re- 
gard to  his  financial  standing  or  desirability  as  a  shareholder. 

§  193.  Offers  of  Shares  to  existing  Shareholders  pro  rata.  — 
If  a  corporation  offers  new  or  additional  shares  to  its  own  exist- 
ing shareholders  or  to  shareholders  in  a  company  wliich  it  is 
about  to  absorb,  the  offer  is  in  general  like  any  other  offer  looking 
to  a  bilateral  contract ;  ^  but  it  has  some  very  striking  pecuUari- 
ties.  For  example,  if  one  of  the  shareholders  to  whom  such  an 
offer  is  made  dies  before  acceptance,  the  offer  may  be  accepted 
by  his  executor.*  A  fortiori,  if  the  offer  is  made,  nominally,  to  a 
shareholder  who  is  deceased  and  whom  the  company  knows  to 
be  dead,  it  may  be  accepted  by  his  executor.^ 

§  194.  Counter-OfEers  made  by  introducing  new  Terms  in 
attempting  to  accept  Apphcation  of  Subscriber.  —  If  a  company's 
ostensible  acceptance  of  an  offer  of  an  applicant  for  shares 
introduces  some  new  term  not  contained  in  the  application,  the 
supposed  acceptance  is,  as  stated  above,  a  counter-offer  which 
must  be  accepted  by  the  original  applicant  before  any  completed 
contract  arises.    The  acceptance  of  such  a  counter-offer  is  less 

*  Greer  v.  Chartiers  Ry.  Co.,  96  was  not  an  offer  which  a  shareholder 

Pa.    St.    391;    42    Am.    Rep.    548;  in  the  old  company  could  accept  by 

Acadia   Loan    Corp.   v.    Wentworth,  mere  notification  of  his  election  to 

40  Nova  Scotia,  525.  take   shares   instead  of   bonds,  but 

^  See  supra,  §   18.3.  that  the  new  company  must  notify 

^  But  cf.   Wallace's  Case  (1900),  him  of  an  allotment  of  the  shares  in 

2  Ch.  671  (where  it  was  held  that  an  order  to  complete  the  contract  be- 

agreement  for  absorj)tion  of  another  tween  them). 

corporation,  containing  a  stipulation         *  Cheshire   Banking   Co.,   32   Ch. 

that    the     shareholders   in    the    old  D.  301. 

company  shall  have  at  their  election  ^  Jackson  v.   Turquand,  L.  R.  4 

shares  or  bonds  of  the  new  company,  H.  L.  305. 

170 


§   lG3-§  260]  OFFER    AXD    ACCEPTANCE  §   194 

frequently  express  tlian  implied  from  aef|uiescenoe.  Mere  in- 
action on  the  part  of  the  allottee  is  not  sufficient  to  create  a  con- 
tract, lie  made  an  application,  which  the  company  refused: 
the  company's  counter-j)ropositi()n  is  a  mere  offer  of  which  he  is 
not  bound  to  take  notice,  and  of  which  acceptance  must  f>e 
affirmatively  shown.  Mere  inaction  or  delay  cannot  amount  to 
an  acceptance  of  the  company's  counter-offer.'  Hence,  he  is  not 
bound  to  institute  legal  proceedings  for  the  removal  of  his  name 
from  the  register  of  shareholders,  but  is  certainly  protected  if 
he  promptly  repudiate  ownership  of  the  shares."  A  request  that 
share-certificates  be  sent  him  was  held  in  one  case  not  to  be  suffi- 
cient evidence  of  acceptance  of  the  company's  offer,  but  merely 
to  indiaite  a  disposition  to  investigate  what  manner  of  shares 
had  been  ofl'ered  him.^  The  mere  receipt  and  retention  of  share- 
certificates  sent  by  the  company  does  not  amount  to  acceptance 
of  the  shares;  *  for  it  is  mere  non-action.  On  the  other  hand, 
a  letter  acknowledging  receipt  of  the  certificates  may  be  construed 
as  an  acceptance  of  the  company's  offer.^  Acting  as  shareholder 
will  be  deemed  an  acceptance  of  the  shares ; "  but  the  execution 
of  a  proxy  to  be  used  only  in  a  certain  contingency  which  never 
occurs  will,  it  seems,  have  no  such  effect.^  Attendance  at  share- 
holders' meetings  may  be  explained,  if  the  attendance  was  not 
for  the  purpose  of  exercising  rights  as  a  shareholder  but  merely 
in  order  to  watch  the  proceedings.^  Ordinarily,  a  transfer  of  the 
shares  or  any  of  them  operates  as  an  acceptance  of  the  company's 
offer  of  them.^  But  this  would  not  be  so  where  the  transfer  is 
made  under  the  mistaken  belief  that  the  shares  transferred  were 
certain  other  shares  for  which  the  transferor  had  subscribed.*" 
The  execution  of  a  blank  transfer  at  the  time  of  the  application, 
by  means  whereof  a  transfer  of  the  shares  is  subsequently  ef- 
fected, has  been  held  not  to  estop  the  applicant  from  denying 

>  Wijnne's  Case,  8  Ch.  1002.  «  SomervUle's  Case,  G  Ch.  266. 

a.  Wilson's  Case,  20  L.  T.  962.  "  Hindley's    Case    (1896),    2   Ch. 

But  see  Ex  parte  Perrett,  15   Eq.  121. 
250;   Wheatcroft's  Case,  42  L.  J.  Ch.         '  Ticonic  Water,  etc.  Co.  v.  Lang, 

853.  63  Me.  480. 

*  Gorrissen's  Case,  8  Ch.  507.  *  Simpson's  Case,  4  Ch.  184. 

Cf.   Wilson's  Case,  20  L.  T.  962.  »  Cf.  Crawley's  Ca.se,  4  Ch.   322; 

3  Beck's  Case,  9  Ch.  392.  Railway  Timetables  Co.,   42  Ch.  D. 

But  t;ee  Hindley's  Case  (1896),  2  98. 
Ch.  121.  '»  Arnot's  Case,  36  Ch.  D.  702. 

*  SomervUle's  Case,  6  Cli.  266. 

171 


§  195  ORG.^'IZATION    AND    ISSUE    OF   SHARES     [ChAP.  Ill 

that  his  offer  was  accepted  by  the  company.'  An  allotment  of 
shares  to  a  person  who  has  never  applied  for  them  at  all  would 
operate  as  an  oiler  on  the  company's  part  to  the  same  extent 
as  an  ostensible  acceptance  of  an  application  which  introduces 
some  new  term  would  do. 

§  195.  Time  for  Acceptance  of  Company's  Offer.  —  The  com- 
pany's offer  must  be  accepted  if  at  all  within  the  time  limited  in 
the  offer  itself,  or  if  no  time  be  limited  then  within  a  reasonable 
time.  It  seems  that  if  the  company  goes  into  liquidation  before 
the  offer  has  expired,  the  option  may  be  accepted  after  the  com- 
mencement of  the  liquidation,-  and  that  upon  such  acceptance 
the  acceptor  becomes  entitled  to  his  pro  rata  share  in  the  com- 
pany's assets. 

§  196.  Application  for  Shares  in  I^orance  of  Company's 
Offer  not  Acceptance.  —  What  is  intended  as  an  offer  to  take 
shares  cannot  be  construed  as  an  acceptance  by  the  applicant 
of  an  offer  previously  made  without  his  knowledge  by  the  com- 
pany. For  example,  where  a  corporation  purports  to  allot  shares 
to  a  person  who  had  not  applied  for  them,  a  subsequent  applica- 
tion for  the  same  number  of  shares  made  in  ignorance  of  the 
previous  attempted  allotment  cannot  constitute  a  binding  con- 
tract unless  it  be  subsequently  accepted  by  the  company  and 
unless  such  acceptance  be  communicated  to  the  appUcant.^ 


§  197.  Implied  Offers  and  Acceptances.  —  There  may  be 
cases  where  either  the  offer  or  acceptance  *  or  both  are  implied 
rather  than  express.^    For  example,  where  R  as  director  signs 

*  Ward's  Case,  10  Eq.  659.  although  it  was  conceded  that  the 
^  Hirsch  v.  Burns,  77  L.  T.  377.  acceptance  or  retention  of  a  deposit 
^  Northern  Electric  Wire,  etc.  Co.,    would  not  be  sufficient  evidence  of 

2  Megone  288.     But  cf.  United  Ports,  acceptance    of    an    application    not 

etc.  Ins.  Co.,  20  W.  R.  88.  made   in   pursuance   of   a   previous 

*  Where  D  agreed  that  he  and  arrangement  such  as  that  stated : 
his  partner  should  between  them  Davies's  Case,  41  L.  J.  Ch.  659. 
take  250  shares,  and  where  D  ac-  ^  Clevenger  v.  Moore  (N.  J.),  58 
cordingly  appUed  for  50  shares  and  Atl.  88;  71  N.  J.  Law  148;  Park- 
his  partner  for  200,  the  court  in-  hurst  v.* Mexican,  etc.  R.  R.  Co.,  102 
ferred  an  assent  on  the  part  of  the  111.  App.  507 ;  Hecht,  Liebmann  & 
company  to  this  division  of  the  250  Co.  v.  Phoenix  Woolen  Co.,  121  Fed. 
shares  from  the  mere  retention  of  188. 

the    deposits    paid    on    application,         Ci.  Stephens  v.  Follett,  43  Fed.  Si2. 

172 


§  lG3-§  260]  SUBSCRIPTIONS    BY    INFANTS  §  198 

the  minutes  of  a  directors'  meeting  at  which  he  was  present,  and 
at  which  a  list  of  supposed  sul^scribers  for  sliares  (inchuhiig 
himself)  was  read  out,  there  is  sufficient  evidence  of  a  completed 
though  implied  contract.'  Somewhat  similar  instances  of  im- 
plied contracts  to  take  shares  may  l>e  found  in  cjises  relating  to 
directors'  (pialification  shares.-  These  cases  of  implied  contract 
are  sometimes  thought  to  rest  on  estoppel ;  ^  but  the  principle  of 
estoppel  is  properly  only  an  element  in  the  implied  contract. 

§  198.  Infants'  Contracts  to  take  Share.  —  An  infant's 
agreement  to  take  shares  in  a  corporation,  like  other  contracts 
of  an  infant,  is  of  course  voidable  even  after  the  contract  has 
been  executed  by  entering  his  name  on  the  register  of  share- 
holders.^ Where  the  infant  has  received  no  benefit  from  the 
contract,  has  attended  no  meetings  of  shareholders,  and  has 
received  no  dividends,  he  may  during  infancy  repudiate  the 
agreement  and  by  next  friend  bring  an  action  to  recover  the 
deposits  paid  on  application  and  allotment.^  Unless,  however, 
the  infant  on  coming  of  age  promptly  repudiates  the  contract,  he 
will  be  bound  thereby  even  though  he  may  never  have  acted  as 
shareholder."  The  right  of  repudiation  exists  although  the  in- 
corporation act  may  provide  that  ^' every  person  who  shall  have 
subscribed  the  prescribed  sum  .  .  .  and  whose  name  shall  have 
been  entered  on  the  register  of  shareholders,  .  .  .  shall  be 
deemed  a  shareholder";  the  words  quoted  mean  every  person 
w^ho  shall  have  contracted  to  subscribe,  and  therefore  do  not 
include  persons  not  sui  jurist  Where  the  infant  is  sued  upon  the 
contract,  a  plea  of  infancy  is  demurrable  unless  it  allege  that  the 
defendant  repudiated  the  shares ;  **  and  this  is  true  even  though 

'  Ex.  -parte  Roney,  33  L.  J.Ch.731.         «  EhbeU's  Case,  5  Ch.  302. 

But  cf.  TnthilVs  Case,  1  Ch.  85.  Cf.  Yeoland  Consols,  58  L.  T.  922 ; 

'  See  iixfra,  §  1414,  et  seq.  Cork,   etc.    Ry.   Co.  v.   Cazenove,    10 

="  Hays  V.   Pittsburgh,  etc.  R.  R.   Q.  B.  935;   Hart's  Case,  6  Eq.  512 
Co.,  38  Pa.  St.  81  ;  Xugent  v.  Super-   (where  tlie  infant  was  held  entitled 
visors,  19  Wall.  241.     See  2  Clark  &  to  repudiate    three  years   after   at- 
Marshall  on  Priv.  Corps.,  §  515,  pp.   taining  majority). 
1570-1573.  '  Xeuvy,  etc.  Ry.  Co.  v.  Coombe, 

*  Xeivry,  etc.  Ry.  Co.  v.  Coombe,  3  Ex.  565 ;  Xorth  Western  Ry.  Co. 
3  Ex.  565.  V.  McMichael,  5  Ex.  114. 

*  Hamilton  v.  Vaughan,  etc.  Co.  But  see  Cork,  etc.  Ry.  Co.  v. 
(1894),  3  Ch.  589.  Cazenove,  10  Q.  B.  935. 

Cf.     White    V.    Mount     Pleasant        *  North  Western  Ry.  Co.  v.  Mc- 
Mills    Corp.,    172    Mass.     462;     52  Michael,  5  Ex.  U-i. 
N.  E.  632. 

173 


§   199  ORGANIZATION    AND    ISSUE    OF    SHARES      [ChAP.  Ill 

the  o\\niership  of  the  shares  be  burdensome  rather  than  bene- 
ficial, at  least  unless  the  infancy  be  alleged  to  be  still  subsisting 
at  the  time  of  pleading.^ 

§  199.  Application  of  Statute  of  Frauds.  —  It  would  seem 
clear  that  subscriptions  to  shares  are  not  in  any  proper  sense 
contracts  of  sale  within  the  seventeenth  section  of  the  Statute  of 
Frauds,  and  that  accordingly  they  should  not  be  required  to  be 
in  writing  in  any  jurisdiction  in  which  the  Statute  of  29  Charles 
II  c.  3  is  in  force  in  unmodified  form,-  and  this,  too,  quite  in- 
dependently of  the  question  whether  shares  of  capital  stock  are 
"goods,  wares  and  merchandise,"  within  the  meaning  of  that 
statute.^  In  some  of  the  American  states,  the  original  Statute 
of  Frauds  may  have  been  so  amended  as  to  include  agreements 
to  take  shares  in  a  corporation,  and  sometimes 'incorporation 
acts  require  that  subscription  shall  be  in  writing,  in  which 
case  oral  subscriptions  will  not  be  binding.^  Whether  contracts 
for  the  sale  or  transfer  of  shares  are  within  the  seventeenth 
section  of  the  statute  is  a  different  question.^ 

§  200.  Statutes  prescribing  Forms  or  Ceremonies  for  Subscrip- 
tions to  Shares.  —  Where  a  statute  prescribes  certain  forms  to 
be  gone  through  by  subscribers  to  shares,  compliance  with  the 
statutory  ceremonies  may  well  enough  be  a  condition  precedent 
to  the  attainment  of  the  status  of  an  actual  shareholder,"  but 
the  courts  should  struggle  against  any  construction  of  the  statute 
which  would  invalidate,  on  account  of  a  failure  to  observe  the 
statutory  conditions,  what  would  otherwise  be  a  binding  execu- 
tory contract  on  the  one  part  to  issue  and  on  the  other  part  to 
accept  shares.''  For  example,  where  a  statute  requires  the  pay- 
ment of  a  deposit  from  every  subscriber  at  the  time  of  subscrib- 
ing, it  may  well  enough  be  that  no  one  can  become  an  actual 
shareholder  entitled  to  the  rights  and  subject  to  the  liabilities  of  a 

1  North  Western  Ry.  Co.  v.  *  Vreeland  v.  New  Jersey  Stone 
McMichael,  5  Ex.  114.  Co.,  29  N.  J.  Eq.  188;    Fanning  v. 

'  Webb  V.   Baltimore,  etc.   R.   R.  Insurance  Co.,  37  Oh.  St.  339;    41 

Co.,  77  Md.  92;  26  Atl.  113;  39  Am.  Am.  Rep.  517. 
St.  Rep.  396 ;    Somerset  Nat.  Bank-         *  See  infra,  §  505. 
ing  Co.  v.  Adams,  72  S.  W.   1125;         «  New  Brunswick,  etc.  Ry.  Co.  v. 

24  Ky.  Law  Rep.  2083 ;    Rogers  v.  Muggeridge,  4  H.  &  N.  580. 
Burr,  105  Ga.  4.32;    31  S.  E.  438;        ^  Cf.    Buffalo,  etc.   R.   R.   Co.   v. 

70  Am.    St.    Rep.    50;   2    Clark    &  Gifford,   87   N.    Y.    294;     Nebraska 

Marshall  on  Priv.   Corps.,    §   445  c.  Chicory    Co.    v.    Lednicky    (Nebr.), 

2  As  to  this  see  infra,  §  505.  113  N.  W.  245. 

174 


§  lG3-§  260]        SUBSCRIPTIONS   THROUGH    AGENTS 


201 


sliart'liolder  until  the  stututory  deposit  he  paid;  l)iit  neverthe- 
less it  is  suhmitted  that  non-payment  of  the  deposit  should 
certainly  not  vitiate  the  contract  or  j)revent  the  one  party  from 
recovering  dama<^es  from  tlieother  for  a  failure  to  issue  the  shares 
or  to  take  and  jKiy  for  them.'  The  decided  cases  on  the  subject 
do  not,  however,  establish  any  iiitelliifible,  systematic  rules,  but 
consist  in  a  wilderness  of  conllictini;  decisions.-  For  example, 
some  cases  hold  that  non-payment  of  a  statutory  deposit  relieves 
the  subscriber  of  any  liability  on  the  contract,''  but  other  ca.ses 
hold  the  contrary.'  As  such  statutes  are  less  common  nowadays 
than  formerly,  the  perplexing  uncertainty  and  contrariety  in 
the  decisions  need  occasion  the  less  regret. 

§  201.  Subscriptions  through  Agents.  —  The  general  prin- 
ciples of  the  law  of  agency  apply  to  contracts  of  subscription  to 
a  corporation's  shares.'^  Thus,  such  contracts  are  governed  by 
the  same  law  as  other  contracts  in  respect  to  the  liability  of  an 
agent  acting  without  or  in  excess  of  his  authority,^  and  in  re- 
spect to  rights  of  the  parties  where  the  contract  is  made  by  an 
agent  for  an  undisclosed  principal.'    Where  an  application  for 


'  Ashtabula,  etc.  R.  R.  Co.  v. 
Smith,  15  Oh.  St.  328. 

*  Cf.  2  Clark  &  Marshall  on  Priv. 
Corps.,  §  445;  1  Morawetz  on  Priv. 
Corps.,  §  71-§  73.  See  also  infra, 
§  796. 

*  E.  g.  Wood  V.  Coosa,  etc.  R.  R. 
Co.,  32  Ga.  273  (with  which  com- 
pare, however,  Mitchell  v.  Rome 
R.  R.  Co.,  17  Ga.  574);  Hapgoods 
V.  Lusch,  107  N.  Y.  Supp.  331. 

*  E.  g.  Vicksburg,  etc.  R.  R.  Co. 
V.  McKean,  12  La.  Ann.  638 ;  Wight 
V.  Shelbrj  R.  R.  Co.,  16  B.  Monr. 
(Ky.)  4;  63  Am.  Dec.  522;  Judah 
V.  American  Live  Stock  Ins.  Co.,  4 
Ind.  333. 

Cf.  Taggart  v.  Western  Md.  R.  R. 
Co.,  24  Mci.  563 ;   89  Am.  Dec.  760. 

*  Cf.  Farmers'  tfc  Mech.  Bank  v. 
Nelson,  12  Md.  35  (where  the  con- 
tract was  held  not  to  be  binding  be- 
cause the  company's  agent  by  whom 
it  was  matle  had  exceeded  his  au- 
thority by  failing  to  exact  a  deposit 
from  the  subscriber). 

*  Ex  parte  Panmure,  24  Ch.  D.  367. 


As  to  ratification  of  contract 
made  by  luiauthorized  agent,  see 
McClelland  v.  Whiteley,  15  Fed.  322; 
Levita's  Case,  5  Ch.  489 ;  Electric 
Welding  Co.  v.  Prince  (Mass.),  81 
N.  E.  306  (headnote  inadequate  — 
ratification  by  payment  of  calls  and 
failure  to  repudiate  shares  otherwise 
than  by  resisting  an  action  for  call). 

^  Southampton,  etc.  Steatn  Boat 
Co.,  4  De  G.  J.  &  S.  200 ;  State  ex  rel. 
Columbia  Valley  R.  R.  Co.  v.  Supe- 
rior Ct.  (Wash.),  88  Pac.  332  (sub- 
scription by  a  person  described  as 
"trustee"  without  disclosure  of 
name  of  principal  or  cestui  que 
trust) ;  State  ex  rel.  Biddle  v.  Superior 
Court  (Wash.),  87  Pac.  40  (a  similar 
case,  holding  that  either  the  princi- 
pal or  the  "trustee"  is  liable). 

But  sec  Hyslop  v.  Morrel  Bros., 
W.N.  (1891)  19. 

Cf.  Ex  parte  Bugg,  2  Drewry  «fe 
Sm.  452  (where  the  relation  was 
held  to  be  that  of  trustee  and  cestui 
que  trust  and  not  that  of  agent  and 
principal). 


175 


§  202  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.   Ill 

shares  is  made  in  the  name  of  a  married  woman  who  is  incapable 
of  contracting  and  who  signs  the  appUcation  at  the  instance  of 
her  father  without  knowing  its  contents  or  effect,  and  where  the 
father  intends  to  become  the  substantial  owner  of  the  shares, 
the  case  is  assimilated  to  an  application  in  the  name  of  a  ficti- 
tious person,  so  that  the  contract  is  regarded  as  made  by  the 
father  under  his  daughter's  name  as  an  alias.  ^ 

§  202.  Subscriptions  by  Agent  or  Trustee  for  the  Corpora- 
tion itself.  —  A  subscription  by  a  person  as  trustee  or  agent  for 
the  company  itself  would  seem  to  be  a  nullity.-  There  must  be 
at  least  two  parties  to  a  contract.     Under  some  circumstances 

—  for  example,  where  the  trustee  or  agent  represents  that  the 
subscription  is  real  and  not  colorable  —  he  may  be  bound 
personally.^ 

§  203.  Subscriptions  by  Executors.  —  Ordinarily,  a  subscrip- 
tion by  an  executor  binds  him  personally  and  not  the  estate 
of  his  decedent.*  But  where  a  person  who  is  executor  subscribes 
for  two  sets  of  shares,  the  first  individually,  and  the  second  as 
executor,  there  are,  it  has  been  held,  two  distinct  contracts.^ 

§   204-§   219.      SUBSCRIPTIONS     PROCURED     BY     FRAUD     OR 
MISREPRESENTATION . 

§  204.     Defence  of  Fraud  in  general  —  Laches  of  Subscriber. 

—  The  only  argument  against  holding  that  subscriptions  to 
shares  like  other  contracts  may  be  avoided  by  the  allottee  on 
account  of  fraudulent  misrepresentations  practised  upon  him 
by  agents  of  the  company  is  that  the  creditors  of  the  corporation 

—  innocent  third  parties  —  have  a  vital  interest  in  such  sub- 
scriptions ;  that  —  to  use  a  figure  of  speech  familiar  in  America 

—  the  subscriptions  to  the  capital  of  a  corporation  constitute  a 
* '  trust-fund  "  for  the  payment  of  its  debts.  This  argument  is  not 
sufficiently  strong  to  justify  the  courts  in  altogether  depriving  the 
defrauded  allottee  of  the  defence.'    Nevertheless,  it  does  sharply 

'  Pugh  and  Sharsman's  Case,  13  v.  Grand  Collier  Dock  Co.,  11  Sim. 

Eq.  566.     See  also  infra,  §  767.  327 ;    Allibone  v.  Hager,  46  Pa.  St. 

Cf.     Nat.    Commercial     Bank    v.  48. 
McDonnell,  92  Ala.  387 ;  9  So.  149.  *  See  also  infra,  §  768. 

2  Holladay  v.  Elliott,  8  Oreg.  84.  «  Erie,  etc.  R.  R.  Co.  v.  Patrick, 

=>  Johnston  V.  Allis,  71  Conn.  207;  2  Keyes  (N.  Y.)  256. 
41  Atl.   816    (distinguishing  Russell        *  Vreeland  v.  New  Jersey  Stone 

V.  Bristol,  49  Conn.  251);    Preston  Co.,  29  N.  J.  Eq.  188;    Blake's  Case, 

176 


§   163-§  260]        SUBSCRIPTIONS    OHTAINED    BY    FHAUD  §  205 

differentiate  agreements  to  take  shares,  when  executed  by  actual 
issue  of  the  shares,  from  other  contracts.  Accordingly,  the  law 
is  settled  on  both  sides  of  the  Atlantic  that  a  person  who  has  been 
induced  to  take  shares  in  a  corporation  by  fraudulent  misrepre- 
sentation loses  the  defence  unless  he  repudiates  the  contract 
(and  perhaps  unless  he  follows  up  his  repudiation  by  instituting 
a  suit  to  be  relieved  of  the  shares)  within  a  reasonable  time 
after  discovery  of  the  fraud,'  or  after  the  fraud  might,  by  the  ex- 
ercise of  due  diligence  on  his  part,  have  been  discovered.-  How- 
ever, if  a  material  misrepresentation  be  proved,  the  contract  is 
prima  facie  voidable  so  that  the  burden  of  establishing  laches 
rests  on  the  company.^  Failure  promptly  to  rescind  may  be 
excused  where  the  delay  is  due  to  a  request  of  the  company  or  its 
promoters.^  An  attempt  to  repudiate  liability  on  the  shares  for 
some  cause  other  than  the  fraudulent  misrepresentation  in  ques- 
tion will  not  negative  the  inference  of  laches  arising  from  the 
delay  in  discovering  the  fraud  and  in  repudiating  the  shares  on 
that  ground.^  The  question  whether  the  defrauded  shareholder 
has  used  due  diligence  is  in  general  a  question  of  fact  for  the 
jury." 

§  20.^.  English  Rule  requiring  Repudiation  of  Shares  and 
Institution  of  Proceedings  for  Removal  of  Name  from  Share- 
Register    before    Winding-up    or    Suspension    of    Business.  —  In 


34  Beav.  639 ;   Mulholland  v.  Wash-  Walker,  13  Nat.  B.  Reg.  82 ;   North- 

ington   Match   Co.,    35   Wash.    315;  rop  v.  Bushnell,  38  Conn.  498. 

77  Pac.  497 ;    Stewart  v.  Rutherford,  Cf.  Dufjield  v.  Barnum  Wire,  etc. 

74  Ga.  435,  and  many  other  cases.  Works,  64  Mich.  293;  31  N.  W.  310; 

But  see  Howard  v.  Glenn,  85  Ga.  Hinkley  v.  Sac  Oil,  etc.  Co.  (Iowa), 
238;  11  S.  E.  610;  21  Am.  St.  Rep.  107  N.  W.  629,  634  (where  a  good 
156;  Turner  v.  Grangers',  etc.  Ins.  statement  will  be  found  of  the  de- 
Co.,  65  Ga.  649;  38  Am.  Rep.  gree  of  diligence  required  in  suspect- 
801.  ing  and  discovering  fraud). 

'  Central  Ry.  Co.  v.  Kisch,  L.  R.  But  see  American  Alkali  Co.  v. 

2  H.  L.  99;    Tail's  Case,  3  Eq.  795;  Salorn,  131  Fed.  46,  50-51 ;   65  C.  C. 

Ashley's  Case,  9  Eq.  263 ;    Sharpley  A.  284. 

V.  South  Ry.  Co.,  2  Ch.  D.  663;    Re  ^  London  &  Staffordshire  Fire  In^. 

Shearman,  66  L.  J.  Ch.  25;    Ogilvie  Co.,  24  Ch.  D.  149. 

V.  Knox  Ins.  Co.,  22  How.  380.     See  *  Cox  v.  Xational  Coal,  etc.  Co. 

2  Clark  &  Marshall  on  Priv.  Corps.,  (W.  Va.),  56  S.  E.  494. 

§  473  d.  »  Upton  V.    Tribilcock,  91   U.   S. 

2  Wilkinson's   Case,   2   Ch.    536;  45,51-55. 

Peel's  Case,  2  Ch.  674 ;    Laurence's  •  Xewton  Nat.  Bank  v.  Newbegin, 

Case,  2  Ch.  412;    Upton  v.   Trihil-  74  Fed.    135;  20  C.  C.  A.  339;  33 

cock,  91  U.  S.  45,  54-55;   Farrar  v.  L.  R.  A.  727. 

VOL.  I. —  12  177 


§  205  ORGANIZATION    AND    ISSUE    OF    SHARES      [ChAP.  Ill 

addition  to  this  duty  of  diligence,  the  hiw  in  Great  Britain  im- 
poses a  somewhat  arbitrary  restriction  on  the  defrauded  share- 
holder's right  of  defence.  In  that  country,  it  will  be  remembered, 
each  company  is  required  to  keep  a  register  of  its  members, 
which  shall  be  open  to  inspection  by  shareholders  and  creditors ; 
and  when  a  winding-up  commences  all  those  persons  whose 
names,  with  their  consent,  have  been  entered  on  that  register 
must  be  placed  on  the  "  list  of  contributories."  The  commence- 
ment of  the  winding-up  proceeding,  according  to  the  construc- 
tion put  by  the  British  courts  on  the  Companies  Act,  fixes  forever 
the  liabilities  of  these  "contributories."  Hence,  a  person  who 
has  been  induced  to  take  shares  by  fraud  and  whose  name  has 
been  entered  on  the  register  of  members,  loses  his  defence  unless 
prior  to  the  winding-up  he  has  instituted  legal  proceedings  to 
have  his  name  removed  from  the  register ;  and  this  is  true  even 
though  he  did  not  discover  the  fraud  and  had  no  opportunity  of 
discovering  it  prior  to  the  commencement  of  the  winding-up.^ 
This  is  a  technical  and  perhaps  an  arbitrary  rule,  founded  upon 
the  peculiar  nature  of  winding-up  proceedings  under  the  English 
law. 

Under  this  rule,  it  is  not  enough  that  the  subscriber  may 
have  repudiated  the  contract  before  the  winding-up;  he  must 
institute  legal  proceedings  to  have  his  name  removed  from  the 
register.^  It  was  once  held  not  to  be  enough  that  he  may  have 
set  up  the  defence  of  fraud  against  an  action  for  calls ;  ^  but  re- 
cent cases  hold  that  to  be  sufficient.*  It  makes  no  difference,  how- 
ever, that  the  company's  assets  derived  from  other  sources  are 
sufficient  to  pay  the  debts  in  full  so  that  the  defrauded  share- 

1  Oakes    v.    Turquand,    L.    R.    2         Cf.  Cocksedge  v.  Metropolitan,  etc. 

H.  L.  325 ;    Kent  v.  Freehold  Land  Ass'n,  64  L.  T.  826. 
Co.,  3  Ch.  493.  ^  Etna  Ins.  Co.  (1871),  Ir.  Rep. 

Cf.  Addlestone  Linoleum  Co.,  37  6  Eq.  298  (where  the  action  for  calls 

Ch.  D.  191.  had  been  defeated  on  account  of  the 

'  Scottish  Petroleum  Co.,  23  Ch.  fraud) ;   Cleveland  Iron  Co.,  16  W.  R. 

D.  413;    Ex  parte  Storey,  6  Times  95. 

L.  R.  357;    62  L.  T.  791.     If  such         *  Whiteley's    Case  (1900),   1    Ch. 

proceedings    are    instituted    before  365;    Pakenham  Pork  Packing  Co., 

the  \vinding-up  is  begun,  it  is  im-  6  Ont.  L.  R.  582.     But  see  Electric 

material  that  the  winding-up  may  Welding  Co.  v.   Prince  (Mass.),  81 

have    supervened    before    they    are  N.  E.  306,  310  (as  to  a  subscription 

determined.      Reese    River    Mining  to  shares  in  an  English  company). 
Co.  V.  Smith,  L.  R.  4  H.  L.  64. 

178 


§  163-§  2G0]       SUBSCRIPTIONS    OBTAINED    BY    FRAUD  §  206 

holder's  liul)ility  is  hciiij;  enforced  merely  for  the  benefit  of  other 
shareholders.'  If,  however,  one  shareholder  begins  proceedings 
to  coinjx'l  the  removal  of  his  name  from  the  register  because 
of  misrepresentation,  an  agreement  between  the  company  and 
other  shareholders  similarly  situated  that  their  claims  for  relief 
from  the  contract  of  membership  shall  abide  the  result  of  those 
proceedings,  will  entitle  those  shareholders  to  rescission  of 
their  contracts  although  the  company  may  be  wound-up  prior 
to  the  decision  of  the  test  case; '  but  the  mere  fact  that,  without 
any  such  agreement,  other  shareholders  having  like  cause  to 
complain  began  proceedings  for  the  removal  of  their  names  from 
the  register  is  not  enough.  If,  however,  the  company  assents  to 
the  repudiation  of  the  shares  and  .strikes  out  the  allotment,  there 
is  no  occasion  for  legal  proceedings,  and  consequently  the  allottee 
will  be  protected  even  though  a  winding-up  supervenes;^  and 
this  is  true  although  the  allotment  is  cancelled  upon  some 
ground  other  than  the  misrepresentation.^  Supervening  insol- 
vency of  the  company,  coupled  with  a  closing  of  its  doors  and 
suspension  of  business,  will,  it  seems,  have  the  same  effect  in 
preventing  a  shareholder  from  subsequently  repudiating  lia- 
bilitv  on  the  ground  of  fraud  as  the  commencement  of  formal 
winding-up  proceedings  would  have.^  These  rules  have  no 
application  where  the  shares  have  been  declared  forfeited  by 
the  company,  and  an  action  brought  against  the  former  share- 
holder to  recover  calls  overdue  at  the  time  of  the  forfeiture ;  in 
such  a  case  the  former  shareholder  has  become  a  mere  debtor  to 
the  company,  and  like  any  other  debtor  may  defend,  even  after 
the  institution  of  licpiidation  proceedings,  on  the  ground  that  the 
claim  against  him  was  obtained  by  the  company's  fraud,  unless 
by  laches  or  otherwise  he  had  lost  the  right  to  set  up  this 
defence  at  the  time  of  the  forfeiture." 

§  206.  American  Rule  as  to  Effect  of  Winding-up  Proceed- 
ings on  Defence  of  Fraud.  —  In  America,  the  courts,  it  is  sub- 

'  Burgess's  Case,  15  Ch.  D.  507.  '  Tennent    v.     City    of    Glasgow 

2  Panic's  Case,  4  Ch.  497 ;  Scot-  Bank,  4  A.  C.  615.  Mere  insolvency, 
tish  Petroleum  Co.,  23  Ch.  D.  413  without  .suspension  of  business,  will 
(semble).  not  have  that  effect.    Ex  'parte  Carl- 

3  Wright's  Case,  20  W.  R.  45;    7  i7ig,  56  L.  J.  Ch.  321. 

Ch.  55;  Fox's  Case,  5  Eq.  118.  See  °  Aaron's  Reefs  v.  Twiss  (1S96), 
also  infra,  §  637.  A.  C.  273.     Cf.  infra,  §  828. 

*  Wright's  Case,   20   W.    R.   45; 
7  Ch.  55. 

179 


§  207  ORGANIZATION    AND    ISSUE    OF    SHARES      [ChAP.   Ill 

mitted,  should  not  follow  the  English  decisions  in  holding  that 
the  supervention  of  insolvency  or  of  liquidation  proceedings 
abruptly  cuts  short  a  shareholder's  right  of  rescission  on  ac- 
count of  misrepresentation,  irrespective  of  whether  he  had  been 
guilty  of  laches  in  discovering  the  fraud  or  repudiating  the 
shares.  In  this  country,  it  would  seem  that  after  insolvency  or 
the  commencement  of  a  suit  for  the  winding-up  of  the  company's 
affairs  as  well  as  before,  the  questions  are  whether  the  share- 
holder has  used  due  diligence  in  discovering  the  fraud  and  in 
getting  rid  of  the  shares.^  However  this  may  be,  it  would  seem 
clear  that  in  America  a  defrauded  subscriber  to  shares  who  has 
repudiated  the  contract  before  the  known  insolvency  of  the  com- 
pany and  before  the  commencement  of  winding-up  proceedings 
should  not  be  debarred  from  relief  because  he  may  not  have 
instituted  a  suit  for  rescission  and  removal  of  his  name  from  the 
register  of  shareholders.^ 

§  207.  Election  to  keep  Shares  notwithstanding  Fraud  or 
Misrepresentation.  —  Even  in  a  case  where  there  has  been  no 
prolonged  delay  in  repudiating  the  contract  and  in  beginning 
proceedings  to  have  one's  name  removed  from  the  register  of 
shareholders,  or  where  such  proceedings  have  actually  been 
commenced,  yet  the  shareholder  to  whom  the  misrepresenta- 
tion was  made  may  voluntarily  elect  to  keep  the  shares  and  thus 
preclude  himself  from  raising  or  persisting  in  the  defence  of 
fraud  or  misrepresentation.^     Any  facts  evincing  an  intention 

*  OgUvie   v.    Knox   Ins.    Co.,   22  tion) ;   Wallace  v.  Hood,  89  Fed.   11 

How.   380 ;    Newton  Nat.   Bank   v.  (same  point) ;  Marion  Trust  Co.   v. 

Newbegin,    74    Fed.    135    (semble) ;  flZis/i  (Ind.),  79  N.  E.  415. 
Ramsey  v.  Thompson  Mfg.  Co.,  116         '  Fear  v.   Bartlett,  81   Md.  435; 

Mo.  313;    22  S.  W.  719;    Kentucky  32    Atl.    322;    33    L.    R.    A.    721; 

Mutual,   etc.   Co.   v.   Schcefer   (Ky.),  Newton  Nat.  Bank  v.  Newbegin,  74 

85  S.  W.  1098 ;  27  Ky.  L.  Rep.  657 ;  Fed.    135 ;  20  C.   C.  A.   339 ;  33  L. 

Dieterle  V.  Ann  Arbor  Paint,  etc.  Co.,  R.   A.    727;    Ramsey    v.    Thompson 

107    N.    W.    79;     143    Mich.    416;  Mfg.   Co.,    116  Mo.  313,  22   S.   W. 

Hinkley  v.  Sac  Oil,  etc.  Co.  (Iowa),  719;  Savage  v.  Bartlett,  78  Md.  561; 

107  N.  W.  629.  28  Atl.  414. 

But  see  Howard  v.   Turner,   155         But  see  Howard  v.  Glenn,  85  Ga. 

Pa.  St.  349;    26  Atl.  753;    35  Am.  238;   11  S.  E.  610;  21  Am.  St.  Rep. 

St.  Rep.  883 ;    Howard  v.  Glenn,  85  156 ;   Turner  v.   Grangers',  etc.   Ins. 

Ga.  238,  261 ;    11  S.  E.  610 ;  21  Am.  Co.,  65  Ga.  649 ;  38  Am.  Rep.  801 ; 

St.  Rep.  156;    Scott  v.  Latimer,  89  Howard  v.  Turner,  155  Pa.  St.  349 ; 

Fed.   843  ;     33   C.   C.    A.    1    (where  26  Atl.753  ;  35  Am.  St.  Rep.  883  (rul- 

statutory  habiUty  to  creditors  under  ing  on  plaintiff's  second  "point")- 
the  National  Bank  Act  was  in  ques-         ^  Wilson  v.  Hundley,  96  Va.  96 ; 

180 


§  lG3-§  200]       SUBSCRIPTIONS   OBTAINED    BY    FRAUD  §  208 

to  retain  ownership  of  the  shares  after  learning  of  the  fraud 
will  have  that  effect  —  such  as  payment  of  calls,'  voting  at 
shareholders'  meetings,-  receiving  dividends,^  attempting  to 
sell  the  shares,*  etc.  Doing  these  things  will  not,  however,  de- 
prive the  shareholder  of  the  defence  unless  he  had  previously 
discovered  the  misrepresentation.^  Moreover,  the  fact  that  a 
defrauded  allottee  has  trafficked  in  other  shares  in  the  same 
company  will  not  preclude  him  from  rescinding  the  fraudulent 
contract.^  INIoreover,  the  fact  that  the  shareholder  has  repu- 
diated the  contract  on  some  ground  other  than  that  of  fraud 
will  not  preclude  him  from  subsequently  setting  up  the  defence 
of  fraud. ^ 

§  208.  Necessity  for  returning  Shares  to  Company.  —  An 
allottee  of  shares  cannot  rescind  the  contract  because  of  fraud 
unless  he  is  in  a  position  to  place  the  company  in  statu  quo  by 
surrendering  the  shares.^  Hence,  if  a  person  is  induced  by 
fraud  to  take  shares  in  an  unincorporated  association,  his  assent 
to  its  becoming  incorporated,  so  that  the  shares  in  the  unincor- 
porated association  cease  to  exist  and  consequently  cannot  be 
restored  on  rescission  of  the  contract,  will  prevent  him  from 
rescinding  the  subscription  on  account  of  the  fraud.'  Simi- 
larly, if  the  defrauded  allottee  transfers  the  shares  to  his  infant 

30  S.  E.  492;   70  Am.  St.  Rep.  837;  '  Scholey  v.    Central   Ry.   Co.,   9 

Franey  v.  Wauwatosa  Park  Co.,  99  Eq.  266  n. 

Wise.  40 ;   74  N.  W.  548.  *  Ex  -parte  Briggs,  1  Eq.  483. 

'  See    Whiteliouse's   Case,    3    Eq.  *  Mount   Morgan   Gold    Mine,    3 

790 ;   Re  Shearman,  60  L.  J.  Ch.  25 ;  Times  L.  R.  556. 

Marten  V.  Burns  Wine  Co.,  99  Cal.  ®  Mulhollandv.Y/ashingtonMatch 

355;    33  Pac.  1107.  Co.,  35  Wash.  315;    77  Pac.  497. 

Cf.  Fear  v.  Bartlctt,  81  Md.  435;  "  Alabama   Foundry,    etc.    Works 

32  Atl.  322;   33  L.  R.  A.  721.  v.  Dallas,  29  So.  459;    127  Ala.  513. 
»  Foulkes  V.  Quartz  Hill.  etc.  Min-  **  Cf.    Maine  v.    Midland   Invest- 
ing Co.,  Cababe  &  EUis,  156;  Mar-  mcnt  Co.  (Iowa),  109  N.  W.  801. 

ten  V.  Burjis  Wine  Co.,  99  Cal.  355;         As  to  whether  the  defrauded  sub- 

33  Pac.  1107.  scriber  is  bound  to  return  the  identical 
Cf.   Ogilvie  v.   Knx)x  Ins.  Co.,  22    shares  issued  to  him  or  whether  it  is 

How.    380,    391    (headnote    inade-  enough  to  return  an  ecjual  number  of 

quate).  the  same  class  of  shares,  cf.  §  501. 

But  see  Tomlin's  Case  (1898),  1         "  Western  Bank  v.  Addie,  L.  R. 

Ch.  104.    Mere  attendance  at  a  meet-  1  H.  L.  (Sc.)  185.      As  to  the  effect 

ing   \\-ithout   voting   lias   iK^en   held  of    assenting    to    a     reorganization 

not  to  be  a  condonation  of  the  mis-  scheme,  cf.  Spreckels  v.  Gorrill  (Cal.), 

representation.     Ex  parte  Edwards,  92  Pac.  1011. 
64  L.  T.  561.    Cf.  Maine  v.  Midland 
Investment  Co.  (Iowa),  109  X.  W.  801. 

181 


§  209  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.   Ill 

children,  he  puts  it  out  of  his  power  to  return  them,  and  is  there- 
fore prechided  from  rescinding  on  the  ground  of  the  fraud.' 
The  fact,  however,  that  in  ignorance  of  the  fraud  a  shareholder 
has  sold  some  of  the  shares  which  he  was  induced  to  take  will 
not  prevent  liim  from  repudiating  the  cftntract  so  far  as  the 
shares  remaining  under  his  control  are  concerned."  In  order  to 
rescind  for  fraud  or  misrepresentation,  the  allottee  must  offer  to 
restore  any  dividends  that  may  have  been  paid  to  him.^ 

§  209.  Defence  of  Fraud  available  either  at  Law  or  in  Equity. 
—  The  defence  that  a  contract  to  take  shares  in  a  corporation 
was  procured  by  the  fraud  of  the  company,  when  available  to 
the  shareholder  at  all,  is  good  at  law  as  well  as  in  equity ;  ^  but 
the  better  practice  is  to  file  a  bill  in  equity  for  rescission  of  the 
contract  of  subscription.^  The  defrauded  shareholder  is  not 
precluded  from  asking  equitable  intervention  because  the  shares 
may  have  been  issued  at  a  discount.® 

§  210.  Recovering  back  Money  paid  in  on  the  Shares.  — 
Upon  rescission  of  an  allotment  of  shares  on  account  of  mis- 
representation, the  allottee  is  entitled  to  recover  from  the  com- 
pany any  sums  he  may  have  paid  on  the  shares,  by  way  of 
deposits  on  application  or  allotment,  or  otherwise,^  with  interest 
thereon.*    The  decree  for  such  repayment  may  go  against  the 

'  Francis  v.  Xew  York,  etc.  R.  R.  Bosher  v.  R.  &  H.  Land  Co.,  89  Va, 

Co.,  108  N.  Y.  93;    15  N.  E.  192.  455;    16  S.  E.  360;  37  Am.  St.  Rep 

^  Mount   Morgan   Gold   Mine,    3  879    (similar  point  to   that   of  last 

Times    L.    R.    556.      Cf.    American  case).     Cf.  Barcus  v.  Gates,  89  Fed 

Alkali  Co.  v.  Salom,   131  Fed.  46,  783;   32    C.  C.    A.   337;    Negley   v 

49-50 ;   65  C.  C.  A.  284.  Hagerstown  Mfg.  Co.,  86  Md.  692 

3  Wallace  v.  Hood,  89   Fed.    11,  Txjler  \.  Savage,  143  U.  S.  79. 
15  (headnote  inadequate) ;    Marten         But  see  Dorsey  Machine  Co.   \ 

V.  Burns  Wine    Co.,  99    Cal.    355;  McCaffrey,  139  Ind.  545;    38  N.  E 

33  Pac.  1107.  208;   47  Am.  St.  Rep.  290. 

*  Bwlch-y-Plwm    Mining    Co.    v.         "  Barcus  v.  Gates,  89  Fed.  783 
Baymes,  L.  R.  2  Ex.  324 ;   American  32  C.  C.  A.  337. 

Alkali  Co.  v.   Salom,    131   Fed.   46,         '  Karberg's  Case  (1892),  3  Ch.  1 

50;   65  C.  C.  A.  284.  Grangers'  Ins.  Co.  v.  Turner,  61  Ga, 

*  Mack  V.  Latta,  178  N.  Y.  525;  561;     Ramsey    v.    Thompson    Mfg. 
71  N.  K.  97;   67  L.  R.  A.  126  (join-  Co.,  116  Mo.  313;   22  S.  W.  719. 
ing  claim  for  damages  against  tlie         Cf.  Stewart  v.  Austin,  3  Eq.  299 
directors  for    deceit) ;    Manning    v.  Stewart  v.  Rutherford,  74  Ga.  435. 
Berdan,  135  Fed.   159;    Sherman  v.         *  Ex  parte  Wainwright,  59  L.  J 
Am.  Stove  Co.,  85  Mich.    169 ;    48  Ch.   281 ;     McClanahan   v.    Ivanhoe 
N.  W.  537  (where  two  shareholders  Land,  etc.  Co.,  96  Va.  124;   30  S.  E 
united  in  a  single  suit  for  rescission) ;  450. 

182 


§   163-§  2G0]        SUBSCRIPTIONS    OBTAINED    BY    FRAUD  §  213 

individual  oflicers  or  agents  wIuj  j;urticij>atcd  in  the  fraud  as 
well  as  against  the  cor|X)ration  itself.' 

§  211.  Fraud  practised  on  orig-inal  Subscriber  no  Defence 
to  Transferee.  —  The  defence  that  a  subscription  was  induced 
hy  fraud  is  personal  to  the  defrauded  subscril>er  and  cannot 
be  set  up  by  a  transferee.-  On  the  other  hand,  the  mere  fact 
that  a  subscriber  may  have  paid  a  bonus  to  a  third  person  in 
order  to  secure  the  allotment  of  the  shares  is  not  conclusive 
evidence  that  he  should  be  regarded  as  a  transferee  from  that 
person  and  as  such  tleprived  of  the  defence  of  fraud.^ 

§  212.  Action  for  Damages  for  Deceit  by  defrauded  Sub- 
scriber. —  A  person  who  is  induced  by  fraud  to  subscribe  for 
shares  in  a  corporation  cannot  retain  the  shares  and  at  the  same 
time  maintain  an  action  of  tort  for  deceit  against  the  company. 
If  for  any  reason  his  right  to  rescind  is  lost,  he  cannot  sue  the 
company  in  tort  for  deceit.*  His  rights  in  that  respect  differ 
from  those  of  a  person  who  has  been  induced  by  fraud  to  pur- 
chase land,  chattels,  or  ordinary  choses  in  action.  It  would 
seem,  however,  that  the  defrauded  subscriber  may  maintain 
an  action  of  tort  for  deceit  against  the  individual  officers  or 
agents  who  were  guiltv  of  fraud,  although  he  be  disabled  or 
averse  from  giving  up  the  shares.^ 

§  213-§  219.     What  sufficient  Fraud  or  Misrepresentation 

to  justify  Rescission. 

§  213.  In  general.  —  In  respect  to  the  question  what  will 
amount  to  such  fraud  or  misrepresentation  as  will  afford  a  de- 
fence to  an  agreement  to  take  shares,  such  a  contract  does  not 

'  Tyler  v.  Savage,  143  U.  S.  79 ;         But  see  Dorsey  Machine  Co.  v. 

Vreeland  v.  Xew  Jersey  Stone  Co.,  McCaffrey,  139  Ind.  545;   38  N.  E. 

29    N.  J.  Eq.   188;  Mack  v.  Latta,  208;  47  Am.  St.  Rep.  290. 
178  N.  Y.  525;    71  N.  E.  97;    67         ^  Cf.  MiUer  v.  Barber,  66  N.  Y. 

L.  R.  A.  126.  558;  Austin  m.  Murdoch,  127  N.  Car. 

-  BerryrnUe    Land,    etc.     Co.    v.  454  ;  37  S.  E.  478,  Getchell  v.  Dusen- 

Lcu'/s,  19  S.  E.  Rep.  781  (Va.).  bury     (Mich.),     108    N.     W.     723; 

'  McClanahan  v.   Ivanhoe   Land,  Luetzke     v.     Roberts     (Wise),     109 

etc.  Co.,  96  Va.  124;   30  S.  E.  4.-)0.  N.  W.  949;  Hall  v.  Old    Talargoch 

*  Houldsworth  v.  City  of  Glasgow  Lead    Mining    Co.,    3    Ch.    D.    749 

Ba«<V,  5  .\.  C.  317 ;    Wilson  y.  Hund-  (wlicn    the    court    refused    to    stay 

ley,  96  Va.  96 ;  30  S.  E.492 ;  70  Am.  proceetlings  in  an  action  by  a  sub- 

St.  Rop.  837.     Cf.   Wallace  v.  Hood,  scriber    against    tlie    company    and 

89  Fed.  11,  22-23.  the    directors    jointly).      See'   also, 

183 


§  214  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.   Ill 

differ  from  other  contracts.*  It  has  been  held  that  if  the  mis- 
representation be  material  and  be  relied  upon  by  the  subscriber, 
he  may  rescind  the  contract  even  though  he  would  have  sub- 
scribed had  no  misrepresentation  been  made.'  Certainlv,  the 
defrauded  subscriber  may  rescind  without  showing  that  the 
shares  were  worth  less  than  he  paid  for  them.^  Some  authorities 
maintain  that  an  agreement  to  take  shares  in  a  corporation  is 
within  the  class  of  contracts  iiberrimae  fidci  which  are  voidable 
for  mere  non-disclosure  without  proof  of  actual  misrepresenta- 
tion ;  *  but  the  prevalent  and  better  opinion  is  that  this  is  not 
so,  and  that  such  agreements  are  voidable  for  non-disclosure 
only  when  the  suppressio  veri  makes  that  which  is  stated  false 
or  misleading.^ 

§  214.  Misrepresentation  as  to  Corporation  ASairs.  —  Cer- 
tain cases  of  representations  relating  to  corporation  affairs  in- 
volve questions  which  do  not  usually  arise  except  with  respect 
to  contracts  to  take  shares.  A  statement  in  a  prospectus  that 
A  is  a  director  will  justify  rescission  of  a  contract  of  subscrip- 
tion to  shares,  although  the  representation  may  have  been  true 
at  the  time,  if  A  retires  before  allotment.''  A  statement  in  a 
prospectus  that  A  was  expected  to  become  a  director  is  deemed 
untrue  where  A  had  expressed  an  intention  of  becoming  a 
director  but  had  not  authorized  the  publication  of  his  name.^ 
A  representation  that  undrawn  profits  to  a  large  amount  had 

Grovcr  v.  Cavanaugh  (Ind.),  82  X.  E.         But  see  Pulsford  v.  Richards,  17 

104    (holding    that    oral    misrepre-  Beav.  87. 

sentations    by    officers    as    to    the         *  Stern  v.  Kirkby  Lumber  Co.,  134 

financial  condition  of  the  company  Fed.  509 ;  Spreckels  v.  Gorrill  (Cal.), 

will   sustain   an   action   by   the   de-  92  Pac.  1011. 

frauded  subscriber  notwithstanding         *  Anson   on   Contracts,    8th   ed.. 

Lord  Tenterden's  Act).  160.     Cf.   Components    Tube    Co.   v. 

'  Central  Ry.  Co.  v.  Kisch,  L.  R.  Naylor  (1900),  2  Jr.  1  ;    New  Bruns- 

2  H.  L.  99.  wick,  etc.  Co.  v.  Muggcridge,  1  Dr.  & 

Cf.  Oakes  v.  Turquand,  L.  R.  2  Sm.  363. 
H.   L.   325;    Jackson  v.    Turquand,         *  Cf.     Aaron^s    Reefs    v.     Twiss, 

L.  R.  4  H.  L.  305  ;  London  &  Stafford-  (1896),  A.  C.  273  ;   Central  Ry.  Co.  v. 

shire  Fire  Ins.  Co.,  24  Ch.  D.    149;  Kisch,  L.  R.  2  H.  L.  99;   Pulsford  v. 

Smith  V.  Reese  River  Co.,  2  Eq.  264  Richards,  17  Beav.  87. 
(in  substance  affirmed  in  Reese  River        "  Anderson's  Case,  17  Ch.  D.  373 ; 

Co.  V.  Smith,  L.  R.  4  H.  L.  64);  Scottish  Petroleum  Co.,  2^  Ch.D.  413. 
Wainv^ight's  Case,  63  L.  T.  429;  '  Kurberg's  Case  (1892),  3  Ch.  1. 
Byers  Bros.   v.   Maxwell    (Tex.),  73         Cf.     Ex    parte    Wainwright,    59 

S.  W.  437.  L.  J.  Ch.  281. 

*  Ex  parte  Carting,  56  L.  J.  Ch.  32 1 . 

184 


§  163-§  2G0]        SUBSCRIPTIONS    OBTAINED    BY    FHAUD  §  21G 

been  appropriated  as  a  "reserve  fund"  is  not  the  less  true 
because  the  profits  in  question  were  not  invested  as  a  separate 
fund  but  were  made  part  of  the  working  capital.'  A  repre- 
sentation that  no  shares  had  been  sold  for  less  than  par  is  very 
material.-  The  same  is  true  of  a  representation  that  the  com- 
pany is  legally  incorporated,  whereas  in  fact  some  of  the  pro- 
ceedings necessary  to  secure  limited  liability  have  lx?en  omitted.^ 
On  the  other  hand,  a  representation  that  neighl)ors  and  friends 
of  the  subscriber  have  also  agreed  to  become  shareholders  has 
been  thought  immaterial.^  This  decision,  however,  must  be 
supported,  if  at  all,  upon  the  ground  that  the  representation  was 
too  indefinite  to  be  relied  upon;  for  a  representation  that  a 
named  person  has  subscribed  is  certainly  material  and  will 
justify  rescission  if  the  individual  in  question  was  not  a 
bona  fide  subscriber.^  A  representation  that  the  company  is 
free  from  debt  has  been  held  to  mean  that  the  land  which 
constitutes  its  only  property  is  unincumbered.^ 

§  215.  Misrepresentation  as  to  Matters  of  Law.  —  By  the 
principle  of  law  usually  accepted  in  England  and  America,  con- 
tracts are  not  voidable  for  misrepresentation,  even  though  fraud- 
ulent, as  to  matters  of  law ;  and  hence  agreements  to  take  shares 
cannot  be  avoided  because  they  may  have  been  induced  by 
fraudulent  misstatements  as  to  the  powers  of  the  company 
under  its  act  of  incorporation  or  as  to  the  purport  or  effect  of 
the  general  enabling  act,  if  the  company  be  organized  under  a 
general  law.^  Hence,  also,  a  wilfully  false  statement  that  the 
shares  are  "non-assessable"  will  not  be  ground  for  repudiation 
of  liability.^ 

§  216.  Misrepresentation  as  to  Contents  of  Incorporation 
Paper.  —  Misrepresentation  as  to  the  contents  of  the  incorpora- 

'  Kenncdij   v.   Acadia   Pulp,   etc.  503;   Alabama  Foundry,  etc.  Works 

Co.,  38  Nova  Scotia  291.  v.  £»a//as,  29  So.  459 ;  127  Ala.  513. 

=  Hubbard  v.    International  Mer-         *  Tinkerv.Kier,\95'Mo.  183;  94 

cantile  Agency  (N.  J.),  59  Atl.  24.  S.  W.  501. 

Cf.  Wenstrom  ConsoL,  etc.  Co.  v.         '  1    Morawetz    on    Priv.    Corps., 

Purneil,  75  Md.  113,  122  ;  23  Atl.134.  2d  ed.,  §  95. 

=•  Maine   v.    Midland   Investment         Cf.  Clem  v.  Newcastle,  etc.  R.  R. 

Co.  (Iowa).  109  N.  W.  801.  Co.,  9  Ind.  488;    68  Am.  Dec.  653. 

*  Haskell  V.  Worthington,  94   Mo.         *  U pton  v.  Tribilcock,  91  U.  S.  45; 

560;  7  S.  W.  481.  Parker  v.  Thomas,  19  Ind.  213;    81 

^'CL  Coles  v.  Kennedy,  81   Iowa  Am.  Dec.  385;  Ellison  \.  Mobile,  etc. 

360;  46X.W.  1088;  25  Am.  St.  Rep.  R.  R.  Co.,  36  Miss.  572. 

185 


§  217  ORGANIZATION    AND    ISSUE    OF    SHARES     [ClIAP.  Ill 

tion  paper  may  entitle  a  person  who  has  agreed  to  take  shares 
on  the  faith  thereof  to  repudiate  the  agreement.^  In  England 
the  opinion  has  been  advanced  that  such  misrepresentation, 
after  the  paper  has  been  recorded  and  therefore  after  the  appli- 
cants for  shares  have  an  opportunity  of  examining  it  for  them- 
selves, will  not  justify  rescission,-  and  the  same  principle  has  been 
approved  in  America ;  ^  but  nevertheless  this  opinion  seems  to 
be  without  support  in  principle  especially  where  the  misrepre- 
sentation is  fraudulent.^  The  doctrine  of  constructive  notice 
should  not  be  perverted  into  a  cover  for  fraud.^  Such  misrep- 
resentations usually  occur  in  cases  of  departure  from  the  original 
scheme  laid  down  for  the  company  by  its  promoters  in  a  pros- 
pectus published  before  incorporation.  The  mere  fact  of  such 
departure  affords  no  defence  to  a  person  who  has  subscribed 
for  shares  after  the  incorporation  paper,  embodying  the  altered 
scheme,  has  been  executed  and  recorded,  unless  the  original 
prospectus  or  other  statements  setting  forth  the  original  scheme 
be  circulated  after  the  change  was  made,  and  be  brought  to  the 
knowledge  of  and  relied  upon  by  the  applicant  for  shares.  The 
case  of  an  application  for  shares  made  prior  to  incorporation, 
as  affected  by  subsequent  departures  from  the  original  scheme, 
is  considered  below.^ 

§  217.  Misrepresentation  unauthorized  by  Corporation.  — 
In  order  that  a  contract  of  subscription  to  shares  may  be  re- 
scinded for  misrepresentation,  it  is  in  general  necessary  that  the 
misrepresentation  be  proved  to  have  been  made  by  an  agent  of 
the  corporation  duly  authorized  to  make  representations  for  the 
purpose  of  inducing  persons  to  subscribe  to  the  shares.''  Re- 
scission may,  however,  be  had  on  account  of  misrepresentation, 
which  was  made  by  promoters  prior  to  the  company's  incor- 
poration.    If  the  company  accepts  an  application  for  shares, 

'  Central  Ry.  Co.  v.  Kisch,  L.  R.  agreement  to  take  shares,  although 

2  H.  L.  99.  the    prospectus    referred    applicants 

2  Cf.  Ross    V.    Estate    Investment  for  shares  to  a  recorded  document 

Co.,  3  Eq.  122;   Oakes  v   Turquand,  inspection  of  which  would  have  dis- 

L.  R.  2  H.  L.  .325.  closed    the    untruth    of    the    mis- 

^  OH  City  Land,  etc.  Co.  v.  Porter,  representations). 

99  Ky.  254 ;   35  S.  W.  643.  ^  See  supra,  §  162. 

*  Cf.     Langham     v.     East     Rose  *  Infra,  §  258. 

Wheal,  etc.  Co.,   37    L.   J.  Ch.  253  '  Newlands     v.     National     Em- 

(where  a  misleading  prospectus  players,  etc.  Ass'n,  54  L.  J.  Q.  B.  428. 
was  held  to  justify  rescission  of  an 

186 


§  lG3-§  2G0]      now  kuhscription'  perfoiimed  §  220 

which  was  made,  and  is  known  l)y  the  conipany  to  have  been 
made,  in  rehance  upon  statements  of  promoters  made  before 
incorporation,  the  corporation  thereby  adopts  those  representa- 
tions, so  that  they  have  the  same  effect  in  rendering  the  agree- 
ment voidable  as  if  they  had  been  made  by  agents  of  the 
company  after  its  formation.* 

§  218.  Misrepresentation  as  to  Nature  of  Transaction. — 
Where  misrepresentation  goes  to  the  nature  of  tlie  transaction 
—  for  example,  where  a  person  signs  a  subscription  to  shares 
under  the  belief,  induced  by  fraud,  that  he  is  merely  depositing 
money  in  a  bank  —  he  never  becomes  a  shareholder  and  may 
apparently  repudiate  the  shares  in  spite  of  delay  or  of  the  super- 
vention of  winding-up  proceedings.- 

§  219.  Misrepresentation  as  to  Identity  of  Company.  —  In 
a  case  of  misrepresentation  or  mistake  as  to  the  identity  of  the 
company  whose  shares  are  applied  for,  there  is  no  meeting  of 
minds  and  therefore  no  contract  at  all.  For  example,  it  was 
held  in  England  that  where  a  person  received  an  allotment 
of  shares  in  a  company  recently  incorporated,  the  application 
having  been  made  under  the  erroneous  belief,  fostered  by  the 
directors,  that  the  company  was  a  different  and  long-established 
corporation,  there  was  no  meeting  of  minds  and  therefore  no 
contract  at  all  —  not  even  a  voidable  one ;  so  that  the  allottee 
was  not  liable  in  respect  of  the  shares  although  the  company 
went  into  liquidation  before  he  repudiated  ownership.^ 


§  220.  How  Contract  of  Subscription  may  be  performed.  — ■ 
A  contract  to  subscribe  for  or  to  take  shares  in  a  corporation  is 
satisfied  either  by  personally  accepting  the  shares  or  by  finding 
some  one  else  who  will  do  .so.*  Performance  by  the  corporation 
means  the  issue  of  valid  shares.  It  does  not  necessarily  include 
the  issue  of  a  share-certificate.^    If  the  contract  calls  for  paid-up 

>  Karberg's  Case  (1S92),  3  Ch.  1.         =  Xational  Ins.,  etc.  Ass'n,  A  De  G. 

Cf.    Lrpule   v.    Anglo-lUdian,    etc.  F.  &  J.  78. 
Spinning   Co.    (1890),    1    Ch.    178;         ^  BaiUie's  Case  {\S9S),  I  Ch.  UO. 
Steivart  v.  Rutherford,    74   Ga.   435;  Cf.  Stewart  v.  Austin.  3  Eq.  299. 

and  infra,  §  257  and  §  337.     But  see         *  London     ct     Colonial     Finance 

Gourlie  v.  Chandler,  41  Nova  Scotia  Corp.,  77  L.  T.  146. 
341.  ^  Infra,  §  233  and  supra.  ,^  171. 

1S7 


§  221  ORGAJJIZATION    AND    ISSUE    OF   SHARES     [ChaP.  Ill 

shares,  the  company  can  perform  its  part  only  by  issuing  shares 
which  are  in  fact  and  law  fully  paid  up.' 

§   221-§   227.      CONDITIONAL   AGREEMENTS  TO  TAKE   SHARES. 

§  221-§  223.     Conditions  Precedent. 

§  221.  In  general.  —  Conditional  subscriptions  to  shares 
have  occasioned  considerable  diversity  of  judicial  opinion.  We 
shall  first  consider  subscriptions  upon  a  condition  precedent  — 
that  is  to  say,  agreements  to  become  a  shareholder  in  a  corpora- 
tion if  a  certain  contingency  occurs.  The  objection  to  such 
agreements  is  that,  if  they  are  binding,  they  tie  up  the  com- 
pany and  prevent  it  from  allotting  the  shares  to  other  applicants 
who  might  be  willing  to  accept  the  same  unconditionally,  and 
yet  do  not  enable  the  corporation  to  call  in  the  portion  of  the 
capital  represented  by  the  shares  so  subscribed  for.  In  other 
words,  if  such  agreements  are  binding,  the  company  incurs  at 
once  all  the  disadvantages  of  an  absolute  allotment,  but  receives 
none  of  the  benefits  until  the  condition  is  performed.  Accord- 
ingly, it  is  usually  laid  down  in  America  that  either  party  may 
withdraw  from  such  conditional  agreements  at  any  time  before 
the  condition  is  performed.^  According  to  these  authorities, 
such  conditional  subscriptions  are  void  as  contracts  but  operate 
as  offers  which  may  be  accepted  by  performing  the  condition.* 
Some  cases  hold  that  conditional  subscriptions  are  not  contrary 
to  law,  and  that  therefore  the  subscriber  cannot  withdraw  even 
before  the  condition  is  performed.*    Of  course,  unless  the  con- 

•  Ecuadorian  Ass'n  v.  Ecuador  If  the  performance  of  the  con- 
Co.  (N.  J.),  65  All.  1051  (headnote  dition  lies  peculiarly  within  the 
inadequate).  See  infra,  §  2.33,  §  779,  company's  knowledge,  the  sub- 
and  §  789.  scriber  will  not  be  bound  unless  the 

*  See  1  Morawetz  on  Priv.  Corps.,  company  give  liira  notice  of  per- 
2d  ed.,  §  78-§  81.  formance.     Chase  v.   Sycamore,  etc. 

Cf.  Taggart  v.  Western  Md.  R.  R.  R.  R.  Co.,  38  111.  215. 
Co.,  24  Md.  563;    89  Am.  Dec.  760         *  New  Albany,  etc.  R.  R.  Co.  v. 

(semble) ;  Baltimore,  etc.  R.  R.  Co.  v.  McCormick,   10   Ind.  499  ;    71  Am. 

Pumphrey,  74  Md.  86;    21  Atl.  559.  Dec.  337;    Cravens  v.  Eagle  Cotton 

3  Webb  V.   Baltimore,  etc.   R.   R.  Mi«s  Co.,  120  Ind.  6;  21N.  E.  981; 

Co.,  11  Md.  92  ;   26  Atl.  113 ;  39  Am.  16  Am.  St.  Rep.  298 ;  Pli!ladelphia, 

St.  Rep.  396 ;   Ashtabula,  etc.  R.  Co.  etc.  R.  R.  Co.  v.  Hickman,  28  Pa.  St. 

V.    Smith,    15    Oh.    St.    328,    .335;  318;  Van  Allen  v.  Illinois  Central  R. 

Taggart  v.  Western  Md.  R.  R.  Co.,  24  R.  Co.,  1  Bosw.  (N.  Y.)  515,  523-524 

Md.  563;  89  Am.  Dec.  760.  (holding  that  the  company  is  bound). 

188 


§  163-§  260]  CONDITIONAL   SUBSCRIPTIONS 


§  222 


dition  is  performed,  the  subscriber  cannot  be  held  even  though 
his  name  may  have  been  entered  by  the  company  on  the  register 
of  members,'  unless  indeed  the  condition  be  waived  by  acting 
as  shareholder  or  otherwise.-  Such  waiver  will  not  be  binding 
if  the  subscriber  believed  that  the  condition  had  been  performed.^ 
The  fact  of  filing  an  application  for  removal  of  the  applicant's 
name  from  the  register  of  shareholders  on  the  ground  that  his 
subscription  had  been  obtained  by  fraud  will  not  amount  to 
waiver  of  non-performance  of  a  condition  precedent.''  If  sul> 
scriptions  upon  conditions  precedent  are  legally  no  subscrip- 
tions at  all  until  the  condition  be  performed  or  waived,  they 
cannot  be  counted  in  calculating  whether  the  capital  has  been 
completely  subscribed.^ 

§  222.  Underwriting  Agreements.  —  Inasmuch  as  the  only 
objection  to  subscriptions  upon  conditions  precedent  is  that 
they  tie  up  the  company  and  prevent  the  allotment  of  the  shares 
to  persons  who  might  be  willing  to  subscribe  unconditionally, 


Perhaps,  tliis  is  the  law  in  Eng- 
land. See  Hirsch  v.  Bums,  77  L.  T. 
377 ;  Consolidated  Copper  Co.  v. 
Peddie,  5  Ilettie  393 ;  Shaw's  Case, 
34  L.  T.  715. 

Cf.  Racine  County  Bank  v.  Ayers, 
12  Wise.  512  (where  tlie  court  .said 
tiiat  the  conditional  subscription 
was  valid  but  where  the  actual 
decision  was  that  upon  performance 
of  the  condition,  the  subscriber  not 
having  previously  withdrawn  became 
bound). 

'  Rogers'  Case,  3  Ch.  633 ;  Simp- 
son's Case,  4  Ch.  184 ;  Sunken 
Vessels  Recovery  Co.,  3  De  G.  &  J.  85. 

Cf.  Wood's  Case,  15  Eq.  236; 
Elder  v.  New  Zealand  Co.,  30  L.  T. 
285;  Audenried  v.  East  Coast  Mill- 
ing Co.,  59  Atl.  577  (N.  J.). 

But  see  Bedford  R.  R.  Co.  v. 
Bowser,  48  Pa.  St.  29;  Boijd  v. 
Peach  Bottom  Ry.  Co.,  90  Pa.  St.  169. 
These  Pennsylvania  cases  may  per- 
haps be  supported  on  the  ground 
that  the  condition  was  really  a 
condition  subsequent. 

'  Cf.  supra,  §  194.  1  Morawetz 
on  Priv.  Corps.,  2d  ed.,  §  91-§  93, 
where  the   nature   of  the  so-called 


"waiver"  as  the  making  of  a  new 
contract  is  forcibly  pointed  out. 

See  also  Lane  v.  Brainard,  30 
Conn.  565,  579  (waiver  by  acting  as 
director) ;  W heater oft's  Case,  42 
L.  J.  Ch.  853;  Imperial  Land 
Corporation,  16  W.  R.  1191  (acting 
as  director  held  not  proof  of  waiver 
of  condition) ;  Slipher  v.  Earhart, 
83  Ind.  173  (waiver  by  executing 
unconditional  note  for  amount  of 
shares) ;  Chamberlain  v.  Painesville, 
etc.  R.  R.  Co.,  15  Oh.  St.  225  (waiver 
by  executing  unconditional  note) ; 
Dayton,  etc.  R.  R.  Co.  v.  Hatch,  1 
Disney  (Oh.)  84  (payment  of  calls, 
voting  as  shareholder,  etc.) ; 
Wyman  v.  Bowman,  127  Fed.  257, 
265-266 ;   62  C.  C.  A.  189. 

But  see  Ridgefidd,  etc.  R.  R.  Co. 
v.  Reynolds,  46  Conn.  375  (where 
the  condition  was  held  not  to  be 
waived  by  acting  as  shareholder). 

^  Hawkins  v.  Citizens  Real  Estate, 
etc.  Co.  (Oreg.),  64  Pac.  320. 

*  Tomlin's  Case,  14  Times  L.  R. 
53. 

*  Central  Turnpike  Corp.  v.  Valen- 
tine, 10  Pick.  (Mass.)  142. 


189 


§  223  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

it  follows  that  if  the  company  is  left  free  to  allot  the  shares  to 
any  one  else,  the  conditional  subscription  is  valid,  and  binds  the 
conditional  subscriber.  For  this  reason,  underwriting  agree- 
ments, or  contracts  to  take  certain  shares  if  they  are  not 
subscribed  by  the  public,  are  valid  and  binding  upon  the 
underwriter,^ 

§  223.  Bonds  or  Scrip  convertible  into  Shares.  —  The  issue 
of  bonds  or  scrip  convertible  into  shares  at  the  option  of  the 
holder  is  really  a  subscription  to  the  shares  upon  a  condition 
precedent  and  is  liable  to  the  same  objections.  If  the  company 
is  bound  by  the  conditional  agreement,  it  cannot  allot  the  shares 
to  any  one  else  until  the  time  for  performance  of  the  condition 
be  passed.  If  tliis  reasoning  be  sound,  the  issue  of  such  con- 
vertible bonds  would  not  be  lawful  without  affirmative  statutory 
authority;  or  at  any  rate  the  corporation  would  not  be  liable 
for  allotting  the  shares  to  third  persons, , or  for  repudiating  the 
option  in  any  other  manner,  at  any  time  before  the  exercise  of 
the  option.  In  at  least  one  case,  however,  this  argument  did 
not  prevail,  but  on  the  contrary  the  court  held  that  the  cor- 
poration could  not  escape  from  the  obligation  to  exchange 
the  bonds  for  shares.^  At  any  rate,  the  issue  of  bonds  con- 
vertible into  shares  at  the  option  of  the  company  would  not 
be  open  to  any  such  objection;  for  the  company  would  still 
be  at  liberty  to  allot  the  shares  to  other  persons  and  would 
therefore  run  no  risk  of  losing  unconditional  subscribers  to  its 
capital. 

§  224-§  226.     Conditions  Subsequent 

§  224.  In  general.  —  A  subscription  to  shares  coupled  with 
a  condition  subsequent  —  that  is  to  say,  an  agreement  to  be- 
come a  shareholder  subject  to  the  proviso  that  in  a  certain  con- 
tingency the  subscriber  shall  cease  to  be  a  shareholder  —  is  so 
far  good  that  if  shares  are  actually  issued  to  the  subscriber,  the 
issue  is  valid;    the  condition  should  be  rejected  as  repugnant, 


1  Cf.  Re  Hooley  (1899),  2  Q.   B.         Cf.  Denney  v.  Cleveland,  etc.  R.  R. 
579.     See  infra,  §  439.  Co.,    28    Oh.    St.    108   (where    the 

^  Van   Allen    v.    Illinois    Central    question  was  left  open). 
R.   R.   Co.,   7   Bosw.    (N.   Y.)   515. 

190 


§  163-§  2G0]  CONDITIONAL   SUBSCRIPTIONS 


§  225 


ultra  vires,  and  void.'  I'he  issue  of  shares  as  collateral  security 
for  a  del)t  of  the  company  seems  to  l)e  permitted,  and  if  so  must 
be  deemed  an  exception  to  the  principle  just  stated.-  Moreover, 
a  condition  that  in  a  certain  event  some  other  person  shall  Ije 
substituted  as  shareholder  does  no  more  than  ])r()vide  for  a 
transfer,  and  is  valid.-'  A  condition  that,  upon  failure  to  pay 
calls  or  the  like,  the  subscriber's  membership  shall  cease  is  sul)- 
stantially  equivalent  to  the  reservation  of  a  power  of  forfeiture 
(which  the  law  would  imply  without  express  words)  and  would 
therefore  seem  to  be  unobjectionable.''  What  is  intended  as  a 
conilition  subsequent,  while  ineffective  as  a  condition,  may 
operate  as  a  promise  on  the  part  of  the  company  to  perform  the 
intended  condition  so  as  to  give  the  shareholder  a  right  of  action 
against  the  company  for  damages  in  case  of  breach.^ 

§  225.  Redeemable  Shares.  —  Redeemable  shares  are  really 
shares  issued  upon  a  condition  subsequent.  Nevertheless,  it  is 
generally  held  in  America  that,  even  without  the  affirmative 
statutory  authority  which  sometimes  exists,  redeemable  shares 


'  Pittsbvrgh,  etc.  R.  R.  Co.  v. 
Biggar,  34  Pa.  St.  455 ;  Southport, 
etc.  Banking  Co.,  55  L.  J.  Cli.  497; 
Melvin  v.  Lamar  Ins.  Co.,  80  111.  446 ; 
22  Am.  Rep.  199;  Addison's  Case,  5 
Ch.  294;  Bedford  R.  R.  Co.  v. 
Bowser,  48  Pa.  St.  29;  Stunt  v. 
Neu-ark  Weldless,  etc.  Co.,  22  Oh. 
Circ.  Ct.  120;  Chamberlain  v. 
Painesville,  etc.  R.  R.  Co.,  15  Oh.  St. 
225,  247  (semble) ;  Australian  Pro- 
ducers A  Traders,  31  Vict.  L.  R.  511 
(a  strong  case). 

Cf.  Black  ct  Co.'s  Case,  8  Ch.  254, 
258-2G0  (headnote  inadequate) ; 
Pellatt's  Case,  2  Ch.  527,  532-533; 
Mare  v.  Anglo-Indian  S.  S.  Co.,  3 
Times  L.  R.  142 ;  Fort  Miller,  etc. 
Co.  V.  Paijne,  17  Barb.  (N.  Y.)  567, 
679;  Boyd  v.  Peach  Bottom  Ry.  Co., 
90  Pa.  St.  169 ;  Bucksport,  etc.  R.  R. 
Co.  V.  Buck,  68  Me.  81,  84-85 
(headnote  inadequate). 

But  see  Vent  v.  Duluth  Coffee,  etc. 
Co.,  64  Minn.  307;  67  N.  W.  70; 
Porter  v.  Plymouth  Gold  Mining  Co., 
29  Mont.  347;  74Pac.  938;  101  Am. 
St.  Rep.  569. 


A  fortiori,  the  rule  .stated  in  tlie 
text  applies  where  the  condition  is 
kept  secret.  Great  Western  Tel.  Co. 
V.  Haight,  49  111.  App.  633;  While 
Mountains  R.  R.  Co.  v.  Eastman, 
34  N.  H.  124;  Olmstead  v.  Vance, 
etc.  Co.,  196  lU.  236;   63  N.  E.  634. 

^  Cf.  Burgess  v.  Seligjnan,  107 
U.  S.  20 ;  2  Sup.  Ct.  10 ;  McLean- 
Bowman  Co.,  138  Fed.  181. 

But  see  Brewster  v.  Hartley,  37 
Cal.  15 ;  99  Am.  Dec.  237  (where  it 
was  said  that  stock  cannot  be  Issued 
as  collateral  security  for  the  com- 
pany's own  debt) ;  Addison's  Case, 
5  Ch.  294. 

3  Burke  v.  Smith,  16  WaU.  390. 

But  cf.  Sicartwout  v.  Michigan 
Air  Line  R.  R.  Co.,  24  Mich.  389. 

*  Cf.  Weeks  v.  Silver  Islet,  etc. 
Mining  Co.,  23  Jones  &  S.  (X.  Y.)  1. 
But  see  Mann  v.  Cooke,  20  Conn. 
178. 

*  Chamberlain  v.  Painesville,  etc. 
R.  R.  Co.,  15  Oh.  St.  225,  247 
(semble) ;  Stunt  v.  Newark  Weldless, 
etc.  Co.,  22  Oil.  Circ.  Ct.  120  (sem- 
ble). 


191 


§  226  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

may  be  issued  whether  the  option  of  redemption  rests  with  the 
shareholder  '  or  with  the  company.-  Wherever  corporations 
are  held  to  have  an  implied  power  to  purchase  their  own  shares 
it  is  not  surprising  that  this  conclusion  should  be  reached. 

§  226.  Shares  convertible  into  Bonds.  —  The  issue  of  shares 
convertible  into  bonds  or  debentures  is  likewise  really  an  issue 
subject  to  a  condition  subsequent.  The  issue  of  such  convertible 
shares  is  sometimes  expressly  authorized  by  statute.  Apart  from 
statute,  it  is  submitted  that  a  provision  for  conversion  into  bonds 
should  be  held  to  be  illegal;  but  undoubtedly  many  American 
courts  —  particularly  those  courts  which  concede  the  power  of  a 
corporation  to  purchase  its  own  shares  —  would  uphold  such  a 
provision  even  without  the  aid  of  any  statute.  Where  conver- 
sion of  shares  into  bonds  is  provided  for,  and  no  time  is  expressly 
limited  for  an  exercise  of  the  option  by  the  shareholder,  he  must 
nevertheless  exercise  it  within  a  reasonable  time  and  cannot  be 
allowed  to  call  for  bonds  in  exchange  for  his  shares,  after  the 
lapse  of  years  and  after  the  company  has  become  insolvent.^ 


§  227.  Whether  Agreement  to  be  construed  as  Absolute  or 
Conditional  and  whether  Condition  to  be  construed  as  Precedent 
or  Subsequent.  —  Considerable  difficulties  may  be  experienced  in 
determining  whether  a  subscription  should  be  construed  to  be 
conditional,*  and  if  so  whether  the  condition  should  be  con- 

»  Browne  v.  St.  Paul  Plow  Works,  Co.  v.  Camden  (Va),  56  S.  E.  561 ; 

62  Minn.  90 ;   64  N.  W.  66 ;    Vent  v.  Lindsay  v.  Arlington  Co-op.  Ass'n, 

Dvluth  Coffee,  etc.  Co.,  64  Minn.  307 ;  186  Mass.  371 ;  71  N.  E.  797. 
67  N.  W.  70 ;   Wisconsin  Lumber  Co.         But  see  Olmstead  v.   Vance,  etc. 

V.  Greene,  127  Iowa  350 ;    101  N.  W.  Co.,   196   111.   236;    63  N.   E.   634; 

742;    109  Am.  St.  Rep.  387;    69  L.  Long  v.  Guelph  Lumber  Co.,  31  Up. 

R.  A.  968 ;    Gaehle's  Piano  Mfg.  Co.  Can.   C.    P.    129 ;     Boley   v.   Sonora 

V.  Berg,  45  Md.   113  (holding  that  Development  Co.   (Mo.),   103  S.   W. 

shareholder  on  exercising  option  is  975. 

entitled  to  the  par  value  of  the  shares         '  Hackett  v.  Northern  Pac.  Ry.  Co., 

and  not  merely  to  the  value  at  the  36  N.  Y.  Misc.  583 ;   73  N.  Y.  Supp. 

time  of  redemption  as  impaired  by  1087. 

losses,  but,  query,  whether  this  case         ^  Catlin  v.  Green,  120  N.  Y.  441 ; 

can  stand  with  Maryland  Trust  Co.  24  N.  E.  941. 

V.  Nat.  Mechanics'  Bank,   102  Md.         Cf.  Mclntyre  v.  E.  Bement's  Sons 

608;  63  Atl.  70) ;  Fremont  Carriage  (Mich.),  109  N.  W.  45. 
Co.  V.  Thomsen,  91  N.  W.  376;    65         *  See     Lane     v.     Brainard,     30 

Nebr.   370;     United  States  Mineral  Conn.  565;    Shaw's  Case,  34  L.  T. 

192 


^   103-§   2(J()J  COXDITIONAL    SUBSCRIPTIONS  §   227 

struct!  to  be  precedent  or  subsequent.  In  doubtful  cases,  the 
courts  incline  to  hold  the  subscription  to  be  conditional,  and 
the  condition  to  be  a  condition  precedent.'  Thus,  where  a 
letter  of  allotment  contained  a  provision  that  after  payment  of 
the  allotment  money  no  further  call  would  be  made  until  the 
rej)ort  of  a  committee  of  directors  aj)pointed  to  investigate  a 
mine  which  the  company  was  formed  to  purcha.se,  and  that 
"if  the  board  resolve  not  to  purchase  the  mine,  the  money 
will  be  returneil  to  the  shareholders  without  deduction,"  the 
vScotch  Court  of  Session  held  that  the  allotment  was  subject 
to  a  condition  precedent.^  So,  where  the  subscriber's  name 
was  entered  on  the  register  of  shareholders,  but  with  a  nKnno- 
randum  statin^:  that  the  allotment  was  conditional,  and  where 
the  share-certificates  were  deposited  in  escrow  to  await  the 
performance  of  the  condition,  the  court  held  that  the  condition 
was  a  condition  precedent.^  So,  where  an  application  for 
shares  is  made  as  a  part  of  a  scheme  for  the  amalgamation  of 
two  companies  and  upon  the  supposition  that  the  amalgama- 
tion will  be  consummated,  if  for  any  reason  the  consolidation 
is  not  accomplished  or  is  set  aside,  the  application  falls  with 
it.*  Where  the  application  for  shares  is  made  by  the  sub- 
scriber on  the  faith  of  a  prospectus,  a  condition  inserted  in 
the  prospectus  may  sometimes  be  read  into  the  offer  of  the  sub- 
scriber.    Thus,  where  the  prospectus  states  that  no  allotment 

715  (where  the  condition  was  that  25  Fed.  5-14;    Bucksport,  etc.  R.  R. 

the  apj>licant   should   be  appointed  Co.  v.  Brewer,  67  Me.  295 ;   Parker  v. 

director) ;   Re  Mogridge,  57  L.  J.  Ch.  Thomas,  19  Ind.  213  ;  81  Am.  Dec.358. 

932  (condition  that  applicant  should  But  see  Paducah,  etc.  Railroad  Co. 

be  appointed  manager) ;    Rankin  v.  v.  Parks,  86  Tenn.  554  ;  8  S.  W.  842  ; 

Hop,  etc.  Exchange  Co.,  20  L.  T.  207  ;  Cravens  v.  Eagle  Cotton  Mills  Co.,  120 

Simpson   V.    Heaton's,   etc.    Co.,    19  Ind.  6;    21  N.  E.  981;    16  Am.  St. 

W.    R.    614;     Morrow    v.    Iron    &  Rep.    298;   Australian  Producers  & 

Steel  Co.,  87  Tenn.  262;    10  S.  W.  Traders,  31   Vict.  L.  R.  511;    Xorth 

495;    10  Am.  St.  Rep.  658 ;   3  L.  R.  Missouri  R.R.Co.\.Miller,3lMo.  19. 

A.  37 ;    Chamberlain  v.  Painesville,  ^  Consolidated     Copper     Co.      v. 

etc.    R.    R.    Co.,    15    Oh.    St.    225;  PerfJiV,  5  Rettie  393. 

Swnrtwoitt     v.   Michigan    Air    Line  ^  Spitzel    v.    Chinese    Corp.,     15 

R.  R.  Co.,  24  Mich.  389;  Sweeney  v.  Times  L.  R.  281. 

Tenn.,  etc.  R.  R.  Co.   (Tenn.),   100  But  see  Southport,  etc.   Banking 

S.   W.   732   (subscription   construed  Co.,  55  L.  J.  Ch.  497. 

not   to   be   conditional   but    merely  *  Bank   of    Hindustan   v.   Alison, 

subject  to  special  terms).  L.  R.  6  C.  P.  222  ;  Stace  and  Worth's 

'  Cf.  Sunken  Vessels  Recovery  Co.,  Case.  4  Ch.  682. 

3  De  G.  &  J.  85;  Cook  v.  Chittenden,  But  see  Campbell's  Case,  9  Cii.  1. 

VOL.  I.  —  13  193 


§  22S  OKGAXIZATIOX    AXD    ISSUE    OF    SHARES     [ChAP.  Ill 

will  be  made  until  a  certain  number  of  shares  have  been  sub- 
scribed, an  application  for  shares  based  thereon  is  subject  to 
that  condition  precedent  and  cannot  be  accepted  until  the 
stipulated  number  of  shares  have  been  subscribed.^ 


§  228.  Subscriptions  on  Special  Terms.  —  Subscriptions  on 
special  terms  differ  from  conditional  subscriptions  in  that,  while 
the  rights  or  liabilities  of  the  shareholder  are,  by  agreement, 
varied  from  those  which  the  law  annexes  to  the  status  in  the 
absence  of  any  special  arrangement,  still  there  is  no  proviso 
that,  in  case  of  lack  of  compliance  with  the  agreement  for 
special  rights  or  liabilities,  the  subscriber  shall  cease  to  be  a 
shareholder.^  It  is  perfectly  competent  for  the  company  to 
make  special  terms  with  a  shareholder  as  to  his  rights  and 
liabilities,  provided  only  such  special  terms  do  not  conflict  with 
some  statutory  provision  or  with  the  policy  of  the  incorpora- 
tion laws,  or  infringe  in  some  way  the  rights  of  dissenting 
shareholders.  Usually  subscriptions  on  special  terms  confer 
special  rights  in  respect  to  dividends,  in  which  case  they 
belong  to  the  topic  of  preferred  shares,^  or  else  they  attempt 
to  regulate  the  time  or  manner  of  payment  for  the  shares,  in 
which  case  they  are  part  of  the  subject  of  payment  for  shares 
—  a  topic  considered  below. ■* 

§  229.  Application  of  Parol  Evidence  Rule.  —  In  dealing 
with  questions  as  to  subscriptions  alleged  to  be  conditional  or 
subject  to  special  terms,  the  parol  evidence  rule  must  constantly 
be  borne  in  mind.  Written  subscriptions  to  shares  like  other 
contracts  in  wTiting  cannot  be  varied  by  proof  of  special  parol 
terms  or  conditions.^ 

§  230.  Subscriptions  in  Excess  of  Authorized  Capital.  — 
The  subjects  of  excessive  subscriptions  for  shares  and  of  over- 

^  Finance  and  Issue  v.  Canadian  Thornsburgh  v.  Newcastle,  etc.  R.  R. 

Produce  Corp.  (1905),  1  Ch.  37,  45.  Co.,  14  Ind.  499;   Thigpen  v.  3/i.ssi- 

'  Sweeney  v.  Tenn.,  etc.  R.  R.  Co.  sippi    Central  R.  R.  Co.,    32   Miss. 

(Tenn.),  100  S.  W.  732,  736.  347  ;  Smith  v.  Tallahassee,  etc.  Pltmk 

'  Infra,  §  525  et  seq.  Road  Co.,   30   Ala.   650;     Wight  v. 

*  Infra,  §  774  et  seq.  Shelbij  R.  R.  Co.,  16  B.  Monr.  (Ky.) 

*  New  Albany,  etc.  R.  R.  Co.   v.  4 ;   63  Am.  Dec.  522. 

Fields,  10  Ind.  187  ;    Vicksburg,  etc.  Cf.  Cass  v.  Pittsburg,  etc.  Ry.  Co., 

R.  R.  V.  McKean,  12  La.  Ann.  638 ;    80  Pa.  St.  31.     See  also  supra,  §  185. 

194 


§  ]G3-§  2G0]  EXCESSIVE  subscriitions  §  230 

issued  shares  are  involved  in  no  little  obscurity.  Of  course, 
wliere  the  capital  of  a  corporation  is  limited,  the  company  has 
no  rifijht  to  issue  shares  in  excess  of  the  prescribed  limit ;  but 
the  mere  fact  that  the  company  has  agreed  to  issue  more  sliares 
than  it  can  lawfully  issue  does  not  release  subscribers  to  whom 
the  company  is  able  and  willing  to  issue  valid  shares.'  If  after 
issuing  sliares  to  thf  full  amount  of  its  authorized  capital,  it 
should  undertake  to  issue  additional  shares,  the  contract  so  to 
do  would  be  iilfra  vircfi  and  unenforceable  either  by  or  against 
the  company.  Even  if  the  contract  should,  so  far  as  possil^le, 
be  executed  by  the  issue  of  share-certificates  and  otherwise, 
the  allottees  would  acquire  (unless  under  very  exceptional  cir- 
cumstances) no  rights  of  membership.-  If  the  overissued 
shares  should  be  transferred  to  bona  fide  purchasers,  the  com- 
pany might  be  estopped  from  questioning  the  validity  of  the 
shares  in  their  hands  ;^  so  that  they  would  have  a  cause  of 
action  against  the  company  for  damages ;  but  not  even  bona  fide 
purchasers  would  be  actual  shareholders,  so  as  to  be  entitled  to 
vote,  for  example,  or  to  participate  in  dividends.*  Of  cour.se,  no 
idtra  vires  increase  of  capital  can  afifect  the  vested  rights  and 
obligations  of  persons  who  have  already  become  shareholders.^ 
In  a  case  of  mere  executory  contracts  to  issue  shares  in  ex- 
cess of  the  authorized  capital,  it  would  seem  that  holders  of 
the  first  contracts  in  point  of  time  would  be  entitled  to  a  pref- 
erence in  the  distribution  of  the  authorized  shares.  Neverthe- 
less, those  who  without  notice  of  any  outstanding  equities  first 
attain  the  position  of  actual  shareholders,  and  thus  become 
intrenched  behind  the  legal  title,  will  prevail  over  persons 
who  subscribed  before  them  but  to  whom  no  shares  had  been 
actually  issued  before  the  authorized  capital  was  exhausted. 
The  subscribers  to  whom  the  company  can  issue  no  shares  by 
reason  of  the  exhaustion  of  the  entire  authorized  capital  have 
a  good  claim  for  damages  against  the  company." 

'  Oler  V.  Baltimore,  etc.  R.  R.  Co.,         =  j^fra,  §  909,  §  580. 
41    Md.    583;     Shick    v.    Citizens'         *  Ibid. 

Enterprise  Co.,    15   Ind.   App.   329;         *  Carturight     v.     Dickinson.     88 

57  Am.  St.  Rep.  230.  Tcnn.  476;    12  S.  W.  1030;    17  Am. 

But  see  Bri.ftol  Creamer]/  Co.   v.  St.  Rep.   910;   7  L.  R.  A.  706.     Cf. 

TUton,   70  N.  H.  239;   47  Atl.  Rep.  infra,  §  581. 
591.  6  Birmi7}gham      Xat.      Bank      v. 

^  Infra,  §  579,  §  580.  Roden,  97  Ala.  404 ;    11  So.  883. 

195 


§  231  ORGANIZATION    AND    ISSUE    OF    SHARES     [ClIAP.  Ill 

Still  more  difficult  questions  arise  where  the  valid  shares 
cannot  be  traced  and  distinguished  from  the  overissued  shares. 
Such  confusion  cannot  so  readily  occur  in  England,  where  each 
share  is  distinguished  bv  a  denoting  number;  and  indeed  the 
English  system  of  numbering  shares  is  a  valuable  check  upon 
overissue.  In  former  days  in  America,  particularly  in  cases 
of  incorporation  under  special  acts,  commissioners  used  to  be 
appointed  with  power  to  apportion  the  shares  in  case  of  over- 
subscription.' 

§  231.  Rescission  or  Modification  of  Agreement  to  take 
Shares.  —  So  long  as  an  agreement  to  take  shares  in  a  cor- 
poration  remains  executory  —  that  is  to  say,  until  the  subscriber 
has  become  an  actual  shareholder  —  it  may,  like  any  other  con- 
tract, be  rescinded  or  modified  by  mutual  consent.^  So,  if  the 
company  refuses  to  issue  the  shares  as  agreed,  the  subscriber, 
upon  gi\ing  due  notice  of  his  election  to  rescind  the  contract, 
may  recover  back  any  sum  paid  upon  his  subscription  upon 
the  ground  of  failure  of  consideration.^  Of  course,  a  gratuitous 
release  of  one  who  has  subscribed  to  the  company's  capital  would 
generally  be  ultra  vires,  and  might  be  void  as  in  fraud  of  cred- 
itors; but  the  company  has  the  same  control  over  executory 
contracts  to  take  shares  in  its  capital  that  it  has  over  its  other 
assets  or  choses  in  action.  In  America,  where  no  formality 
such  as  entry  on  a  register  of  members  is  generally  necessary 
in  order  to  make  a  person  an  actual  shareholder,  difficulty 
may  be  experienced  in  the  application  of  the  rule;  but  the 
rule  itself  is  submitted  to  be  as  sound  in  the  United  States 
as  in  Great  Britain.  After  the  contract  of  subscription  has 
been  executed  and  the  subscriber  has  become  an  actual 
shareholder,  rescission  by  mere  agreement  is  in  general,  ac- 
cording to  the    better   view,  no   longer   possible,   except   as   a 

'  See    2    Clark    &    Marshall    on  Morawetz  on  Priv.  Corps.,  2d  ed., 

Priv.  Corps.,  §  514.  §  110. 

2  Florence  Land  Co.,   29  Ch.   D.  Cf.  Kipling  v.   Todd,  3  C.  P.  D. 

421 ;    Sahlgreen  &  Carr all's  Case,  3  350. 

Ch.    323,    328,    329    (headnote    in-  But  see  Adams'  Case,  13  Eq.  474 ; 

adequate) ;     Harnett's  Case,    18  Eq.  Davidson's  Case,  4  K.  &  J.  688. 

507 ;   Whiteley's  Case,  1  Megone  154 ;  As  to  the  rule  in  respect  to  sub- 

Cook    V.    Chittenden,    25    Fed.    544  scribers  of  the  incorporation  paper, 

(headnote  inadequate) ;    Chetlain  v.  see  infra,  §  242. 

Republic  Life  Ins.  Co.,  86  111.  220,  ^  Swazey  v.  Choate  Mfg.  Co.,  48 

224-225  (headnote  inadequate) ;    1  N.  H.  200. 

196 


§   103-§  2G0]       ENFORCEMENT    OF    SUBSCRIPTIONS  §  233 

compromise  of   a  buna  fide   dispute  as  to  whether  the  share- 
holder is  bound.' 

§  232-§  236.     Remedies  for  Breach  of  Executory  Contracts  of 

Subscription. 

§  232.  Actions  at  Law  —  By  the  Subscriber.  —  An  agree- 
ment to  take  shares  in  a  corporation,  Hke  any  other  contract, 
may  be  sued  ujwn  at  law  by  either  party  in  case  of  a  breach  by 
the  other.  For  instance,  if  a  corporation  which  has  accepted  an 
application  for  shares  refuses  to  issue  them  as  agreed,  the  appli- 
cant may  sue  the  company  in  assumpsit,  and  recover  the  differ- 
ence between  the  market  value  of  the  shares  and  the  amount  — 
usually,  of  course,  their  par  value  —  which  he  would  have  had 
to  pay  for  them.-  If  he  has  paid  for  the  shares  in  full,  the  meas- 
ure of  damages  would  be  the  market  value  of  the  shares ;  ^  but 
an  action  for  money  had  and  received  to  recover  back  the  money 
which  he  has  paid  will  not  lie.^ 

§  233.  By  the  Corporation.  —  Conversely,  if  the  subscriber 
refuses  to  accept  the  allotted  shares,  the  company  may  have  an 
action  of  assumpsit  against  him.  Such  an  action,  however,  must 
be  distinguished  from  an  acti3n  to  recover  calls.*  The  breach 
laid  would  be,  not  the  failure  to  pay  calls,  but  the  refusal  to  ac- 
cept the  shares.  An  action  for  calls  is  an  action  to  recover  a 
liquidated  sum  of  money  which  the  defendant  is  under  a  duty  or 
obligation  to  pay;  an  action  for  refusal  to  perform  an  agree- 
ment to  take  shares  in  the  complaining  corporation  is  an  action 
for  damages,  in  which  the  amount  recoverable  would  rarely  be 
the  same  as  in  an  action  for  calls.  The  measure  of  damages 
would  be  the  difference  between  the  amount  which  the  defend- 
ant as  shareholder  would  have  been  liable  to  pay  on  call  or  other- 

'  See  infra,  §  635  et  seq.  into  liquidation  is  not  a  breach  of 

^  Cf.   Hirsch  v.   Burns,  77  L.  T.  such   a   contract.    Hirsch  v.   Burns, 

377 ;     Rogers   v.   Gladiator,   etc.   Co.  77  L.  T.  377. 

(S.    Dak.),    113  N.  W.  86  (holding         ^  Arnold    v.    Suffolk    Bank,    27 

that   the    action    cannot    be    main-  Barb.  (N.  Y.)  424. 
tained  where  the  contract  called  for         *  Arnold    v.    Suffolk    Bank,    27 

issue  of  shares  in  violation  of  a  con-  Barb.  (N.  Y.)  424. 
stitutional  provision  recjuiring  pay-         *  Cf.  Charlotte,  etc.  R.  R.  Co.  v. 

mcnt  in  money,  labor,  or  property).  Blakdey,    3    Strob.    (S.    Car.)    245 

That  the  company  voluntarily  goes  (headnote  inadequate). 

197 


§  234  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.   Ill 

wise  ^  generally,  of  course,  the  par  value  of  the  shares  —  and 
the  actual  market  value  of  the  shares  when  paid-up.^  In  any  such 
action  it  is  incumbent  on  the  company  to  show  that  it  was  ready 
and  \nlling  to  carry  out  its  part  of  the  contract  by  issuing  the 
shares,-  and,  if  the  contract  calls  for  paid-up  shares,  that  the 
shares  if  issued  would  be  in  fact  and  law  paid-up.''  But  since 
delivery  of  share-certificates  is  not  necessary  to  constitute  an  issue 
of  shares,  there  would  be  no  necessity  of  proving  a  tender  of 
certificates.'*  If  the  company  should  by  gross  mismanagement 
or  otherwise  greatly  depreciate  the  value  of  its  shares  after  the 
making  of  a  contract  of  subscription  to  shares  and  before  the 
actual  issue  of  shares  thereunder,  it  would  seem  that  the  com- 
pany, having  disabled  itself  from  carrying  out  the  contract 
according  to  the  expectation  of  the  parties,  would  not  be  entitled 
to  enforce  the  contract  against  the  subscriber.'^  In  this  additional 
respect,  an  action  upon  an  executory  agreement  to  take  shares 
differs  from  an  action  against  a  person  who  has  actually  become 
a  shareholder  to  recover  the  amount  of  his  subscription,  to  which 
latter  action  fraudulent  or  ultra  vires  acts  on  the  part  of  the 
corporation  constitute  no  defence.^ 

§  234.  Bills  for  Speciac  Performance.  ^  Some  diversity  of 
opinion  has  existed  upon  the  question  whether  a  court  of  equity 
should  enforce  specific  performance  of  a  contract  of  subscrip- 
tion to  shares  in  the  capital  of  a  corporation.  In  one  or  two  com- 
paratively early  English  cases,  the  ]\Iaster  of  the  Rolls  refused 

1  Thrasher  v.  Pike  Co.  R.  R.  Co.,  Land  Co.  v.  Hayward,  95  Wise.  109; 
25  III.  393  ;   Mt.  Sterling  Carload  Co.    69  N.  W.  567. 

V.  Little,  14  Bush   (Ky.)  429  (over-  ^  Ecuadorian    Ass'n    v.    Ecuador 

ruled  in  pari  by  Bullock  V.  Falmouth,  Co.  (N.  J.),  65  Atl.   1051  (headnote 

etc.  Co.,  85  Ky.  184;  3  S.  W.  129) ;  inadequate).    See  infra,  §  778,  §  789. 

Rhey  y.  Ebensburg,  etc.  Co.,  27  Fa.  Si.  *  Webb   v.    Baltimore,   etc.   R.   R. 

261.    See  IMorawetz  on  Priv.  Corps.,  Co.,  77  Md.  92;    26  Atl.    113;    39 

2ded.,  §  46,  p.  45,  and  §50,  p.  50.  Am.  St.  Rep.  396;  Smith  v.  Gower, 

Cf.    Re  Hooley   (1899),   2   Q.    B.  63  Ky.   17;    Slipher  v.  Earhart,  83 

579,  where  the  refusal  to  accept  the  Ind.    173;     Fulgam.   v.    Macon,   etc. 

shares  consisted  in  a  repudiation  of  R.    Co.,    44    Ga.    597;     Marson    v. 

the  contract  of  subscription  by  the  Deithcr,  49  Minn.  423 ;   52  N.  W.  38. 

subscriber's  assignee  in  bankruptcy.  See  supra,  §  171. 

2  Oler  V.  Baltimore,  etc.  R.  R.  Co.,  Cf.  Ilawleyv.  Upton,  102  U.  S.  314. 
41- Md.  583  (semble) ;  Carter,  etc.  But  see  St.  Paul,  etc.  R.  R.  Co.  v. 
Co.  V.  Hazzard,  65  Minn.  432;    68  Robbins,  23  Minn.  440. 

N.   W.   74 ;     Burrows  v.   Smith,    10         "  See  1  Morawetz  on  Priv.  Corps., 
N.  Y.  550;    St.  Paul,  etc.  R.  R.  Co.    2d  ed.,  §  118. 
V.    Robbins,    23    Minn.    439 ;     Level        »  Infra,  §  756. 

198 


§  163-§  2G0]      ENFORCEMENT    OF    SUBSCRIPTIONS  §  235 

to  decree  specific  performance  of  the  agreement  against  the  sub- 
scril)er.'  But  the;  tendency  in  more  recent  times  lias  been  the 
other  way.-  Specific  {)erformance  cannot  be  had  where  the  sul> 
scriber  has  become  bankrupt,  and  the  assignee  in  bankruptcy 
repu(Hates  tlie  contract  of  SMl).scription.^  In  one  case  where  the 
directors  of  a  corporation,  beheving  themselves  to  be  the  only 
shareholders,  sold  the  property  of  the  company  and  divided  the 
proceeds  among  themselves,  the  court  held  that  a  {)erson  to  whom 
the  company  had  agreed  to  issue  shares  but  to  whom  no  shares 
had  been  issued,  should  be  regarded  in  equity  as  owner  of  the 
promised  shares,  and  as  such  entitled  to  maintain  a  bill  for  an 
accountinjj  affliinst  tiie  directors.' 

§  235.  Statute  of  Limitations.  —  A  subscription  to  shares 
in  the  caj)ital  of  a  corporation  being  an  ordinary  contract  gov- 
erned by  the  same  rules  as  other  contracts  in  respect  to  actions 
or  suits  based  thereon,  it  follows  that  the  right  to  enforce  such 
a  contract  may  be  barred  by  limitations.^  Upon  an  action  against 
a  shareholder  for  non-payment  of  calls,  the  statute  of  limita- 
tions does  not  begin  to  run  until  the  call  is  made  and  notice 
thereof  given.®  But  where  a  person  who  has  merely  promised 
to  become  a  shareholder  repudiates  the  agreement  and  refuses 
to  accept  the  allotted  shares,  he  thereby  commits  a  breach  of 
contract  and  a  court  might  well  hold  that  the  statute  of  limita- 
tions then  commences  to  run.^ 

'  Bluck    V.    Mallalue,    27    Beav.  had  performed  services  to  be  paid 

398;    Sheffield  Gas,  etc.  Co.  v.  Har-  for  with  shares,  the  shares  having 

rison,  17  Beav.  294.  no  market  vahie) ;   Garrett  v.  Kansas 

'  Odessa  Tramways  v.  Mendel,  8  City  Coal  Mining  Co.,  113  Mo.  330; 

Ch.  D.  235.  20  S.  W.  965;   35  Am.  St.  Rep.  713 

Cf.  Arnot's  Case,  36  Ch.  D.  702 ;  (specific  performance  against  com- 

Florence  Land  Co.,  29  Ch.  D.  421;  pany  refused   where  contract    pro- 

Selover  v.  Isle  Harbor  Land  Co.,  91  vitied   for   issue   of   shares   as  fully 

Minn.  451 ;    98  N.  W.  344 ;    Selover  paid  in  exchange  for  property  at  an 

v.  Isle  Harbor  Land  Co.  (Minn.),  Ill  inflated  valuation).     See  also  infra, 

N.    W.    155;     Edgerton    v.    Electric  §  975. 

Imp.  Co.,  50  N.  J.  Eq.  354;   24  .\tl.         ^  j^^  Hooley  (1899),  2  Q.  B.  579. 
540     (where     specific     performance  *  Pendery  v.  Carleton,  87  Fed.  41 ; 

prayed   by   the   subscriber   was   re-  30  C.  C.  A.  510. 

fused  on  the  ground  that  the  con-  *  Florence  Land  Co.,   29  Ch.   D. 

tract   was   tainted   with   illegahty) ;  421,  442. 
Baumhoff  v.  St.  Louis,  etc.  R.  R.  Co.  «  See  infra,  §  761. 

(Mo.),    104    S.    W.    5    (specific   per-  ^  But  see  Haggert  Bros.  Mfg.  Co., 

formance  decreed  against  the  com-  19  Ont.  App.  582  (where  defendant 

pany  in  favor  of  a  contractor  who  was  a  charter  member). 

199 


§  230  ORGAXIZATIOX    AND    ISSUE    OF    SHARES     [ChAP.   Ill 

§  236.  Laches.  —  Not  merely  may  the  right  to  enforce  a 
contract  of  subscription  to  shares  of  capital  stock  be  barred  at 
law  by  limitations,  but  it  may  in  equity  be  lost  by  laches.' 


§  237.  Scrip  and  Scripholders.  —  In  cases  where  for  any 
'reason  it  is  deemed  desirable  to  postpone  the  actual  issue  of 
shares,  the  expedient  is  sometimes  adopted  of  issuing  "scrip,"  or 
certificates  stating  that  the  holder  thereof  will  be  entitled  to  a 
certain  number  of  shares  when  issued  by  the  company.  A  holder 
of  such  scrip  is  not  a  shareholder,  but  merely  a  person  who  is 
entitled  under  certain  circumstances  to  become  a  shareholder.^ 
Hence,  a  scripholder  is  not  subject  to  the  liabilities  of  a  share- 
holder.^ The  scrip  may  be  of  various  sorts.  For  instance,  the 
terms  may  be  such  that  upon  the  occurrence  of  certain  contin- 
gencies, the  company  has  the  right  to  insist  that  the  holder  shall 
take  the  shares.*  Or,  the  scripholder  may  have  a  mere  option  of 
becoming  a  shareholder;  and  in  that  case  the  company  has  no 
right  without  his  consent  to  enter  his  name  on  the  share-register, 
so  as  to  subject  him  against  his  will  to  the  obligations  of  a  share- 
holder.^ The  only  right  of  the  company  in  such  a  case  is  to  give 
notice  that  the  scripholder  might  be  registered  as  a  shareholder, 
and  then  if  the  option  be  not  exercised  within  a  reasonable  time 
to  allot  the  shares  to  other  persons.^  One  of  the  strongest  reasons 
for  issuing  scrip  is  to  enable  the  holder  to  transfer  his  rights  more 
readily  than  could  otherwise  be  done.  Accordingly,  where  the 
scrip  is  by  its  terms  transferable  by  delivery  so  as  to  be  enforce- 

'  Florence  Land  Co.,  29  Ch.   D.         Quoere,  "whether  scrip  certificates 

421 ;  Whiteley's  Case,  1  Megone  154.  are     not    sometimes    open    to    the 

Cf.  Carter,  etc.  Co.  v.  Hazzard,  65  objection  that  they  constitute  con- 
Minn.  432 ;  68  N.  W.  74.  ditional  agreements  to  take  shares. 

^  Eustace   v.    Dublin    Trunk   Ry.  See  supra,   §  221-§  22.3. 
Co.,  6  Eq.  182.  Cf.  Van  Allen  v.   Illinois  Central 

3  Ormerod's    Case,    5    Eq.     110.  R.   R.   Co.,   7   Bosw.    (N.   Y.)    515, 

He  may,  however,  under  some  cir-  52.3-524. 

cumstances  be  Hable  as  a  person  who         *  Mclluraith  v.  Dublin  Trunk  Ry. 

has  agreed  to  become  a  shareholder.  Co.,  7  Ch.  134. 
Barton's  Case,  4  De  G.  &  J.  46.  *"  Mcllurraith  v.  Dublin  Trunk  Ry. 

*  Midland,  etc.  Ry.  Co.  v.  Gordon,  Co.,  7  Ch.  134. 
16  M.  &  W.  804.  Cf.  Ex  parte  Collum,  9  Eq.  236 ; 

Cf.  Van  Allen  v.  Illinois  Central  Barton's  Case,  4  De  G.  &  J.  46. 
R.  R.  Co.,  7  Bosw.  (N.  Y.)  515. 

200 


§    10.3-§   200]       SIGNERS    OF    INCOKPORATION    PAI'ER  §   238 

able  by  the  bearer,  a  mercantile  custom  that  it  shall  be  deemed 
negotiable  will  be  respected  by  the  courts,  so  that  in  a  case  of 
fraudulent  conversion  the  true  owner  cannot  maintain  an  action 
of  trover  against  a  buna  fide  purchaser.'  Even  where  the  scrip  is 
declared  to  be  "negotiable  only  by  transfer  on  the  books  of  the 
company,  and  with  the  assent  of  this  company  first  obtained 
thereto,"  it  has  been  held  that  the  complete  e<juital)le  title  may 
pass  without  the  company's  assent  by  an  unrecorded  transfer ;  ^ 
but  this  doctrine  as  thus  broadly  stated  may  perhaps  be  ques- 
tioned, the  company's  assent  being  made  a  condition  precedent 
to  the  passing  of  either  legal  or  equitable  title  as  against  the 
company  itself.  Ordinarily,  any  obligations  which  the  scrip- 
hokler  may  undergo  are  escaped  by  a  bona  fide  transfer  of  his 
scrip.^  Sometimes  so-called  scrip-certificates  are  issued  to  actual 
shareholders;  but  these  instruments  are  in  legal  efi'ect  mere 
share-certificates,  and  accordingly  a  transfer  of  such  "scrip" 
will  not  relieve  the  holder  of  the  liabilities  of  a  shareholder  unless 
the  transfer  has  been  made  in  the  mode  prescribed  by  law  for 
making  an  assignment  of  shares/ 

§   238-§    248.     AGREEMENTS   MADE   BY   SIGNING    INCORPORATION 

PAPER. 

§  238.  Peculiarity  of  such  Agreements.  —  The  second  class 
of  agreements  to  take  shares  mentioned  above  ^  consists  of 
agreements  entered  into  by  subscribing  the  incorporation  paper. 
This  class  of  agreements  to  take  shares  is  peculiar  in  several 
respects.  All  these  peculiarities  spring  from  the  circumstance 
that  subscriptions  of  the  incorporation  paper  are  part  of  the 
machinery  provided  by  law  for  the  organization  of  the  com- 
pany. Such  subscriptions  must,  therefore,  by  force  of  the  statute 
have  such  operation  as  will  enable  them  to  discharge  that 
function.    Even  where  the  statute  does   not    require  or    con- 

'  Rumball  v.  Metropolitan  Bank,  Gordon,    16  M.   &   W.   804,   holding 

2  Q.  B.  D.  194.  that   tlie   Habilities   of   the   original 

^Hubbard  v.  Manhattan  Trust  ecriphoklor  continue  until  the  trans- 
Co.,  87  Fed.  51,  57-58;  30  C.  C.  A.  feree  of  the  scrip  has  been  actually 
520.  registered  as  shareholder. 

*  Eustace   v.    Dublin    Trunk   Ry.         *  McEuen    v.    West   London 

Co.,  6  Eq.  1S2.  Wharves,  6  Ch.  655. 

But  see  Midland,  etc.  Ry.  Co.  v.         '  Supra,  §  181. 

201 


§  239  ORGANIZATION    AND    ISSUE    OF    SHARES     [CuAP.  Ill 

template  that  the  subscribers  of  the  incorporation  paper  shall  by 
subscription  agree  to  take  shares,  still  there  is  nothing  illegal  in 
their  doing  so ;  ^  but  in  that  case  it  would  seem  that  no  other 
efi'ect  should  be  given  to  the  subscription  than  attaches  to 
agreements  to  take  shares  made  prior  to  incorporation  otherwise 
than  by  signing  the  incorporation  paper. 

§  239.  Withdrawal  of  Signer  before  Registration  of  Instru- 
ment. —  Before  the  paper  is  recorded,  obviously  any  subscriber 
may,  with  the  consent  of  all  his  co-subscribers,  retract  or 
cancel  his  subscription.  Until  registration,  all  is  in  fieri.-  It 
has  been  held,  however,  in  some  cases  that  without  the  unani- 
mous consent  of  the  subscribers  one  of  their  number  cannot 
withdraw  even  before  the  paper  is  recorded ;  ^  but  in  other  cases, 
the  contrary  has  been  held.^  If  it  be  law  —  and  we  shall  see 
that  some  authorities  so  hold  —  that  a  promise  to  take  shares 
in  a  company  about  to  be  formed  cannot  be  retracted  without 
the  consent  of  the  other  promoters,  then  a  fortiori  a  subscriber 
of  an  incorporation  paper  cannot  revoke  his  agreement  to  become 
a  stockholder,  even  prior  to  the  recording  of  the  instrument. 
Indeed,  even  if  it  be  held  that  ordinarily  a  promise  to  take 
shares  in  a  company  to  be  subsequently  incorporated  is  revo- 
cable at  the  pleasure  of  the  promisor,  a  different  rule  might 
be  applied  where  the  promise  is  made  by  subscribing  a  docu- 
ment which  is  to  be  recorded  as  the  company's  incorporation 
paper. 

§  240.  Effect  of  Altering  Instrument  before  Registration  with- 
out Signer's  Consent.  —  A  material  alteration  in  the  paper 
without  the  consent  of  one  of  the  subscribers  will  no  doubt  re- 
lease him,*  and  may  even  have  the  effect  of  vitiating  the  incor- 

*  Heaslon  v.  Cincinnati,  etc.  R.  R.  burg,  etc.  R.  R.  Co.,  78  Pa.  St. 
Co.,  16  Ind.  275;  79  Am.  Dec.  430;  465;  Cop-page  v.  Hutton,  124  Ind. 
Dupee  V.  Chicago  Horse  Shoe  Co.,  401  (holding  that  where  paper  is 
117  Fed.  40;    54  C.  C.  A.  426.  required  to  be  acknowledged,  a  per- 

^  Cf.  Squires  v.  Brown,  22  How.  son    who    has    signed    but    not    ac- 

Pr.  (N.  Y.)  35.  knowledged  it  is  not  bound) ;  Green- 

^  Hughes  v.   Antietam  Mfg.   Co.,  brier  Industrial  Exposition  v.  Rodes, 

34  Md.  316,  328;    Lake  Ontario,  etc.  37  W.  Va.  738,  740;    17  S.  E.  305 

R.  R.  Co.  V.  Mason,  16  N.  Y.  451.  (same  point  as  last  case). 

*  Auburn  Bolt  Works  v.  Shultz,  ^  Greenbrier  Industrial  Exposi- 
143  Pa.  St.  256;  Muncy  Traction  tion  v.  Rodes,  37  W.  Va.  738;  17 
Engine   Co.    v.    Green,    143    Pa.    St.  S.  E.  305. 

269;    13  Atl.  747;    Garrett  v.  DUls-         Cf.  Felgate's  Case,  11  L.  T.  613. 

202 


§   163-§  260]       SIGNERS    OF    INCORPORATION    PAPER  §  242 

poration.'  So,  a  person  who  si<rns  a  l)laiik  piece  of  paper  and 
above  whose  signature  articles  of  incorporation  are  filled  in  is 
not  bound.-  Indeed,  the  cases  go  much  further  than  this.  For 
if  when  the  defendant  signs  the  paj)er  there  is  any  material 
blank  which  is  afterwards  filled  up  without  his  authority,  he  is 
not  bound.^  And  a  blank  in  respect  to  any  of  the  matters 
required  by  the  incorporation  law  to  be  stated  in  the  paper  is 
deemed   to  be  material.' 

§  241.  Effect  of  Registration  without  Signer's  Authority. — 
On  the  other  hand  it  has  been  held  that  a  person  who  signs 
an  incorporation  paper  for  a  certain  number  of  shares  will  be 
liable  as  a  shareholder  even  though  he  intended  that  the  instru- 
ment should  have  the  effect  of  an  escrow  merely,  and  although 
it  was  recorded  without  waiting  for  jxMformance  of  the  condition.* 

§  242.  Signer  irrevocably  bound  when  Instrument  is  duly  re- 
corded. —  As  soon  as  the  incorporation  paper,  as  signed,  is 
duly  recorded,  each  subscriber  is  irrevocably  bound  to  accept 
the  number  of  shares  in  respect  of  which  he  signed  the  same.®  In 
order  to  complete  his  obligation,  there  is  no  need  of  acceptance 
by  the  company  or  of  any  allotment  of  shares."  Whether  or  not 
such  a  subscriber  is  an  actual  shareholder  from  the  moment  of  the 
incorporation  of  the  company  is  a  question  which  has  received 
consideration  above.^  The  fact  that  some  condition  precedent 
to  incorporation,  such  as  the  filing  of  a  certificate  with  the 
secretary  of  state,  is  omitted  so  that  the  company  never  becomes 
a  corporation  de  jure  will  not,  it  has  been  held,  release  the  sub- 
scriber.**   The  company  has  no  power  to  release  a  subscriber  of 

'  See  supra,  §  143.  ^  Evans'  Case,  2  Ch.  427  ;  Sidtiey's 

^  Bucher  v.  Dillsburg,  etc.  R.  R.  Case,    13    Eq.    228;     Haggert    Bros. 

Co.,  76  Pa.  St.  306.  Mfg.  Co.,  19  Ont.  App.  582. 

3  Dutchess,  etc.  R.  R.  Co.  v.  *  Supra.  §  164. 
Mabbett,  58  N.  Y.  397 ;  Consols  Ins.  Cf.  Lord  Lurgan's  Case  (1902),  1 
Ass'n  V.  Xewall,  3  Post.  &  F.  130  Ch.  707,  709,  where  Buckley,  J., 
(where  the  blank  related  to  the  said:  "There  is  no  executoiy  con- 
number  of  sliares  which  the  sub-  tract  which  is  subsequently  exe- 
scril)er  was  to  take).  cuted.     There  is  no  contract  at  all 

*  Dutchess,    etc.     R.    R.     Co.    v.  until  the  moment  when  the  corpora- 

Mcbbett,  58  N.  Y.  397.  tion  and  the  cliaracter  of  member- 

'  Rehbein  v.  Rahr,  109  Wise.  136 ;  ship  in  tlie  signatories  to  the  memo- 

83  N.  W.  315.    See  supra,  §  129.  randum   come   simultaneously   into 

'  In  addition  to  cases  cited  infra,  existence." 
see    Ruthbune   v.    Axjer,    105   X.    Y.         '  McCarter  v.  Ketcham,  72  N.  J. 

Supp.   1041.  Law    247    (headnote    inadequate); 

203 


§  243  ORGANIZATION    AND    ISSUE    OF    SHARES       [ChAP.  Ill 

the  incorporation  paper  from  this  obligation  to  take  shares 
therein ;  '  and  consequently  even  a  subscriber  who  has  been 
permitted  to  sever  his  ostensible  connection  with  the  company 
and  has  been  treated  for  years  as  if  he  were  not  a  member,  is 
nevertheless  still  bound  by  his  obligation  to  take  the  shares.-  If, 
however,  the  company  has  issued  the  whole  of  its  authorized 
capital  to  other  persons,  then  the  subscriber  of  the  incorporation 
paper  is  released  from  his  obligation  to  take  shares.^  This  is 
either  because  the  company  is  not  in  a  position  to  carry  out  its 
correlative  obligation  to  issue  the  shares,  or  because  the  shares 
which  the  subscriber  agreed  to  take  may  be  deemed  to  have  been 
virtually  transferred  by  him  to  the  persons  to  whom  the  company 
allotted  them.^ 

§  243.  Whether  Signer  can  avoid  Subscription  for  Fraud.  — 
An  agreement  to  take  shares  entered  into  by  executing  the 
incorporation  paper  of  a  projected  company  cannot,  at  least 
in  England,  be  rescinded  for  fraud  on  the  part  of  the  pro- 
moters.^ For  if  it  could,  the  substratum  of  the  company  would 
be  cut  away;  and  as  there  might  then  be  less  than  the 
minimum  number  of  corporators  required  by  the  statute,  the 
incorporation  might  be  vitiated.  Hence,  for  the  protection  of 
innocent  persons  who  may  deal  with  the  company,  it  is  neces- 
sary to  compel  the  corporators  to  take  the  shares  in  spite  of  the 
fraud  by  which  they  were  induced  to  do  so. 

62  Atl.  693 ;  McCarter  v.  Ketcham  Rep.  2083  (holding  that  where  cer- 
(N.  J.),  67  Atl.  610  (headnote  in-  tain  members  of  a  company  sub- 
adequate)  ;  Cayuga  Lake  R.  R.  Co.  ecribe  for  all  the  capital  of  a  new 
V.  Kyle,  64  N.  Y.  185.  Cf.  infra,  corporation  with  the  intention  of 
§  260.  distributing  it  pro  rata  among  the 

'  London  &  Provincial  Coal  Co.,  other  members  of  the  old  company, 

5  Ch.  D.  525;    Ex  parte  Watson,  54  any   of  those    other   members  who 

L.  T.  233.  subsequently    agree    with    the    new 

^  Sidney's  Case,  13  Eq.  228;    Ex  company  to  take   their    proportion 

■parte  Watson,  54  L.  T.  233 ;    Scott-  of   its   capital   are   bound   by   their 

ish    Security    Co.'s    Rec'r   v.    Starks  subscription). 

(Ky.),  78  S.  W.  455  (headnote  in-         ■•  But,  as  to  this  theory  of  imphed 

adequate);   25  Ky.  Law  Rep.  1722;  transfer,    see    Ex  parte   Watson,  54 

Ilaggert  Bros.  Mfg.  Co.,  19  Ont.  App.  L.  T.  233.    See  also  infra,  §  869. 
582.  ^  Lord  Lurgan's   Case    (1902),    1 

But  see  O'Brien  v.  Fulkerson,  75  Ch.  707. 
Mich.  554 ;  42  N.  W.  979.  But  see   Wert  v.   Crawfordsville, 

^  Mackley's  Case,  1  Ch.'D.2'i7.  etc.     Turnpike    Co.,   19    Ind.     242; 

Cf.  Somerset  Nat.  Banking  Co.  v.  Metropolitan   Lead    &    Zinc    Co.    v. 

Adams,  72  S.  W.  1125;   24  Ky.  Law  Webster,  193  Mo.  351 ;   92  S.  W.  79. 

204 


§   l63-§  200]       SIGNERS    OF    IXCOUPOUATKJN     I'Al'EU  §  245 

§  244-§  24.S.     Obligations  of  Subscrifjcr  in  other  Respects. 

§  244.  In  general.  —  The  ohiigutioii  of  .sul).scTil)er.s  of  an 
incorporation  papei-,  in  the  ab.sence  of  .special  ari-angenient,  is 
to  pay  the  par  vakie  of  tlie  shares  for  which  they  subscribed,  in 
in.stahnents  when  called  in  by  the  directors.  In  other  words, 
the  oi)ligation  is  the  same  as  that  which,  in  the  absence  of  special 
agreement,  attaches  to  any  other  sharehoidei-.  On  the  other 
hand,  the  fact  that  the  company  may  recjuire  from  other  j)ersons 
who  agree  to  become  shareholders  a  payment  on  allotment  does 
not  oblige  the  directors  to  exact  a  like  payment  from  the  signa- 
tories of  the  incorporation  paper  on  the  allotment  to  them  of  the 
shares  in  respect  of  which  they  signed  that  instrument.' 

§  245.  Special  Agreements  with  Company  as  to  Time  and 
Mode  of  Payment. —  Although  prima  facie  the  oljligation  of 
signatories  of  the  incorporation  paper  is  to  pay  for  the  shares 
they  have  agreed  to  take  in  cash  on  call  by  the  directors,  yet  the 
time  and  mode  of  payment  may  be  regulated  by  agreement 
entered  into  between  the  corporation  and  the  signatory.  For 
example,  in  the  absence  of  prohibitory  statutes,  the  company 
may  agree  with  the  subscriber  that  payment  shall  be  made  by 
transfer  of  property  —  lands,  chattels,  good  will,  etc.  —  in  lieu 
of  cash;  and  a  transfer  in  accordance  with  such  agreement, 
unless  it  be  impeachable  for  fraud,  will  completely  satisfy  the 
signatory's  obligation.-  A  statute,  however,  which  requires 
shares  to  be  paid  for  in  cash  unless  a  contract  stipulating  for 
some  different  mode  of  payment  shall  have  been  recorded  prior 
to  their  issue  has  been  held  to  necessitate  in  all  cases  payment 
in   cash    by  subscribers  of    the    incorporation   paper ;  ^   for,  it 

Cf.  Squires  v.  Brown,  22  How.  Pr.  1041  (where  the  valuation  of  prop- 

(N.    Y.)    35 ;     Miller   v.    Wild   Cat  erty  taken  in  payment  was  held  to 

Gravel  Road  Co.,  57  Ind.  241.  be     unreasonably     excessive     and 

'  Alexander    v.    Automatic    Tele-  fraudulent). 

phone  Co.  (1899),  2  Ch.  302.  ^  Jarvis's  Case  (1899),  1  Ch.  193 

-  Drummond's  Case,  4  Oh.   772 ;  (semble) ;    Dalton  Time  Lock  Co.  v. 

Pell's  Case,  5  Ch.  \\;    Baglan  Hall  Dalton,    66    L.    T.    704;      Ebenezer 

Colliery    Co.,    5    Ch.    346;     Jones's  Timmins  &  Sons,  Ld.  (1902),  I  Ch. 

Case,   6  Ch.   48;     Maynard's   Case,  238. 

9  Ch.  60.  Cf.  FothergilVs  Case,  8  Ch.  270; 

Cf.  Dieterle  v.  Ann  Arbor  Paint,  Re  Archibald  D.  Dawney,  L't'd,  83 

etc.  Co.,  107  N.  W.  79;    143  Mich.  L.  T.  47. 
416;    Rathbone  v.  .Iyer,  105  N.  Y. 

205 


§  24G  ORGANIZATION    AND    ISSUE    OF    SHARES       [ChAP.  Ill 

was  reasoned,  the  shares  subscribed  for  in  that  instrument  are 
deemed  to  be  issued  at  the  very  moment  of  incorporation  ^  so 
that  in  the  nature  of  things  no  contract  stipulating  for  pay- 
ment otherwise  than  in  cash  could  be  registered  antecedent  to 
the  issue. 

§  24().  Whether  Shares  allotted  and  paid  for  after  Incorpora- 
tion satisfy  Obligation  incurred  by  signing  Incorporation  Paper. 
—  Where,  after  the  company  is  organized,  a  signatory  of  the 
incorporation  paper  applies  for  shares  in  the  ordinary  way,  and 
the  same  are  allotted  to  him,  if  it  be  proved  even  by  parol  that 
the  shares  so  allotted  were  intended  by  all  parties  to  include, 
or  be  the  same  as,  the  shares  which  the  applicant  agreed  to  take 
by  subscribing  the  incorporation  paper,  effect  will  be  given  to 
such  intention;  and  the  allotment  of  the  shares  so  applied  for 
will  be  held  to  satisfy  the  obligation  created  by  signing  the  incor- 
poration paper."  Indeed,  it  has  been  said  that  in  such  a  case 
the  burden  of  proof  is  on  the  company  or  its  liquidator  or  receiver 
to  show  that  there  were  really  allotted  to  the  subscriber,  and  that 
the  latter  did  accept  additional  shares  besides  those  in  respect 
of  which  he  signed  the  incorporation  paper.^  Where  in  sign- 
ing the  incorporation  paper,  the  signatory  was  really  acting  on 
behalf  of  a  partnership  of  which  he  was  a  member,  his  obligation 
is  satisfied  by  an  allotment  of  the  stipulated  number  of  shares 
to  that  firm.* 

On  the  other  hand,  the  obligation  of  the  signatory  is  to  take 
shares  from  the  company,  and  cannot  be  satisfied  by  taking 
shares  by  transfer  from  another  shareholder  or  even  by  taking, 
as  the  nominee  of  another  person,  shares  which  the  latter  has 
contracted  with  the  company  to  take.^ 

§  247.  Whether  Subscription  for  Preferred  Shares  satisfied 
by  taking  and  paying  for  Common  Shares. —  Where  a  signatory  of 
an  incorporation  paper  agrees  by  his  subscription  to  take  pref- 
erence shares,  his  obligation,  it  has  been  held,  may  be  satisfied 
by  taking  with  the  company's  assent  an  equal  number  of  ordi- 

*  See  supra,  §164,  where  the  But  see  Currie's  Case,  1 1  W.  R.  46. 
correctness  of  this  premiss  is  ques-         ^  Mnynard's  Case,  9  Ch.  60,  68, 

tioned.  per  Mellish,  L.  J. 

2  GUman's  Case,  31  Ch.  D.  420;         *  Dunster's    Case    (1894),    3    Ch. 

Drummorul's  Case,  4  Ch.  772  ;   Pell's  473. 

Case,  5  Ch.  1 1 ;    Maynard's  Case,  9         ^  Forbes   &   Judd's   Case,   5  Ch. 

Ch.  60.  270.    Cf.  Migotti's  Case,  4  Eq.  238. 

206 


§   163-§  260]      SIGNERS    OF    INCORPORATION    PAPER  §  248 

nary  shares.^  The  ratio  decidendi  of  this  case  —  to  wit,  that  the 
Companies  Act  does  not  ref(uire  any  distinction  to  he  made  in 
the  inemorunduni  of  association  or  incorporation  paper  between 
preferred  and  ordinary  shares,  and  that  the  instrument  may  be 
altered  in  respect  to  matters  not  recpiircd  by  the  statute  to  be 
mentioned  therein  —  is  not  in  accord  with  the  hiter  cases;  -  but 
nevertheless  it  is  submitted  that  the  actual  decision  is  sound  and 
would  be  followed. 

§  24<S.  Subscription  of  Incorporation  Paper  for  Shares  to  be 
issued  as  fully  paid  without  Payment  in  fuU.  —  It  is  true,  that 
a  corporation's  executory  promise  to  issue  paid-up  shares  cannot 
be  satisfied  by  the  issue  of  shares  which  in  law  are  not  fully  paid.^ 
Nevertheless,  where  an  incorporation  paper  states  that  the  shares 
which  the  subscribers  agree  to  take  shall  be  credited  as  fully 
paid  although  no  money  or  money's  worth  may  have  been  given 
therefor,  it  would  seem  clear  that  the  signatories  are  bound  not- 
withstanding to  pay  for  the  shares  which  by  their  subscription 
of  the  instrument  they  agree  to  take.^  However,  where  a  person 
subscribes  an  incorporation  paper  for  some  shares  which  shall 
be  issued  subject  to  the  usual  obligation  of  payment  of  their  par 
value  in  cash,  and  also  for  other  shares  which,  it  is  stated,  shall 
be  issued  as  fully  paid,  it  has  been  held  in  England  that  he  can- 
not be  required  to  pay  for  the  latter  shares.^  The  reason  for 
this  distinction,  if  indeed  it  be  sound,  must  be  that  the  sub- 
scriber can  perform  his  function  as  a  corporator  if  he  be  bound 
to  take  and  pay  for  aiiy  shares,  and  that  the  agreement  to  take 
the  additional  shares  to  be  issued  as  paid-up  is  surplusage.  How- 
ever, the  soundness  of  the  distinction  may  be  questioned.  For 
instance,  in  Pennsylvania  where  a  subscriber  to  an  incorpora- 
tion paper  appeared  on  the  face  of  the  instrument  to  have 
subscribed  for  100  shares,  it  was  held  that  in  spite  of  a  contem- 
poraneous oral  agreement  that  all  except  five  shares  should  be 
turned  back  to  the  company  as  "treasury  stock"  witiiout  any 
payment  by  the  subscriber,  he  was  nevertheless  bound  to  pay 
for  the  full  one  hundred  shares,  and  that  too  although  the  suit 
did  not  appear  to  be  prosecuted  for  the  benefit  of  creditors,  and 

»  Duke's  Case,  1  Ch.  D.  620.  *  Baron  de  Beville's  Case,  7  Eq.  11 

■  Supra,  §  120,  §  144.  (semble).    Cf.  Migotti's  Case,  i  Eq. 

•  Infra,   §  778,    §  789.     See  also    238. 
supra,  §  184  and  §  233.  »  Baron  de  BevUle's  Case,  7  Eq.  11. 

207 


§  249  ORGANIZATION    AND    ISSUE    OF    SHARES        [CilAP.   Ill 

although  there  was  no  allegation  of  a  deficiency  of  assets;  ^  but, 
certainly,  this  decision  was  based  more  upon  the  peculiar  phrase- 
ology of  the  Pennsylvania  statute  than  upon  general  principles 
of  law  applicable  to  subscriptions  to  shares  made  by  signing  an 
incorporation  paper. 

§  249-§  2G0.     Agreements   7nad&  'prior  to  I ncorporation    other- 
wise than  by  signing  the  Incorporation  Paper. 

§  249.  Nature  and  Effect  in  general  —  Revocability.  — •  The 
third  and  last  class  of  agreements  to  take  shares  comprises 
agreements  made  with  or  between  promoters  prior  to  the  incor- 
poration of  the  company  otherwise  than  by  subscribing  the 
incorporation  paper.-  Agreements  of  this  sort  differ  from  agree- 
ments made  by  signing  the  incorporation  paper  in  that  they 
are  not  so  clearly  or  necessarily  part  of  the  statutory  scheme 
for  the  organization  of  the  corporation.^  If  they  are  to  be  gov- 
erned by  the  general  principles  of  the  law  of  contracts,  the  com- 
pany upon  attaining  corporate  existence  has  no  right  to  enforce 
them  unless  they  first  be  adopted  or  accepted  by  it.  To  be 
sure,  it  is  sometimes  thought  that  the  principle  prevailing  in  some 
of  the  United  States,  which  permits  the  beneficiary  of  a  contract 
to  which  he  is  a  stranger  to  maintain  an  action  thereon,  is  broad 
enough  to  entitle  the  corporation  to  enforce  a  promise  made  to 
its  promoters  to  take  shares  of  its  capital  stock.*  But  the  cor- 
poration, while  undoubtedly  deriving  benefit  from  the  contract, 
is  certainly  not  the  sole  beneficiary  thereof,  since  the  other  share- 
holders and  promoters  have  a  great  interest  in  its  enforce- 
ment; and  the  better  view  is  that  the  corporation  has  no  right 
to  enforce  such  a  contract.^  Like  other  contracts  made  by  pro- 
moters on  behalf  of  a  corporation  to  be  subsequently  organized, 

*  Greater  Pittsburg  Real  Estate  Co.         *  Marysville,  etc.  Co.  v.  Johnson, 

V.  Riley,  210  Pa.  St.  283;    59  Atl.  93  Cal.  538,  548;   29  Pac.  126;   27 

1068.  Am.  St.  Rep.  215;    Glenn  v.  Busey, 

==  As  to  the  liability  of  promoters  5  Mack.    (D.   C.)    233,  238-239;    1 

to  the  subscriber  on  such  contracts,  Morawetz    on    Priv.    Corps.,    §    50. 

see  Feitel  v.  Dreyfous  (La.),  42  So.  Cf.    Hamilton,    etc.     Co.    v.    Rice,    7 

259;    117  La.  756  (where  the  pro-  Barb.  (N.  Y.)   157;    Eastern  Plank 

moters   were   exonerated   from    lia-  Road  Co.  v.  Vaughan,  14  N.  Y.  546, 

bility,  because  they  had  not  accepted  555.      But  see  2  Clark  &  Marshall 

the  subscriber's  application).  on  Priv.  Corps.,  §  443,  p.  1379. 

'  Cf.  Peninsular  Ry.  Co.  v.  Dun-         °  Lake  Ontario  Shore  R.  R.  Co.  v. 

can,  28  Mich.  130.  Curtiss,  80  N.  Y.  219. 

208 


§  163-§  2C0]      SUBSCRIPTIONS    BEFORE    INCORPORATION       §  249 


such  an  af^eement  may  undoubtedly  operate  as  an  offer  which 
the  company  when  incorporated  may  accept ;  '  but  if  this  be 
its  only  operation  as  regards  the  corporation,  it  is  revocable  by 
the  subscriber  so  far  as  the  corporation  is  concerned  at  any 
time  before  the  company  is  incorporated  and  accepts  the  offer. 
In  England,  there  seems  to  be  no  doubt  that  tiiis  is  the  law 
with  respect  to  corporations  formed  under  the  Companies  Acts ;  * 
and  the  same  rule  is  supported  by  the  weight  of  autiiority  in  the 
United  States.^  The  right  of  revocation  exists  although  the  sub- 
scription is  under  seal,  so  that  lack  of  consideration  would  be 
no  defence/    Withdrawal  is  allowed  not  only  because  the  sub- 


«  Athol  Music  Had  Co.  v.  Carey, 
116  Mass.  471;  San  Joaquin,  etc. 
Co.  V.  Beecher,  101  Cal.  70;  35 
Pac.  349 ;  Buffalo,  etc.  R.  R.  Co.  v. 
Clark,  22  Hun  (N.  Y.)  359;  Riche- 
lieu Hotel  Co.  V.  International,  etc. 
Encampment  Co.,  140  111.  248;  29 
N.  E.  1044 ;  33  Am.  St.  Rep.  234 ; 
Yonkers  Gazette  Co.  v.  Taylor,  30 
N.  Y.  App.  Div.  334  ;  51  N.  Y.  Supp. 
969 ;  Bryant's,  etc.  Mill  Co.  v.  Felt, 
87  Me.  234;  32  Atl.  888;  47  Am. 
St.  Rep.  323;  33  L.  R.  A.  593; 
Badger  Paper  Co.  v.  Rose,  95  Wise. 
145,  151-152;  70  N.  W.  302;  37 
L.  R.  A.  162  ;  Avon  Springs  Sanita- 
rium Co.  V.  Weed,  104  N.  Y.  Supp.  58. 

But  of.  1  Morawetz  on  Priv. 
Corps.,  2d  ed.,  §  49,  where  the 
opinion  is  expressed  that  a  contract 
to  subscribe  for  shares  in  a  corpora- 
tion to  be  subsequently  formed, 
contemplates  tliat  tlie  parties  before 
becoming  shareholders  shall  per- 
form a  further  act,  namely,  execute 
tlie  statutory-  contract  of  member- 
ship by  subscription  upon  the  stock- 
books,  and  therefore  does  not  con- 
stitute an  offer  which  the  corpora- 
tion can  accept.  Sed  quaere.  Cf. 
Coyote,  etc.  Co.  v.  Ruble,  8  Oreg. 
284;  Coppage  v.  Hutton,  124  Ind. 
401;  24  N.  E.  112;  7  L.  R.  A.  591; 
Troy,  etc.  R.  R.  Co.  v.  Tibbits,  18 
Barb.  (N.  Y.)  297;  Sedalia.  etc.  Ry. 
Co.  V.  Wilkerson,  83  Mo.  235 ;  Yon- 
kers Gazette  Co.  v.  Taylor,  30  N.  Y. 
App.  Div.  334  ;  51  N.  Y.  Supp.  969 ; 


Woods  Motor  Vehicle  Co.  v.  Brady, 
39  N.  Y.  Misc.  79 ;  78  N.  Y.  Supp. 
203;  Cleavdand  v.  Mullin,  96  Md. 
598 ;  54  Atl.  665 

In  Lake  Ontario  Shore  R.  R.  Co. 
V.  Curtiss,  80  N.  Y.  219,  an  agree- 
ment between  third  persons  that 
each  should  subscribe  to  stock  in  a 
corporation  then  forming  was  held 
not  to  contemplate  acceptance  by 
the  company  and  not  to  be  enforce- 
able at  its  suit. 

-  So  in  Canada.  London  Speaker 
Printing  Co.,  Pearce's  Case,  16  Ont. 
App.  508. 

^  Poughkeepsie,  etc.  Co.  v.  Griffin, 
24  N.  Y.  150;  Bryant's,  etc.  Mill 
Co.  V.  Felt,  87  Me.  234  ;  32  Atl.  888 ; 
47  Am.  St.  Rep.  323 ;  33  L.  R.  A. 
593 ;  Hudson  Real  Estate  Co.  v. 
Tower,  156  Mass.  82;  30  N.  E.  465; 
32  Am.  St.  Rep.  434;  s.  c,  161 
Mass.  10;  36  N.  E.  680;  42  Am. 
St.  Rep.  379 ;  Stuart  v.  Valley  R.  R. 
Co.,  32  Gratt.  (Va.)  146;  Carter, 
etc.  Co.  V.  Hazzard,  65  Minn.  432; 
68  N.  W.  74 ;  Sedalia,  etc.  Ry.  Co. 
V.  Wilkerson,  83  Mo.  235  (where  the 
Bubscriber  died  before  the  company 
was  incorporated). 

Cf.  Minneapolis  Threshing  Co.  v. 
Davis,  40  Minn.  110;  41  N.  W. 
1026;  3  L.  R.  A.  796;  12* Am.  St. 
Rep.  701. 

♦  Hudson  Real  Estate  Co.  v. 
Tower,  156  Mass.  82,  84  (headnote 
inade(iuate) ;  30  N.  E.  405;  32 
Am.  St.  Rep.  434. 


VOL.  I.  — 14 


209 


§  250  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP,  III 

scriber's  promise  is  without  consideration,  but  also  for  the  more 
fundamental  reason  that  there  is  no  promisee  in  existence.  The 
retraction  may  give  a  right  of  action  to  the  other  promoters  with 
whom  the  agreement  was  made,  if  a  contract  inter  sese  was  in- 
tended; but  this  right  of  an  action  of  the  promoters  or  co- 
subscribers  does  not  inure  to  the  benefit  of  the  corporation. 
The  withdrawal  need  not  be  communicated  to  all  the  promoters 
or  co-subscribers,  but  is  complete  upon  communication  to  the 
chief  officer  of  the  preliminary  organization  preparatory  to 
incorporation.^  According  to  the  principle  that  the  ante-incor- 
poration agreement  operates  only  as  an  offer,  the  company  upon 
its  incorporation  is  not  bound  to  allot  the  shares  in  accordance 
therewith.- 

§  250.  Doctrine  that  Ante-incorporation  Subscriptions  are  Ir- 
revocable. —  On  the  other  hand,  all  modern  corporations  derive 
their  existence,  directly  or  indirectly,  from  statutes;  and  if 
the  legislature  in  those  statutes  should  expressly  or  impliedly 
enact  that  promises  to  take  shares  in  a  corporation  to  be  sub- 
sequently formed  should  be  incapable  of  revocation  by  the 
promisor,  effect  must  of  course  be  given  to  that  legislative  in- 
tent. The  question  is,  therefore,  whether  the  courts  can  discern 
such  an  intention  in  the  incorporation  laws.  In  the  case  of 
special  acts  of  incorporation,  this  is  more  easily  done.  For  ex- 
ample, even  in  England,  a  special  act  incorporating  certain 
named  individuals  and  all  other  subscribers  to  the  capital  of  the 
projected  company  has  been  held  to  make  alKsubscribers  mem- 
bers of  the  company,  even  though  some  of  them  had  attempted 
to  withdraw  their  subscriptions  before  the  passage  of  the  act.* 
In  the  case  of  general  laws  or  enabling  acts,  the  intention  that 
ante-incorporation  subscriptions  to  the  capital  shall  be  binding 
is  not  so  readily  discernible.  In  England,  for  instance,  under 
the  Companies  Acts,  and  in  some  of  the  United  States  under 
the  general  incorporation  laws,  such  a  subscription  would,  as 
stated  above,  be  held  to  be  revocable  at  the  pleasure  of  the  sub- 

*  Hudson     Real     Estate     Co.     v.         ^  Merrick  v.  Consumers  Heat,  etc. 

Tower,  161  Mass.  10;   36  N.  E.  680;  Co.,   Ill  111.  App.   153;    Starrett  v. 

42  Am.  St.  Rep.  379.     The  part  of  Rockland,  etc.  Ins.  Co.,  65  Me.  374 

prudence  would  be  to  communicate  (headnote  inadequate), 
the    acceptance    to    the    officers    of         ^  Kidwelly  Co.  v.  Rahy,  2  Price 

the    corporation    as    soon    as    it    is  93.     Cf.  Burke  v.  Lechmene,  L.  R.  6 

formed.  Q.  B.  297. 

210 


§   lG3-§  260]      SUBSCRIPTIONS    BEFORE    INCORPORATION       §  251 

scriber.  Oil  the  other  hand,  inasmuch  as  such  subscriptions 
preHininary  to  incorporation  under  general  laws  are  doubtless 
contemplated  by  the  incorporation  acts,  and  inasmuch  as  the 
process  of  incorporation  is  undoubtedly  somewhat  facilitated 
by  holding  them  to  be  irrevocable,'  one  need  not  be  disposed  to 
quarrel  with  a  decision  that  they  cannot  be  revoked  without  the 
unanimous  consent  of  the  co-subscribers.-  This  result  is,  how- 
ever, more  often  reached  upon  the  more  questionable  ground 
that  the  sul)Scriptions  constitute  contracts  of  the  several  pro- 
moters inter  sese  which  may  be  availed  of  by  the  corporation  as 
the  beneficiary  notwithstanding  an  attempt  to  revoke.^ 

§  2')].  Subscriptions  before  Incorporation  as  Powers  of  Attorney 
to  apply  for  and  accept  Shares  in  Corporation.  —  A  subscription 
to  shares  in  a  corporation  to  be  formed  may  take  the  shape 
of,  or  amount  to,  a  delegation  of  authority  to  an  agent  to 
apply  for  antl  accept  the  shares  when  the  company  shall  have 
been  incorporated/  This  form  is  often  adopted,  especially  in 
England,  in  the  case  of  underwTiting  agreements  made  before 
the  incorporation  of  the  company.^  In  some  cases,  such  powers 
of  attorney  may  be  made  irrevocable."  Somewhat  similar  to 
this  is  the  plan  sometimes  adopted  where  several  persons  bind 
themselves  to  pay  the  amount  of  their  subscriptions  to  a  desig- 
nated person  as  trustee,  who  is  to  turn  the  money  over  to  the 
corporation  when  incorporated  in  exchange  for  its  shares.  In 
such  cases,  the  trustee  may  maintain  an  action  against  any  sub- 
scriber who  refuses  to  pay.^ 

1  a.  Loiwille,  etc.  R.  R.  Co.  v.  »  See  supra,  §  249. 

Elliot,  101  N.  Y.  Supp.  328.  Cf.  Cleaveland  v.  MvUin,  96  Md. 

-Johnson    v.    Wabash,    etc.    Co.,  598;   54  Atl.  665 ;   Knox  v.  Childers- 

16  Ind.  389  (but  with  this  case  com-  burg  Land  Co.,   86   Ala.    180,    183 ; 

pare   Ccrppage  v.   Hutton,    124    Ind.  5  So.  578. 

401);     Nebraska      Chicory     Co.     v.  "  Cf.  Ottawa  Dairy  Co.  v.  Sorley, 

Lednicky  (Nebr.),  1 13  N.  W.  245.  34  Can.  Sup.  Ct.  508  (wlicre  the  agent 

Cf.  Peninsular  Ry.  Co.  v.  Duncan,  was  held  to  have  exceeded  his  au- 

28  Mich.  130.  thority    so    that   no   contract    was 

But    if    a    subscription    contains  formed   between  the  principal   and 

special  terms  not  provided  for  in  the  the  company), 

incorporation  law,  then  very  clearly  ^  Sec  infra.  §  443-§  445. 

it  can  have  no  other  effect  than  a  *  Infra,  §  443. 

revocable  offer  until  the  company  '  Cf.  West  v.  Crawford,  80    Cal., 

is   incorporated   and   accepts    it.     I  19;  21  Pac.  1123.     As   to   the  right 

Morawetz  on  Priv.  Corps.,  2d  ed.,  of  the  corporation  to  recover  money 

§  S3,  §  86;    Junction  R.  R.  Co.  v.  collected  by  such  a  tru.'^tcc,  see  infra, 

Reeve,  15  Ind.  236.  §  255. 

211 


§  252  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

§  252.  Doctrine  that  Subscriptions  made  before  Incorporation 
without  subscribing  Incorporation  Paper  are  devoid  of  all  legal 
Effect.  —  Some  cases  proceed  upon  the  ground  that  the  incor- 
poration laws  contemplate  no  subscriptions  prior  to  incorpora- 
tion made  otherwise  than  by  signing  the  incorporation  paper 
and  that  therefore  such  ante-incorporation  subscriptions  must 
be  wholly  devoid  of  legal  effect.^  But  as  already  intimated 
such  decisions  are  contrary  to  the  weight  of  authority,^  inas- 
much as  such  subscriptions  prior  to  incorporation  should  have 
at  least  as  much  effect  as  other  contracts  made  by  promoters 
on  behalf  of  a  prospective  corporation.  The  question  is,  how- 
ever, altogether  one  of  statutory  construction  so  that  general 
rules  can  do  no  more  than  determine  the  attitude  which  the 
courts  should  assume  in  construing  the  statute. 

§  253.  Attempts  of  Promoters  to  release  Subscriber. —  All  the 
authorities  would  agree  that  in  any  case  after  the  company  has 
been  incorporated  and  the  contract  of  subscription  has  become 
binding  between  it  and  the  subscriber,  the  promoters  to  whom 
the  subscription  was  made  before  the  incorporafion  have  no 
longer  any  authority  to  release  the  subscriber.^ 

§  254.  Requisite  Definiteness  in  Subscription  before  Incor- 
poration. —  In  order  that  an  ante-incorporation  subscription 
should  have  any  effect,  it  must  specify  the  number  and  par  value 
of  the  shares  subscribed  for.*  In  other  words,  it  must  be  suffi- 
ciently definite  to  constitute  a  contract.^  As  the  company  is 
still  in  fieri  and  its  constitution  not  yet  settled,  greater  particu- 
larity is  required  than  in  the  case  of  an  offer  to  take  shares  in  an 
existing  company,  in  which  case,  it  would  be  unnecessary  to 
state,  for  instance,  the  par  value  of  the  shares. 

§  255.  Right  of  Corporation  to  Deposits  paid  Promoters.  —  A 
person  may  contract  with  a  promoter  of  a  projected  corpora- 

'  Poughkeepsle,    etc.    Plank  Road  Water  Co.  v.  Beecher,   101   Cal.   70; 

Co.  V.  Griffin,  24  N.  Y.  150 ;  Coppage  35  Pac.  349  ;   International  Fair,  etc. 

V.  Hutton,   124  Ind.  401;  24  N.  E.  Ass'n  v.  Walker,  83  Mich.  386;    47 

112;  7  L.  R.  A.  591;  Speight  Mfg.  N.  W.  338;    Nebraska  Chicory  Co. 

Co.,   BoiUtbee's  Case,   16  Ont.  App.  v.  Lednicky,  113  N.  W.  245  (Nebr.). 

508,  519.  See  supra,  §  249,  §  250. 

Cf.  Sedalia,  etc.  Ry.  Co.  v.  Wilker-  *  Balfour  v.   Baker,  etc.   Co.,  27 

son,  83  Mo.  235;  Monterey,  etc.  R.  R.  Oreg.  300  ;   41  Pac.  164. 

Co.  V.  Ilildreth,  53  Cal.  123.  *  Woods    Motor    Vehicle    Co.    v. 

'  Peninsular  Ry.  Co.  v.  Duncan,  Brady,  181  N.  Y.  145;  73  N.  E.  674. 

28   Mich.    130;     San   Joaquin,    etc.  ^  Ci.  Avon  Springs  Sanitarium  Co. 

212 


§   163-§  260]       SUBSCRIPTIONS    BEFORE    INCORPORATION       §   258 

tioii  to  subscribe  to  shares  therein;  and,  independently  of  tlie 
question  whether  the  corporation  may  take  advantage  of  such 
contracts  and  hold  the  subscriber,  any  deposits  paid  by  the  sub- 
scriber to  the  promoter  are  clearly  impressed  with  a  trust  in 
favor  of  the  company  which  may  accordingly  recover  them  from 
the  promoter  as  money  had  and  received  to  its  use.' 

§  2")().  EfEect  of  Failure  of  Company  to  allot  Shares  within 
Reasonable  Time.  —  Ante-incorporation  subscribers  to  the  capital 
of  a  company  will  be  relea.sed  unless  an  allotment  of  the  shares 
subscribed  for  be  made  within  a  rea.sonable  time  after  incor- 
poration. This  is  undoubtedly  true  where  such  subscriptions 
are  deemed  mere  olVers ;  -  and  it  is  submitted  that  the  same 
rule  should  hold  good  where  they  are  held  to  be  irrevocable  by 
the  subscriber.^ 

§  257.  Subscription  voidable  for  Fraud  of  Promoter.  —  Upon 
whatever  theory  subscriptions  to  the  capital  of  a  projected  com- 
pany are  to  be  enforced  —  whether  because  of  adoption  or 
acceptance  by  the  company  after  its  incorporation,  or  because 
they  are  deemed  binding  in  the  first  instance  —  they  are  never- 
theless subject  to  rescission  for  fraud  or  misrepresentation  of 
the  promoters  to  the  same  extent  as  if  the  company  had  been 
already  incorporated.* 

§  258.  Effect  of  Departures  from  Original  Scheme.  — -  More- 
over, any  material  departures  from  the  plan  of  the  company 
as  contemplated  when  the  subscription  was  made  will  release 
the  subscriber.^     For  example,  where  the   prospectus  on  the 

V.  TT'eerf,  104  N.  Y.  Supp.  58  (where  Stewart  v.  Rutherford,  74  Ga.  435 ; 

the   subscription  was    held   on    de-  I  Morawetz  on  Priv.  Corps.,  2d  ed., 

murrer    sufHciently    definite);    Xe-  §  102,  p.  101. 

maha    Coal,    etc.    Co.    v.    Settle,  54  But  see  Shick  v.  Citizens'  Enter- 
Kan.   424;    38  Pac.  483;   Peninsu-  pnse  Co.,  15  Ind.  App.  329,  337-338; 
lar   Ry.    Co.    v.   Duncan,   28    Mich.  57  Am.  St.  Rep.  230. 
130,  145.  See  also  supra,  §  217. 

'  San  Joaquin,  etc.  Co.  v.  TT'es^,         *  Stern  v.  McKee,  70  N.  Y.  App. 

94  Cal.  399 ;   29  Pac.  785.  Div.    142 ;     75   N.    Y.    Supp. .  157 ; 

See  infra,  §  399.  West  End,  etc.  Co.  v.  Nash,  51  W. 

=  /ia%'s  Case,  3  Ch.  592 ;   Carter,  Va.  341;   41  S.  E.  182;  Middlecoff 

etc.  Co.  V.  Hazzard,  G5  Minn.  432,  Hotel  Co.  v.  Yeomans,  89  III.  App. 

438;   68  N.  W.  74.  170;       Smith     v.      Burns      Boiler 

»  But    see    Burke    v.    Lechmere,  cfe    Mfg.    Co.    (Wise),    111    N.    W. 

L.  R.  6  Q.  B.  297.  1123;    Knox    v.    Childersburg  Land 

*  Zang  v.  Adams,  23  Colo.  408;  Co.,     86     Ala.     180;      5     So.     578 

48  Pac.  509 ;    58  Am.  St.  Rep.  249 ;  (change    in   law    as   to    method   of 

213 


§258 


ORGANIZATION    AXD    ISSUE    OF    SHARES     [ChAP.  Ill 


faith  of  which  the  subscription  was  made  states  as  the  ob- 
ject of  the  company  the  working  of  a  particular  estabhshed 
mine  in  Russia,  the  fact  that  the  incorporation  paper  when  re- 
cortleil  justifies  the  working  of  any  mine  in  Russia  releases  the 
subscriber.'  A  change  in  the  period  to  be  prescribed  for  the 
termination  of  the  coi-porate  existence  will  release  a  person  who 
has  agreed  to  take  shares."  Prima  facie,  a  domestic  corpora- 
tion is  deemed  to  have  been  contemplated ;  and  therefore  in  the 
absence  of  some  provision  showing  that  a  foreign  corporation 
was  intended,  a  foreign  corporation  cannot  claim  the  benefit  of 
the  subscription.''  But  a  mere  change  in  the  name  of  the  pro- 
jected company  will  have  no  such  effect ;  *  and  any  change  which 
is  immaterial,  and  merely  expresses  w;hat  would  otherwise 
be  implied,  does  not  release  prior  subscribers.^  In  respect  to 
the  necessity  for  prompt  repudiation,  etc.,  these  cases  of  depar- 


payment  for  stock,  held  sufficient 
to  release  subscriber). 

And  see  Shick  v.  Citizens'  Enter- 
prise Co.,  15  Ind.  App.  329,  337-338; 
57  Am.  St.  Rep.  230. 

And  as_  to  cases  of  incorporation 
by  special  act,  see  Midland,  etc. 
Ry.  Co.  V.  Gordon,  16  M.  &  W.  804 ; 
Nixon  V.  Brownlow,  3  H.  &  N.  686 
(where  the  amount  of  the  capital 
and  number  and  amount  of  the 
shares  were  altered). 

'■  Stewart's  Case,  1  Ch.  574; 
Webster's  Case,  2  Eq.  741. 

Cf.  Lavorence's  Case,  2  Ch.  412 ; 
Peel's  Case,  2  Ch.  674 ;  Wilkinson's 
Case,  2  Ch.  536;  Woods  Motor 
Vehicle  Co.  v.  Brady,  181  N.  Y.  145 ; 
73  N.  E.  674  (offer  to  take  shares  in 
company  to  deal  in  motor  vehicles ; 
company  afterwards  incorporated  to 
manfacture  and  deal  in  automo- 
biles) ;  Smith  v.  Burns  Boiler  & 
Mfg.  Co.  (Wise),  111  N.  W.  1123 
(offer  to  take  shares  in  company  for 
manufacturing  boilers,  corporation 
formed  with  power  to  engage  in  gen- 
eral "merchandising  "  and  general 
manufacturing) ;  Dorris  v.  Sweeney, 
60  N.  Y.  463  (offer  to  take  shares 
in  com[)any  for  working  a  certain 
patent  for  preserving  fruits,  company 


formed  for  manufacture  of  preserved 
fruits  and  canning  of  fruits). 

But  see  Haskell  v.  Worthington, 
94  Mo.  560 ;  7  S.  W.  481  (where  it 
was  said  that  a  subscriber  would  not 
be  released  because  incorporation 
paper  when  recorded  would  author- 
ize the  company  to  transact  business 
in  addition  to  that  contemplated  by 
the  subscription). 

^  Greenbrier  Industrial  Exposi- 
tion V.  Rodes,  37  W.  Va.  738;  17 
S.  E.  305. 

^  Cf.  Olympia  Mining  Co.  v. 
Kerns  (Idaho),  91  Pac.  92. 

*  Yonkers  Gazette  Co.  v.  Taylor, 
30  N.  Y.  App.  Div.  334;  51  N.  Y. 
Supp.  969. 

Cf.  Haskell  v.  Worthington,  94 
Mo.  560 ;  7  S.  W.  481. 

^  Union  Agricultural,  etc.  Ass'n  v. 
Neill,  31  Iowa  95;  Comanche  Cotton 
Oil  Co.  V.  Browne  (Tex.),  92  S.  W.  450 
(company  projectetl  to  operate  a  cot- 
ton seed  oil  mill,  amendment  ex- 
pressly authorizing  the  operation  of 
cotton-gins  as  feeders  for  the  mill 
immaterial) ;  Lowville,  etc.  R.  R.  Co. 
V.  Elliot,  101  N.  Y.  Supp.  328  (com- 
pany projected  to  build  a  railway; 
com{)any  incorporated  to  "  build, 
maintain,  and  operate "  a  railway). 
14 


§.  lG3-§  2G0]       SUBSCHIi'TKJN.S    BEFORE    INX'ORPORATION       §  200 

tures  from  the  original  scheme  or  project  are  assimilated  to  cases 
of  fraud  or  misrepresentation.'  But  the  fact  that  tiie  subscriber 
attends  a  meeting  of  the  corporation  under  the  belief  that  it  is 
a  mere  meeting  of  the  promoters  called  to  consider  the  pro- 
p.  i.'ty  of  accepting  the  incorporation  paper  as  filed  will  not  pre- 
clude him  from  withdrawing.-  The  departures  from  the  original 
scheme  may  be  such  as  to  justify  the  conclusion  that  the  com- 
pany which  was  actually  formed  was  not  that  in  which  the  sub- 
scriber agreed  to  take  shares;  and  in  that  case  there  would  be 
no  contract  at  all.^  It  is  not  necessary  that  the  corporation 
should  be  formed  by  parties  to  the  subscription  agreement.* 
Unreasonable  delay  in  the  incorporation  of  the  company  is 
ecjuivalent  to  a  substantial  departure  from  the  original  project, 
and  will  have  the  same  effect  in  releasing  a  subscriber  to  the 
shares.^ 

§  2.39.  Signer  of  a  proposed  Incorporation  Paper  not  bound 
if  Company  incorporated  under  different  Instrument.  — ^  If  a  per- 
son signs  a  document  which  is  intended  to  operate  as  an  incor- 
poration paper,  he  cannot  be  held  by  a  company  which  is 
organized  under  a  different  paper  executed  by  other  persons.* 
In  other  words,  if  a  person  intends  to  become  a  corporator,  he 
cannot  without  some  further  act  or  offer  on  his  part  be  held  as 
a  subscriber  to  the  capital  if  the  company  is  incorporated  by 
other  persons. 

§  260.  Whether  De  Facto  Corporation  can  enforce  Subscrip- 
tion. —  Even  where  the  doctrine  of  de  facto  corporations  is  rec- 

'  .mna  Ins.  Co.  (1871),  Ir.  Rep.  181  N.  Y.  145;  73  N.  E.  674;  Smith 

6  Eq.  298;    Osborne    Park   Land  &  v.  Burns  Boiler  &  Mfg.  Co.  (SYisc), 

Investment  Co.,  18  Vict.  L.  R.  515.  Ill  N.  W.  1123. 

See  also  Xickum  v.  Burkhardt.  30  2    Clark    &    Marshall    on    Priv. 

Oreg.  4G4  ;  47  Pac.  788 ;  48  Pac.  474  ;  Corps.,  §  439  d. 

60  Am.  St.  Rep.  822.  Cf.  Ship's  Case,  2  De  G.  J.  &  S. 

But  cf.  Ship's  Case,  2  De  G.  J.  &  544. 

S.  544.  See    also     Accidental,     etc.     Ins. 

2  Smith  V.  Burns  Boiler  &  Mfg.  Corp.  v.  Davis,  15  L.  T.  182  (where 

Co.  (Wise),  111  N.  W.  1123.  the  departure  was  held  not  to  be  of 

^  Richmond     Factory     Ass'n     v.  this  cliaracter). 

Clarke,  61  Me.  351   (where  the  sub-  *  Avon  Springs    Sanitarium    Co. 

Bcription    contemplated     incorpora-  v.  Weed,  104  N.  Y.  Supp.  58. 

tiou   under  a  general   law  and   the  *  Patterson  v.   Turner,  3  Ont.  L. 

company  which  was  actually  formed  Rep.  373. 

was   incorporated   by   special   act);  "  Richmond  Street  R.   R.   Co.   v. 

Woods  Motor  Vehicle  Co.  v.  Brady,  Rccd,  83  Ind.  9. 

215 


§  260  ORGANIZATION    AND    ISSUE    OF    SHARES     [ChAP.  Ill 

ognized,  a  person  who  subscribes  to  shares  of  stock  before 
incorporation  is  deemed  to  contemplate  incorporation  de  jure; 
and  hence  according  to  the  weight  of  authority,  he  cannot  be 
held  to  his  subscription  by  an  organization  which  has  a  mere 
de  facto  existence.^ 

>  Dorris  v.  Sweeney,  60  N.  Y.  463  ;  Marshall  on  Priv.  Corps.,  §  462  e,  p. 

Shick  V.  Citizens'  Enterprise  Co.,  15  1440. 

Ind.  App.  329 ;  57  Am.  St.  Rep.  230.         Cf.  DeWitt  v.  Hasting,  69  N.  Y. 

Williams  v.  Citizens  Enterprise  Co.,  518. 

153  Ind.  496 ;   55  N.  E.  425 ;   Capps         But    as    to    subscriptions    made 

V.  Hastings  Prospecting  Co.,  40  Nebr.  by  signing  the  incorporation  paper, 

470 ;  58  N.  W.  956 ;  24  L.  R.  A.  259  ;  see  supra,  §  242. 
42  Am.   St.   Rep.   677;   2    Clark  & 


216 


CHAPTER  IV 

IRREGULAR  INCORPORATION  —  PROOF  OF  INCORPORATION 

Section 

Confusion  in  authorities      201 

Scope  of  treatment 262 

Dimiiiishinf;  importance  of  subject 2G3 

Non-compliance  with  directory  provisions  —  substantial   compHance 

with  law 264 

Breaches  of  conditions  subse(|uent 265 

Certificates  by  pubhc  officers  to  the  regularity  of  incorporation .    .     266-270 

In  general      266 

Whether  certificate  conclusive  evidence  of  regularity  of  proceed- 
ings —  revocation  of  certificate 267 

Statutes  making  certificate  conclusive  evidence  of  regularity      268-270 

English  cases 268 

American  cases 269 

Whether  certificate  precludes  direct  attack  by  the  state  upon 

validity  of  incorporation 270 

Proof  of  incorporation 271-283 

Statement  of  question      271 

Necessity  for  raising  issue  by  the  pleadings 272 

Direct  proof  of  incorporation      273 

Indirect  or  circumstantial  evidence  of  incorporation 274 

Secondary  evidence  of  contents  of  incorporation  paper     ....     275 
Statute  recognizing  corporate  existence  of  defectively  incorpo- 
rated company 276 

Admissions  of  incorporation 277 

Estoppel  to  deny  incorporation 278-282 

Estoppel  by  record 278 

Estoppel  by  deed 279 

Estoppel  in  pais 280-282 

Estoppel  of  individual  to  deny  the  incorporation  .    .    .     280 
Estoppel   of    supposed  corporation  to   deny   its   own 

existence 281 

Estoppel  by  dealing  with  supposed  corporat'on  .    .    .     282 

Disproof  of  incorporation 283 

Corporations  de  facto 284-292 

Whether  irregular  incorporation  proceedings  can  give  rise  to  a 

coqioration  de  facto      284 

Circumstances  necessary  to  create  a  corporation  de  facto      .     285-290 

In  general      285 

Requirement  of  a  law  under  which  the  corporation  miglit  be 

formed 286 

Requirement  of  bona  fides  in  attempting  to  comply  with  law     287 
Requirement  of  substantial  or  colorable  compliance  with 

law      288 

What  amounts  to  colorable  comyiliance 289 

Requirement  of  user  of  corporate  privileges 290 

217 


§  261  IRREGULAR  INCORPORATION       [ChAP.  IV 

Corporations  de  facto  (continued)  Section 

Nature  of  de  facto  corporations 291-292 

De  facto  corporations  distinguished  from  corporations  by 

estoppel 291 

Powers  and  rights  of  corporation  de  facto 292 

Rights  and  liabilities  of  members  of  defectively  incorporated  com-    ' 

pany 293-294 

LiabiUties  to  third  persons 293 

Rights  and  liabiHties  inter  sese 293a 

Rights  against  tliird  persons 294 


§  261.  Confusion  in  Authorities.  —  Few  topics  in  the  Ameri- 
can law  of  corporations  are  more  confused  than  the  subject  of 
irregular  or  defective  incorporation  —  of  the  consequences  of 
defects,  or  lack  of  compliance  with  law,  in  the  terms  of  the  in- 
corporation papers  or  in  its  execution  or  recording,  or  a  non- 
observance  of  statutory  requirements  in  respect  to  matters 
preceding  or  attending  the  incorporation.  What  are  the  conse- 
quences of  such  defects  ?  Do  they  render  the  attempted  incor- 
poration wholly  nugatory  ?  Or  does  the  association  in  spite  of 
such  irregularities  become  a  corporation  de  facto  whose  exist- 
ence can  be  questioned  only  on  direct  proceedings  instituted  by 
the  sovereign  ?  If  a  negative  answer  be  given  to  this  last  ques- 
tion, may  the  persons  who  compose  the  association  or  who  deal 
with  it  be  estopped  under  some  circumstances  to  deny  its  cor- 
porate existence  ?  Upon  these  and  similar  questions,  the  law  in 
the  United  States  consists  in  a  wilderness  of,  often,  irreconcilable 
decisions.^ 

§  262.  Scope  of  Treatment.  —  In  the  present  chapter,  we 
shall  endeavor  at  least  to  clear  away  some  of  the  undergrowth 
that  obscures  the  approaches  to  the  forest,  without  undertaking 
the  herculean  task  of  opening  a  pathway  through  the  jungle 
itself.  This  plan  of  dealing  with  the  subject  is  believed  to  be 
most  conducive  to  the  elucidation  of  the  matter.  For  wherever 
the  cases  are  so  numerous  and  in  such  hopeless  conflict  as  the 
American  decisions  on  the  law  of  de  facto  corporations  and  of 
corporations  by  estoppel,  the  most  helpful  and  satisfactory  treat- 
ment of  many  particular  features  of  the  law  must  be  confined 
to  the  cases  in  some  one  state. 

'  For  a  thorough  and  scientific  see  articles  by  Professor  E.  H.  War- 
treatment  of  parts  of  the  subject,  ren,  in  20  Harv.  L.  Rev.  456  and 
with    full    citations    of    authorities,    21  Harv.  L.  Rev.  305. 

218 


§  261-§  294]  CONDITIONS    SUBSEQUENT  §  265 

§  2(53.  Diminishing  Importance  of  Subject.  —  The  whole  sub- 
ject, one  should  observe,  is  of  less  importance  than  formerly. 
For  the  more  recent  incorporation  laws  are  .so  simple  that  the 
irregularities  or  defects  in  the  incorporation  proceedings  can 
always  be  avoided  by  the  merest  tyro  by  the  exercise  of  the 
most  ordinary  care. 

§  2()4.  Non-compliance  with  Directory  Provisions  —  Substantial 
Compliance  with  Law.  —  It  should  be  premi.sed  that  the  non- 
observance  of  provisions  that  can  be  deemed  directory  merely 
is,  properly  speaking,  no  irregularity  at  all,  and  hence  may  be 
entirely  disregarded.'  In  determining  whether  or  not  a  given 
provision  should  be  construed  as  directory  and  not  mandatory, 
regard  should  be  had  to  the  purpose  of  the  statute.  Sub- 
stantial compliance  and  not  necessarily  literal  compliance  even 
with  mandatory  provisions  is  all  that  is  requisite;  and,  if  the 
statute  is  substantially  complied  with,  the  company  becomes  a 
corporation  de  jure  as  well  as  de  facto.-  In  other  words,  a  mere 
lack  of  literal  compliance  with  the  act  is  not  deemed  a  defect  or 
irregularity  in  the  incorporation. 

§  205.  Breaches  of  Conditions  Subsequent.  —  Moreover,  where 
a  statute,  in  however  mandatory  terms,  requires  certain  acts 
to  be  done  after  the  attainment  of  corporate  existence,  failure 
to  comply  with  that  requirement  will  be  merely  a  cause  of 
forfeiture,  which,  according  to  well-known  principles,  in  the 
absence  of  an  express  and  emphatic  statutory  declaration  to  the 
contrary,  can  be  taken  advantage  of  only  by  the  state  on  a  direct 
proceeding  instituted  for  that  purpose.^  Thus,  where  a  statute 
provides  that  on  registration  of  the  incorporation  paper,  the  sub- 

'  See  Rose  Hill,  etc.  Road  Co.  v.  Rep.  172;  State  ex  rel.  Attorney-Gen- 
People  ex  rel.  Laivless,  115  111.  133;  eral  v.  Wood,  13  Mo.  App.  139. 
3  N.  E.  725;  Judah  v.  Am.  Live  ^  Murphy  v.  Wheatley,  102  Md. 
Stock  Ins.  Co.,  4  Ind.  333;  New-  501;  63  Atl.  62;  Hammond  v. 
comb  V.  Reed,  12  Allen  (MsLss.)  362,  Straus,  53  Md.  1,  12;  Baker  v. 
364  (headnote  inadequate);  Brain-  Adm'r  of  Backus,  32  111.  79;  Shako- 
tree  Water  Supply  Co.  v.  Inhabitants  pee  Mfg.  Co.,  37  Minn.  91,  93;  33 
of  Braintree,  146  Mass.  482,  488  N.  W.  219;  County  of  Macon  v. 
(headnote  inadeciuate) ;  16N.  E.  420.  Shores,  97  U.  S.  272,  277  ;   Brovm  v. 

^  People  ex  rel.  Bernard  v.  Cheese-  Wyandotte,  etc.  Ry.  Co.,  68  Ark.  134 ; 

man,  7  Colo.  376,  379;    3  Pac.  716;  56  S.  W.  862;    Merrick  v.  Reynolds 

People  V.  Stockton,  etc.  R.   R.  Co.,  Engine,    etc.    Co.,    101    Mass.    381 ; 

45  Cal.    306;     13    Am.    Rep.     178;  Granby  Mining  Co.  v.  Richards,  95 

People  V.   Montecito   IVater  Co.,  97  Mo.   106;  8S.  W.  246;    Hughcsdale 

Cal.  276;  32  Pac.  236;  33  Am.  St.  Mfg.   Co.  v.  Vanner,  12  R.  I.  491; 

219 


§  266  IRREGULAR  INCORPORATION       [ChAP.  IV 

scribers  shall  be  incorporated,  the  non-observance  of  a  require- 
ment that  a  dupHcate  of  the  instrument  shall  be  filed  with  the 
secretary  of  state  can  be  at  most  a  cause  of  forfeiture,  not  to  be 
availed  of  collaterally.^  So,  a  condition  precedent  to  the  right 
to  commence  business  may  be  a  condition  subsequent  to 
corporate  existence.-  The  matter  of  conditions  subsequent  to 
incorporation  relates  in  strictness  to  the  dissolution  of  corpora- 
tions, and  to  the  termination  of  corporate  existence ;  and  hence 
any  consideration  of  the  subject  in  detail  would  be  beyond  the 
scope  of  this  treatise. 


§   266-§    270.      CERTIFICATES   BY   PUBLIC   OFFICERS  TO   REGU- 
LARITY   OF    INCORPORATION. 

§  266.  In  general.  —  Often,  as  shown  above,^  the  corpora- 
tion laws  provide  that  the  incorporation  paper  shall  be  sub- 
mitted to  some  public  officer  who  is  to  determine  whether  or  not 
it  compUes  with  law.  Sometimes,  too,  this  officer  is  required 
to  certify  his  determination  upon  the  instrument.  In  England, 
the  document  is  submitted  to  the  registrar  of  joint-stock  com- 
panies, who,  if  he  approve  the  paper,  records  the  same,  and  there- 
upon issues  a  certificate,  called  a  certificate  of  incorporation, 
stating  that  the  company  has  complied  with  the  law  and  is  duly 
incorporated.*  This  name,  certificate  of  incorporation,  although 
in  itself  appropriate  enough,  cannot  conveniently  be  applied  in 
America  to  similar  certificates,  because  in  many  states  the  in- 
corporation papers  are  called  certificates  of  incorporation.  The 
name,  however,  is  immaterial:  the  nature  of  the  instrument  is 
the  same.  The  issuance  of  the  certificate  by  the  registrar  or 
other  officer  charged  with  the  duty,  although  it  furnishes  the  best 
and  most  convenient  evidence  of  incorporation,  is  nevertheless 
not  ordinarily  a  condition  precedent  to  incorporation.^ 

Harrod  v.  Hamer,  32  Wise.  162  ;  Ry-  205  (headnote  inadequate) ;    Ham- 
land  V.  riollinger,  117  Fed.  216.  mond  v.  Straus,  53  Md.  1,  16. 

See  also  supra,  §  137    and  cases  See  also  supra,  §  177. 

cited,  and  §  139.  "  Supra,  §  139-§  142. 

*  Mokelumne  Hill  Mining  Co.  v.  *  Companies  Act,  1862,  §  18. 

Woodbury,  14  Cal.  424 ;  73  Am.  Dec.  ^  Sparks  v.   Woodstock  Iron,  etc. 

658,    See  supra,  §  137.  Co.,  87  Ala.  294;    6  So.   195.     S6e 

'  Stokes   V.  Findlay,  4   McCrary  also  supra,  §  142. 

220 


§  261-§  294]         CERTIFICATES    OF    REGULARITY  §  267 

§  267.  Whether  Certificate  conclusive  Evidence  of  Regular- 
ity—  Revocation  of  Certificate. -~ 'I'lie  first  question  is  wlietlier 
the  determination  of  the  officer  to  whom  the  instrument  is 
submitted  tiiat  the  document  conforms  to  law  is  conclusive,  so 
as  to  preclude  anybody  who  may  be  interested  from  showing 
that  the  officer  was  mistaken,  some  mandatory  provision  of  law 
having  been  disregarded.  Where  there  is  no  express  provision 
to  that  effect,  the  officer's  determination  is  not  conclusive :  that 
is,  the  mere  fact  that  the  incorporation  papers  must  Ije  passed 
upon  by  some  public  official  does  not  make  liis  approval  a  con- 
clusive determination  that  all  legal  requirements  have  been 
observed..  So,  where  a  special  act  of  incorporation  provided 
that  the  company  should  have  the  right  to  collect  tolls  as  soon 
as  a  certificate  of  its  organization  should  be  returned  by  certain 
commissioners  to  the  governor  of  the  state  and  the  latter  should 
proclaim  the  company  to  be  entitled  to  do  so,  a  proclamation  of 
the  governor  in  pursuance  of  the  statute  was  held  not  to  be  con- 
clusive evidence  of  incorporation,  upon  issue  joined  on  a  plea  of 
7iul  tiel  corporation.-  Of  course,  however,  a  court  may  well  hold 
that  under  the  American  doctrine  of  de  facto  corporations  the 
fact  of  the  official  approval  amounts  to  colorable  compliance  unth 
law  so  as  necessarily  to  make  the  company  a  corporation  de  facto 

'  Oler  V.  Baltimore,  etc.  R.  R.  Co.,  these  latter  cases,  compare  the  other 

41  Md.  583,  590;   Kinston,  etc.  R.  R.  English  cases  cited  infra,  §  268. 
Co.  V.  Stroud,  132  N.  Car.  413;    43         See  also  Laflin,  etc.  Powder  Co. 

S.    E.   913    (where  the   official  was  v.  Sinsheimer,  46  Md.  315;    24  Am. 

merely   charged   wth   the   duty   as  Rep.    522 ;     Mix   v.   Xat.    Bank   of 

registrar  of  refusing  to  record  an  il-  Bloomington,  91  111.  20;  33  Am.  Rep. 

legal  instrument) ;   Boyce  v.  Trustees  44  (holding  certificate  to  be  prima 

Towsontown     Sta.,     46     Md.     359;  facie    evidence    of    incorporation); 

People  6x  rel.  Davenport  v.  Rice,  68  Merchants'    Nat.    Bank    v.    Glendon 

Hun  (N.  Y.)   24;    22  N.  Y.  Supp.  Co.,  120  Mass.  97  (similar  point  to 

631   (holding  that  registrar  may  de-  last  case). 

cUne  to  record  the  paper  if  not  in  As  to  the  effect  of  a  statutory 
compliance  with  law,  notwithstand-  provi.sion  that  an  official  certificate 
ing  the  approval  of  a  judge  to  whom  shall  be  prima  facie  evidence  of  in- 
the  statute  required  the  instrument  corporation,  see  Wood  v.  Wiley  Con- 
to  be  submitted);  Hamilton,  etc.  struction  Co.,  56  Conn.  87;  Bartlett 
Road  Co.  V.  Townsend,  13  Ont.  App.  v.  Wilbur,  53  Md.  485  (holding  that 
534.  the  same  effect  will  be  given  to  the 

But  see  First  Nat.  Bank  v.  Rocke-  certificate  in  a  foreign  state). 
feller,    195    Mo.    15   (headnote  mis-         ^  Duke  v.  Cahawha  Nav.  Co.,  10 

leading) ;   93    S.    W.    761 ;    Banwen  Ala.  82,  91  (headnote  inadequate) ; 

Iron  Co.   V.   Barnett,  8  C.   B.   406 ;  44  Am.  Dec.  472. 
Bird's  Case,  1  Sim.  N.  S.  47.    With 

221 


§  268  IRREGULAR  INCORPORATION        [ChAP.  IV 

in  spite  of  any  previous  irregularities  in  the  proceedings.'  So, 
too,  the  fact  that  the  official  approval  was  obtained  by  fraudulent 
misrepresentations  on  the  part  of  the  promoters  is  not  ground  for 
collateral  attack  upon  the  validity  of  the  incorporation.-  This 
conclusion  should  be  based  not  merely  upon  the  ground  that 
there  is  colorable  compliance  with  the  incorporation  law  but 
also  upon  the  ground  that  there  is  formal  compliance  and  that 
the  legislature  intended  to  require  no  more.  The  judge  or  officer 
to  whom  the  incorporation  proceedings  are  submitted  may  re- 
voke his  approval,  at  any  rate  where  his  error  in  granting  the 
approval  was  so  flagrant  that  the  attempted  incorporation  is 
absolutely  void.^ 

§  268-§  270.     Statutes  making  Certificate  Conclusive  Evidence 

of  Regularity. 

§  268.  English  Cases.  —  The  extent  to  which  statutory  pro- 
visions purporting  to  make  the  officer's  decision  conclusive  will 
be  carried,  of  course  depends  very  largely  on  their  terms.  The 
English  Companies  Act  of  1862  provided  that  the  registrar's 
issuance  of  a  "certificate  of  incorporation"  should  be  "conclu- 
sive evidence  that  all  the  requisitions  of  this  Act  in  respect  of 

*  Jones  V.  Dana,  24  Barb.  (N.  Y.)  Haacke   v.    Knights  of  Liberty,   etc. 

395,   402;     Tar  River  Nav.   Co.   v.  Club,    76   Md.    429;     25   Atl.    422; 

Neal,  .3  Hawks  (N.  Car.)  520.  Laflin,    etc.    Powder    Co.    v.    Sins- 

'  U.  S.   Vinegar  Co.  v.  ScMegel,  heimer,  46  Md.  315;    24  Am.  Rep. 

143    N.    Y.    537;     38    N.    E.    729;  522. 

Glover  v.  Giles,  18  Ch.  D.  173 ;  Hart-         But  see  Jersey  City  Gas  Co.  v. 

man  v.   Pennsylvania  Range   Boiler  Dwight,   29   N.    J.    Eq.    242    (where 

Co.,  24  Pa.  Co.  Ct.  Rep.  324;    Duke  merely  colorable  compliance  was  had 

V.  Cahawba  Nav.  Co.,  16  Ala.  372,  with  a  statute  making  the  subscrip- 

374;    Cochran    v.     Arnold,    58    Pa.  tion  and  payment  of  a  certain  pro- 

St.     399     (overruling    Patterson    v.  portion   of  the   capital   a   condition 

Arnold,   45    Pa.    St.    410) ;   Rice  v.  precedent  to  incorporation). 
Xat.  Bank,  126  Mass.  300  (headnote         ^  National    Endowment    Co.,    142 

inadequate).  Pa.  St.  450;   21  Atl.  879. 

Cf.  American  Salt  Co.  v.  Heiden-  But  see  Illinois  Watch  Case  Co. 
heimer,  80  Tex.  344 ;  15  S.  W.  1038 ;  v.  Pearson,  140  111.  423,  432-433 ; 
26  Am.  St.  Rep.  743;  Tavaglini  v.  31  N.  E.  400;  16  L.  R.  A.  429  (hold- 
Societa  Italiane,  5  Pa.  Dist.  R.  441 ;  ing  that  the  approval  cannot  be  re- 
German  Ins.  Co.  V.  Strahl,  13  Phila.  voked  because  after  it  was  given 
512;  Pattison  v.  Albany  Bldg.,  etc.  another  corporation  changed  its 
Ass'n,  63  Ga.  373 ;  Litchfield  Bank  name  to  one  very  similar  to  that  of 
V.  Church,  29  Conn.   137,  148-149;  the  new  company). 

222 


§  2Gl-§  294]  CERTIFICATES    OF    REGULARITY  §  268 

re<^i.strati(>ii  luive  been  complied  with."  '  The  cases  in  which 
this  onaetiiient  has  been  construed,  althouf^h  not  altogether  har- 
monious, constitute  our  chief  source  of  enlightenment  as  to  the 
effect  of  such  provisions.  Thus,  where  tlie  object  clau.se  of  a 
memorandum  of  association  was  altered  after  execution  by  the 
subscribers  and  before  registration,  the  House  of  Lords  held  that 
the  registrar's  "certificate  of  incorj)oration "  precluded  the 
courts  from  looking  at  such  matters  for  the  purpose  of  question- 
ing the  validity  of  the  incorporation ;  -  and,  after  the  argument 
in  this  case  but  before  the  dec-ision  of  the  IIou.se,  Lord  Cairns 
pronounced  a  similar  judgment,^  in  which,  however,  he  left  the 
point  open  whether  the  conclusive  effect  given  by  the  statute  to 
the  registrar's  certificate  would  deprive  persons  who  might  be 
injured  from  suing  the  registrar  for  knowingly  recording  an  al- 
tered document.*  In  several  subsequent  cases,  however,  the 
doctrine  has  been  enunciated  (although  in  none  of  them  was  it 
necessary  to  the  decision)  that  the  registrar's  certificate  and  de- 
termination that  the  document  offered  for  registration  complies 
with  law  does  not  ])revent  any  one  who  may  be  desirous  of  im- 
peaching the  corporation  of  the  company  from  showing  that  in 
fact  less  than  the  required  number  of  signatures  were  attached  * 
—  that,  for  example,  one  person  had  signed  twice.  So,  in  con- 
struing a  similar  provision  in  the  Companies  Act  of  ISoG,^  it  was 
held  that  the  registrar's  certificate  was  not  conclusive  upon  the 


*  Companies  Act,  1862,  §  18.  the  corporation.     Wenlock  v.  River 
^  Oakes    v.    Turquand,    L.    R.    2  Z)ee  Co.,  38  Ch.  D.  534.    As  to  other 

H.     L.    325,    354,    369    (headnote  provisions    making    certificates    of 

inadequate).  public  officers  "conclusive  evidence " 

^  Peel's  Case,  2  Ch.  674.  of    regularity    in    corporate    affairs, 

*  2  Ch.  682.  see    Ladies  Dress  Ass'n  v.  Pulbrook 

*  National   Debenture,    etc.    Corp.  (1900),  2  Q.  B.  376,  and  infra,  §   588 
(1891),   2   Ch.   505;    Laxon   &   Co.  and  §  646. 

(1892),  3  Ch.  555.  «    19   &   20    Vict.,    c.    47,   §   115. 

Hut  see  Nassau  Phosphate  Co.,  "The    certificate    of    incorporation 

2  Ch.  D.  610;    Bird's  Case,  1  Sim.  given  to  any  existing  company,  in 

N.  S.  47.  pursuance  of  this  act,  shall  be  con- 

A  statutory  provision  making  a  elusive  evidence  that  all  the  requi- 

commissioner's     certificate     conclu-  sitions   herein   contained  in   respect 

sive   evidence^  that   a   charge   upon  of  registration  under  this  act  have 

the    company's    lands    to    secure    a  been  complied  witli,  and  the  date  of 

loan  is  valitl  relates  merely  to  mat-  such  certificate  shall  be  deemed  to 

ters  of  procedure  antl  does  not  vali-  be  the  date  at  which  the  company 

date  a  loan  which  is  ultra   vires   of  is  incorporated  under  this  act." 

223 


§  269  IRREGULAR    INCORPORATION  [ChAP.  IV 

question  whether  the  company  was  such  a  company  as  was 
authorized   to  be  incorporated   under  the  act.' 

The  Companies  Act  of  1900  uses  broader  language  than  the 
Act  of  1862,  providing  that  "a  certificate  of  incorporation  given 
by  the  registrar  in  respect  of  any  association  shall  be  conclusive 
e^^dence  that  all  the  requisitions  of  the  Companies  Acts  in 
respect  of  registration  and  of  matters  precedent  and  incident 
thereto  have  been  complied  with,  and  that  the  association  is  a 
company  authorized  to  be  registered  and  duly  registered  under 
the  Companies  Acts";-  and  this  provision  is  believed  in  Eng- 
land, no  doubt  with  good  reason,  to  shut  off  all  inquiry  into  al- 
leged irregularities  in  the  proceedings,  in  so  far  at  least  as  those 
irregularities  might  be  used  as  a  ground  for  attacking  the  validity 
of  the  incorporation.^ 

§  269.  American  Cases.  —  In  the  United  States,  statutory 
provisions  having  the  same  objects  as  the  sections  of  the  Com- 
panies Acts  discussed  in  the  last  paragraph  are  frequently  en- 
countered. Probably,  in  such  cases,  the  EngUsh  decisions  would 
be  followed.  But  the  circumstance  should  never  be  lost  from 
sight  that  in  England  the  intention  of  the  legislature  is  the  sov- 
ereign criterion,  while  in  the  United  States  that  intention  must 
be  disregarded  if  it  conflict  with  any  constitutional  limitation. 
Thus,  where  some  American  statute  directs  that  the  incorpora- 
tion paper  shall  be  submitted  for  examination  to  one  of  the  judges 
whose  approval  shall  be  conclusive  evidence  of  its  conformity  to 
law,  the  questions  at  once  arise  whether  the  duty  so  imposed  on 
the  judge  is  judicial  in  nature,  and  whether  it  is  competent 
for  the  legislature  to  enact  that  an  ex  parte  decision  shall  con- 
clude the  rights  of  persons  who  have  had  no  opportunity  to  be 
heard  upon  the  question.  Of  course,  it  is  not  intended  to 
intimate  that  such  objections  are  sound  or  insuperable. 

Indeed,  as  already  intimated,  the  American  authorities  indi- 
cate that,  here  as  in  England,  the  courts  will  effectuate  whatever 


*  Northumberland  &  Durham  Dist.  dence  that  "the  company  was  au- 

Banking  Co.,  2  De  G.  &  J.  357,  dis-  thorized    to    be    registered    under 

tinguished  in   Ennis   &   West  Clare  this  act." 

Ry.  Co.,  .3  L.  R.  Ir.  94,  where  the  ^  Companies  Act,  1900  (63  &  64 

statute    which    was    constnied    ex-  Vict.,  c.  48),  §  1. 

pressly  provided  that  the  registrar's  »  1    Lindley   on  Companies,   6th 

certificate  should  be  conclusive  evi-  ed.,  151-152. 

224 


§  261-§  294]  CERTIFICATES    f)F    REGULARITY  §  270 

is  shown  to  be  the  clear  legislative  intent  upon  these  matters.* 
'J'lius,  where  a  state  statute  relating  to  the  consolidation  or  anial- 
ganuition  of  railway  cfjnipanics  provided  that  a  copy  of  the  arti- 
cles of  consolidation  certified  by  the  secretary  of  state,  in  whose 
office  they  were  retpiired  to  be  filed,  should  be  conclusive  evi- 
dence of  the  consuniniati(jn  of  the  consolidation,  the  United 
States  Supreme  Court  held  that  the  corporate  existence  of  the 
amalgamated  company  could  not  be  impeached  by  a  share- 
holder in  one  of  the  constituent  corporations  u{X)n  the  ground 
that  some  required  precedent  formality  had  been  omitted.-  So, 
the  section  of  the  National  Bank  Act  providing  for  the  conversion 
of  state  into  national  banks  declares  tiiat  upon  the  issuance  by 
the  comptroller  of  a  certificate  that  the  bank  has  complied  with 
the  provisions  of  the  federal  law  the  association  shall  thenceforth 
be  deemed  a  national  bank;  and  the  Supreme  Court  held  that 
this  certificate  having  been  given  precluded  a  shareholder  from 
impeaching  the  validity  of  the  incorporation  under  the  national 
law  by  showing  that  the  owners  of  two-thirds  of  the  stock  had 
not,  as  required  by  the  Act  of  Congress,  assented  to  the  change.^ 

The  whole  question  is  of  less  importance  in  the  United  States 
than  in  England  because  of  the  prevalence  of  very  liberal  doc- 
trines in  this  country  as  to  de  facto  corporations  and  "corpora- 
tions by  estoppel." 

§  270.  Whether  Certificate  precludes  direct  Attack  by  the 
State  upon  Validity  of  Incorporation.  —  Even  the  most  express 
statutory  declaration  that  a  public  officer's  approval  of  the  in- 
corporation papers  shall  be  conclusive  evidence  of  the  due  for- 
mation of  the  company  will  not  prevent  a  direct  attack  upon  its 
corporate  existence  by  the  sovereign  power  by  scire  facias,  quo 
warranto,  or  other  similar  proceeding.  That  the  American  courts 
will  so  hold,  there  can  be  little  doubt.*    The  same  result  would 


'  In  addition  to  cases  cited  be-  305  (as  to  conclusiveness  of  certifi- 

low,    see    American    Order    Scottish  cate  of  renewal  of  period  of  corpo- 

Clans  V.  Merrill,  151  Mass.  558;  24  rate  e.xistence  of  national  bank). 
N.  E.  918;  8  L.  R.  A.  320.  .\s  to  conclusive  effect  of  certifi- 

*  Leavenworth  v.  Chicago,  etc.  Ry.  cates    of    increase    or   reduction    of 
Co.,  134  U.  S.  688  (headnote  inade-  capital,  see  infra,  §  588  and  §  646. 
quate);  10  Sup.  Ct.  708.  *  Leavenworth  v.  Chicago,  etc.  Ry. 

*  Casey  v.   Gdli,   94   U.   S.   673  Co.,    134   U.   S.   688,    700-701;    ,10 
(headnote  inadequate).  Sup.  Ct.  708  (semble). 

Cf.   Clement  v.    U.  S.,   149  Fed. 
VOL.  I.  —  15  225 


§  271  IRREGULAR    INCORPORATION  [ChAP.  IV 

be  reached  in  England  if  only  the  law  provided  some  method 
of  impeaching  the  validity  of  an  incorporation  under  the  Com- 
panies Acts  by  means  of  a  direct  proceeding  instituted  by  the 
crown.' 

§   271-§  283.      PROOF  OF  INCORPORATION. 

§  271.  Statement  of  Question.  —  The  most  orderly  and  in- 
structive method  of  examining  the  various  problems  regarding 
irregularities  in  incorporation  is  by  a  consideration  of  the  fol- 
lowing question :  when  one  party  to  an  action  or  suit  is  desirous 
of  proving  that  a  certain  association  of  individuals  is  incorpo- 
rated under  a  general  law  or  companies  act,  while  his  opponent 
is  correspondingly  interested  in  negativing  that  fact,  what  will 
be  sufficient  evidence  of  due  incorporation  ? 

§  272.  Necessity  for  raising  Issue  by  the  Pleadings.  —  But 
before  attempting  to  answer  this  question,  the  obvious  legal 
principle  should  be  adverted  to,  that  the  issue  of  incorporation 
vel  lion  must  in  some  way  be  raised  upon  the  pleadings,^  other- 
wise no  evidence  upon  that  question  will  be  necessary  or  admis- 
sible.   Thus,  if  at  common  law,  in  an  action  of  trespass  brought 

'  See  Salomon  v.  Salomon  &  Co.  Calfee  (Ark.),  95  S.  W.  1011;  Mont- 

(1897),  A.  C.  22,  30;    Reuss  v.  Bos,  gomeryv.  Seaboard  Air  Line  Ry.  Co., 

L.  R.  5  H.  L.  176,  193.  73    S.    Car.    503;     53    S.    E.    987; 

^  See  Society  for  the  Propagation  Chicago,  etc.  Ry.  Co.  v.  State  (Ark.), 

of  the  Gospel  v.   Town  of  Pawlet,  4  106  S.  W.   199  (denial  that  plaintiff 

Pet.    480    (corporate    existence  '  of  was  a  corporation  owning  a  railway 

plaintiff  admitted  by  general  issue  held  bad  as  a  negative  pregnant). 

plea  to  writ  of  entrj') ;    Bristol,  etc.  As  to  what  is  a  sufficient  allega- 

Trust  Co.  V.  Jonesboro,  etc.  Trust  Co.,  tion  of  incorporation,  see  Swing  v. 

lOlTenn.  545;  48  S.W.22S;  Taylor  Consolidated  Fruit  Jar  Co.   (N.  J.), 

V.  Portsmouth,  etc.  Ry.  Co.,  91  Me.  63  Atl.  899 ;    and  infra,  §  464 ;    and 

193,  199;    39  Atl.  560;    64  Am.  St.  5  Enc.  of  PI.  &  Pr.,  pp.  75-77,  tit. 

Rep.  216;   Herald  Shoe  Co.  v.  Okla-  "Corporations,  IV,  3  (b)." 

homri  Pub.  Co.,  79  Pac.   Ill   (Okl.)  A  body  which  sues  or  is  .sued  as 

(where    a    general    appearance    for  a  corporation  need  not,  according  to 

defendant   was   held   to   preclude   a  the  weight  of  authority,  be  alleged 

denial   that  the  defendant   was  in-  to  be  such.    See  Leader  Printing  Co. 

corporated) ;    Emerson  Co.  v.  Nim-  v.  Lowry,  9  Okl.  89 ;    59  Pac.  242 ; 

ocks,    88    Fed.     280    (denial    of    all  Central  Bank  v.  Knowlton,  12  Wise, 

knowledge    of   plaintiff   corporation  624 ;     78  Am.   Dec.   769 ;    Ryan  v. 

not   sufficient   in   an   equity   case) ;  Farmers'    Bank,    5    Kans.    6.58 ;     .5 

Pittsburgh,  etc.  Ry.  Co.  v.  Lightheiser  Enc.   of  PI.   &  Pr.,   pp.   70-74,   tit. 

(Ind.),   78  N.   E.    1033,    1037   (gen-  "Corporations,  IV,  3  (a),"  where  a 

eral    appearance    admis.sion    of    de-  largo  luimher  of  authorities,  pro  and 

fendant's  incorporation) ;    Sim^n  v.  con,  are  cited. 

226 


§  2Gl-§  294]  PROOF    OF    INCORPORATION  §  273 

by  an  alleged  corjx)ration,  the  defendant  should  plead  in  con- 
fession and  avoidance  only,  he  would  admit  the  plaintilT's 
incorporation,  and  cuuld  not  at  the  trial  put  the  plaintirt"  ujxjn 
proof  thereof.  How  it  is  necessary  to  plead  in  order  to  raise  the 
question  whether  a  certain  association  is  incorporated  is  a  fjU€*s- 
tion  that  belongs  to  tiie  law  of  pleading.'  In  this  place,  ;dl  that 
is  appropriate  on  the  question  is  a  word  of  caution  lest  tlic  im- 
portance should  l>e  overlooked  of  shaj)ing  the  plcudirgs  in  such 
a  way  as,  under  the  lex  fori,  to  raise  the  issue  whether  the  co.n- 
pany  is  incorporated.  Of  course,  a  party  who  alleges  in  his 
pleadings  that  a  certain  company  is  incorporated  caimot  he 
allowed  to  change  front  and  claim  that  there  is  no  such  corpora- 
tion.^ An  admission  in  the  pleadings  that  "the  defendant  is  a 
corporation  "  will  be  construed  to  mean  that  the  defendant  was 
incorporated,  not  merely  at  the  time  of  action  brought,  but  also 
at  the  time  of  the  transactions  on  account  of  which  the  suit  was 
brought.^ 

§  273.  Direct  Proof  e£  Incorporation,  —  From  what  has  been 
said  above, ^  it  is  apparent  that  the  production  of  a  certificate 
from  a  public  officer,  if  such  there  be,  charged  with  the  duty  of 
passing  finally  and  conclusively  upon  the  regularity  of  pro- 
ceedings looking  to  incorporation  is  the  simplest  evidence  that 
the  association  in  question   is  a  corporation.^    But  if  the  law 

*  See  cases  cited  supra,  p.  226,  not    as    precluding    the    defendant 

n.  2,  and  1  Chitty  on  Pleading,  16th  from     insisting    on     an     objection, 

Am.  ed.,  star  page  464,  note;  5  Enc.  raised  in  the  answer,  that  the  com- 

of  PI.  &  Pr.,  pp.  77-90,  tit.  "Corpo-  pany  was  not   incorporated  at   the 

rations,  IV,  3  (c)."  time  of  the  transactions  referred  to. 

'  First  Xat.  Bank  v.  Dovetail,  etc.  *  Supra,  §  268  and  §  269. 

Gear  Co.,  143  Ind.  534;    42  N.  E.  ^  Cf.  Mix  v.  Xat.  Bank  of  Bloom- 

924.    Cf.  Wallace  \.Loomis,^l  U.  S.  ii^gton,  91  111.  20;    33  Am.  Rep.  44 

146.  (liolding      comptroller's      certificate 

'  Legrand  v.  Manhattan  Mer-  under  National  Bank  Act  that  the 
cantile  Ass^n,  80  N.  Y.  638  (headnote  provisions  of  the  law  have  been  corn- 
inadequate),  plied  with,  and  that  the  association 

But  see  Maryland  Tube  Works  v.  is  authorized  to  commence  business, 

West  End  Imjyrovemcnt  Co.,  87  Md.  to  be  competent  evidence  of  incor- 

207,     213     (headnote    inadequate),  poration) ;    Merchants' Xat.  Bank  v. 

where  an  admission  of  the  incorpo-  Glendon  Co.,   120  Mass.  97   (similar 

r.ition  of  the  plaintiff  contained  in  point  to  last  case), 

an  agreed  statement    of    facts    was  A  certificate  by  a  public  official 

constnied  as   merely  an    admission  stating   that   he   had  previously   is- 

that  the  company  was  incorporated  sued  a  certificate  of  the  due  incor- 

at  the  time  of  the  agreement,  and  poration    of    the    company    is    not 

227 


§273 


IRREGULAR   INCORPORATION 


[Chap.  IV 


under  which  the  company  is  formed  makes  no  provision  for  such 
a  final  and  conchisive  certificate,  or  if  for  any  other  reason  such 
a  certificate  is  not  forthcoming,  resort  must  be  had  to  the  less 
terse  and  decisive  proof.  The  only  other  direct  proof  is  the  pro- 
duction of  an  incorporation  paper  in  legal  form/  or  a  certified 
copy  thereof,-  together  with  evidence  of  registration  ^  and  of 
compliance  with  all  provisions  of  the  incorporation  law,^  and 
followed  up  by  evidence  of  the  identity  of  the  association  whose 


equivalent  to  the  latter  certificate, 
and  indeed  is  not  admissible  in 
evidence.  Wall  v.  Mines,  130 
Cal.  27,  38-39;  62  Pac.  386.  Cf. 
Petty  V.  Hayden,  88  N.  W.  339 ;  115 
Iowa  212. 

'  Fortin  v.  U.  S.  Wind,  etc. 
Pump  Co.,  48  111.  451 ;  95  Am.  Dec. 
560 ;  Edelhoff  v.  State,  5  Wyo.  19, 
23-25;  36  Pac.  627  (holding  that 
original  instrument  is  admissible  al- 
though certified  copy  is  expressly 
made  evidence  by  statute) ;  Sumter 
Tobacco  Warehouse  Co.  v.  Phoenix 
Ins.  Co.  (S.  Car.),  56  S.  E.  654  (same 
point  as  last  case  —  headnote  in- 
adequate) ;  Sierra  Land,  etc.  Co.  v. 
Bricker  (Cal.),  85  Pac.  665. 

Cf.  Playik  Road  Co.  v.  Young,  12 
Md.  476  (where  "  letters  patent  " 
issued  by  the  governor  of  another 
state,  and  purporting  to  be  in  con- 
formity with  its  laws,  were  held 
prima  facie  evidence  of  incorpora- 
tion) ;  Agnew  v.  Bank  of  Gettysburg, 
2  H.  &  G.  (Md.)  478  (same  point  as 
last  case). 

^  Cf.  Fresno  Canal,  etc.  Co.  v. 
Warner,  72  Cal.  379;  14  Pac.  37 
(certified  copy  of  certified  record 
copy  admitted) ;  Spring  Valley 
Water  Works  v.  San  Francisco,  22 
Cal.  434 ;  Walker  v.  Shelbyville,  etc. 
Turnpike  Co.,  80  Ind.  452  (orig- 
inal instrument  lost) ;  Washer  v. 
Allensville,  etc.  Turnpike  Co.,  81  Ind. 
78  (original  instrument  lost) ;  Tapley 
V.  Martin,  116  Mass.  275,  276;  Kern 
V.  Chicago,  etc.  Ass'n,  40  111.  App. 
356  (certified  copy  made  evidence 
by  express   statute),  affirmed,   140 


111.  371 ;  Dowagiac  Mfg.  Co.  v.  Hig- 
inbotham,  15  S.  Dak.  547;  91  N.  W. 
330;  Dooley  v.  Cheshire  Glass  Co., 
15  Gray  (Mass.)  494. 

The  original  record  is,  of  course, 
as  good  evidence  as  a  certified  copy. 
State  ex  rel.  Carolina  Iron  Co.  v. 
Abernethy,  94  N.  Car.  545. 

In  Jackson  ex  dem.  Walton  v. 
Leggett,  7  Wend.  (N.  Y.)  377,  it  was 
said  that  the  non-production  of  the 
original  instrument  must  be  ac- 
counted for  before  the  record  can 
be  received. 

^  Sierra  Land,  etc.  Co.  v.  Bricker 
(Cal.),  85  Pac.  665  (production  of 
original  articles  with  "fifing  marks" 
thereon  held  sufficient). 

The  fact  and  date  of  fifing  with 
the  registrar  may  be  proved  by 
parol.  Johnson  v.  Crawfordsville, 
etc.  R.  R.  Co.,  11  Ind.  280. 

*  Cf.  Wood  V.  Wiley  Construction 
Co.,  56  Conn.  87,  97-98 ;  13  Atl.  137 
(where  a  statute  providing  that  a 
certified  copy  of  the  incorporation 
paper  should  be  "prima  facie  evi- 
dence of  the  due  formation,  exist- 
ence, and  capacity  of  such  corpora- 
tion," was  held  to  dispense  with 
proof  that  after  registration  of  the 
instrument  a  copy  had  been  pub- 
lished in  a  newspaper  as  required 
by  law). 

As  to  the  impossibility  of  con- 
tradicting a  magistrate's  certifi- 
cate that  the  incorporation  paper 
was  duly  sworn  to  before  him, 
see  Dooley  v.  Cheshire  Glass  Co., 
15  Gray  (Mass.)  494  (headnote 
inadequate),  and  infra,  §  283. 


228 


§  2Gl-§  294]  PROOF    OF   IXCORPORATIO.V  §   274 

incorporation  is  to  be  proved  with  the  association  mentioned  in 
the  instrument  offered  in  evidence.'  User  of  corporate  privi- 
leges under  the  name  designated  in  an  incorporation  paper  or 
special  act  of  incorporation  is  sufficient  prima  facie  evidence  of 
identity.-  If  any  gap  or  flaw  appears  in  this  chain  of  proof,  the 
fact  of  incorporation  is  not  impregnahly  established.  It  seems, 
however,  to  be  unnecessary  in  the  first  instance  to  prove  the 
genuineness  of  the  signatures  subscribed  to  the  incorporation 
paper,  authenticity  being  presumed.^ 

If  the  organization  of  the  company  by  election  of  officers,  and 
so  forth,  or  by  acceptance  of  a  charter,  is  a  condition  precedent 
to  incorporation,^  the  books  of  the  alleged  corporation  are 
competent  evidence  of  those  facts ;  ^  but  unless  such  regular 
organization  be  expressly  prescribed  as  a  condition  precedent 
to  incorporation,  it  need  not  be  alleged,  and  if  alleged  it  need 
not  be  proved,  by  the  party  ha,ving  the  affirmative  of  the  issue 
of  incorporation  irl  )wn.^ 

§  274.  Indirect  or  circixmstantial  Evidence  of  Incorporation.  — 
But  although  direct  evidence  of  the  kind  set  forth  in  the  last 
paragraph  furnishes  the  most  satisfactory  proof  of  incorpora- 
tion, it  is  not  as  a  rule  the  only  evidence  thereof.^    Thus,  the 

'  As  to  interrogating  a  witness  tures  to  be  a  forgery  is  not  admis- 

whether     the     alleged     corporation  sible  as  a  ground  of  collateral  attack 

acted    under    certain    recorded    in-  on   the    incorporation) ;    and    infra, 

corporation    proceedings,    see   Haas  §  283. 
V.  Ikvik  of  Commerce,  41  Nebr.  754,  *  See  supra,  §  163. 

758-759  (headnote  inadequate) ;  60         *  Duke  v.  Cahawba  Xav.  Co.,  10 

N.  W.  85.    As  to  proof  of  tiie  iden-  Ala.  82 ;    44  Am.  Dec.  472 ;    Foster 

tity  of  an  association  which  is  suing  v.  White  Cloud  City  Co.,  32  Mo.  505; 

as  a  corporation  and  a  certain  com-  Grays  v.  Turnpike  Co.,  4  Rand.  (Va.) 

pany    organized    under   general    in-  578 ;     Buncombe    Turnpike    Co.    v. 

corporation  laws,  see  M.  E.  Church  McCarson,   1   Dev.  &  13.   (N.  Car.) 

v.  Pickett,  19  N.  Y.  482,  487.  306.      See  also  infra,  §  1120. 

^  Came   v.    Brigham,   39   Me.   35         As  to  parol  evidence  of  organiza- 

(headnote  inadequate).  tion,  etc.,  see  Johnson  v.  Okerstrom, 

Cf.   Utica  Ins.  Co.  v.   Tilman,   1  70  Minn.  303 ;   73  N.  W.  147  (where 

Wend.  (N.  Y.)  555.  the    evidence    was    offered    for   the 

^  New    York,    Lackawanna,    etc.  purpose  of  proving  the  company  to 

Ry.  Co.,  99  N.  Y.  12;   1  N.  E.  27;  be  a  corporation  de  facto). 
Lord  V.   Esse.r  Bldg.  Ass'n,  37  Md.  "  Grubb  v.  Mahoning  Xavigation 

320.  32.3-326  (semble).  Co.,  14  Pa.  St.  302. 

Cf.  Duggan  v.  Colorado  Mortgage,         '  In  addition  to  cases  cited  infra, 

etc.  Co.,  11  Colo.  113,  117  (headnote  see  Agricidtural   Cattle   Ins.   Co.   v. 

inadequate,  the  court  declaring  that  Fitzgerald,  16  Q.  B.  432 ;  Xew  York 

evidence  to  prove  one  of  the  signa-  Car  Oil  Co.  v.  Richmond,  6  Bosw. 

229 


§274 


IRREGULAR    INCORPORATION 


[Chap.  IV 


mere  fact  that  a  company  has  organized  and  proceeded  to  trans- 
act business  as  a  corporation  is  perhaps  upon  the  principle  omnia 
jiresumuntur  rite  esse  acta,  some  evidence  of  incorporation,  at 
least  as  against  the  company  itself.'  Certainly,  where  the 
alles^ed  corporatioii  is  engaged  in  business,  performance  of  such 
conditions  precedent  to  incorporation  as  the  commencement  of 
business  within  a  given  time  may  be  presumed.^    So,  the  grant 


213;  Stanford  Land  Co.  v.  Steidle, 
28  Wash.  72;  68  Pac.  178;  Fields 
V.  U.  S.,  27  App.  D.  C.  433,  444- 
445 ;  Dotson  \t  Milliken,  27  App. 
D.  C.  500,  514-515. 

But  see  Frankland's  Case,  Leigh 
&  Cave  Cr.  Cas.  276,  286-287; 
Wetland  Canal  Co.  v.  Hathaway,  8 
Wend.  (N.  Y.)  480,  486;  24  Am. 
Dec.  51 ;  Warner  v.  Daniels,  1  Wood. 
&  Min.  90,  105-106 ;  Utley  v.  Union 
Tool  Co.,  11  Gray  (Mass.)  139; 
Gauthier,  etc.  Co.  v.  Ham,  3  Colo. 
App.  559,  560 ;  34  Pac.  484  (semble). 

*  N arraga7isett  Bank  v.  Atlantic 
Silk  Co.,  3  Mete.  (Mass.)  282  ;  Doyle 
V.  Douglas  Machinery  Co.,  73  111. 
273 ;  Rose  Hill,  etc.  Co.  v.  People 
ex  rel.  Lawless,  115  111.  133;  3  N.  E. 
725 ;  Methodist  Episcopal  Soc.  v. 
Lake,  51  Vt.  353  (where  the  records 
were  lost). 

Cf.  Regina  v.  Langton,  2  Q.  B.  D. 
296 ;  Schuyler  County  v.  Coquard,  9 
Mo.  App.  592  ;  Provident  Institxition 
V.  Burnham,  128  Mass.  458 ;  War- 
den, etc.  of  Mercers  v.  Hart,  1  C.  &  P. 
113;  Bow  V.  Allenstown,  34  N.  H. 
351;  69  Am.  Dec.  489;  Wood  v. 
Jefferson  County  Bank,  9  Cow. 
(N.  Y.)  194;  Packard  v.  Old  Colony 
R.  R.  Co.,  168  Mass.  92;  46  N.  E. 
433 ;  Hagerstown  Turnpike  Road 
Co.  V.  Creeger,  5  H.  &  J.  (Md.)  122 ; 
9  Am.  Dec.  495;  Sasser  v.  State,  13 
Ohio  Rep.  453,  484-488;  Greene  v. 
Dennis,  6  Conn.  293  (hokling  that 
the  alleged  corporation  had  done  no 
acts  which  an  unincorporated  asso- 
ciation might  not  do). 

But  see  Frankland's  Case,  Leigh 
&  Cave  Cr.  Cas.  276. 

Certain   Michigan   cases,    Wilson 


Sewing  Machine  Co.  v.  Spears,  50 
Mich.  534;  15  N.  W.  894;  and 
Canal,  etc.  Co.  v.  Paas,  95  Mich. 
372  ;  54  N.  W.  907 ;  and  Lake  Su- 
perior Bldg.  Co.  V.  Thompson,  32 
Mich.  293,  were  decided  under  a 
statute  expressly  enacting  that  the 
transaction  of  business  under  a  cor- 
porate name  should  be  prima  facie 
evidence  of  incorporation.  In  Smith 
V.  Mayfield,  163  111.  447;  45  N.  E. 
157,  the  court  held  that  a  contract 
with  a  corporation  might  be  ad- 
mitted in  evidence  in  an  action  be- 
tween third  persons  without  proof 
of  incorporation  other  than  the  user 
of  corporate  functions. 

As  to  proof  of  incorporation  by 
general  reputation,  see  People  v. 
Dole,  122  Cal.  483,  497;  55  Pac. 
581;  68  Am.  St.  Rep.  50  (with 
which  case  compare  Norton  v.  State, 
74  Ind.  337,  and  Nicoll  v.  Clark,  13 
N.  Y.  Misc.  128,  130;  34  N.  Y. 
Supp.  159);  Reed  v.  State,  15  Ohio 
Rep.  217;  Fleener  v.  State,  58  Ark. 
98 ;  23  S.  W.  1 ;  People  v.  Ah  Sam, 
41  Cal.  645,  651-654;  Dick  v.  State 
(Md.).  68  Atl.  826;  State  v.  Brown 
(Utah),  93  Pac.  52  (holding  that 
no  sufficient  evidence  of  reputation 
had  been  adduced). 

^  Bank  of  Manchester  v.  Allen,  11 
Vt.  302,  307;  Memphis,  etc.  Plank 
Road  Co.  V.  Rives,  21  Ark.  302  (per- 
formance of  condition  that  subscrip- 
tion books  be  opened  presumed  from 
election  of  officers) ;  National  Fire 
Ins.  Co.  v.  Yeomans,  8  R.  I.  25 ;  86 
Am.  Dec.  610;  Lucas  v.  Bank  of 
Georgia,  2  Stew.  (Ala.)  147,  148. 

Cf.  Chcraw,  etc.  R.  R.  Co.  v.  White, 
14  S.  Car.  51  (holding  that  in  pleading 


230 


§  2Gl-§  294]  PROOF    OF    INCORPORATION  §  275 

of  a  land  patent  to  a  company  as  a  corporation  followed  by  a 
deed  from  the  company  is  snfnciciit  [)r(K)f  of  the  corporate  ex- 
istence of  the  company  in  estahhshiiig  ii  chain  of  title.'  (Jn  the 
other  hand,  according  to  the  weight  of  reason  if  not  of  authority, 
the  nse  of  a  name  such  as  "The  Pacific  Life  Insurance  Company 
of  California"  is  not,  standing  alone,  any  evidence  of  incor- 
poration;- for  with  e<jual  j)ropriety  such  names  might  be  and 
often  are  borne  by  unincorporated  associations.  It  has  been 
held  that  the  direct  testimony  of  a  witness  who  is  acquainted 
with  the  facts  to  the  effect  that  the  company  in  question  is  in- 
corporated is  evid(>nce.^ 

§  275.  Secondary  Evidence  of  Contents  of  Incorporation  Paper. 
—  If  the  effort  is  made  to  prove  incorporation,  not  indirectly 
or  circumstantially,  by  evidence  of  reputation,  user  of  cor- 
porate powers  or  the  like,  but  directly  by  showing  that  an  in- 
corporation paper  in  compliance  with  law  was  duly  executed 
and  recorded,  parol  evidence  of  the  contents  of  the  incorpora- 
tion paper  will  not  be  admissible  unless  the  non-production  of 
the  original  or  a  certified  copy  be  explained.*  The  record  or  cer- 
tified copy  is,  as  we  have  seen,  generally  admissible  without 
accounting  for  the  non-production  of  the  original  instrument.^ 
If  the  proper  foundation  be  laid  for  secondary  evidence  of  the 
contents  of  the  incorporation  paper,  the  court  will  not  insist  upon 
testimony  sufficient  to  reproduce  all  the  essential  provisions  of 
the  instrument,  but  will  be  satisfied  by  general  testimony  that  it 
complied  with  the  law.® 

performance  of  conditions  precedent  *  Cf.  Rose  Hill,  etc.  Road  Co.  v. 

to  incorporation  need  not  be  averred).  People  ex  rel.  Lawless,   115   111.  133; 

'  Galbraith    v.    Shasta    Iron    Co.,  3  N.  E.  725;    Owen  v.  Shepard,  59 

143    Cal.    94,    96     (headnote    inad-  Fed.  746 ;  8  C.  C.  A.  244 ;  Evans  v. 

equate);  76  Pac.  901.  Southern  Turnpike  Co.,  18  Ind.  101; 

=  Briggs  v.  McCulloh,  36  Cal.  542.  Haas  v.  Bank  of  Commerce,  41  Nebr. 

Cf.  Cxuckert  v.  Hacke,  159  Pa.  St.  754,  759-760;  60  N.  W.  85  (holding 

303  ;  28  Atl.  249  ("  Hughes  &  Gaw-  that  a  witness  may  be  asked  whether 

throp  Co. ") ;  Owen   v.   Shepard,  59  the  company    acted    under    certain 

Fed.   746    (headnote    inadetiuate  —  articles   offered   in   evidence  except 

"  Indian  Trailing  Co."  ) ;   8  C.  C.  A.  that  by  amendment  the  amount  of 

244.  capital  was  changed). 

See  infra,  §  464.  '  Supra,  §  273. 

3  State  V.  Pittam,  32  Wash.  137;  •  Rose  Hill,  etc.  Road  Co.  v.  Peo- 

72  Pac.  1042;  Locke  v.  Leonard  Silk  pie  ex  rel.  Lawless,  115  111.   133;    3 

Co.,  37  Mich.  479.  N.  E.  725. 

But  see  State  v.   Brown   (Utah), 
93  Pac.  52. 

231 


§  276 


IRREGULAR   INCORPORATION 


[Chap.  IV 


§  276.  Statute  recognizing  Corporate  Existence  of  defectively 
incorporated  Company.  —  Any  statute  which  recognizes  the  ex- 
istence of  an  association  as  a  body  corporate,  of  course,  dispenses 
with  proof  of  incorporation  and  cures  any  defects  in  the  in- 
corporation proceedings,'  unless  indeed  the  constitution  of  the 
state  prohibits  special  legislation  having  that  etiect.  Such  a 
statute  is  in  effect  a  special  act  of  incorporation. - 

§  277.  Admissions  of  Incorporation.  —  jMoreover,  incorpora- 
tion may  be  proved,  prima  facie,  by  an  admission  of  the  liti- 
gant who  is  denying  the  fact.^  And  this  admission  may  be 
implied  as  well  as  express.  For  instance,  the  execution  of  a 
promissory  note  expressed  to  be  payable  to  a  corporation  is  an 
implied  admission  by  the  maker  that  the  company  is  incorpo- 
rated ;  *  and  indeed  any  contract  or  deahng  with  a  company  as 
a  corporation  is  an  implied  admission  that  the  company  is  incor- 


*  Williams  v.  Union  Bank,  2 
Humph.  (Tenn.)  339;  Basshor  v. 
Dressel,  34  Md.  503 ;  Koch  v.  North 
Ave.  Ry.  Co.,  lb  Md.  222;  23  Atl. 
463 ;    15  L.  R.  A.  377. 

Cf.  Thornton  v.  Marginal  Freight 
Ry.  Co.,  123  Mass.  32  (where  there 
was  held  to  be  no  sufficient  legisla- 
tive recognition  of  corporate  exist- 
ence) ;  Attorney-General  v.  Railroad 
Companies,  35  Wise.  425,  602. 

^  Oroville,  etc.  R.  R.  Co.  v.  Palmas 
County,  37  Cal.  354,  362  (headnote 
inadequate). 

But  see  Central  Agricultural,  etc. 
Ass'n  V.  Ala.  Gold  Life  Ins.  Co.,  70 
Ala.  120  (holding  such  a  statute  not 
to  be  a  violation  of  a  constitu- 
tional prohibition  of  incorporation 
by  special  act  if  the  company  is  al- 
ready in  existence  as  a  corporation 
de  facto);  State  ex  rel.  Sanche  v. 
Wehh,  110  Ala.  214  (same  point); 
Syracuse  City  Bank  v.  Davis,  16 
Barb.  (N.  y'.)  188  (similar  point) ; 
State  v.  Squires,  26  Iowa  340  (similar 
decision  but  on  the  ground  that  a 
general  law  could  not  be  made  ap- 
plicable in  such  a  case). 

*  Cf.  Standard  Oil  Co.  v.  Common- 
wealth (Ky.),  91  S.  W.  1128  (receipt 
given    by    defencjant    company    de- 


scribing itself  as  a  corporation  suffi- 
cient evidence  against  it  in  a  crim- 
inal case  to  prove  its  own  incor- 
poration) ;  Metropolitan  Life  Ins.  Co. 
V.  Dempsey,  72  Md.  288 ;  19  Atl.  642 
(paper  filed  as  copy  of  company's 
incorporation  paper  although  not 
authenticated  as  required  by  law 
evidence  against  the  company  to 
prove  its  incorporation) ;  Marx  v. 
Raley  &  Co.  (Cal.),  92  Pac.  519 
(letter  from  company  admitting  its 
incorporation  sufficient  evidence  to 
support  a  judgment  against  it  as  a 
corporation). 

But  see  Indianapolis,  etc.  Co.  v. 
Herkimer,  46  Ind.  142,  148 ;  Ramsey 
V.  Peoria,  etc.  Ins.  Co.,  55  111.  311. 

As  to  admissions  in  the  plead- 
ings, see  supra,  §  272. 

As  to  an  admission  in  an  agreed 
statement  of  facts,  see  Maryland 
Tube  Works  v.  West  End  Improve- 
ment Co.,  87  Md.  207,  213  (headnote 
inadequate  —  stated  supra,  p.  227, 
n.  2). 

*  Jones  V.  Cincinnati  Type  Foun- 
dry Co.,  14  Ind.  89  (headnote  mis- 
leading) ;  Williams  v.  Cheney,  3 
Gray  (Mass.)  215;  Brown  v.  Scot- 
tish-American Mortgage  Co.,  110  111. 
235;    Williamsburg,  etc.  Ins.  Co.  v. 


232 


§  261-§  294]        ADMISSIONS    OF    INCORPORATION 


§277 


porated.'  The  same  has  been  held  with  respect  to  a  mere  refer- 
ence to  the  company  as  incorporated  in  a  contract  witii  a  third 
person.-  Simihirly,  where  a  company  is  sued  as  a  corporation, 
certificates  for  shares  issued  under  the  company's  seal  and  recit- 
ing that  the  company  had  been  duly  registered  under  a  general 
incorporation  law  are  as  against  the  defendant  suflicient  prima 
facie  proof  of  incorporation ;  ^  and  in  America  the  mere  use  by 
the  defendant  of  a  name  such  as  is  usually  borne  by  a  corpora- 
tion would  perhaps  have  the  same  effect.*  On  the  other  hand,  a 
mere  admission  that  an  account  made  out  in  the  name  of  a 
supposed  corporation  is  correct  is  not  an  admission  that  the 
creditor  is  incorporated.^  But  this  sort  of  proof,  considered  as 
merely  evidentiary  —  that  is,  unless  some  other  rule  of  law  in- 
tervenes —  is  prima  facie  merely,  and  may  be  overthrown  by 
showing  that  in  point  of  fact  the  incorporation  paper  is  not  in 
correct  form,  or  has  not  been  recorded,  or  that  there  is  some 
other  fatal  defect  in  the  incorporation  proceedings.®  Unless  the 
evidence  that  establishes  the  admission  is  to  be  given  some  effect 
beyond  or  other  than  a  mere  admission,  it  is  always  subject  to 


Frothingham,  122  Mass.  391  (where 
a  bond  was  in  favor  of  a  company 
and  its  successors) ;  Campbell  & 
Zell  Co.  V.  American  Surety  Co.,  129 
Fed.  491  ;  Lucas  v.  Bank  of  Georgia, 
2  Stew.  (Ala.)  147,  150  (semble) ; 
South  Bay  Meudoiv  Dam  Co.  v.  Gray, 
30  Me.  547,  549-550. 

CL  Franz  v.  Teutonia  Bldg.  Ass., 
24  Md.  259 ;  Johnston  Harvester  Co. 
V.  Clark,  30  Minn.  308;  Provident 
Institution  v.  Burnham,  128  Mass. 
458;  Gaines  v.  Bunk  of  Mississippi, 
12  Ark.  769;  Williams  v.  Bank  of 
Michigan,  7  Wend.  (N.  Y.)  539,  541- 
542. 

But  see  Ramsey  v.  Peoria,  etc.  Ins. 
Co.,  55  111.  App.  311. 

'  French  v.  Donahue,  29  Minn. 
Ill;  12N.  W.  354;  Johnston  Har- 
vester Co.  V.  Clark,  30  Minn.  308; 
Ryan  v.  Martin,  91  N.  Car.  464; 
Griffin  v.  Clinton  Line,  etc.  R.  R.  Co., 
11  Fed.  Cas.  27,  31;  Sierra  Land, 
etc.  Co.  V.  Bricker  (Cal.),  85  Pac.  665. 

Cf.  Topping  v.  Bickford,  4  Allen 
(Mass.)  120;    Williams  v.   Bank  of 


Michigan,  7  Wend.  (N.  Y.)  539; 
Dooleyy.  TT'o^co^, 4  Allen  (Mass.)  406. 

But  see  Welland  Canal  Co.  v. 
Hathaway.  8  Wend.  (X.  Y.)  480; 
24  Am.  Dec.  51. 

^  Anglo-Calif ornian  Bank  \. Field, 
146  Cal.  644,  651  ;   80  Pac.  1080. 

^  Mostyn  v.  Calcott  Hall  Mining 
Co.,  1  Fos.  &  Fin.  334. 

*  Bon  Aqua  Imp.  Co.  v.  Standard 
Fire  Ins.  Co.,  34  W.  Va.  764,  769- 
770  (headnote  inadequate  —  wiiere  a 
contract  of  the  "  Standard  Fire  Ins. 
Co."  was  signed  by  "W.  K.,  Presi- 
dent, C.  W.  C,  Secretary") ;  12  S.  E. 
771.    See  infra,  §  464. 

*  Florsheim  &  Co.  v.  Fry,  109  Mo. 
App.  487,  492 ;   84  S.  W.  1023. 

"  Griffin  v.  Clinton  Line,  etc.  R. 
R.  Co.,  11  Fed.  Ca.s.  27,  31. 

Cf.  Indianapolis,  etc.  Co.  v.  Her- 
kimer, 46  Ind.  142  (where  evidence 
of  an  admission  was  excluded  when 
it  appeared  from  other  evidence  that 
the  incorporation  paper  had  not 
been  filed,  etc.). 

See  also  infra,  §  283. 


233 


§278 


IRREGULAR   INCORPORATION 


[Chap.  IV 


contradiction  by  bringing  forward  the  incorporation  proceed- 
ings themselves.  Whether  any  such  further  effect  is  to  be  given 
will  depend  on  the  position  taken  in  respect  to  questions  which 
will  shortly  be  adverted  to  and  upon  which  the  courts  are  by 
no  means  agreed. 

§  278- §  282.     ESTOPPEL  to  deny  incorporation. 

§  278.  Estoppel  by  Record.  —  An  estoppel  partakes  of  the 
nature  of  a  conclusive  admission.  Now,  without  entering  on  the 
vexed  question  of  "corporations  by  estoppel,"  one  can  readily 
perceive  that  an  admission  of  corporate  existence  may  in  some 
cases  crystallize  into  an  estoppel  to  deny  corporate  existence. 
Take  the  clearest  case  —  estoppel  by  record.  If  in  one  action 
or  suit  the  question  whether  a  certain  association  is  legally  incor- 
porated is  raised,  argued,  and  decided  in  favor  of  the  legality 
of  the  incorporation,  that  decision  will  be  conclusive  by  estoppel 
in  any  subsequent  litigation  between  the  same  parties,  so  as  to 
preclude  a  second  attack  upon  the  company's  corporate  exist- 
"ence.^  On  the  other  hand,  the  two  actions  must  be  between  the 
same  parties  or  their  privies,  or  else  the  estoppel  will  not  be 
available.  Hence,  a  judgment  in  an  action  by  a  corporation  or 
its  receiver  against  one  shareholder  cannot  be  pleaded  in  another 
action  by  the  receiver  against  another  shareholder.' 

§  279.  Estoppel  by  Deed.  —  As  to  estoppel  by  deed,  the  case 
is  perhaps  not  so  clear;  and  yet,  on  principle,  it   is  difficult 

until  the  claim  against  the  individual 
members  had  become  barred  by 
limitations). 

^  Nickum  v.  Burckhardt,  30  Oreg. 
464  ;  47  Pac.  788 ;  48  Pac.  474 ;  60 
Am.  St.  Rep.  822  (where  the  former 
judgment  was  relied  upon  to  estab- 
lish that  the  company  was  not  in- 
corporated). 

But  see  Pochelu  v.  Kemper,  14 
La.  Ann.  308;  74  Am.  Dec.  433 
(where  a  judgment  against  supposed 
corporation  on  promissory  note  was 
held  to  estop  holder  from  suing  mem- 
bers as  partners).  It  is  submitted 
that  a  better  ground  for  this  last 
decision  is  that  the  claim  is  merged 
in  the  judgment.     See  infra,  §  293. 


1  Keene  v.  Van  Reuth,  48  Md.  184 
(headnote  misleading) ;  Williams 
V.  Bank  of  Michigan,  7  Wend.  (N.  Y.) 
539,  541-542  (semble) ;  Robertson 
V.  Parks,  76  Md.  118,  133-134  (head- 
note  inadequate);    24  Atl.  411. 

Cf.  Estey  Mfg.  Co.  v.  Runnels,  55 
Mich.  130 ;  20  N.  W.  823  ;  Fields  v. 
Cook,  16  La.  Ann.  153 ;  Rush  v. 
Halcyon  Steamboat  Co.,  84  N.  Car. 
702,  704  (holding  that  after  judg- 
ment against  a  supposed  corpora- 
tion, its  corporate  existence  cannot 
be  attacked  in  resisting  a  motion 
for  a  writ  of  execution) ;  Droege  v. 
Emery  (Ky.),  105  S.  W.  374  (similar 
to  last  case,  with  the  further  fact 
that  the  objection  to  the  company's 
corporate  existence  was  not  raised 

234 


§  261-§  294]  ESTOPPEL  §  280 

to  see  why  a  recital  in  a  deed  that  a  company  is  incorporated 
should  not  in  a  proper  case  hind  the  party  hy  way  of  estoppel.' 
However,  the  authorities  in  general  have  not  discriminated  be- 
tween estoppel  by  deed  and  estoppel  in  pais;  and  in  fact  the 
doctrine  of  esto[){)el  in  pais  has  been  carried  so  far  in  respect  to 
these  matters  that  in  most  of  the  United  States  there  is  rarely 
any  need  of  resorting  to  any  peculiar  law  of  estoppel  by  deed. 

§  280- §  282.     Estoppel  in  Pais. 

§  280.  Estoppel  of  Individual  to  deny  the  Incorporation.  — 
There  seems  to  be  no  reason  to  doubt  that  on  the  strictest  {)rinci- 
ples  of  the  common  law  a  person  may  sometimes  be  estopped 
in  pais  to  deny  that  a  certain  company  is  a  corporation.  The 
ordinary  elements  of  an  estoppel  in  pais  are  well  known  —  a 
statement  false  in  fact,  relied  upon  by  another  person  to  his  prej- 
udice. Thus,  if  a  person  either  expressly,  or  impliedly  by 
openly  holding  shares  in  an  association  which  claims  to  be  a 
corporation,  represents  to  those  who  may  choose  to  deal  with  the 
company  that  the  concern  is  incorporated  and  that  the  share- 
holders are  accordingly  subject  to  any  individual  liability  to 
creditors  which  by  statute  may  be  imposed  on  the  stockholders 
of  a  corporation,  he  will  be  estopped  to  escape  such  liability  on 
the  plea  that  the  company  was  never  legally  incorporated.^  In 
such  a  case,  all  the  elements  of  an  estoppel  in  pais  are  present; 
and  therefore,  consistently  with  principle,  no  other  decision  could 
be  reached.  So,  the  maker  of  a  promissory  note  in  favor  of  a 
supposed  corporate  body  will  be  estopped  from  denying  the 
validity  of  the  note  in  the  hands  of  a  bona  fide  holder  for  value, 
although  the  supposed  incorporation  was  invalid.'^  And  upon 
the  same  principle,  a  person  who  executes  a  deed  conveying 

'  Pilbrow    V.     PUbrow's    Atmos-  Co.,  10  R.  I.  112;  Slocum  v.  Warren, 

pheric,  etc.  Co.,  5  C.  B.  440;  German  10  R.  I.  116;    Wheelock  v.  Kost,  77 

Bank   v.   Stumpf,   6   Mo.    App.    17;  111.296;   Tanner  v.  Nichols,  80  S.  W. 

Ha.^cnritter   v.    Kirchhofjer,    79    Mo.  225;   25  Ky.  Law  Rep.  2191. 
239 ;    Whitney  v.  Robinson,  53  Wise.  See  also  Casey  v.  Galli,  94  U.  S. 

309;     10   N.    W.    512;     White   Oak  673;    Maxwell  v.  Akin,  8Q  Fed.  178. 
Grove   Benev.   Soc.   v.    Murray,    145         ^  Camp  v.  Byrne,  41  Mo.  525. 
Mo.  G22;   47  S.  W.  .iOl.  Cf.  Canfield  v.  Gregory.  66  Conn. 

Cf.  Keen  v.   Whittimjton,  40  Md.  9;    33  Atl.  536  (suit  by  receiver  of 

489,  495.  supposed    insolvent    corporation    to 

*  Slocum  V.  Proindence  Steam,  etc.  collect  unpaid  subscriptions^. 


§  isi 


IRREGULAR    INCORPORATION 


[Chap.  IV 


property  to  a  supposed  corporation  may  be  taken  as  representing 
to  any  person  to  whom  the  supposed  corporation  may  convey 
the  land  that  the  company  is  duly  incorporated,  and  accordingly 
may  be  estopped  from  asserting  the  contrary  as  a  flaw  in  the 
title  of  such  grantee.' 

§  281.  Estoppel  of  supposed  Corporation  to  deny  its  own 
Existence.  —  Perhaps  without  any  real  extension  of  this  princi- 
ple the  estoppel  might  be  held  to  cover  the  shareholders  collec- 
tively, that  is,  the  supposed  corporation.  That  is  to  say,  when 
persons  have  held  themselves  out  to  the  world  as  members  of  a 
corporation,  they  might  be  held  to  be  estopped  from  denying 
that  fact  when  strangers  take  them  at  their  word  and  sue  them 
as  a  corporation.  To  this  effect  are  many  American  cases.-  The 
objection  to  this  view  is  that  the  capacity  to  be  sued  as  a  corpora- 
tion is  in  a  sense  jurisdictional,  so  that  to  permit  an  action 
against  an  association  as  if  it  were  a  corporation  because  of  a 
mere  equity  against  its  members  is  very  like  estopping  the  court. 
Consequently,  one  cannot  well  find  fault  with  a  decision  that  an 
action  cannot  be  sustained  against  an  unincorporated  association 
merely  because  of  an  equitable  estoppel  of  its  members  to  deny 
the  incorporation.^  Upon  the  same  principle,  an  English  judge 
held  that  the  question  whether  a  certain  association  was  a  cor- 
poration and  so  within  the  statutes  conferring  jurisdiction  for 
the  winding-up  of  companies  had  to  be  decided  without  refer- 
ence to  any  estoppel  of  the  members  to  deny  their  corporate 
existence.*      Nevertheless,    the    prevalent    American    doctrine 


'  Snyder  v.  Studebaker,  19  Ind. 
462;  81  Am.  Dec.  415.  See  also 
infra,  p.  238,  n.    1.     Cf.   §  294. 

^  E.  g.  Callender  v.  Painesville, 
etc.  R.  R.  Co.,  11  Ohio  St.  516;  Mc- 
Cidlough  V.  Talledega  Ins.  Co.,  46 
Ala.  376,  377;  Stewart  Paper  Mfg. 
Co.  V.  Rau,  92  Ga.  511 ;   17  S.  E.  748. 

Of  course,  no  such  estoppel  can 
bind  a  de  jure  corporation  subse- 
quently formed ;  Bradley  Fertilizer 
Co.  V.  South  Publishing  Co.,  4  N.  Y. 
Misc.  172 ;   23  N.  Y.  Supp.  675. 

^  Boyce  v.  Towsontown  Sta.  M.  E. 
Church,  46  Md.  359. 

*  National  Debenture  and  Assets 
Corp.    (1891),   2   Ch.    505,   509-510 


(headnote  inadequate).  Said  Keke- 
wich,  J.,  "  It  is  said  in  short,  that  the 
company  is  estopped  from  setting 
up  this  case  as  an  objection.  I  do 
not  think  it  is  necessary  to  deal  with 
the  question  of  estoppel.  The  point 
has  been  mentioned  to  the  court. 
The  court  has  to  make  the  order, 
and  will  not  knowingly  make  an 
order  which  is  wrong  in  form  and 
substance  in  a  matter  of  this  kind, 
however  much  the  parties  may  be 
estopped  from  bringing  forward  any 
argument  against  it.  I  say  'in  a 
matter  of  this  kind,'  because  the 
question  is  one  of  jurisdiction.  .  .  . 
On  a  question  of  jurisdiction,  I  take 


236 


§  261-§  294] 


E.STr)r'PEL 


§  282 


supported  by  the  cases  cited  above  cannot  be  deemed  any  very 
flagrant  violation  of  established  piinciplcs  of  estojipcl  in  pul.-i. 

§  2.S2.  Estoppel  by  Dealing  with  supposed  Corporation.  — 
But  many  American  courts  —  perhaps  we  should  say,  most 
American  courts  —  go  furtiier  and  hold  not  only  that  those  who 
j)articipate  in  representing  to  the  public  that  a  defectively  in- 
<-orporated  company  of  which  they  are  members  is  a  legally  con- 
stituted corporation  are  estopped  to  deny  its  corporate  character, 
but  also  that  anybody  who  deals  witii  them  as  a  corporation  is 
likewise  estopped.'  That  is  to  say,  any  one  who  contracts  with 
a  company  which  is  purporting  to  act  as  a  corporation  cannot 
sul)sequently  when  sued  upon  the  contract  by  the  suppo.sed  cor- 
poration deny  the  company'^  corporate  existence,  nor  can  he 
hold  the  members  of  the  supposed  corporation  as  partners. 

This  conclusion,  it  is  submitted,  cannot  be  justihed  by  the 
ordinary  principles  of  estoppel  in  pais.    For  the  person  or  persons 


it,  the  court  must  make  up  its  own 
mind  and  is  bound  to  disregard  any 
question  of  estoppel." 

'  Casey  v.  Galli,  94  U.  S.  673,  680 
{semble) ;  Close  v.  Glenwood  Ceme- 
tery, 107  U.  S.  466,  476-477 ;  2  Sup. 
Ct.  267;  Studebaker  Bros.  Mfg.  Co. 
V.  .Montgomery.  74  Mo.  101  ;  Shields 
V.  Clifton  Hill  Land  Co.,  94  Tenn. 
123 ;  28  S.  W.  668 ;  26  L.  R.  A.  509 ; 
4.-1  Am.  St.  Rep.  700  ;  Estey  Mfg.  Co. 
V.  Runnels,  55  Mich.  130;  20  N.  W. 
823;  Stoutimore  v.  Clark,  70  Mo. 
471  (estoppel  raised  by  signing  note 
payable  to  "Missouri  City  Savings 
liank");  Worcester  Med.  Institution 
V.  Harding,  1 1  Cush.  285 ;  Seaton  v. 
Grimm,  110  Iowa  145;  81  N.  W. 
225  (where  the  party  estopped  was 
himself  a  corporator) ;  Planters',  etc. 
Bunk  V.  Padgett,  69  Ga.  159  ;  Thomp- 
son V.  Commercial,  etc.  Ass.  Co.,  78 
Pac.  1073  (Colo.) ;  Rannels  v.  Rome, 
145  Fed.  296;  74  C.  C.  A.  376; 
Whitney  v.  Robinson,  53  Wise.  309; 
10  N.  W.  512;  Platte  Valley  Bank 
V.  Harding,  1  Nebr.  461  (estoppel 
raised  by  signing  note  payable  to 
^'Platte  Valley  Bank  or  order"); 
Hasselman  v.  U.  S.  Mtg.  Co.,  97  Ind. 
365  (person  claiming  title  to  land 


under  a  supposed  corporation  es- 
topped to  deny  its  existence  for  the 
purpo.se  of  avoiding  a  prior  mortgage 
executed  by  it  upon  the  property) ; 
Gow  V.  Collin,  etc.  Lumber  Co.,  109 
Mich.  45;  66  N.  W.  676;  Western 
Investment  Co.  v.  Davis  (Ind.  Ty.), 
104  S.  W.  573;  Young  v.  Plattner 
Implement  Co.  (Colo.),  91  Pac.  1109 
(estoppel  by  execution  of  a  note  re- 
citing the  payee  to  be  a  corpora- 
tion) ;  Lincoln  Park  Chapter  v. 
Swatek,  204  111.  228 ;  68  N.  E.  429 
(estoppel  by  receiving  dividends) ; 
Brooke  v.  Day  (Ga.),  59  S.  E.  769, 
770  (semble) ;  Union  Pac.  Lodge  v. 
Bankers'  Surety  Co.  (Nebr.),  113 
N.  W.  263. 

Cf.  Black  River,  etc.  R.  R.  Co.  v. 
Clarke,  25  N.  Y.  208 ;  West  Win^ted 
Sav.  Bank  v.  Ford,  27  Conn.  282; 
71  Am.  Dec.  66. 

In  Marion  Savings  Bank  v.  Dun- 
kin,  54  Ala.  471  (where  the  doctrine 
stated  in  the  text,  although  recog- 
nized as  law,  was  held  to  be  inap- 
plicable because  the  person  against 
wliom  the  estoppel  was  invoked 
had  had  no  direct  deaUngs  with  the 
supposed  corporation). 


237 


§  282  IRREGULAR    INCORPORATION  [ChAP.  IV 

in  whose  favor  the  estoppel  is  invoked  —  that  is,  the  supposed 
corporation  or  its  members  —  were  not  misled  by  any  misrepre- 
sentation of  the  person  who  is  to  be  estopped.  If  we  assume 
that  whoever  deals  with  a  company  which  claims  to  be  a  corpo- 
ration impliedly  represents  to  it  that  it  is  incorporated,  yet  the 
supposed  company  or  its  members  are  not  misled ;  for  they  are 
better  acquainted  with  the  facts  than  he  can  possibly  be.'  If 
the  argument  be  advanced  that  he  impliedly  represents  that  he 
will  not  when  sued  upon  the  contract  deny  the  company's  cor- 
porate existence,  the  answer  is  that  a  promissory  representation 
cannot  give  rise  to  an  estoppel.^  Moreover,  the  contrary  view 
permits  persons  by  arrogating  corporate  functions  to  themselves 
in  entire  defiance  of  law,  and  in  complete  disregard  of  salutary 
legal  restrictions,  to  create,  virtually,  a  corporation  which  will 
have  such  powers  as  their  own  whim  from  time  to  time  may 
dictate  and  whose  existence  will  be  as  real  for  all  practical  pur- 
poses as  if  it  were  legally  organized. 

Hence,  those  cases  are  to  be  commended  which  protest  against 
the  perversion  of  the  sound  doctrine  of  estoppel  to  deny  corporate 
existence  into  this  very  different  doctrine  of  "  corporations  by 
estoppel."  ^  This  protest  is  reinforced  by  a  line  of  cases  holding 
that  "corporations  by  estoppel"  exist  only  when  the  facts  are 
such  as,  according  to  the  principles  adverted  to  in  a  succeeding 
paragraph,  would  constitute  the  association  a.  "de  facto  corpo- 
ration." *    In  so  far  as  these  latter  cases  assimilate  or  confuse 

'  If  the  supposed  corporation  as-  Ann.  1076;    17  So.  496;  49  Am.  St. 

signs   to    a   third    person    property  Rep.  394;  Abbott  v.  Omaha  Smelting 

which  has  been  granted  to  it  as  a  Co.,  4  Nebr.  416;    Griffin  v.  Clinton 

corporation,     the     original    grantor  Line,  ete.  72.  ^.  Co.,  11  Fed.  Cas.  27 ; 

may  well  be  estopped  from  denying  Provident,  etc.    Trust  Co.   v.  Saxon, 

the  title  of  the  purchaser  from  the  116  La.  408;  40  So.  778;  Louisiana 

supposed    corporation.      See    Green  I^at.    Bank   v.    Henderson,    116   La. 

V.  Grigg,  98  N.  Y.  App.  Div.  445;  413;    40  So.  779. 
90    N.    Y.    Supp.    565,    and    supra,  Cf.  Indiana  Bond  Co.  v.  Ogle,  22 

§  280.  Ind.  App.  593 ;    54  N.  E.  407 ;    72 

*  Bigelow  on  Estoppel,  5th  ed.,  Am.  St.  Rep.  326;  Doyle  v.  Mizner, 
p.  574.  42  Mich.  332  ;    3  N.  W.  968 ;    Jones 

*  Boyce  v.  Towsontown  Station  v.  Aspen  Hardware  Co.,  21  Colo.  263; 
M.  E.  Church,  46  Md.  359 ;  Wetland  40  Pac.  457 ;  52  Am.  St.  Rep.  220 ; 
Canal  Co.  v.  Hathaway,  8  Wend.  29  L.  R.  A.  143 ;  Glenn  v.  Bergman, 
480,48.3-484;  24  Am.  Dec.  51  (sub-  20  Mo.  App.  343. 

Btantially  overruled  by  Black  River,  *  Jones  v.  Aspen  Hardware  Co., 
etc.  R.  R.  Co.  V.  Clarke,  25  N.  Y.  21  Colo.  263,  268 ;  40  Pac.  457 ;  52 
208) ;    Williams  v.  Hewitt,  47  La.    Am.  St.  Rep.  220 ;  29  L.  R.  A.  143 , 

238 


§  261-§  294]  DISPROOF    OF    INCORPORATION  §  283 

the  doctrines  of  estoppel  and  of  de  facto  corporations,  it  is  sub- 
mitted tluit  they  are  to  be  regretted ;  but  in  so  far  as  they  im- 
pliedly repudiate  the  notion  of  "corporations  by  estoppel,"  they 
may  be  iieartily  approved. 

Where  the  doctrine  of  corporations  by  estoppel  is  recognized, 
in  an  action  against  the  members  of  the  suj^poscd  corporation  as 
partners,  the  plaintiff,  in  order  to  negative  any  estoppel,  may 
show  that  at  the  time  of  dealing  with  the  alleged  corporation 
he  was  informed  that  the  company  was  a  partnership.' 


§  2S3.  Disproof  of  Incorporation.  —  To  disprove  incorpora- 
tion, the  most  satisfactory  evidence  is  the  testimony  of  the  lawful 
custodian  of  the  register  of  corporations  to  the  effect  that  no 
incorporation  paper  has  ever  been  recorded  on  behalf  of  the 
supposed  company.-  In  Texas,  it  has  been  held  that  the  testi- 
mony of  a  private  person  to  the  effect  that  he  had  examined  the 
register  of  corporations  and  failed  to  find  any  record  of  a  corpo- 
ration bearing  a  certain  name  is  not  admissible ;  ^  but  it  is  sub- 
mitted that  according  to  the  better  view  any  person  who  has 
examined  the  records  may  testify  as  to  what  is  not  to  be  found 
there.*  A  certificate  from  the  custodian  of  the  record  that  the 
supposed  incorporation  paper  had  7wt  been  filed  is  not  evidence.* 
It  has  been  held,  however,  that  if  the  original  incorporation  paper 
is  produced,  the  fact  that  it  bears  no  indorsement  indicative  of 
having  been  filed  with  the  proppr  officer  is  evidence  that  it  was 
not  so  filed. "^ 

Evidence  that  residents  of  the  supposed  domicile  of  the  alleged 
corporation  had  never  heard  of  its  existence  has  been  said  to 
be  competent.^ 

Stanwood  v.  Sterling  Metal  Co.,  107  '  Cross  v.  Pinckneyville  Mill  Co., 

111.  App.  569,  574.    Cf.  infra,  §  291.  17  111.  54;    Lusk  v.  Riggs,  97  N.  W. 

'  Christian,    etc.    Grocery    Co.    v.  10.33,    1034;     70    Nebr.    713    (.sem- 

Fruitdale  Lumber  Co.,  25  So.   5G6 ;  ble). 

121  Ala.  340.  »  Lusk  v.  Riggs,  97  N.  W.   1033 

'  Cobb  V.  Bryan  (Tex.),  83  S.  W.  (headnote    inadequate) ;     70    Nebr. 

887  (semble).  713. 

'  Cobb  V.  Bryan  (Tex.),  83  S.  W.  '  Cobb  v.  Bryan  (Tex.),  83  S.  W. 

887.  887  (semble). 

*  Cross  V.  Pinckneyville  Mill  Co., 
17  111.  54,  55  (semble). 

239 


§283 


IRREGULAR  INCORPORATION 


[Chap.  IV 


We  have  seen  above  that  in  attacking  collaterally  the  existence 
of  an  alleged  corporation,  it  is  not  permissible  to  show  that  a 
public  officer's  certificate  of  due  incorporation  that  may  be  re- 
quired by  law  was  obtained  by  the  fraud  of  the  promoters.^ 
Similarly,  it  is  not  competent  in  a  collateral  proceeding  to  show 
that  some  of  the  material  statements  in  the  incorporation  paper 
are  false  in  point  of  fact,-  or  that  some  of  the  subscribers  who  on 
the  face  of  the  paper  appear  to  have  duly  acknowledged  it  did 
'  not  in  fact  do  so.^  A  fortiori,  it  is  not  a  good  plea  to  an  action 
by  the  company  that  the  execution  of  the  incorporation  paper,  or 
deed  of  settlement,  was  obtained  by  fraud  without  alleging  upon 
whom  the  fraud  was  practised.*  On  the  other  hand,  these 
doctrines  will  not  be  allowed  to  shield  promoters  who  may  have 
been  guilty  of  fraud ;  ^  and  the  courts  will  rip  open  the  incorpo- 
ration in  so  far  as  may  be  necessary  to  restore  defrauded  parties 
to  the  status  in  quo  and  in  so  far  as  can  be  done  without  risk 
of  injustice  to  innocent  persons  who  have  had  dealings  with  the 
corporation."  Moreover,  in  cases  of  fraud,  it  would  seem  that 
in  America  judgment  of  ouster  might  be  entered  against  the 
corporation  at  the  instance  of  the  state.^ 


»  Supra,  §  267. 

»  Buffalo,  etc.  R.  R.  Co.  v.  Hatch, 
20  N.  Y.  157,  159  (headnote  inade- 
quate) ;  Am.  Salt  Co.  v.  Heiden- 
heimer,  80  Tex.  344  ;  15  S.  W.  1038 ; 
26  Am.  St.  Rep.  743. 

But  see  Montgomery  v.  Forbes, 
148  Mass.  249  (incorporation  with- 
out bona  fide  intent  to  carry  on 
business  at  place  named  in  incor- 
poration paper).  That  false  state- 
ments in  an  incorporation  paper 
u-ill  not  sustain  an  action  of  deceit 
against  the  subscribers,  see  Webb  v. 
Rockefeller,  195  Mo.  57,  63-75;  93 
S.  W.  772. 

^  First  Nat.  Bank  v.  Rockefeller, 
195  Mo.  15  (headnote  misleading) ; 
93  S.  W.  761. 

As  to  the  conclusiveness  of  the 
magistrate's  certificate  of  acknowl- 
edgment,   see    Dooley    v.    Cheshire 


Glass    Co.,    15    Gray    (Mass.)    494 
(headnote  inadequate). 

As  to  a  case  where  some  of  the 
signatures  to  the  instrument  are 
forgeries,,  see  supra,  p.  229,  n.  3. 

*  Pilbrow  V.  PUbrow's  Atmos- 
pheric, etc.  Co.,  5  C.  B.  440. 

*  Montgomery  v.  Forbes,  148 
Mass.  249 ;  19  N.  E.  342  ;  Patterson 
V.  Arnold,  45  Pa.  St.  410  (overruled 
in  Cochran  v.  Arnold,  58  Pa.  St.  399) ; 
Niemeyer  v.  Little  Rock  Junction  Ry., 
43  Ark.  111.    And  see  infra,  §  287. 

*  Jones  V.  Missouri-Edison  Elec- 
tric Co.,  144  Fed.  765;  75  C.  C.  A. 
631- 

'  Cf.  Holman  v.  State  ex  rel.  Gib- 
son, 105  Ind.  569 ;  5  N.  E.  702 ;  State 
ex  inf.  Attorney-General  v.  Hogan, 
163  Mo.  43 ;  63  S.  W.  378 ;  Webb  v. 
Rockefeller,  195  Mo.  57;  93  S.  W. 
772. 


240 


§  261-§  294] 


CORPORATIONS    DE    FACTO 


284 


§    284-§   292.      INCORPORATION    DE    FACTO. 

§  284.  Whether  irregular  Incorporation  Proceedings  can  give 
rise  to  Corporation  De  Facto.  —  Cases  not  seldom  arise  in  which 
some  condition  precedent  to  the  legal  organiication  of  a  cor- 
poration has  been  omitted,  and  in  wliich  no  conclusive  certifi- 
cate of  due  incorporation  exists,  and  in  which  no  estoppel  to 
deny  the  company's  existence  can  he  invoked.  In  such  cases, 
the  American  courts  generally  will,  under  certain  conditions, 
hold  that  the  association  although  not  legally  incorporated  is 
nevertheless  a  corporation  de  facto,  that  is  to  say,  an  association 
whose  right  to  corporate  functions  and  attributes  is  complete  as 
against  all  the  world  except  the  sovereign.'  This  doctrine,  which 
is  based  upon  analogy  to  the  law  of  de  facto  officers,-  has  never 
received  recognition  in  England,^  and  is  apparently  repudiated 
in  Maryland.*  So  too,  in  some  other  states,  the  rule  has  been 
enunciated  that  the  non-performance  of  any  material  require- 


'  Commissioners    of    Douglas  favor  of  the  corporation  itself  it  is 

County  V.  Bolles,  94  U.  S.  104 ;  Doty  substantially  applied  in  favor  of  in- 

V.  Patterson,  155  Ind.  60;    56  N.  E.  nocent  shareholders. 
668 ;   Stout  v.  Zulick,  48  N.  J.  Law,         '  See,     for     example,     National 

599;    7  Atl.  362;    Tulare  Irrigation  Debenture,  etc.   Corp.   (1891),  2  Ch. 

District  v.  Shepard,  185  U.  S.  1 ;  22  505,  and  Laxon  A  Co.  (1892),  3  Ch. 

Sup.  Ct.  531 ;   Leavengood  v.  McGee  555,   and   other  cases   cited   supra, 

(Oreg.),    91    Pac.    453;     GUkey    v.  §    268,    where   neither   counsel   nor 

Toivn  of  How,   105  Wise.  41   (a  de  court  dreamt  of  attempting  to  apply 

facto  municipal    corporation) ;    A'ew  any  such  doctrine  as  the  American 

Orleans   Debenture,    etc.    Co.   v.  La.,  doctrine  of  de  facto  corporations. 


As  to  Canadian  law,  see  Common 
V.  McArthur,  29  Can.  Sup.  Ct.  239 
(where  the  principle  of  de  facto  in- 
corporation seems  to  have  been  acted 


ISO  U.  S.  320,  327-328;  21  Sup. 
Ct.  378 ;  Baltimore,  etc.  R.  R.  Co.  v. 
Fifth  Baptist  Church,  137  U.  S.  568; 
1 1  Sup.  Ct.  185 ;  Eaton  v.  Aspinwall, 

19  N.  Y.  119;    Venable  v.  Ebenezer  upon). 

Baptist  Church,  25  Kans.  177.  *  Boyce  v.  Towsontown  Station 
=  Note,  however,  that  the  doc-  M.  E.  Church,  46  Md.  359;  Mary- 
trine  of  de  facto  corporations  applies  land  Tube  Works  v.  West  End  Imp. 
in  favor  of  the  supposed  corporation  Co.,  87  Md.  207;  39  Atl.  620;  39 
itself,    whereas   the   doctrine    of  de  L.  R.  A.  810. 

facto  officers  does  not  apply  in  favor  Cf.  Workingm^n's  Accommoda- 
of  the  officer  himself.  .\  reason  for  tion  Bank  v.  Converse,  29  La.  Ann. 
this  distinction  may  be  found  in  the  369.  But  as  to  the  Maryland  law, 
fact  that  the  de  facto  corporation  is  see  Keene  v.  Van  Renth,  48  Md.  184 
composed  of  natural  persons  who  (which  as  to  the  actual  decision  can 
may  be  reganled  as  innocent  third  be  explained  on  the  ground  men- 
persons,  so  that  when  the  de  facto  tioned  supra,  §  278,  and  also  relied 
doctrine  is  applied  nominally  in  upon  by  the  court). 
VOL.  I. —  16                                 241 


§  284  IRREGULAR  INCORPORATION       [ChAP.  IV 

ment  of  an  incorporation  law  will  always  render  the  attempted 
incorporation  void  except  where  an  estoppel  to  enter  upon  the 
question  can  be  raised.'  But  according  to  the  decided  weight 
of  American  authority  the  possibility  of  de  facto  corporations  is 
recognized. 

As  an  original  question,  it  is  very  difficult  to  sustain  this  prev- 
alent American  doctrine.  We  have  seen  that  a  company  be- 
comes incorporated  de  jure  when  the  only  irregularity  consists 
in  a  failure  to  observe  directory  provisions  of  the  incorporation 
laws,^  or  where  the  law  has  been  substantially  complied  with.^ 
Moreover,  irregularities  in  the  incorporation  proceedings  are  not 
to  be  presumed ;  and  we  have  seen  above  that  where  no  irregu- 
larities in  the  incorporation  proceedings  affirmatively  appear, 
very  slight  evidence  will  be  sufficient  proof  of  incorporation.* 
Furthermore,  breaches  of  conditions  subsequent  to  incorpora- 
tion can  never  be  availed  of  by  persons  other  than  the  state, 
unless  the  legislature  in  express  words  so  directs.^  In  some 
cases,  also,  an  estoppel  may  prevent  the  question  from  being 
raised.'  It  is  only  when  all  these  principles  fail,  that  the  Ameri- 
can doctrine  of  de  facto  corporations  becomes  operative.  When 
this  is  the  case,  —  when  there  has  been  a  failure  to  perform 
some  act,  performance  of  which  the  legislature  has  declared  to 
be  a  condition  precedent  to  incorporation,  when  this  fact  affirma- 
tively appears  in  evidence,  and  when  no  party  is  estopped  to 
allege  the  truth,  upon  what  principle  are  the  courts  justified  in 
holding  that  although  the  legislature  has  declared  there  shall 
not  be  a  corporation  yet  there  shall  be  a  corporation  except  as 
against  the  sovereign?  If  it  were  common  law  that  private 
persons  might  without  statutory  or  royal  authority  by  mere  agree- 
ment convert  themselves  into  a  corporation  which  should  have 

'  Said    the    court   in   Slocum   v.  42  Mich.  332 ;   3  N.  W.  968 ;   Grif[in 

Providence,  etc.  Steam  Co.,  10  R.  I.  v.  Clinton  Line,  etc.  R.  R.  Co.,   11 

112,    114:     "We   know   of   no   rule  Fed.  Cas.  27 ;    Hurt  v.  Salisbury,  55 

which    precludes    inquiry    into    the  Mo.   310;     Indianapolis,  etc.   Co.   v. 

question,  whether  a  company  which  Herkimer,  46  Ind.  142 ;    Williams  v. 

assumes  to  act  as  a  corporation  has  Hewitt,  47  La.  Ann.   1076;    17  So. 

ever  been  incorporated,  in  any  case,  496 ;   49  Am.  St.  Rep.  394. 
in  the  absence  of  any  matter  of  es-         ^  Supra,  §  264. 
toppel  to  prevent  the  inquiry."  *  Ibid. 

Cf.  Kaiser  v.  Lawrence  Savings  *  §  274. 
Bank,  56  Iowa  104 ;  8  N.  W.  772 ;  '  §  265. 
41  Am.  Rep.  85;    Doyle  v.  Mizner,         »  §  278-§  282. 

242 


§  261-§  294]  CORPORATIONS    DE    FACTO  §  286 

all  the  characteristics  of  a  lawful  corporation  except  where  the 
state  is  concerned,  then  the  American  doctrine  of  de  facto  cor- 
porations might  he  sustained,  on  the  ground  that  such  incorpo- 
rations owe  their  existence  to  the  ccjunnon  law  rather  than  to 
an  incorporation  statute  which  has  not  been  complied  with. 
Rut  as  far  back  as  the  time  of  Edward  III,  the  common  law 
was  settled  adversely  to  this  hypothesis.'  The  only  ground  <jn 
which  the  American  doctrine  of  de'  facto  corporations  can  well 
be  sustained  is  that  the  legislature  in  prescribing  certain  con- 
ditions precedent  to  incorporation  must  be  taken  to  have  in- 
tended them  to  be  conditions  precedent  to  incorporation  dc  jure 
merely,  and  not  necessarily  (in  cases  where  colorable  com- 
pliance with  law  is  had)  to  incorporation  as  regards  private 
persons.* 

§  285- §  290.     Circumstances  necessary  to    create  a    Corpo- 
ration De  Facto. 

§  285.  In  general.  —  Even  under  the  prevalent  American 
doctrine  of  de  facto  corporations,  certain  circumstances  must 
concur  in  order  to  warrant  its  application.  If  there  be  a  valid 
statute  under  which  a  company  might  be  incorporated,  a  bona 
fide  colorable  attempt  to  comply  with  the  law,  and  finally  an 
organization  and  exercise  of  corporate  functions,  all  the  au- 
thorities which  recognize  the  doctrine  of  de  facto  corporations 
would,  probably,  agree  that  a  proper  case  has  been  made  for 
holding  that  the  company  is  a  de  facto  if  not  a  de  jure  corporation.^ 

§  2(S().  Requirement  of  a  Law  under  which  the  Corporation 
might  be  formed.  —  The  existence  of  a  law  under  which  the 
corporation  might  lawfully  be  organized  is  recognized  by  the 
weight  of  authority  as  a  necessary  condition  to  the  attainment 
of  a  de  facto  corporate  existence.*    Some  cases  hold  that  the  ex- 

'  Y.  B.  49  Edw.  Ill,  3.    See  also,  St.  Rep.  552;   Doty  v.  Patterson,  155 

infra,  §  285-§  290,  as  to  the  requisites  Ind.  60 ;   56  N.  E.  668  ;    Tulare  Irri- 

of  a  corporation  de  facto  under  the  gation  District  v.  Shepard,  185  U.  S. 

American  doctrine.  1 ;  22  Sup.  Ct.  531 ;  StotU  v.  Zulick, 

'  This  rule  of  statutory  construe-  48  N.  J.  Law  599;    7  Atl.  362. 
tion  —  for   such   it    really   is  —  has  *  Am.  Loan  &  Trtist  Co.  v.  ^U in- 
been   expressly   enacted   as   law   in  nesota,  etc.  R.  R.  Co.,   157  111.  641 ; 
CaUfornia.  42  N.  E.  153;  Gillette  v.  Aurora  Ry. 

»  Finnegan     v.     Noerenbiirg,     52  Co.,  81  N.  E.  1005;  228  111.  261. 

Minn.  239;  53  N.  W.  1150;  38  Am.  Cf.  Snyder  v.  Studebaker,  19  Ind. 

243 


§  287 


IRREGULAR  INCORPORATION      [ChAP.  IV 


istence  of  an  unconstitutional  statute  or  enabling  act  satisfies 
this  requirement ;  ^  but  a  larger  number  take  the  opposite  view." 
Some  authorities  insist  that  if  all  the  objects  of  the  supposed 
corporation  are  objects  for  which  the  statute  does  not  authorize 
companies  to  be  incorporated,  the  case  is  as  if  no  incorporation 
act  were  on  the  statute  books.^  Moreover,  some  authorities 
maintain  that  if  persons  who  are  not  under  the  statute  compe- 
tent to  act  as  corporators  attempt  to  form  a  corporation,  there 
is  no  law  under  which  they  might  be  incorporated  so  that  no 
de  facto  corporation  can  result  from  the  attempt.* 

§  287.     Requirement  of   Bona   Fides   in  attempting  to   comply 
with   Law.  —  The  requirement  that  in    order  to  give  rise  to  a 


462  (proceeding  on  the  ground  of 
estoppel  and  declaring  that  an  es- 
toppel cannot  be  raised  on  a  matter 
of  law) ;  St.  Louis  Colonization  Ass'n 
V.  Hennessy,  11  Mo.  App.  555,  556 
(semble  —  similar  point  to  that  of 
last  case). 

'  Board  of  Comm'rs  v.  Shields, 
62  Mo.  247 ;  Coxe  v.  State,  144  N.  Y. 
396,  409 ;  39  N.  E.  400 ;  Hudson  v. 
Green  Hill  Cemetery,  113  111.  618; 
Catholic  Church  v.  Tobbein,  82  Mo. 
418 ;  Lang  v.  Mayor,  etc.  of  Bayonne 
(N.  J.),  68  Atl.  90. 

Cf.  Smith  V.  Sheeley,  12  Wall.  358 
(holding  that  an  association  organ- 
ized under  an  act  of  a  territorial 
legislature  which  could  not  take 
effect  until  approved  by  Congress 
was  nevertheless  a  corporation  de 
facto). 

^  Brandenstein  v.  Hoke,  101  Cal. 
131 ;  35  Pac.  562;  Eaton  v.  Walker, 
76  Mich.  579;  43  N.  W.  638;  6 
L.  R.  A.  102. 

Cf.  Georgia  Southern,  etc.  R.  R. 
Co.  V.  Mercantile  Trust  Co.,  94  Ga. 
306;  21  S.  E.  701 ;  47  Am.  St.  Rep. 
153;  32  L.  R.  A.  208  (attempt 
to  incorporate  under  an  unconsti- 
tutional special  act  held  to  create 
a  corporation  de  facto  because  of  the 
existence  of  a  valid  general  law  under 
which  the  company  might  have  been 
organized) ;  Snyder  v.  Studebaker, 
19  Ind.  462;  81  Am.  Dec.  415  (over- 


ruling Evansville,  etc.  R.  R.  Co.  v. 
City  of  Evansville,  15  Ind.  395  and 
also  holding,  notwithstanding  Har- 
riman  v.  Southam,  16  Ind.  190,  that 
it  is  sufficient  if  a  valid  special  act 
of  incorporation  was  at  one  time 
in  existence  although  repealed  by 
a  new  constitution  before  it  was 
accepted). 

'  Davis  V.  Stevens,  104  Fed.  235 ; 
Vredenburg  v.  Behan,  33  La.  Ann. 
627,  635-636 ;  Indiana  Bond  Co.  v. 
Ogle,  22  Ind.  App.  593;  54  N.  E. 
407;  72  Am.  St.  Rep.  326;  Gillette 
V.  Aurora  Ry.  Co.,  81  N.  E.  1005; 
228  111.  261. 

But  cf.  Lancaster  v.  Amsterdam 
Imp.  Co.,  140  N.  Y.  576,  584  (head- 
note  inadequate) ;  35  N.  E.  964 ; 
24  L.  R.  A.  322;  Williams  v.  Citi- 
zens' Ry.  Co.,  130  Ind.  71,  73-75; 
29  N.  E.  408;  30  Am.  St.  Rep.  201 ; 
15  L.  R.  A.  64 ;  Gajf  v.  Flesher,  33 
Oh.  St.  107,  113-115,  453. 

See  also  infra,  §  296. 

*  Cf.  Evenson  v.  Ellingson,  67 
Wise.  634;  31  N.  W.  342  (unau- 
thorized union  of  two  churches  to 
form  one  corporation,  whereas  the 
statute  allowed  incorporation  of 
any  single  church  or  religious 
society). 

But  see  Toledo,  etc.  R.  R.  Co.  v. 
Continental  Trust  Co.,  95  Fed.  497, 
506-511;  36  C.  C.  A.  155. 


244 


§  261-§  294]  CORPORATIONS    DE    FACTO  §  287 

corporation  de  facto  the  attempt  to  comply  with  the  incorpora- 
tion law  must  not  merely  be  colorable  but  must  also  be  bona  fde 
is,  at  least  apparently,  insisted  upon  by  some  authorities.  The 
difficulty  in  applying  this  rule  is  that  altiiough  the  original  pro- 
moters and  corporators  may  not  have  acted  in  good  faith,  those 
who  subse(juently  accjuire  shares  in  the  company,  or  have  deal- 
ings of  any  kind  with  it,  may  be  quite  innocent.  In  case  of  a 
fraudulent  but  colorable  attempt  to  secure  the  benefits  of  incor- 
poration, the  courts  should  frustrate  the  effort,  and  may  perhaps 
hold  the  fraudulent  parties  subject  to  any  liability  which  they 
would  have  incurred  if  the  company  were  unincorporated,'  but 
so  far  as  innocent  third  persons  —  such  as  innocent  shareholders 
or  creditors  —  are  concerned,  the  company  should  certainly  be 
treated  as  a  de  facto  corporation.^  Thus,  we  have  seen  that  it 
is  not  permissible  to  attack  incorporation  collaterally  by  show- 
ing that  some  of  the  statements  in  the  incorporation  paper  are 
untrue,^  or  that  a  certificate  of  due  incorporation  was  obtained 
by  fraud.*  It  should  be  added  that  fraud  in  this  connection  does 
not  mean  an  intent  to  use  the  corporation  for  dishonest  purposes 
but  rather  means  an  attempt  to  secure  the  benefits  of  incorpora- 
tion without  complying,  except  colorably,  with  its  provisions. 
Fraud  on  the  law  is  meant  rather  than  a  fraud  on  individuals, 
although  of  course  the  two  kinds  of  fraud  may  overlap. 

'  Gartside  Coal  Co.   v.   Maxwell,  was  declared  to  have  been  overruled 

22  Fed.   197  (semble) ;  Montgomery  by  National  Docks  Ry.  Co.  v.  Central 

V.  Forbes,  148  Mass.  249;    19  N.  E.  R. R.  Co., 32N.  J.  Eq.755);  Southern 

342  ;    Patterson  v.  Arnold,  45  Pa.  St.  Bank  v.  Williams,  25  Ga.  534. 
410  (overruled  in  Cochran  v.  Arnold,         ^  Patterson  v.  Arnold,  45  Pa.  St. 

58    Pa.     St.    399);    Christian,    etc.  410,   415-416   (semble);   Duggan  v. 

Grocery  Co.  v.  Fruitdale  Lumber  Co.,  Colorado  Mtg.,  etc.  Co.,  11  Colo.  113, 

121  Ala.  340,  345-346;    25  So.  560;  117   (headnote  inadequate  —  where 

Brundred  v.  Rice,  49  Oh.  St.  640 ;  one  of  t!ie  signatures  to  incorpora- 

32  N.  E.  169 ;   34  Am.  St.  Rep.  589.  tion  paper  was  a  forgerj') ;  National 

Cf.     Jones    v.     Missouri    Edison  Docks  Ry.  Co.  v.  Central  R.  R.  Co., 
Electric  Co.,  144  Fed.  765;  75  C.  C.  32  N.  J.  Eq.  755  (headnote  inade- 
A.  631 ;   Daindson  v.  Hobson,  59  Mo.  quate) ;  Attorney-General  v.  Stevens, 
App.   130;    Niemeyer  v.  Little  Rock  Sa.xt.  Ch.  (1  N.  J.  Eq.)369;  Aurora, 
Junction  Ry.,  43    Ark.   Ill;    Earn-  etc.  R.  R.  Co.   v.  City  of  Laurence- 
ham  v.  Benedict,  107  N.  Y.  159;    13  burgh,  56  Ind.  80,  87;    Terhune  v. 
N.  E.  784;    Jersey  City  Gas  Co.  v.  Midland  R.  R.  Co..  38  N.  J.  Eq.  423. 
Dwight,  29  N.  J.  Eq.  242  (which,  in         See  infra,   §   299.     Cf.   Booth  v. 
Elizabethtown  Gas  Light  Co.  v.  Green,  Wondcrly,  36  N.  J.  Eq.  250. 
46  N.  J.  Eq.   118,   130,  affirmed  on         '  Supra,  §  283. 
opinion   below,  49    N.   J.    Eq.  329,         *  Supra,  §  267. 

245 


§  288  IRREGULAR    INCORPORATION  [ChAP.   IV 

§  288.  Requirement  of  Substantial  or  Colorable  Compliance 
with  Law.  —  In  some  cases,  it  has  been  said  that  only  where 
the  incorporation  law  has  been  substantially  complied  with  can 
the  company  be  a  de  facto  corporation ;  '  but  if  this  be  true  the 
whole  efficacy  is  extracted  from  the  doctrine  of  de  facto  corpora- 
tions. For  in  any  case  of  substantial  compliance  with  law,  the 
company  is  incorporated  de  jure  ^  and  not  merely  de  facto. 
Colorable  compliance  with  the  incorporation  law  is  essential 
in  order  to  create  a  corporation  de  facto ;  ^  but  substantial 
compliance    is  not    necessary.* 

§  289.  What  amounts  to  Colorable  Compliance.  — -  In  deter- 
mining what  amounts  to  colorable  compliance  with  the  incor- 
poration law,  much  is  necessarily  left  to  the  discretion,  one 
might  almost  say  the  disposition,  of  the  judge.  The  true  test 
of  colorable  compliance  is  this :  has  the  incorporation  law  been 
so  far  complied  with  that  although  some  condition  precedent 
to  incorporation  prescribed  by  the  legislature  has  not  been  ob- 
served, yet  the  courts  are  justified  in  inferring  or  assuming  that 
the  legislature  meant  that  the  irregularity  in  question  should 
have  no  more  serious  effect  than  a  breach  of  a  condition 
precedent  to  incorporation  de  jure  but  not  precedent  to  incor- 
poration de  facto  f 

The  defects  in  the  incorporation  paper,  and  in  and  about  its 
execution  and  registration,  which  are  deemed  so  serious  that 
there  cannot  be  deemed  to  be  even  colorable  compliance  with 
the  law  have  been  already  pointed  out  in  a  previous  chapter.^ 

'  Kaiser     v.     Lawrence     Savings  Am.   St.   Rep.  85 ;    Card  v.  Moore, 

Bank,  56  Iowa  104,  109;    8  N.  W.  68  N.  Y.  App.  Div.  327,  337;    74 

772;    41   Am.   Rep.   85;    Harris  v.  N.  Y.  Supp.  18,  affirmed  short,  173 

McGregor,   29    Cal.    124;    WUliams  N.  Y.  598;    66  N.  E.  1105;    Booth 

V.  Hewitt,  47  La.  Ann.  1076;    17  So.  v.  Wonderly,  36  N.  J.  Law  250. 
496 ;    49  Am.  St.  Rep.  394  ;    Cress-         Cf .  Bradley  Fertilizer  Co.  v.  South 

well  V.  Oherly,  17  111.  App.  281,  283.  Publishing  Co.,  4  N.  Y.  Misc.  172; 

Cf.  Jones  V.  Aspen  Hardware  Co.,  23  N.  Y.  Supp.  675. 
21  Colo.  263;    40Pac.  457;    52  Am.  *  Finnegan     v.     Noerenberg,     52 

St.  Rep.  220;   29  L.  R.  A.  143.  Minn.  239;   53  N.  W.  1150;   3S  Am. 

^  Supra,  §  264.  St.  Rep.  552 ;   Johnson  v.  Okerstrom, 

^  McLennan  v.  Hopkins,  2  Kans.  70  Minn.  303;  73  N.  W.  147. 
App.  260;    41   Pac.   1061;    Lusk  v.  Ci.  Georgia  Southern,  etc.  R.  R.  Co. 

Riggs,    97   N.   W.    10.33;     70   Nebr.  v.  Mercantile  Trust  Co.,  M  Ga..  ZQ&; 

713 ;   Abbott  v.  Omaha  Smelting  Co.,  21  S.  E.  701 ;   47  Am.  St.  Rep.  153; 

4    Nebr.    416;     Bergeron   v.    Hobbs,  32  L.  R.  A.  208. 
96  Wise.  641;    71  N.  W.  1056;    65         «  Chap.  II,  passim. 

246 


§  26i-§  294]  CORPORATIONS    DE    FACTO  §  290 

Of  course,  if  no  written  incorporation  paper  is  ever  executed, 
tliere  is  no  colorable  compliance  with  the  incorporation  law  and 
therefore  no  corporation  dc  facto?  On  the  other  hand,  an  in- 
corporation paper  which  on  its  face  complies  with  law  will 
amount  to  colorable  compliance  with  the  statute  although  some 
of  the  statements  in  the  instrument  are  false  in  point  of  fact.^ 
There  may  be  colorable  compliance  although  the  affidavit 
annexed  to  the  incorporation  paper  omits  the  averment  required 
by  the  statute  of  a  bona  fule  intent  to  construct  the  railroad 
mentioned  in  the  instrument.^ 

Where  there  is  a  distinct  statutory  prohibition  against  exer- 
cising any  corporate  privileges  until  a  certain  condition  has  been 
performed,  it  is  very  difficult  to  hold  that  there  can  be  even 
colorai)le  compliance  with  law  without  at  least  apparent  per- 
formance of  that  condition.*  For  example,  where  a  statute 
prohibits  the  exercise  of  any  corporate  privileges  before  a  cer- 
tain tax  is  paid,  there  can  be  no  colorable  compliance  with  the 
incorporation  law  and  therefore  no  corporation  de  facto  unless 
the  tax  is  paid.^ 

§  290.  Requirement  of  User  of  Corporate  Privileges.  —  As 
to  what  is  sufHcient  evidence  of  user  of  corporate  privileges 
to  constitute  an  association  a  corporation  de  facto  ®  there  is  much 
diversity  of  opinion.  As  it  is  very  difficult  to  point  out  any  sharp 
visible  distinction  between  a  corporation  and  an  unincorporated 

'  Utley  V.  Union  Tool  Co.,  11  wliich  should  be  compared  the  de- 
Gray  (Mass.)  139;  Bradley  Fer-  cisions  in  the  same  state  apparently 
tilizer  Co.  v.  South  Publishing  Co.,  repudiating  the  whole  doctrine  of 
4  N.  Y.  Misc.  172 ;  23  N.  Y.  Supp.  de  facto  corporations,  supra,  §  284). 
675.  ®  In  addition  to  cases  cited  be- 
But  cf.  Merrick  v.  Reynolds  En-  low,  see  Finnegan  v.  Noerenberg, 
gine,  etc.  Co.,  101  Mass.  381.  52  Minn.  239;  53  N.  W.  1150;  38 
'  See  supra,  §  283.  Am.  St.  Rep.  552  (where  evidence 

*  Buffalo,  etc.  R.  R.  Co.  v.  Cary,  of  user  was  held  sufficient);  John- 
26  N.  Y.  75.  son  v.  Okerstrom,  70  Minn.  303  ;    73 

''  In  addition  to  cases  cited  be-  N.  W.    147   (as  to  the  permissible 

low,     compare     Workitigmen's     Ac-  methods  of  proving  user) ;    Martin 

commodation   Bank   v.   Converse,  29  v.  Deetz,  102  Cal.   55 ;   36  Pac.  368 ; 

La.  Ann.  369.  41    Am.    St.    Rep.    151   (where    the 

*  Jones  V.  Aspen  Hardware  Co.,  proof  was  held  insufficient);  Stan- 
21  Colo.  263;  40  Pac.  457;  52  Am.  wood  v.  Sterling  Metal  Co.,  107  111. 
St.  Rep.  220;  29  L.  R.  A.  143;  App.  569  (evidence  of  user  held 
Maryland  Tube  Works  v.  We.'it  End  insufficient) ;  DeWitt  v.  Hastings, 
Improvement  Co.,  87  Md.  207;  39  69  N.  Y.  518  (evidence  of  user  held 
Atl.   620;    39   L.   R.   A.  810   (with  insufficient). 

247 


§291 


IRREGULAR    INCORPORATION 


[CBLA.P.  IV 


body,  this  diversity  of  opinion  is  natural.  Probably,  the  best 
rule  is  that  in  each  case  it  is  a  question  of  fact  whether  the  asso- 
ciates have  acted  under  a  public  claim  of  incorporation.  The 
use  of  a  name  appropriate  to  a  corporation  even  though  not 
necessarily  peculiar  to  a  corporation,  the  use  of  a  corporate  seal, 
the  election  of  directors  or  officers,'  are  circumstances  tending 
to  establish  this  public  claim  even  though  not  conclusive  upon 
the  point.  General  reputation  has  been  held  to  be  evidence 
of  user  of  corporate  privileges.- 

§  291- §  292.     Nature  of  De  Facto  Corporations. 

§  291.  De  Facto  Corporations  Distinguished  from  Corporations 
by  Estoppel.  —  The  doctrine  of  de  facto  corporations  is  often 
confused  with  the  principle  of  estoppel.  We  have  seen  that 
some  courts  assert  that  no  one  can  be  estopped  to  deny  the 
incorporation  of  a  company  unless  the  elements  of  a  corporation 
de  facto  are  present.^  Many  other  cases  treat  the  doctrine  of 
de  facto  corporations  as  resting  on  the  ground  of  estoppel,*  or 
are  so  meagre  or  indistinct  that  nobody  can  say  whether  they  are 
based  on  the  ground  of  estoppel  or  on  the  ground  that  the  com- 
pany is  a  corporation  de  facto,  or  on  both  grounds.^  But  in 
reality  the  two  principles  are  quite  distinct.  The  doctrine  of 
de  facto  corporations  does  not  rest  on  estoppel,  but  on  that 
public  policy  which  is  thought  to  prohibit  the  annulling  of  a 
company's  acts  because  of  some  technical  flaw  in  the  incorpora- 
tion proceedings,  which,  perhaps,  none  but  a  skilled  lawyer 


'  Buffalo,  etc.  R.  R.  Co.  v.  Cary, 
26  N.  Y.  75 ;  Johnson  v.  Okerstrom, 
70  Minn.  303 ;   73  N.  W.  147. 

^  Holmes  v.  GUliland,  41  Barb. 
(N.  Y.)  568. 

*  Supra,  §  282.  And  see  Guckert 
V.  Hacke,  159  Pa.  St.  303;  28  Atl. 
249  (semble). 

*  E.  g.  Smith  V.  Sheeley,  12  Wall. 
358;  Snider s'  Sons  v.  Troy,  91  Ala. 
224 ;  8  So.  658 ;  1 1  L.  R.  A.  515 ;  24 
Am.  St.  Rep.  887. 

«  Andes  v.  Ely,  158  U.  S.  312; 
15  Sup.  Ct.  954  ;  County  of  Leaven- 
worth V.  Barnes,  94  U.  S.  70  (head- 
note  misleading) ;    Chubb  v.  Upton, 


95  U.  S.  605;  Commercial  Bank  v. 
Pfeiffer,  108  N.  Y.  242;  15  N.  E. 
311;  Baker  v.  A'e^",  73  Ind.  68; 
Hagerman  v.  Ohio  Bldg.,  etc.  Ass'n, 
25  Ohio  St.  186 ;  Butchers',  etc.  Bank, 
130  Mass.  264;  Curtis  v.  Meeker, 
62  111.  App.  49 ;  Ramsey  v.  Peoria, 
etc.  Ins.  Co.,  55  111.  311 ;  Old  Colony 
Trust  Co.  V.  City  of  Wichita,  123 
Fed.  762,  776 ;  Empire  Mfg.  Co.  v. 
Stuart,  46  Mich.  482  ;  9  N.  W.  527 ; 
Fitzpatrick  v.  Rutter,  160  111.  282; 
43  N.  E.  392  ;  Hause  v.  Mannheimer, 
67  Minn.  194  ;  69  N.  W.  810 ;  Marsh 
V.  Mathias,  19  Utah  350;  56  Pac. 
1074. 


248 


§  261-§  294]  CORPORATIONS    DE    FACTO  §  292 

could  detect.'  Hence,  according  to  the  doctrine  of  incorpora- 
tion de  facto,  the  coiiiijaiiy's  existence,  ahhough  dc  facto  only,  is 
real  as  against  all  the  world,''  even  against  persons  who  have 
had  no  dealings  with  it  and  who,  therefore,  could  not  on  anv 
theory  be  estopped.^ 

§  292.  Powers,  Rights,  etc.,  of  Corporation  De  Facto.  —  Wher- 
ever the  de  facto  doctrine  is  applied,  the  attainment  of  a 
dc  facto  corporate  existence  is  tantaniovmt,  to  all  intents  and 
purposes,  to  the  creation  of  a  corporation  which  may  at  any 
moment  suffer  corporate  capital  punishment  and  which  is  in 
all  respects  in  the  same  condition  as  a  company  whose  original 
incorporation  was  regular  but  which  has  forfeited  the  right  to 
existence  by  reason  of  misconduct  or  breach  of  a  condition  sub- 
sequent. Thus,  a  de  facto  company  pos.sesses  all  the  powers 
of  mortgaging  after-accjuired  property,  consolidating  with  other 
companies,  and  the  like,  which  a  de  jure  corporation  of  the  same 
class  might  enjoy,*  the  only  possible  exception  ^  —  and  that 
although  supported  by  some  authorities "  yet  denied  by  a  still 
greater  number ''  —  being  in  regard  to  powers  in  derogation  of 
common  right,  such  as  the  power  to  condemn  private  property. 

»  Society  Perun  v.  Cleveland,  43  *  But   see  Gastonia  Cotton  Mfg. 

Oh.  St.  481;    3  N.  E.  357;  Buffalo,  Co.   v.    W.  L.   Wells  Co.,   128  Fed. 

etc.  R.  R.  Co.  V.  Cary,  26  N.  Y.  75.  369;    63  C.  C.  A.  Ill  (holding  that 

*  Cf.  Bushnell  v.  Consolidated  Ice  for  purposes  of  determining  the  juris- 
Machine  Co.,  138  111.  67;  27  N  E.  diction  of  a  federal  court  a  corpora- 
596  (holding  that  shareholder  in  tion  de  facto  cannot  be  treated  as  a 
corporation  de  facto  cannot  main-  citizen  of  the  state  under  whose  laws 
tain  bill  for  partnersliip  accounting  it  attempted  to  organize),  reversed 
against  his  fellow-members).  on  another  point,    IT'.  L.  Wells  Co. 

^  Haas    V.    Bank    of    Commerce,  v.  Gastonia  Cotton  Mfg.  Co.,  198  V.  S. 

41  Nebr.  754;    60  N.  W.  85;    Wil-  177;  25  Sup.  Ct.  640. 
liamson  v.  Koknmo  Bldg.,  etc.  Ass'n,  *  Cumberland   Telephone,  etc.  Co. 

89  Ind.  389;    Doty  v.  Patterson,  155  v.   St.    Louis,    etc.    Ry.    Co.,  41    So. 

Ind.   60;   56  N.    E.    668   (semble) ;  492;    117  La.  199;   Neiv  York  Cable 

East    Norway    Church    v.    Froislie,  Co.  v.  New  York,  104  N.  Y.  1 ;    10 

37  Minn.  447 ;  35  N.  W.  260 ;  Chini-  N.  E.  332 ;    Orrick  School  Dis't.  v. 

guy   V.    Bishop   of   Chicago,    41    111.  Dorton,  125  Mo.  439;    28  S.  W.  765 

148.  (admission    by    property    owner   of 

*  Georgia  Southern,  etc.  R.  R.  Co.  corporate  existence  not  sufficient) ; 
V.  Mercantile  Trust,  etc.  Co.,  94  Ga.  Hampton  v.  Clinton  Co.,  65  N.  J 
306 ;  32  L.  R.  A.  208 ;  21  S.  E.  701 ;  Law  158. 

47  Am.  St.  Rep.  153  (mortgaging  '  Ward  v.  Minnesota,  etc.  R.  R. 
after-acquired  property);  People  v.  Co.,  119  111.  287,  291-292;  ION.  E. 
La  Rue,  67  Cal.  526  (consolidating  365 ;  Eddleman  v.  Union  County 
with  other  companies).  Traction,  etc.    Co.,  217   III.   409,  75 

249 


§  292 


IRREGULAR    INCORPORATION 


[Chap.  IV 


So,  a  court  of  equity  will  not  refuse  the  extraordinary  remedy 
of  injunction  because  the  plaintiff  is  a  de  facto  corporation.* 
Moreover,  the  shareholders  in  a  de  facto  corporation  are  subject 
to  the  same  liabilities  to  creditors  and  other  persons  as  if  the 
incorporation  had  been  de  jure.'-  The  existence  of  a  de  facto 
corporation  is  real  even  against  the  state  ^  except  upon  direct 
proceedings  to  oust  it  from  corporate  powers.  Under  a  statute 
punishing  criminally  embezzlement  from  an  "incorporated 
company"  a  conviction  may  be  sustained  if  the  company  is  a 
corporation  de  facto.*  Conversely,  a  statute  applicable  to  "  un- 
incorporated companies"  does  not  apply  to  companies  which 
are  corporations  de  facto. ^  A  corporation  de  facto  cannot  be 
wound-up  as  a  partnership.^ 


N.  E.  510;  National  Docks  Ry.  Co. 
V.  Central  R.  R.  Co.,  32  N.  J.  Eq. 
755;  Gillette  v.  Aurora  Ry.  Co.,  81 
N.  E.  1005;  228  111.  261  (semble 
—  drawling  a  distinction  between  a 
denial  of  the  company's  corporate 
existence  and  a  denial  that  even 
de  jure  corporations  of  the  class  to 
which  this  company  belongs  are  au- 
thorized by  law  to  condemn  prop- 
erty) ;  Central  of  Ga.  Ry.  Co.  v. 
Union  Springs,  etc.  Ry.  Co.,  39  So. 
473;  144  Ala.  639;  Morrison  v. 
Forman,  177  111.  427 ;  53  N.  E.  73 ; 
Smith  V.  Cleveland,  etc.  Ry.  Co.  (Ind.), 
81  N.  E.  501,  .507;  Wellington  etc. 
R.  R.  Co.  V.  Cashie,  etc.  Lumber  Co., 
114  N.  Car.  690 ;  19  S.  E.  646 ;  Mor- 
rison V.  Indianapolis,  etc.  Ry.  Co. 
(Ind.),  79  N.  E.  961;  2  Lewis  on 
Eminent  Domain,  §  391. 

Cf.  Boca,  etc.  R.  R.  Co.  v.  Sierra 
Valleys  Ry.  Co.  (Cal.),  84  Pac.  298, 
303  (where  a  de  jure  coqioration 
claimed,  unsuccessfully,  the  right 
as  a  de  facto  corporation  to  con- 
demn property  for  a  railway  wliich 
by  its  incorporation  paper  it  had 
no  power  to  constnict). 

'  Williams  v.  Citizens  Street  Ry., 
130  Ind.  71 ;  29  N.  E.  408;  30  Am. 
St.  Rep.  201 ;  15  L.  R.  A.  64;  Cin- 
cinnati, etc.  R.  R.  Co.  V.  Danville,  etc. 
Ry.  Co.,  75  111.  113. 

2. 


^  Eaton  V.  Aspinwall,  19  N.  Y. 
119;  Perkins  v.  Hatch,  4  Hun 
(N.  Y.)  137;  Rowland  v.  Meader 
Furniture  Co.,  38  Oh.  St.  269; 
Hamilton  v.  Clarion,  etc.  R.  R.  Co., 
144  Pa.  St.  34  ;  23  Atl.  53 ;  13  L.  R. 
A.  779;  Aspinioall  v.  Sacchi,  57 
N.  Y.  331  (as  to  right  of  shareholder 
who  has  been  subjected  to  a  statu- 
tory liability  to  creditors  to  enforce 
contribution  from  other  shareholders 
in  the  de  facto  corporation) ;  Harris 
V.  Gateway  Land  Co.,  128  Ala.  652; 
29  So.  611. 

Cf.  St.  Joseph,  etc.  Ry.  Co.  v. 
Shambaugh,  106  Mo.  557,  566.  The 
same  result  may  often  be  reached 
on  the  ground  of  estoppel.  See 
supra,  §  280. 

*    People  V.  La  Rue,  67  Cal.   526. 

Cf.  Coxe  V.  State,  144  N.  Y.  396 
(where  the  point,  although  neces- 
sarily involved,  does  not  appear  to 
have  been  argued  or  considered). 

*  People  v.  Carter,  122  Mich.  668 ; 
81  N.  W.  924. 

'  Rowland  v.  Meader  Furniture 
Co.,  38  Oh.  St.  269. 

*  Bushnell  v.  Consolidated  Ice 
Machine  Co.,  138  111.  67.  Cf.  cases 
cited  infra,  p.  253,  n.  3,  and  also 
Merchants,  etc.  Line  v.  Wagoner,  71 
Ala.  581. 


;o 


§  291-§  294]  LIABILITY    OF    MEMBERS  §  293 

Of  course,  the  attainment  of  a  de  jure,  and  not  merely  a  de 
facto,  existence  may  be  made  a  condition  in  a  contract  so  that 
the  contract  will  not  be  enforceal)le  unless  the  company  be- 
comes incorporated  de  jure.  According  to  some  authorities, 
such  a  condition  is  implied  in  a  subscription  to  shares  in  a  com- 
pany to  be  subsequently  formed.' 

The  dissolution  of  a  de  facto  corjwration  whether  by  scire 
facias,  or  quo  warranto,  or  otherwise,  is  governed  by  the  same 
principles  as  the  dissolution  of  a  de  jure  corporation,  and  there- 
fore is  beyond  the  scope  of  the  present  work.  A  judgment 
of  ouster  because  of  non-performance  of  conditions  precedent 
to  incorporation  does  not  relate  back  so  as  to  defeat  the  rights 
of  third  parties  which  may  have  vested  during  the  company's 
de  facto  existence.^ 

§  293- §  294.     Rights  and  Liabilities  of  Members  of 
defectively  incorporated  Company. 

§  293.  Liability  to  Third  Persons.  —  The  members  of  a  defec- 
tivelv  incorporated  company  are,  in  many  states  and  under  most 
circumstances,  protected  from  individual  liability  for  debts  and 
torts  of  the  association  by  the  doctrines  of  estoppel  and  of  de  facto 
corporations.  But  in  jurisdictions  where  those  doctrines  are  not 
recognized  or  in  cases  where  for  any  reason  they  do  not  apply,  the 
members  should  be  held  liable  as  partners  both  ex  contractu^ 

'  See  supra,  §  260.  As  to  whether  Wechselberg  v.  Flour  City  Nat.  Bank, 
a  vendor  of  shares  warrants  the  com-  64  Fed.  90;  12  C.  C.  A.  56;  26  L. 
pany  to  be  incorporated  de  jure,  R.  A.  470;  Abbott  v.  Omaha  Smelt- 
see  inha,  ^  97S.  ing    Co.,    4    Nebr.    416,    424-425; 

^  Society  Perun  v.  Cleveland,  43  Kaiser  v.   Lawrence  Savings   Bank, 

Oh.  St.  481;   3  N.  E.  357;   Rowland  56  Iowa  104;   8  N.  W.  772;  41  Am. 

y.  Mcader  Furniture  Co.,  38  Oh.  St.  Rep.    85;     Bigelow    v.    Gregory,    73 

269.  Ill-    197;     Loverin    v.    McLaughlin, 

Cf.  Thompson  v.  N.  Y.,  etc.  R.  R.  161  111.  417;   44  N.  E.  99;    Bergeron 

Co.,  3  Sandf.  Ch.  (N.  Y.)  625,  651;  v.  Hobbs,  96  Wise.  641;    71  X.  W. 

Farnsworthv.  Drake,  11  Ind.  101.  1056;    65  Am.  St.   Rep.  85;    Duke 

3  McLennan  v.  Hopkins,  2  Kans.  v.  Taylor,  37  Fla.  64;    19  So.   172; 

App.   260;    41   Pac.    1061;    Shields  53  Am.  St.  Rep.  232;  31  L.  R.  A, 

V.  Clifton  Hill  Land  Co.,  94  Tenn.  484;    Garnett  v.  Richardson,  35  Ark. 

123,  146;  28  S.  W.  668;  26  L.  R.  A.  144;    Guckert  v.  Hacke,  159  Pa.  St. 

509 ;    45  Am.  St.   Rep.   700 ;     Wil-  303 ;  28  Atl.  249 ;   Martin  v.  Fewell, 

liams  v.  Hewitt,  47  La.  Ann.  1076;  79  Mo.  401  ;    Whipple  v.  Parker,  29 

17  So.  496;    49  Am.  St.  Rep.  394;  Mich.    369;     Owen   v.    Shepard.    59 

Davis    v.    Stevens,    104    Fed.    235;  Fed.  746;    8  C.  C.  A.  241  (holding 

251 


§  293 


IRREGULAR   INCORPORATION 


[Chap.  IV 


and  ex  delicto}  Although  this  rule  is  accepted  by  the  weight 
of  authority,  yet  some  cases  hold  that  the  members  are  not 
liable  as  partners  -  but  that  only  those  members  who  actually 
participate  in  making  the  contract  or  in  committing  the  tort 
are  liable.  In  cases  of  contract,  according  to  these  authori- 
ties, the  Hability  is  that  of  agents  who  have  contracted  on  be- 
half of  a  non-existent  principal.^  These  authorities  proceed  on 
the  crround  that  the  several  members  never  intended  to  assume 
the  position  of  co-partners  and  never  held  themselves  out  as 
occupying  that  relation,  so  that  injustice  would  be  done  by 


that  where  persons  carrying  on  busi- 
ness under  a  company  name  are 
sued  as  partners,  the  burden  of 
proof  rests  upon  them  to  prove  the 
company  to  be  incorporated) ;  Sex- 
ton V.  Snyder,  119  Mo.  App.  668; 
94  S.  W.  562;  Chaffe  v.  Uidellng, 
27  La.  Ann.  607;  Globe  Publishing 
Co.  V.  State  Bank,  41  Nebr.  175,  188, 
189  ;  59  N.  W.  68.3  ;  27  L.  R.  A.  854 
(semble) ;  Empire  Mills  v.  Alston 
Grocery  Co.,  4  Willson  Civ.  Cas. 
(Tex.),  §  221. 

Cf.  N.  Y.,  etc.  Bank  v.  Crowell, 
111  Pa.  St.  313 ;  35  Atl.  613 ;  Pat- 
terson V.  Arnold,  45  Pa.  St.  410; 
WeUs  V.  Gates,  18  Barb.  (N.  Y.)  554  ; 
Fvller  V.  Rowe,  57  N.  Y.  23  (holding 
that  a  person  is  not  liable  for  debts 
contracted  before  he  became  a  mem- 
ber of  the  supposed  corporation) ; 
Hyatt  V.  Van  Riper,  78  S.  W. 
1043 ;  105  Mo.  App.  664  (where  de- 
fendants had  made  false  representa- 
tions about  the  company,  but  which 
is  disapproved  in  part  in  Webb  v. 
Rockefeller,  195  Mo.  57;  93  S.  W. 
772) ;  Booth  v.  Wonderly,  36  N.  J. 
Law  250  (where  the  directors  were 
declared  to  be  liable  as  partners). 
So  such  an  association  may  be  held 
subject  to  the  Bankurpt  Act  as  a 
partnersliip  Davis  v.  Stevens,  104 
Fed.  235. 

It  is  a  different  question  whether 
the  members  of  a  corporation  are 
liable  as  partners  upon  ultra  vires 
contracts.  See  Trowbridge  v.  Scud- 
der,  11  Cush.   (Mass.)  83;  Mediil  v. 


Collier,  16  Oh.  St.  599;  and  infra, 
§  1641.  Sometimes,  by  statute,  in- 
dividual liability  is  expressly  imposed 
on  members  or  officers  of  an  asso- 
ciation which  fails  to  observe  some 
particular  requirement  of  the  in- 
corporation law.  See  Loverin  v. 
McLaughlin,  161  111.  417. 

'  Vredenburg  v.  Behan,  33  La. 
Ann.  627  (liability  for  keeping  fero- 
cious wild  animals). 

Cf.  Mandeville  v.  Courtright,  142 
Fed.  97;  73  C.  C.  A.  321  (as  to  lia- 
bility of  members  of  a  corporation 
for  torts  committed  in  the  course 
of  an  ultra  vires  business). 

-  Humphreys  v.  Mooney,  5  Colo. 
282,  288-292  ;  Fay  v.  Noble,  7  Cush. 
188;  Stafford  Bank  v.  Palmer,  47 
Conn.  443 ;  Planters',  etc.  Bank  v. 
Padgett,  69  Ga.  159;  Rutherford  v. 
HUl,  22  Oreg.  218;  29  Pac.  546; 
29  Am.  St.  Rep.  596;  17  L.  R.  A. 
549 ;  Johnson  v.  Corser,  34  Minn. 
355 ;   25  N.  W.  799. 

Cf.  Central  City  Savings  Bank  v. 
Walker,  66  N.  Y.  424;  Seacard  v. 
Pendleton,  55  Hun  (N.  Y.)  579; 
9  N.  Y.  Supp.  46;  State  v.  How,  1 
Mich.  512  (where  the  object  of  the 
attempted  corporation  was  deemed 
illegal) ;  Blanchard  v.  Kaull,  44  Cal. 
440. 

^  Johnson  v.  Corser,  34  Minn. 
355 ;  25  N.  W.  799 ;  Fay  v.  Noble, 
1  Cush.  (Mass.)  188,  194  (headnote 
inadequate). 

Cf.  Hurt  V.  Salisbury,  55  Mo. 
310. 


252 


§  261-§  294]      RIGHTS    AND    LIABILITIES    OF    MEMBERS      §  293  a 

treating  them  as  such.  But  tliis  argument,  although  specious,  is 
believed  to  be  fallacious.  Although  it  is  true  that  the  members 
of  the  association  did  not  intend  to  become  partners,  they  did 
intend  to  engage  in  a  joint  enterprise  as  an  a.ssociated  bodv.* 
Now,  the  law  knows  but  two  forms  of  associations  for  business 
or  trade  —  corporations  and  partnerships ;  and  as  they  are 
not  a  corporation  they  must  be  a  partnership.  Iliis  doctrine, 
however,  of  a  partnership  by  legal  construction  does  not  apply 
unless  the  members  actually  authorize  the  transaction  of  busi- 
ness, although  their  mistaken  belief  that  they  had  l)ecome  in- 
corporated is  immaterial.  \Vhere,  however,  the  members  do 
authorize  the  transaction  of  business,  they  are  to  be  treated  in- 
law as  a  partnership  except  as  to  those  attributes  of  a  corpora- 
tion which  it  is  competent  for  persons  to  assume  by  mere  agree- 
ment. Their  belief  that  they  were  incorporated  is  simply  a 
mistake  of  law,  which   may  be  quite  disregarded. 

A  creditor  of  a  defectively  incorporated  association  who  ob- 
tains a  judgment  against  the  company  as  a  corporation  is  there- 
after precluded  from  holding  the  members  individuallv  liable 
as  partners.-  The  claim  is  merged  in  the  judgment  against  the 
supposed  corporation. 

§  293  o.  Rights  and  Liabilities  Inter  Sese.  —  To  be  sure, 
as  the  members  of  a  defectively  incorporated  association  intend 
to  become  a  corporation  and  not  a  firm,  their  rights  inter  sese 
will  be  governed  by  the  principles  applicable  to  members  of  a 
corporation  rather  than  to  co-partners,^  so  far,  that  is,  as  it  is 
competent  for  partners  by  njere  agreement  to  provide  that  the 

'  In  this  respect  they  differ  from  1034;     Cresswell   v.    Oberly,    17    111. 

promoters  of  a   company.     Conse-  App.  281.    See  supra,  p.  234,  n.  2. 
quently,    a    suit    framed    upon    the  ^  Cannon  v.  Brush  Electric  Co., 96 

theory    that    defendants   are    Hable  Md.  446 ;  54  Atl.  121 ;  94  Am.  St.  Rep. 

as  members  of  a  defectively  incor-  598  ;   Heald  v.  Owen,  79Iowa  23. 
porated  association   is  not  sustain-  Cf.    Heck    v.    McEwen,    12    Lea 

able  by  proof  of  facts  which  would  (Tenn.)  97,  101 ;    Ward  v.  Brigham, 

create   a   liability   as   promoters   of  127  Mass.  24  ;   Lincoln  Park  Chapter 

a     prospective     corporation.       See  v.  Swatek,  68  N.  E.  429;    204  111. 

infra,  §  360.  228 ;   Card  v.  Moore,  68  N.  Y.  App! 

^  Nebraska    Nat.    Bank    v.    Fer-  Div.  327;    74  N.  Y.  Supp.   18,  af- 

gruson,  49  Nebr.  109 ;   68N.  W.  370;  firmed   short,    173   N.    Y.   598;'    66 

59    Am.    St.    Rep.    522;     Pittsburg  N.  E.   1105  (where  the  parties  did 

Sheet  Mfg.  Co.  v.  Beale,  204  Pa.  St.  not    regard    themselves    as    incor- 

85 ;     53   Atl.    540 ;     Heuer   v.    Car-  porated) ;    Stowe   v.   Flagg,   72    111. 

michad,   82   Iowa  288;    37  N.    W.  397;    Coleman  v.  Coleman,  78  Ind. 

253 


§294 


IRREGULAR    INCORPORATION 


[Chap.  IV 


principles  of  corporate  management  sliall  apply  to  them.  Hence, 
it  would  seem  that  there  is  no  implied  agency  of  each  share- 
holder for  the  association/  but  that  only  the  directors  and  other 
duly  constituted  agents  can  bind  the  company. 

§  294.  Rights  against  Third  Persons.  —  x\s  the  members  of 
an  association  who  erroneously  believe  themselves  to  be  in- 
corporated are  in  law  members  of  a  partnership  and  liable  as 
such  to  third  persons,  it  follows  also  that  they  enjoy  the  rights 
of  partners  as  regards  third  persons.  Consequently,  a  deed  con- 
veying land  or  chattels  to  them  by  the  supposed  corporate  name 
would  vest  title  in  them  as  joint  tenants  or  tenants  in  common.^ 
•The  supposed  corporate  name  is  treated  as  a  mere  description 
of  the  individual  members.     If,  however,  the  members  of  the 


344  (holding  that  one  member  of  a    of  the  wadow  and  children  of  Wm. 


defectively  incorporated  company 
cannot  on  buying  in  a  claim  against 
the  company  enforce  it  against  his 
fellow-members) ;  Hill  v.  Beach, 
12  N.  J.  Eq.  31  (a  case  decided  be- 
fore the  modern  law  of  corporations 
had  taken  shape  and  containing 
much  that  would  not  now  be  ac- 
cepted as  law) ;  Johnson  v.  Corset, 
34  Minn.  355 ;  25  N.  W.  799  (as  to 
implied  agency  of  every  member) ; 
Curtis  V.  Tracy,  169  111.  233;  48 
N.  E.  399;  61  Am.  St.  Rep.  168 
(director  participating  in  transac- 
tion of  business  before  recording 
of  certificate  cannot  hold  associates 
liable  as  partners  on  claim  con- 
tracted in  his  favor) ;  Foster  v. 
Moulton,  35  Minn.  458;  29  N.  W. 
155  (where  the  court  thought  that 
a  company  might  be  a  corporation 
de  facto  as  between  the  members  but 
not  as  regards  strangers). 

As  to  rights  of  members  who 
have  been  held  liable  to  creditors, 
or  who  have  incurred  expenses,  to 
contribution  from  their  associates, 
see  Richardson  v.  Pitts,  71  Mo.  128; 
Flagg  v.  Stowe,  85  111.  164. 

'  See  cases  cited  in  last  note. 

2  Wray  v.  Wray  (1905),  2  Ch.  349 
(where  a  deed  of  land  to  "Wm.  W. 
of  Laurel  House"  was  held  to  con- 
vey legal  title  to  a  firm  composed 


W.,  deceased,  and  carrying  on  busi- 
ness under  his  name) ;  Maugham 
V.  Sharpe,  17  C.  B.,  n.  s.,  443  (chattel 
mortgage  to  a  supposed  corpora- 
tion) ;  Byam  v.  Bickford,  140  Mass. 
31 ;  2  N.  E.  687  (deed  to  a  volun- 
tary association  by  its  name). 

Cf.  Clifton  Heights  Land  Co.  v. 
Randell,  82  Iowa  89;  47  N.  W. 
905;  American  Silk  Works  v.  Salo- 
mon, 6  T.  &  C.  (N.  Y.)  352 ;  White 
Oak  Grove  Benev.  Sac.  v.  Murray, 
145  Mo.  622 ;  47  S.  W.  501  (holding 
that  equitable  title  passes  and  that 
a  bill  in  equity  will  lie  to  compel 
grantor  to  execute  a  new  deed) ; 
Retnhard  v.  Virginia  Lead  Mining 
Co.,  107  Mo.  616  (proceeding  on 
the  ground  of  estoppel  and  explain- 
ing Douthitt  V.  Stinson,  63  Mo.  268, 
and  Arthur  v.  Weston,  22  Mo.  379, 
on  the  ground  that  they  related 
altogether  to  the  legal  as  distin- 
guished from  the  equitable  title) 
Whipple  V.  Parker,  29  Mich.  369 
Hart  V.  Seymour,  147  111.  598,  610 
35  N.  E.  246. 

But  see  Prevost  v.  Morgan's,  etc. 
R.  R.  Co.,  42  La.  Ann.  809;  8  So. 
584;  German  Land  Ass'n  v.  Schol- 
ler,  10  Minn.  331 ;  ChUds  v.  Hurd, 
32  W.  Va.  66,  100  (declaring  the 
deed  to  be  "null  and  void"). 


254 


§  261-§  294]       RIGHTS    AND    LIABILITIES    OF    MEMBERS         §   294 

defectively  incorporated  })ody  are  not  ascertainahle  hut  con- 
sist in  an  indefinite,  fluctuating  number  of  individuals — for 
example,  the  members  of  a  church  or  congregation  —  the  con- 
veyance cannot  vest  title  in  them  as  individuals  but  is  void  for 
uncertainty,'  unless  indeed  it  can  be  sustained  as  a  charity.  It 
has  been  held  that  a  promissory  note  payable  to  the  order  of 
a  railroad  company  which  in  j>oint  of  fact  is  not  incorporated 
is  in  legal  edect  payable  to  a  fictitious  payee;  -  but  on  pi-in(i{)le 
it  would  certainly  seem  that  if  any  such  company  is  in  existence, 
although  it  be  unincorporated,  the  note  should  be  regarded  as 
payable  to  the  members  or  shareholders  jointly  or  as  partners. 
Upon  the  same  principle  that  (except  when  the  doctrines  of 
estoppel  or  of  de  facto  corporations  come  into  play)  the  members 
of  a  defectively  incorporated  association  are  entitled  to  the 
rights  of  partners  as  against  third  persons,  it  follows  that  the 
members  of  an  association,  organized,  though  defectively,  under 
a  general  incorporation  law  may  sue  as  a  partnership  for  the 
protection  of  the  joint  property.^ 

*  State  use  Trustees  M.  E.  Church  -  Farnsworthv.  Drake,  11  Ind.  101. 

V.    Warren,   28   Md.    338;     German  »  Jones  v.  Aspen  Hardware  Co., 

Land    Association    v.    Scholler,    10  21  Colo.  263;   40  Pac.  457;   52  Am. 

Minn.  331.  St.  Rep.  220;  29  L.  R.  A.  143. 


255 


CHAPTER  V 

INCORPORATION   FOR   ILLEGAL   PURPOSES 

Section 
Illegal  purpose  distinguished  from  merely  unauthorized  purpose    .    .     295 

Incorporation  avowedly  for  illegal  purpose 296-297 

In  general      296 

Effect  of  illegality  of  company  upon  contracts 297 

Incorporation  ostensibly  for  lawful  but  really  for  illegal  purposes     298-302 

Likelihood  that  illegal  purpose  will  be  veiled 298 

Company  incorporated  de  facto      299 

Ouster  from  corporate  privileges  at  suit  of  sovereign 300 

No  chartered  right  to  execute  secret  illegal  purpose      301 

Northern  Securities  Co.  v.  U.  S.,  193  U.  S.  197       302 

What  purposes  are  illegal 303-306 

Not  usually  a  question  of  corporation  law ,    .    .    .    .     303 

Violation  of  provisions  of  the  incorporation  law 304 

Purposes  unlawful  but  not  criminal      305 

Purposes  contrary  to  public  poUcy 306 

§  295.  Illegal  Purpose  distlngmshed  from  merely  imauthorized 
Purpose.  —  Although  the  books  are  full  of  cases  on  irregular 
or  defective  incorporation,  very  little  authority  exists  on  ques- 
tions relating  to  incorporation  for  illegal  purposes.  To  be 
sure,  some  law  can  be  found  on  the  subject  of  unauthorized 
incorporation  —  that  is,  incorporation  or  attempted  incorpora- 
tion for  some  object  innocent  enough  in  itself  but  not  among 
the  objects  for  which  the  incorporation  laws  make  provision  as 
the  objects  of  an  incorporated  company.'  But  this  subject  is  so 
closely  connected  with  the  topic  of  irregular  or  defective  incor- 
poration, even  if  it  is  not  identical  with  it,  and  with  the  topic 
of  the  object  clause  of  the  incorporation  paper,  that  separate 
treatment  is  undesirable. 

Moreover,  it  is  important  to  distinguish  cases  relating  to 
unincorporated  companies  which  are  illegal  not  because  of  any 
inherent  illegality  in  their  objects  —  that  is,  not  because  it  would 
be  illegal  for  an  individual  to  pursue  the  same  objects  —  but 
because  of  some  statute  forbidding  the  formation  of  voluntary 
associations  of  the  character  of  the  company  in  question.  The 
most  striking  illustrations  of  illegal  voluntary  associations  of 

'  See  supra,  §  121,  and  §  286.  J.   98,    121-122    (per   Page  Wood, 

a.  Butt    V.    Monteaux,    1    K.  &  V.  C). 

256 


§  295-§  300]  AVOWED    ILLEGAL    PURPOSE  §  296 

this  kind  are  furnished  by  the  British  Companies  Act  of  1S02, 
which  prohibits  the  formation  of  companies  with  more  than  a 
certain  number  of  members  unless  registered  under  that  act  or 
formed  in  pursuance  of  some  other  act  of  parhament  or  of  letters 
patent,  etc'  In  such  cases,  there  is  no  attempt  to  become  incor- 
porated, and  consequently  there  is  certainly  no  corporation  either 
de  jure  or  dc  facto.  Such  cases  are,  therefore,  to  be  distinguished 
from  cases  where  would-be  corporators  go  through  formalities 
prescribed  by  general  incorporation  laws,  for  illegal  purposes. 
Nevertheless,  the  English  books  referring  to  companies  formed 
in  violation  of  the  statutory  prohiijition  constantly  use  the  general 
phrase  "illegal  companies,"  ■  and  discrimination  must  therefore 
l)e  exercisetl  in  relying  upon  these  English  cases  and  text-writers 
as  authorities  in  America.  When  an  English  judge  or  lawyer 
speaks  of  an  "illegal  company,"  he  generally  means  not  a  com- 
pany which  has  attempted  to  become  incorporated  for  illegal 
purposes  but  a  voluntary  association  which  is  illegal  because  of 
the  prohibition  in  the  Companies  Acts.^ 

§  296-§  297.     Incorporation  avowedly  for  Illegal  Purpose. 

§  296.     In    general.  —  Suppose,    however,    the    objects    for 
which  a  corporation  is  sought  to  be  organized  are  not  merely 

'  "  No  company,  association,  or  working  mines  within  and  svibject 
partnership  consisting  of  more  tlian  to  the  jurisdiction  of  the  Stannaries." 
ten  persons  shall  be  formed,  after  Companies  Act,  1862,  §  4. 
the  commencement  of  this  Act,  for  -  E.  g.  1  Lindley  on  Companies, 
the  purpose  of  carrying  on  the  busi-  6th  ed.,  Bk.  I,  Chap.  5.  The  general 
ness  of  banking,  unless  it  is  regis-  language  used  in  parts  of  this  chapter 
tered  as  a  company  under  this  Act,  especially  §  2,  pp.  189-192,  may  be 
or  is  formed  in  pursuance  of  some  useful  as  authority  for  American 
other  Act  of  Parliament  or  of  letters  lawyers ;  but  the  cases  cited  by 
patent;  and  no  company,  associa-  Lord  Lindleyt  when  analyzed,  will 
tion,  or  partnership  consisting  of  often  if  not  generally  be  found  to 
more  than  twenty  persons  shall  be  be  inapplicable  to  American  con- 
formed after  the  commencement  of  ditions. 

this  Act,  for  the  purpose  of  carrying  ^  But  compare  Ilfracombe  Perma- 

on  any  other  business  that  has  for  nent  Mut.  Benefit  Bldg.  Soc.  (1901), 

its  object  the  acquisition  of  gain  by  1   Ch.    102,    112,   where  Wright,   J., 

the  company,  association  or  partner-  protested    against    this    use    of    the 

ship,  or  by  the  individual  members  word     illegal     and     preferred     the 

thereof,  unless  it  is  registered  as  a  phrase  "a  society  not  authorized  by 

company    under    tliis    Act,     or    is  law  and  therefore  not  existing,  from 

formed  in  pursuance  of  some  other  the  point  of  view  of  the  Companies 

Act    of    Parliament,    or    of    letters  Acts,  as  a  society  at  all." 
patent,  or  is  a  company  engaged  in 
VOL.  I.  —  17                                  257 


§  296  INCORPORATION    FOR    ILLEGAL    PURPOSES      [ChAP.  V 

unauthorized  but  even  actually  illegal.  Of  course,  any  instance 
of  this  sort  is  a  special  case  under  the  general  class  or  head  above 
referred  to  of  corporations,  or  intended  corporations,  formed  v^ith 
objects  for  which  the  incorporation  law  does  not  provide.  For 
no  incorporation  act,  however  liberal  or  even  loose  it  may  be, 
permits  persons  to  incorporate  for  the  purpose  of  violating  the 
laws  —  of  performing  acts  that  are  either  mala  in  se  or  mala 
prohibita.  If  therefore  any  company  is  avowedly  organized  for 
any  such  purpose  and  if  the  illegal  purpose  appears  on  the  face 
of  the  company's  memorandum  of  association  or  incorporation 
paper,  the  company  certainly  does  not  become  a  corporation 
de  jure,^  and  (unless  there  be  other  and  lawful  objects)  probably 
not  even  a  corporation  dc  Jacio}  Other  consequences,  pains,  and 
penalties  may  attach  to  those  who  engage  in  or  promote  such 
an  organization,  but  that  such  persons  certainly  do  not  become 
incorporated  de  jure  and  probably  not  even  de  facto  is  clear. 

For  example,  all  lawyers  remember  the  traditional  case  of  a 
bill  for  a  partnership  accounting  by  a  member  of  a  firm  of  high- 
waymen.^ If  an  enterprising,  up-to-date  firm  of  that  character 
should  attempt  to  become  incorporated  under  the  laws  of  New 

*  Woodberry  v.  McCIurg,  29  So.  create  no  corporation) ;  Chicora  Co. 
514;  78  Miss.  831  (purchasing  shares  v.  Crews,  6  S.  Car.  243;  Padstow 
of  other  companies  in  violation  of  Toted  Loss  &  Collision  Ass.  Ass'n, 
an  anti-trust  law) ;  State  v.  Debenture  20  Ch.  D.  137  (company  formed  with 
Guarantee,  etc.  Co.  (La.),  26  So.  600,  more  than  twenty  members  in 
affirmed  as  to  federal  questions  sub  violation  of  the  Companies  Act, 
nam.  New  Orleans  Debenture,  etc.  held  to  have  no  existence  and 
Co.  v.  Louisiana,  180  U.  S.  320;  21  therefore  to  be  incapable  of  being 
Sup.  Ct.  378.  wound-up   as    a    company     (under 

Cf.    People    ex    rel.    Peabody    v.  the  winding-up  acts). 
Chicago  Gas  Trust  Co.,  130  111.  268;         But  see  Lincoln  Bldg.,  etc.  As.9'n 

22  N.  E.  798;    17  Am.  St.  Rep.  319;  v.  Graham,  7  Nebr.   173  (headnote 

8  L.  R.  A.  497.  ,  inadequate  —  lending     at     usurious 

*  Detroit  Schuetzen  Bund  v.  De-  interef^t) ;  New  Orleans  Debenture,  etc. 
troit  Agitaiions  Verein,  44  Mich.  313  ;  Co.,  180  U.  S.  320,  327-328 ;  21  Sup. 
6  N.  W.  675 ;  38  Am.  Rep.  270  Ct.  378  (holding  that  as  a  de  facto 
(opposing  enforcement  of  liquor  corporation  the  company  may  prop- 
law)  ;  St.  Louis  Colonization  Ass'n  erly  be  made  the  sole  defendant  in  a 
V.  Hennessy,  1 1  Mo.  App.  555,  557  proceeding  by  the  state  to  test  the 
(headnote  inadequate  —  semble).  validity  of  the  incorporation). 

Cf.  Trustees  of  N .  C.  Endowment         ^  Everet     v.     Williams,     9     Law 

Fund  V.  Satchwell,  71   N.  Car.   Ill  Quarterly    Rev.    197;     Lindley    on 

(special  act  incorporating  company  Partnership,  7th   ed.,  p.    107.     The 

for  the  purpose  of  dispensing  charity  bill   was   dismissed   with   costs   and 

to  orphans  of  Confederate  soldiers,  the  plaintiff's  solicitors  were  fined 

held  to  be  unconstitutional  and  to  for  contempt. 

258 


§  29o-§  30G]  AVOWED    ILLEGAL    PURPOSE  §  297 

Jersey,  and  should  frankly  state  in  their  incorporation  papers 
that  the  only  object  of  the  proposed  company  would  be  to  engage 
in  highway  rol)bery,  manifestly  the  company's  object  would  not 
be  a  lawful  pur])ose  within  the  meaning  of  the  New  Jersey  law, 
and  therefore  the  attempt  to  become  incorporated  would  be 
wholly  nugatory.  The  same  thing  would  be  true  if  the  com- 
pany's avowed  object  instead  of  being  in  conflict  with  some 
state  law  should  be  the  violation  of  an  act  of  Congress.  Hence, 
if  the  incorporation  paper  of  some  company  should  state  as  its 
sole  object  the  monojiolization  of  interstate  commerce  in  viola- 
tion of  the  Sherman  Anti-Trust  Law,  the  attempt  to  incorporate 
would  be  simply  and  wholly  ineffectual. 

However,  the  inclination  of  the  courts  is  —  and  very  properly 
—  to  presume  that  the  incorporation  papers  do  not  contemplate 
illegal  objects.  For  instance,  when  during  the  Civil  War,  a 
corporation  was  formed  in  Georgia  for  the  purpose  of  trade  with 
foreign  countries,  it  was  held  that  the  expressed  object  of  the 
company  was  not  illegal,  notwithstanding  the  existence  of  the 
blockade  then  maintained  by  the  federal  fleets,  since  the  corpo- 
ration might  conclude  to  wait  until  the  raising  of  the  blockade.^ 

§  297.  Effect  of  Illegality  of  Company  upon  Contracts.  —  In 
a  case  of  incorporation  for  illegal  purposes,  not  merely  is  the 
company  no  corporation,  but  contracts  relating  to  its  formation 
and  operation  will  be  illegal.  Upon  this  point,  cases  relating  to 
English  voluntary  companies  formed  in  defiance  of  the  prohibi- 
tion in  the  Companies  Acts  may  perhaps  be  referred  to.  A 
subscription  to  shares  in  an  illegal  company  is  itself  an  illegal 
contract ;  and  until  the  illegal  purpose  be  carried  out  by  the 
actual  formation  of  the  company,  atnounts  paid  on  the  subscrip- 
tion may  be  recovered  back.  Contracts  for  sale  of  shares  in  the 
illegal  company  are,  it  seems,  likewise  illegal.-     Moreover,  it 


*  Importing    &    Exporting  Co.  v.  (where    the    company    was    illegal 

Locke,  50  Ala.  332,  334.  under  the  Bubble  Act). 

But    cf.    Chifora    Co.    v.   Crews,         Cf.  Buck  v.  Buck,  1  Campb.  547 

C.  S.  Car.  243  (where  a  special  act  of  (holding  tliat  a  purchaser  of  shares, 

the   legislature    of     South   Carolina  in  a  company  which  was  illegal  under 

jnissed  during  the  War  purporting  to  the  Bubble  .Vet,  could  not  maintain 

<Teate  a  corporation  for  tlie  purpose  an   action   for   money   had   and   re- 

of  exporting  protluce  and  importing  ceived  against  his  broker  to  recover 

arms  was  held  to  be  void).  the    balance    remaining    of    money 

'  Josephs  V.  Prebber,  3  B.  &  C.  639  deposited    with    him    to    make    the 

259 


§  298  INCORPORATION    FOR    ILLEGAL    PURPOSES      [ChAP.  V 

seems  even  to  have  been  held  that  a  debtor  owing  money  to  an 
illegal  association  may  escape  payment  to  any  one.^  Moreover, 
a  member  of  the  illegal  association  cannot  maintain  an  action 
against  his  associates  or  trustees  to  require  an  accounting  or  to 
hold  the  trustees  liable  for  breaches  of  trust.-  On  the  other  hand, 
the  illegal  character  of  the  association  is  no  answer  to  a  criminal 
prosecution  for  embezzling  its  funds.^ 

§  298- §  302.     l7icorporation  ostensibly  for  Lawful  but  really 
Illegal  Purposes. 

§  298.  Likelihood  that  Illegal  Purpose  will  be  veiled.  — -  Those 
who  engage  in  illegal  transactions  are  unlikely  frankly  to 
state  their  real  object;  they  are  much  more  apt  to  attempt  to 
conceal  their  actual  intentions  under  the  mist  of  innocent  general 
terms.  For  example,  it  will  be  remembered  that  the  traditional 
highwayman's  partnership  bill  to  which  reference  was  made  in 
a  former  paragraph  alleged  that  the  object  of  the  firm  was  to 
"deal  with  gentlemen  for  watches,  rings,  swords,  canes,  hats, 
cloaks,  horses,  bridles,  saddles,  and  other  things."  Accordingly, 
when  the  promoters  of  a  corporation  design  to  use  the  company 
for  illegal  ends,  they  do  not  avow  their  intent  to  break  the  law 
but  on  the  contrary  state  in  the  incorporation  paper  as  their 
ostensible  object  some  perfectly  legitimate  business,  secretly 
intending  so  to  conduct  that  business  as  to  compass  unlawful 
ends. 

purchase) ;    Bousfield  v.  Wilson,  16  of  a  loan  society  which,  consisting 

M.  &  W.  185  (semble,  that  vendor  of  of  more  than  twenty  members,  was 

shares    in    a    company    which    was  held  to  be  prohibited  by  the  Com- 

illegal  because  of  the  prohibition  in  panics  Act  and  therefore  illegal,   a 

the  Companies  Acts  could  maintain  loan    to    a    member    to    be    repaid 

an    action    against    his    broker    to  according  to  the  society's  rules  was 

recover  the  purchase  price).  illegal,  so  that  no  recovery  could  be 

'  Ex  parte  Day,  1  Ch.  D.  699,  702  had  upon  a  promissory  note,  payable 

("prima   facie,  the  (illegal)  society  to  one  of  the  society's  officers,  given 

is  not  entitled  to  share  in  the  dis-  to  secure  the  loan ;   but  at  the  same 

tribution  of  the  debtor's  assets");  time,  Brett,  M.  R.,  said:   "It  was 

Jennings  v.  Hammond,  9  Q.  B.  D.  contended   that   an   'illegal  person' 

225    (substantially  the   same   point  made  the  contract  illegal:    that  is 

as  Shaw  v.   Benson,  stated  infra) ;  an  argument  with  which  I  cannot 

Re  Thomas,   14  Q.  B.  D.  379,  383  agree."     11  Q.  B.  D.  571. 

(semble).  ^  Sykes  v.  Beadon,  11  Ch.  D.  170. 

In  Shaw  v.  Benson,  11  Q.  B.  D.  ^  Regina   v.    Tankard    (1894),    1 

563,   it   was    held    that   in   a    case  Q.  B.  548. 

260 


§  295-§  30G] 


SECRET    ILLEGAL  PURPOSE 


§   299 


§  299.  Company  incorporated  De  Facto.  —  In  any  case  of 
this  sort,  since  the  nn'moranchiin  of  association  or  incorpora- 
tion paper  is  fair  on  its  face,  the  courts,  in  order  to  protect  inno- 
cent persons  who  may  become  shareholders  in  the  company,  or 
who  may  have  dealini^s  with  it,  are  obliged  to  hold  that  the  com- 
pany comes  into  existence  as  a  corporation,  at  least  as  regards 
all  the  world  except  the  sovereign,'  although  any  public  registrar 
or  other  officer  who  is  recjuired  to  approve  the  y)aj)er  may  with- 
hold approval  on  account  of  the  secret  illegal  purpose.-  For 
example,  when  an  insolvent  corporation  comes  to  be  wound-up 
a  shareholder  cannot  escape  liability  on  the  ground  that  the  real 
object  of  the  company  was  gambling.''  So,  the  corporation  itself 
in  spite  of  its  secret  illegal  object  may  compel  shareholders  to 
pay  their  unpaid  subscriptions.^  On  the  same  principle,  it  is  no 
defence  to  a  suit  to  enforce  a  deed  of  trust  securing  an  issue  of 
bonds  that  the  company  was  incorporated  for  the  illegal  purpose 
of  creating  a  monopoly,^  although  to  be  sure  a  court  of  equity 


*  U.  S.  Vinegar  Co.  v.  Schlegel, 
143  N.  Y.  537 ;  38  N.  E.  729 ;  U.  S. 
Vinegar  Co.  v.  Foehrenbach,  148 
N.  Y.  58 ;  42  N.  E.  403 ;  Clancey  v. 
Onondaga  Fine  Salt  Mfg.  Co.,  62 
Barb.  (N.  Y.)  395. 

Cf.  Patterson  v.  Arnold,  45  Pa. 
St.  410  (overruled  in  Cochran  v. 
Arnold,  58  Pa.  St.  399) ;  Importing 
&  Exporting  Co.  v.  Locke,  50  Ala.  332 
(company  formed  in  Georgia  during 
the  Civil  War  for  trade  with  foreign 
countries,  the  real  intention  being  to 
run  tlie  blockade  established  by  the 
fetleral  government) ;  Attorney-Gen- 
eral v.  .4m.  Tobacco  Co.,  55  N.  J. 
Eq.  352,  376;  36  .\tl.  971,  affirmed 
on  opinion  below,  50  N.J.  Eq.  847; 
42  Atl.  1117;  Finck  v.  Schneider 
Granite  Co.,  187  Mo.  244,  207-268 
(headiiote  misleading) ;  86  S.  W. 
213;  106  Am.  St.  Rep.  452;  State 
V.  New  Orleans  Water  Supply  Co. 
(La.),  36  So.  117,  122;  111  La.  1049 
(where  the  court  said  "  The  (juestion 
whether  a  corporation  has  been 
orgjinized  for  an  illegal  purpose 
must  be  determined  by  the  pro- 
visions of  its  charter   and  not  by 


the  declarations  of  its  officers  or 
agents");  Ilaacke  v.  Knights  of 
Liberty,  etc..  Club,  76  Md.   429. 

But  the  corporate  fiction  does 
not  protect  the  members  from 
individual  liability  for  moneys  de- 
posited in  pursuance  of  the  illegal 
scheme.  McGrew  v.  City  Produce 
Exchange,  85  Tenn.  572  ;  4  S.  W.  38  ; 
4  Am.  St.  Rep.  771 ;  Brundred  v. 
Rice,  49  Oh.  St.  640;  32  N.  E.  169; 
34  Am.  St.  Rep.  589  (promoters  of 
company  formed  to  receive  illegal 
rebates  from  a  railway  company 
liable  individually  to  other  shippers 
for  amount  of  rebates). 

^  First  Church  of  Christ,  Scientist, 
205  Pa.  St.  543;  55  Atl.  536;  97 
Am.  St.  Rep.  753 ;  63  L.  R.  A.  411. 

*  Augir  v.  Ryan,  63  Minn.  373; 
65  N.  W.  640.- 

*  U.  S.  Vinegar  Co.  v.  Foehren- 
bach, 148  X.  Y.  58;  42  N.  E.  403; 
Detroit  Driving  Club  v.  Fitzgerald, 
109  Mich.  670;  67  N.  W.  899. 

*  Dickerman  v.  Northern  Trust 
Co.,  176  U.  S.  181,  195-196;  20 
Sup.  Ct.  311. 


261 


§  300  INCORPORATION    FOR    ILLEGAL    PURPOSES      [ChAP.  V 

will  not  enjoin  a  violation  of  one  of  the  terms  of  a  contract 
other  parts  of  which  provide  for  the  organization  of  the  corn- 
pan  v  for  a  secret  illegal  purpose.*  INIoreover,  the  company  is 
not  prevented  from  protecting  its  property  by  bill  for  an  injunc- 
tion by  the  illegality  of  the  purpose  for  which  it  may  have  been 
incorporated."  To  be  sure,  in  one  case  a  federal  court  applying 
the  maxim  in  pari  delicto  potior  est  conditio  defendentis,  refused 
to  interfere  in  the  internal  afl'airs  of  a  corporation  which  had  been 
formed  ostensibly  for  a  lawful  but  secretly  for  an  illegal  purpose.^ 
jMoreover,  as  regards  parties  who  were  privy  to  the  illegal  intent, 
the  case  may  be  treated  as  if  the  illegality  appeared  on  the  face 
of  the  incorporation  proceedings/  so  that  such  a  party  cannot 
recover  for  money  lent  to  the  company  in  furtherance  of  the 
unlawful  purpose.^  But  the  attempt  to  incorporate  is  not  a  mere 
nullity. 

§  300.  Ouster  from  corporate  Privileges  at  Suit  of  Sovereign. 
—  Nevertheless,  the  promoters  have  undoubtedly  wrought  a 
fraud  on  the  incorporation  act.  The  statute  extended  its  benefits 
to  those  who  might  desire  to  incorporate  for  any  lawful  purpose, 
but  it  has  been  availed  of  by  persons  whose  ostensible  object 
was  law^ful  enough  but  whose  real  purpose  is  illegal.  Hence,  in 
such  a  case  the  law  ought  to  furnish  some  means  of  vindicating 
its  own  dignity  and  ousting  from  the  enjoyment  of  its  privileges 
those  who  have  abused  its  provisions. 

In  England,  however,  serious  doubt  has  been  entertained 
whether  any  proceeding  in  the  nature  of  quo  warranto  or  scire 
facias  to  revoke  a  charter  would  lie  in  such  a  case."  In  most  of 
the  United  States,  if  not  in  all  of  them,  on  the  other  hand,  some 
proceeding  to  oust  the  wrongdoers  from  the  enjoyment  of  cor- 
porate privileges  could  beyond  doubt  be  maintained  by  the 
attorney-general.^    In  the  enforcement  of  this  quasi-penal  remedy 

»  McConnell    v.  Camors-McCon-  (1897),  A.  C.  22,  30;    Reuss  v.  Bos, 

neU  Co.,  152  Fed.  321.  L.  R.  5  II.  L.  176,  193. 

*  American  Steel,  etc.  Co.  v.  Wire  '  Dicker  man  v.  Northern  Trust 
Drawers',  etc.  Unions,  90  Fed.  608,  Co.,  176  U.  S.  181,  190;  20  Sup.  Ct. 
614  (injunction  against  strikers).  311    (semble) ;   State  ex  inf.  Hadley 

'  Le  Warnev.  Mej/er,  38  Fed.  191.    v.  Meramec  Rod,  etc.  Club  (Mo.),  98 

♦  See  supra,  §  296,  §  297.  S.  W.  815;    State  ex  inf.  Hadley  v. 
»  Euston    V.     Edgar    (Mo.),     105    Delmar  Jockey  Club  (Mo.),  92  S.  W. 

S.  W.  773.  185;    Attorney-General   v.   Am.    To- 

•  See  Salomon  v.  Salomon  &  Co.    bacco  Co.,  55  N.  J.  Eq.  352,  376;    36 

262 


§  295-§  306]  SECRET    ILLEGAL    PURPOSE 


301 


the  courts  would  take  care  that  the  rights  of  innocent  parties 
should  not  be  prejudiced.  Moreover,  jjroof  would  probably  be 
required  not  merely  of  the  illegal  intent  but  also  of  the  execution 
of  that  intent  by  illegal  acts.  In  Ireland,  it  has  been  held  that 
where  a  company  is  incorporated  for  the  purpose  of  deceiving 
the  public,  the  attorney-general  is  entitled  to  an  injunction  to 
restrain  the  perpetration  of  the  fraud.' 

§  301.  No  chartered  Right  to  execute  Illegal  Purpose.  —  At 
all  events,  both  in  England  and  America,  every  lawyer  would 
agree  that  the  formation  of  a  corporation  ostensibly  for  an  inno- 
cent but  really  for  an  illegal  or  criminal  purpose  confers  no 
chartered  right  to  commit  the  violation  of  law,-'  and  that  any 
remedies  whether  for  the  prevention  of  the  wTong  if  not  yet  con- 
summated or  for  the  undoing  of  it  if  already  perpetrated  may 
be  availed  of  precisely  as  if  the  incorporation  had  never  been 
effected.^  An  illustration  may  be  found  in  the  numerous  cases  in 
which  corporations  have  been  enjoined  from  using  their  corporate 
names  where  such  use  would  involve  an  infringement  of  the 
trade  name  of  some  prior  organization.*  The  registration  of  a 
company  under  a  general  incorporation  law  gives  it  no  license 
to  commit  crimes  or  torts. 


Atl.  971  (semble),  affirmed  on  opinion 
below  in  ."SG  N.  J.  Eq.  847;  42  Atl. 
1117  (holding  that  the  attorney-gen- 
eral cannot  proceed  in  equity) ; 
State  V.  Nebraska  Distilling  Co.,  29 
Nebr.  700  (illegal  restraint  of  trade) ; 
People  V.  Milk  Exchange,  77  Hun 
(N.  Y.),  436;  29  N.  Y.  Supp.  259 
(illegal  restraint  of  trade) ;  State 
ex  rel.  Voyles  v.  French  Lick  Springs 
Hotel  Co.  (Ind.),  82  N.  E.  801 
(holding  that  where  the  corporation 


188 ;  47  Am.  St.  Rep.  200 ;  Southern 
Electric  Securities  Co.  v.  State 
(Miss.),  44  So.  785  (stated  infra, 
p.  265,  n.  1). 

Cf.  People  ex  rel.  Peabody  v. 
Chicago  Gas  Trust  Co.,  130  111.  268; 
22  N.  E.  798;  17  Am.  St.  Rep.  319; 
8  L.  R.  A.  497. 

'  Cf.  Richardson  v.  Buhl,  77 
Mich.  632  ;  6  L.  R.  A.  457  ;  43  N.  W. 
1102  (where  a  contract  relating  to 
the  furtherance  of  the  illegal  enter- 


has  actually  engaged  in  illegal  trans-    prise  was  pronounced  void) ;    Finck 


actions  it  is  no  defence  that  it  has 
also  carried  out  its  proper,  innocent 
purposes). 

Cf.  Attorney-General  ex  rel.  Wol- 
verine Fish  Co.  V.  A.  Booth  &  Co., 
143  Mich.  89;  106  N.  W.  868.  See 
also  infra,  p.  265. 

'  Attorney-General  v.  Appleton 
(1907),  1  Ir.  252;  Attorney-General 
V.  Myddletons  (1907),  1  lr.471. 

*  Distilling,  etc.  Co.  v.  People  ex 
rel.  Malony,  156  111.  448;  41  N.  E. 

263 


V.  Schneider  Granite  Co.,  187  Mo. 
244;  86S.  W.  213;  106  Am.  St.  Rep. 
452  (same  point  as  preceding  case) ; 
Jones  V.  Missouri-Edison  Electric 
Co.,  144  Fed.  765;  75  C.  C.  A.  631 
(company  formed  for  fraudulent 
purpose) ;  State  v.  Collins  (R.  I.), 
67  Atl.  796  (officer  indictable  for 
conducting  criminal  business  as 
agent  of  the  corporation). 
*  See  infra,  §  454. 


§  302  INCORPORATION    FOR    ILLEGAL    PURPOSES      [ClIAP.  V 

§  302.  Northern  Securifies  Co.  v.  Uiiifed  Sfates,  193  U.  S. 
197.  —  Failure  to  recognize  these  considerations  was  the  under- 
lying fallacy  in  one  of  the  argun:ients  advanced  on  behalf  of  the 
defendant  in  a  famous  recent  case  — '■  the  Northern  Securities 
Case.'  It  will  be  remembered  that  the  Northern  Securities  Com- 
pany had  been  incorporated  under  the  general  laws  of  New 
Jersey  for  the  purpose,  as  the  "certificate  of  incorporation,"  or 
incorporation  paper,  somewhat  more  wordily  stated,  of  buying, 
holding,  and  selling  corporation  stocks  and  bonds  —  a  quite 
legitimate  business.  The  real  purpose  of  the  incorporation,  how- 
ever, was  the  stifling  of  competition  between  two  interstate  rail- 
ways through  acquiring  and  holding  a  majority,  or  all,  of  the 
shares  of  each  of  them.  This  object,  the  Supreme  Court  held, 
was  prohibited  by  the  Sherman  Anti-Trust  Act.  The  soundness 
of  this  conclusion,  while  doubtless  debatable,  in  no  way  turns 
on  questions  of  corporation  law,  and  therefore  does  not  concern 
us  here.  But  assuming  this  construction  of  the  act  to  be  correct, 
the  counsel  for  the  Northern  Securities  Company  argued  that 
nevertheless  that  company,  being  validly  incorporated  under 
the  laws  of  New  Jersey,  had,  by  virtue  of  the  powers  conferred 
upon  it  by  its  incorporation  paper,  the  same  right  as  a  natural 
person  to  purchase  and  hold  shares  in  competing  railway  com- 
panies. The  obvious  answer  to  this  contention  was  that  if,  as 
was  conceded,  the  object  of  the  incorporation  was  the  prevention 
of  competition  between  two  competing  interstate  railways  by 
uniting  the  ownership  of  a  controlling  interest  in  each,  and  if 
this  object  was  a  violation  of  an  act  of  Congress,  then  the  com- 
pany was  not  really  formed  for  a  "lawful  purpose"  within  the 
meaning  of  the  New  Jersey  incorporation  act,  and  its  organiza- 
tion was  in  effect  a  fraud  on  the  laws  of  New  Jersey.  The 
formation  of  a  company  for  the  purpose  of  violating  an  act  of 
Congress  was  as  much  a  fraud  on  the  New  Jersey  incorporation 
law  as  if  the  company's  object  had  been  the  infringement  of  a 
New  Jersey  statute.  Hence,  the  rights  and  dignity  of  the  State 
of  New  Jersey,  so  far  from  being  concerned  in  upholding  a 
power  irl  the  Northern  Securities  Company  to  violate  with  im- 

'  Northern  Securities  Co.  w  U.S.,  Eq.  352;  36  Atl.  971,  affirmed  on 
193  U.  S.  197;  24  Sup.  Ct.  436.  opinion  below,  56  N.   J.   Eq.   847; 

With  this  case,  compare  i4.<tor?z€2/-    42  Atl.  1117. 
General  v.  Am.  Tobacco  Co.,  55  N.  J. 

264 


§  295-§  306]         WHAT    PURPOSES    ARE    ILLEGAL  §  303 

punity  an  act  of  Congress,  demanded  that,  if  the  federal  statute 
forbade  what  the  cotn[KUiy  had  done  and  was  formed  for  the 
purpose  of  doing,  then  vigorous  steps  should  be  taken  to  pre- 
vent the  continuance  of  the  illegal  action  on  its  part  and  to  vin- 
dicate the  outraged  corjjoration  law  of  New  Jersey,  which 
provided  for  the  incorporation  of  companies  for  lawful  purposes, 
and  which  had  been  abused  by  the  organization  of  a  company 
for  the  purpose  of  violating  a  law  of  the  Unite<l  States.  For  this 
reason,  the  federal  court  was  justified  in  enjoining  the  defendant 
corporation,  the  Northern  Securities  Company,  from  exercising 
rights  of  ownership  in  respect  of  the  shares  which  it  had  acfjuired 
in  defiance  of  the  Anti-Trust  Law.'  If  this  decision  rested  upon 
a  sound  interpretation  of  the  act  of  Congress  in  question,  it 
certainly  interfered  in  no  way  with  the  rights  of  New  Jersey  or 
with  those  conferred  by  that  state  on  its  creature,  the  Northern 
Securities  Company.  Indeed,  a  New  Jersey  court,  accepting 
as  sound  the  construction  placed  by  the  Supreme  Court  on  the 
Anti-Trust  Law,  might  well  have  gone  a  step  further  by  dissolv- 
ing the  corporation  and  decreeing  a  forfeiture  of  its  corporate 
privileges  because  of  its  abuse  of  the  New  Jersey  law  by 
organizing  a  corporation  under  legal  forms  for  the  secret  purpose 
of  violating  a  federal  statute.^ 


§  303- §  306.     What  Purposes  are  Illegal. 

§  303.  Not  usually  a  Question  of  Corporation  Law.  —  Of 
course,  the  question  whether  the  purpose  for  which  a  contpany 
is  organized  is  legal  or  is  illegal  is  a  question  of  general  law,  not 
of  corporation  law.  For  example,  in  the  Northern  Securities 
Case,  the  question  whether  the  Anti-Trust  Law,  fairly  construed, 
really  did  prohibit  a  combination  among  the  owners  of  stock 
in  two  competing  interstate  railways  in  order  to  consolidate  their 
holdings  under  a  common  management  is  purely  a  question  in 
the  law  of  monopolies  and  restraints  on  commerce.     The  only 

'  Southern  Electric  Securities  Co.  competing  Mississippi   corporations, 

V.  State   (Miss.),  44   So.    785  (where  from  voting  in  respect  of  the  shares 

the  Mississippi  court   at  the   suit  of  so  acquired  in  defiance  of  a  Missis- 

the  state  of  Mississippi  enjoined  a  sippi  Anti-Trust  law). 
New  Jersey  corporation,  which  had  '  See  supra,  §  300. 
been  formed  to  acquire  the  stock  of 

265 


§  304  IXCORPORATION    FOR    ILLEGAL    PURPOSES      [ChAP.  V 

point  in  the  law  of  corporations  which  the  case  decides  has  been 
discussed  above. 

§  304.  Violation  of  Provisions  of  Incorporation  Law.  —  To  be 
sure,  the  illegahty  alleged  to  lurk  in  the  object  of  a  company's 
organization  may  consist  in  the  intention  to  violate  or  evade 
some  provision  of  the  incorporation  law  itself.  For  example,  in 
the  well-known  case  of  Salomon  v.  Salomon  &  Co.,^  where  a 
company  was  organized  to  take  over  a  mercantile  business  pre- 
\iously  carried  on  by  a  certain  Aaron  Salomon,  the  contention 
was  advanced  that  inasmuch  as  Salomon  owned  all  the  shares 
in  the  company  except  six  (which  were  taken  by  other  members 
of  his  family)  the  company  was  a  mere  de\'ice  to  enable  an  indi- 
vidual to  carry  on  business  with  limited  liability,  and  that  such 
a  device  was  a  violation  of  the  spirit  of  the  Companies  Act  and 
was  unlawful,  and  that  therefore  the  company  never  became 
validly  incorporated.  This  argument  was,  however,  overruled 
by  the  House  of  Lords  upon  the  ground  that  the  law  did  not 
prohibit  the  incorporation  of  a  company  for  the  purpose  of  carry- 
ing on  business  with  limited  liability,  provided  only  the  formali- 
ties prescribed  in  the  incorporation  act  be  observed.^  Any  other 
conclusion  would  have  been  truly  startling.  For  both  in  England 
and  America,  a  very  large  proportion  of  all  the  companies  incor- 
porated are  organized  for  the  mere  purpose  of  avoiding  the  un- 
limited liability  which  attaches  to  an  individual  or  partnership 
carrying  on  business.  If  all  these  companies  were  to  be  held 
illegal,  and  the  attempted  incorporation  invalid,  or  capable  of 
invalidation,  the  consequences  would  have  been  appalling. 

Incorporation  laws  often  require  that  the  company's  principal 
office  or  place  of  business  be  stated  in  the  incorporation  paper. 
If  the  instrument  be  fair  on  its  face  but  if  the  company  be  or- 
ganized without  a  bona  fide  intention  of  carrying  on  business 
at  the  designated  place,  the  validity  of  the  incorporation  may 
certainly  be  called  in  question  by  the  state  on  quo  warranto  pro- 
ceedings, and  under  exceptional  circumstances  may  be  attacked 
collaterally.^ 

'  Salomonv.  Salomon  &  Co.{l897),  invoke     the     jurisdiction     of     the 

A.  C.  22  (headnote  inadequate).  federal    courts    on    the    ground    of 

*  See  also  Irvine  Co.  v.  Bond,  74  diversity  of  citizenship). 
Fed.    849    (where    the    motives    of         ^  Montgomery     v.     Forbes,      148 

incorporation  were  to  secure  limited  Mass.  249 ;   19  N.  E.  342. 
liability  and  to  obtain  the  right  to         But  cf.  supra,  §  283,  §  287. 

266 


§  295-§  306]         WHAT    PURPOSES    ARE    ILLEGAL 


30G 


§  305.  Purposes  Unlawful  but  not  Criminal.  —  The  fact  that 
the  purpose  of  incorporation  is  not  a  crime  is  not  conclusive 
proof  that  the  purpose  is  lawful.  For  example,  the  use  of  a 
corporate  name  which  involves  a  false  representation  is  not  lawful 
although  the  use  of  that  name  may  not  be  a  crime.  Thus,  in 
a  recent  Irish  case,  where  a  corporation  was  proposed  to  be 
formed  under  the  name  of  "S.  G.  Howell,  Dentist,  Limited," 
the  court  held  that  the  proposed  name  would  falsely  suggest  that 
either  S.  G.  Howell  or  the  corporation  was  licensed  to  practise 
dentistry  and  that  therefore  the  object  of  the  company  was 
not  lawful,'  notwithstanding  a  prior  decision  in  which  the  use 
by  a  corporation  of  a  name  including  the  words  "Surgeon  Den- 
tists "  had  been  held  not  to  be  a  violation  of  the  act  for  the  licens- 
ing of  dentists.- 

§  306.  Purposes  contrary  to  Public  Policy.  —  Moreover,  a 
corporation  cannot  be  formed  for  a  purpose  which,  although 
perhaps  not  strictly  illegal,  is  deemed  to  be  contrary  to  public 
policy.^  For  example,  an  organization  for  the  purpose  of  paying 
benefits  or  premiums  to  members  upon  their  marriage  has  been 
thought  to  be  against  public  policy;  and  therefore  it  was  held 
that  a  corporation  could  not  be  formed  for  that  purpose.* 


'  Rex  V.  Registrar  Joint  Stock 
Companies  (19G4),  2  Ir.  634. 

Cf.  Attorney-General  v.  Appleton 
(1907),  1  Ir.  252;  Attorney-General 
V.  Myddletons  (1907),  1  Ir.  471. 

'  0' Duffy  V.  Jaffe  (1904),  2  Ir.  27. 

'  Detroit  Schuetzen  Bund  v.  De- 
troit Agitations  Verein,  44  Mich.  313 
(headnote  inadequate) ;  6  N.  W.  675  ; 
38  Am.  Rep.  270. 


Cf.  Benevolent  Society,  10  Phila. 
(Pa.)  19;  First  Church  of  Christ, 
Scientist,  205  Pa.  St.  543;  55  Atl. 
536;  97  Am.  St.  Rep.  753;  63 
L.  R.  A.  411  (incorporation  for  the 
purpose  of  healing  disease  by  prayer 
alone). 

*  Helping-Hand  Marriage  Ass'n, 
15  Phila.  644. 


267 


CHAPTER  VI 

PROMOTERS 

Section 

Who  are  promoters      307-310 

In  general  —  not  a  definite  legal  status 307 

Who  are  subject  to  disabihty  as  promoters 308 

A  question  for  jury       309 

Promoters  after  incorporation 310 

Whether  promoters  are  partners 311-315 

In  general      311 

Under  the  Companies  Act  of  1844 312-313 

OutUne  of  practice 312 

Members  of  provisional  association,  provisional  committees, 

etc.,  not  partners 313 

Provisional  committees,  etc.,  under  other  statutes 314 

Formation  of  partnership  between  promoters 315 

Promotion  by  means  of  a  prehminary  corporation 316 

ResponsibiUty  of  corporation  for  acts  of  promoters 317-349 

Responsibihty  for  acts  done  after  incorporation 317-319 

What  is  date  of  incorporation  for  this  purpose 318 

After  incorporation  de  facto  but  not  de  jure 319 

Responsibility  for  acts  done  prior  to  incorporation    ....     320-349 

In  general      320 

ResponsibiUty  ex  delicto 321 

Responsibihty  ex  contractu 322-346 

Subscriptions  to  shares 322 

Contracts  other  than  subscriptions  to  shares  .    .    .     323-325 

Rule  at  law 323 

Rule  in  equity •    •     324 

Contracts  by  existing  corporation  in  anticipation 

of  extension  of  powers  distinguished  .  .  .  325 
"Ratification"  of  pre-incorporation  contract  ....  326 
f Adoption"    of    contract  —  new    contract    on    same 

terms 327-337 

In  general      327 

English  rule 328 

American  rule  —  theory  of  continuing  offer    .    .    .     329 
What  is  sufficient  evidence  of  adoption  or  making 

of  new  contract 330-333 

In  genera\      330 

Effect  of  mistake  of  law  or  fact 331 

Imphed  adoption  or  new  contract 332 

Retention  of  V)onefits  as  evidence  of  adoption      333 
Miscellaneous  illu.strations  of  principle  that  "adop- 
tion "  is  really  a  new  contract 334 

Adoption  of  tdtra  vires  contract 335 

Corporation  adopting  lease   liable  as  an  original 

lessee      336 

268 


§  307- §  415]  SYNOPSIS 

Kesponsibility  of  corporation  for  acts  of  promoters  (continued)  Section 

Effect   of   fraud  of   promoters   procuring   original 

contract 337 

Quasi-contractual  liability  for  benefits  received  under 

contract  which  has  not  been  adopted   .    .    .      338-340 

On  principle 338 

The  Kngli.sh  cases 339 

The  American  cases 340 

Effect  of  provision  in  the  incorporation  paper  directing 

payment  of  preliminary  expenses 341 

Voluntarj'  payment 342 

Effect  of  statute  directing  payment      343 

Rule  in  cases  where  promoters  wlien  making  contract 

did  not  intend  a  future  corporation  to  be  bound  344-346 

In  general 344 

Assumption  of  contract  by  company 34.5 

Corporation  formed  to  take  over  business  of  a  firm  346 
Appointment  of  agents  for  the  future  corporation  ....  347 
Whether  knowledge  of  promoters  imputable  to  company  348 

Admissions  of  promoters 349 

Right  of  corporation  to  the  benefit  of  acts  of  promoters  ....      350-356 

Suits  on  contracts  made  prior  to  incorporation 350 

Conveyances  made  for  company's  benefit   prior   to  incorpora- 
tion           351-354 

In  general      351 

Trusts  for  future  corporation 352 

Cases  distinguished 353 

Property  acquired  by  promoters  in  course  of  promotion,  etc.     354 
Assignments  from  promoters  to  company  —  taking  over  property 

of  a  firm 355 

Survey  for  railway  made  prior  to  incorporation 356 

Liabilities  of  promoters  to  persons  not  connected  with  the  com- 
pany        357-362 

Contractual  liability 357-361 

After  incorporation      357 

Before  incorporation 358-361 

In  general      358 

What  is  sufficient  evidence  of  authority  of  co-promoter 

as  agent 359 

Liability  distinguished  from  liability  as  members  of  a 

defectively  incorporated  company 360 

How  promoter's  liability  is  discharged  —  effect  of  com- 
pany's adoption  of  contract 361 

Liability  for  torts 362 

Suits  by  promoters  on  contracts  made  on  behalf  of  projected  corpora- 
tion      363 

Liabilities  of  promoters  to  the  company 364-403 

No  duty  of  active  care  for  interests  of  company 364 

Fiduciary  relation  to  company  —  three  consequences 365 

Comparison  with  directors      366 

Liability  for  actual  fraud  and  deceit 367 

Rescission   by   corporation   of    contracts    with    promoters     368-374 
In  general      368 

269 


PROMOTERS 

Liabilities  of  promoters  to  the  company  (continued)  Section 

What  disclosure  is  sufficient,  and  to  whom  it  must  be  made 

to  render  contract  binding      369 

Return  of  consideration  as  condition  of  rescission      ....  370 

"Waiver  of  right  to  rescind 371 

Laches  of  company      372 

Effect  of  dissolution  of  corporation  on  right  of  rescission     .  373 

Rights  of  individual  shareholders      374 

Liability    of    promoters   to    account   to    corporation   for   their 

profits 375-399 

In  general      375 

Classification  of  cases  in  which  unlawful  profits  are  made.  376 
Profits  made  on  transactions  between  promoters  and  persons 

having  dealings  with  company 377-382 

Outright  bribes 377 

Commissions  and  other  veiled  bribes 378 

Mutual  rights  of  bribe-giver  and  the  company   ....  379 

Mutual  rights  of  bribe-giver  and  the  promoter  ....  380 
Company's  right  to  recover  bribe  independent  of  right 

to  avoid  its  contract  with  bribe-giver 381 

Promoter's  right    to    set-off   or    recoup    expenses  .    . 

incurred  on  company's  behalf 382 

Profits    made    on    a    transaction    between    promoter    and 

company 383-390 

In  general      383 

Purchase  of  property  by  promoter  and  resale  to  com- 
pany —  measure  of  promoter's  profit 384 

Continuation  —  Cape  Breton  Company's  Case      .    .    .  385 

Continuation  —  Gluckstein  v.  Barnes,  1900  (A.  C),  240  386 
Dicta  that  promoter  in  making  resale  deals  at  arm's 

length 387 

Effect  of  false  representation  that  property  is  resold  at 

same  price  paid  by  promoter 388 

Sale  to  company  by  promoter  holding  option  of  purchase  389 

Albion  Steel  Co.  v.  Martin,  1  Ch.  D.  580 390 

Profits  made  with  money  obtained  from  illegal  .sale  of  stock  391 
Company's  claim  founded  on  breach  of  trust  —  bankruptcy 

of  promoter  —  limitations  and  laches 392 

Whether  liability  is  several  or  joint      393 

Burden  of  proof  —  fact  of  profit  and  non-disclosure      .    .    .  394 

What  is  sufficient  disclosure  of  profit  by  promoter      .     395-398 

Question  the  same  whether  company  .seeks  rescission  of 

transaction  or  recovery  of  profit 395 

Disclosure  must  be  actual,  full,  and  frank 396 

To  whom  the  di.sclosure  should  be  made  —  to  directors, 

shareholders,  the  public,  etc 397 

Where  gift  of  profit  to  promoter  is  ultra  vires  of  corpora- 
tion       398 

Liability  of  promoter  to  account  for  property  acquired  on 

behalf  of  company 399 

Liability  of  promoters  in  damages  for  breach  of  fiduciary  duty  to 

company 400-402 

In  general      400 

270 


§  307-§  415]  WHO    ARE    PROMOTERS  §  307 

Liabilities  of  promoters  to  the  company  (continued)  Section 

Examples 401 

Liability  assimilated  to  liability  for  torts  —  non-joinder  of 

defendants 402 

Penal  liability  of  {promoters  to  company 403 

Liabilities  of  promoters  to  one  anotlier 404-4 1 1 

Classification 404 

Accountability  for  profits 405-408 

In  general  —  fiduciary  relation  of  promoters  to  one  another     405 

Lioujren  v.  Pennell,  10  W.  N.  C.  (Pa.)  297 400 

Deducting  from  profit  expenses  incurred  for  benefit  of  all 

promoters 407 

Termination  of  fiduciary  relation  —  abandonment  of  enter- 
prise     408 

Contribution  to  losses  and  expenses 409 

Liability  on  actual  contracts  between  promoters 410-411 

LiabiUty  on  contract  to  form  corporation 410 

Effect   of    illegal   features    of   projected   corporation   upon 

legality  of  contracts  between  promoters 411 

Liability  of  promoters  to  individual  shareholders  and  subscribers  to 

shares 412-415 

Subscribers  to  shares  as  promoters 412 

Whether   promoters   occupy   fiduciary    relation    towards    sub- 
scribers —  liability  for  non-disclosure       413 

Assumption  by  promoters  of  fiduciary  relation  to  shareholders     414 
Liability  for  return  of  deposits  upon  abandonment  of  enterprise     415 

§  307-§  310.     Who  are  Promoters. 

§  307.  In  general  —  Not  a  definite  legal  Term.  —  The  word 
"promoter"  is  not  a  technical  legal  term,  or  "word  of  art," 
but  belongs  rather  to  the  vocabulary  of  commercial  affairs.^ 
Consequently,  it  is  capable  of  no  precise  legal  definition  appli- 
cable to  all  cases.  In  a  general  way,  it  designates  any  person 
who  knowingly  participates  in  organizing  and  starting  in  busi- 
ness an  incorporated  company.^  The  state  of  being  a  promoter 
is  not  a  definite  legal  status  —  such  as  that  of  a  shareholder  or  a 
director  —  to  which  the  law  annexes  certain  rights  and  burdens. 
"It  is  necessary  to  ascertain  in  each  case  what  the  so-called 

'  Whaley  Bridge  Co.  v.  Green,  5  langer   v.   Xew  Sotnbrero  Phosphate 

Q.  B.  D.   109,   111,  per  Bowen,  J.;  Co.,  3  App.  Cas.  1218,  1268;   Cox  v. 

Twycross  v.  Grant,  2  C.  P.  D.  469,  National  Coal,  etc.  Co.  (W.  Va.),  56 

503  (per  Bramwell,  L.  J.) ;   Pitts  v.  S.  E.  494. 

Steele  Mercantile  Co.,  lb  Mo.  App.  Cf.    South    Missouri,    etc.    Co.    v. 

221,  226.  Crommer  (Mo.),  101  S.  W.  22  (where 

*  Emma    Silver    Mining    Co.    v.  the  persons  in  question  were  held  not 

Lewis,  4  C.  P.  D.  396,  407  ;   Twycross  to  be  promoters). 
V.  Grant,  2  C.  P.  D.  469,  541;    Er- 

271 


§  308  PROMOTERS  [Chap.  VI 

promoter  really  did  before  his  legal  liabilities  can  be  accurately 
ascertained."  * 

§  308.  Who  are  subject  to  Disability  as  Promoters.  —  The 
nearest  approach  to  any  definite  legal  consequences  attaching 
to  promoters  qua  promoters  is  found  in  that  rule  of  law  which 
prohibits  any  one  engaged  in  the  promotion  of  an  incorporated 
company  from  deriving  any  secret  advantage  from  his  position. 
In  order  that  a  person  may  be  subject  to  this  disability,  he  need 
only  participate  intentionally  in  the  organization  or  "flotation" 
of  the  company.-  It  would  seem  clear  that  a  mere  intention  of 
getting  up  a  company  without  any  overt  act  will  not  make  a  man 
a  promoter  or  create  any  fiduciary  relationship.^  But  in  order 
to  be  a  promoter,  it  is  not  necessary  that  he  should  act  as  a  prin- 
cipal; a  mere  agent  or  servant  of  one  financially  interested  in 
the  promotion  of  the  company  is  deemed  himself  a  promoter 
within  this  rule.^  So,  the  officers  of  a  corporation  which  is  en- 
gaged in  promoting  another  corporation  are  themselves  pro- 
moters of  the  latter  company.^  Of  course,  a  person  who  employs 
an  agent  to  get  up  a  company  is  a  promoter ; "  qui  facit  per  alium 
facit  per  se.  It  has  been  held  that  one  who  acts  merely  as  solici- 
tor for  a  company  in  the  matters  attending  and  immediately  fol- 
lowing the  incorporation  is  not  a  promoter ;  ^  but  it  is  submitted 
that  no  sound  reason  can  be  given  for  drawing  any  distinction  in 
this  respect  between  solicitors  and  other  agents  or  attorneys.^ 
The  objection  may  be  raised  that  the  printer  who  prints  a  pros- 
pectus or  a  mere  clerk  to  whom  it  is  dictated  knowingly  partici- 
pates in  the  organization  of  the  company,  and  would  therefore 
according  to  the  rules  just  stated  be  subject  to  a  promoter's  disa- 
bilities. The  reply  is  that  such  would  indeed  be  the  case,^  and 
that  any  such  printer  or  clerk  who  makes  a  secret  profit  out  of 

'  Lydney,  etc.  Co.  v.  Bird,  33  Ch.         *  Ex-Mission  Land  Co.  v.  Flash, 

D.  85,  93  (per  Lindley,  L.  J.).  97  Cal.  610,  627 ;    32  Pac.  600. 

^  See  supra,  cases  cited  p.  271  n.  2.         '  Re    Great    Wheal    Polgroth,    49 

2  Re  Hess  Mfg.  Co.,  21  Ont.  App.  L.  T.  20. 
66,  71,  affirmed,  23  Can.  Sup.  Ct.  644.         «  Cf.  Bagnall  v.  Carlton,  6  Ch.  D. 

*  Lydney,  etc.  Co.  v.  Bird,  33  Ch.  371. 

D.  85.  *  "A  man  who  carries  about  an 
Cf.  Grand  Rapids  Safety  Deposit  advertising  board  in  one  sense  pro- 
Co.  V.  Cincinnati  Safe,  etc.  Co.,  45  motes  a  company."    Per  Bowen,  J., 
Fed.  Rep.  671  (headnote  misleading),  in  Whaley  Bridge,  etc.  Co.  v.  Green, 

*  Lagunas  Nitrate  Co.  v.  Lagunas  5  Q.  B.  D.  109,  111. 
Syndicate  (1899),  2  Ch.  392. 

272 


§  307-§  415]  WHO    ARE    PROMOTERS  §  310 

his  relation  to  the  corporation  would  be  accountable  therefor  to 
the  company.  The  great  ditt'erence  between  such  a  subordinate 
and  the  more  dignified  persons  whom  we  are  apt  to  think  of  as 
promoters  is  that  the  opportunities  of  the  former  for  making 
secret  profits  out  of  their  relationship  to  the  intended  corpora- 
tion are  much  more  limited.  On  the  other  hand,  an  independent 
contractor  by  dealing  with  promoters  does  not  ipso  facto  become 
himself  a  promoter;  to  be  a  promoter,  one  must  either  occupy 
such  a  position  as  would  make  him  an  agent  of  the  company  if 
it  were  already  incorporated,  or  he  must  in  some  other  way  as- 
sume the  burden  of  looking  after  the  interests  of  the  unborn 
corporation.^  Similarly,  a  landowner,  who  employs  a  broker  to 
sell  his  property  is  not  to  be  deemed  a  promoter  of  a  corporation 
which  the  broker  without  any  authority  or  even  suggestion  from 
the  landowner  organizes  for  the  purpose  of  purchasing  the  prop- 
erty.^ One  who  agrees  to  become  a  director  in  a  company  to  be 
organized  becomes  from  that  time  a  promoter.^  And  it  would 
seem  very  clear  that  any  one  who  knowingly  aids  promoters 
financially  and  otherwise  in  carrying  out  their  scheme  becomes 
himself  liable  to  all  the  disabilities  of  a  promoter.* 

§  309.  A  Question  for  Jury.  —  At  all  events,  the  question 
whether  or  not  a  person  is  a  promoter  is  a  question  of  fact ;  and 
may,  it  has  been  held,  in  actions  at  law  be  left  to  the  jury  with- 
out any  definition  of  the  term  to  guide  them.^ 

§  310.  Promoters  after  Incorporation.  —  The  peculiarities  of 
the  law  applicable  to  promoters  apply  not  merely  while  the 
corporation  has  no  existence  save  in  the  brains  of  its  projectors, 
but  also,  at  least  to  a  large  extent,  after  it  has  a  technical  legal 
existence,  but  while  it  is  still  in  a  state  of  undeveloped  infancy, 
and  not  yet  wholly  capable  of  managing  its  own  affairs  in  the 
regular  manner.    Accordingly,  one  may  become  a  promoter  of  a 

'  South    Missouri,    etc.     Co.     v.  ties  as  promoters ;    but  conceded  — 

Crommer  (Mo.),  101  S.  W.  22.  unnecessarily,  and,  it  is  submitted, 

*  Forest  Land  Co.  v.  Bjorkquist,  without  good  reason  —  that  they 
110  Wise.  547;   86  N.  W.  183.  occupied  no  fi(kiciaiy  relation  to  the 

^  Nant-y-Glo,    etc.    Ironworks   Co.  company. 

V.  Grave,  12  Ch.  D.  738.  '  Emma    Silver    Mining    Co.    v. 

*  Fountain  Spring  Park  Co.  v.  Lewis,  4  C.  P.  D.  396.  This  practice 
Roberts,  92  Wise.  345 ;  66  N.  W.  seems  to  have  been  followed  in 
399;  53  Am.  St.  Rep.  917.  The  Twycross  v.  Grant,  2  C.  P.  D.  469, 
court  held  the  persons  in  question  and  Whale;/  Bridge  Co.  v.  Green,  5 
to  the  same  liabilities  and  disabili-  Q.  B.  D.  109. 

VOL.  I.  —  18  273 


§311 


PROMOTERS 


[Chap.  VI 


company  after  its  incorporation/  and  those  who  have  formerly 
been  promoters  do  not  cease  to  be  such  on  the  registration  of 
the  company.-  A  person  who  is  not  a  director  may  be  a  pro- 
moter of  a  company  which  is  already  incorporated  but  the  capi- 
tal of  which  has  not  been  subscribed  and  which  has  therefore 
not  yet  commenced  operations  as  a  full-fledged  going  concern.^ 
But  where  a  company  has  been  organized  and  operated  by  a 
board  of  directors  for  as  much  as  a  year,  it  has  been  held  that  the 
relation  of  promotership  no  longer  exists,  and  that  a  former  pro- 
moter may  then  deal  with  the  company  at  arm's  length." 

§  311-§  315.     Whether  Promoters  are  Partners. 

§  311.  In  general.  —  In  spite  of  some  decisions  to  the  con- 
trary,^ most  of  which  have  been  overruled,  it  is  now  almost  uni- 
versally held  that  persons  do  not  become  partners  merely  by 
co-operating  in  the  formation  of  a  corporation.^  This  is  true 
both  of  those  whose  connection  with  the  project  consists  merely 
in  subscribing  for  shares  in  the  intended  company  ^  and  of  those 


'  Twycross  v.  Grant,  2  C.  P.  D. 
469,  503,  540,  541. 

2  Lagunas  Nitrate  Co.  v.  Lagunas 
Syndicate  (1899),  2  Ch.  392,  428; 
Pietsch  V.  MUbrath,  101  N.  W.  388, 
391;  102N.  W.  342;  123  Wise.  647; 
107  Am.  St.  Rep.  1017. 

3  Emma  Silver  Mining  Co.  v. 
Lewis,  4  C.  P.  D.  396,  407. 

*  Russell  V.  Rock  Run  Fuel  Gas 
Co.,  184  Pa.  St.  102,  107-108;  39 
Atl.  21. 

*  Holmes  v.  Higgins,  1  B.  &  C. 
74;  Lucas  v.  Beach,  1  Man.  &  Gr. 
417,  which  cases  are  explained  in 
Lindley  on  Partnership,  7th  ed.,  19. 

See  also  Chandler  v.  Bacon,  30 
Fed.  Rep.  538  (where  no  such  point 
was  necessary  to  the  decision,  since 
the  liabihty  of  promoters  for  secret 
profits,  like  that  of  directors,  is 
doubtless  joint  and  several) ;  Getty  v. 
Devlin,  54  N.  Y.  403,  413  (reported 
on  a  subsequent  appeal  in  70  N.  Y. 
504);  Emery  v.  Parrott,  107  Mass. 
95;  Dole  v.  Wooldredge,  135  Mass. 
140;  Queen  City  Furniture,  etc.  Co. 
V.  Crawford,  127  Mo.  356,  364;    30 


S.  W.  163;  Garnett  v.  Richardson, 
35  Ark.  144;  Ryland  v.  Hollinger, 
117  Fed.  216;  Mt.  Carmel  Tel.  Co. 
V.  Ml  Carmel  &  Fleming  Tel.  Co. 
(Ky.),  84  S.  W.  515. 

"  Reynell  v.  Lewis,  15  M.  &  W. 
517;  Wolstab  v.  Spottisivode,  15  M. 
&  W.  501 ;  Batard  v.  Hawes,  2  E.  & 
B.  287  ;  Ward  v.  Brigham,  127  Mass. 
24 ;  Hornblower  v.  Crandall,  7  Mo. 
App.  220,  230-231  (semble),  af- 
firmed, 78  Mo.  581;  Wilson  v. 
Hotchkiss,  2  Ont.  L.  Rep.  261 
(semble) ;  Wilkins  v.  Davies,  16 
Vict.  L.  R.  70. 

See  also  West  Point  Foundry  Ass. 
V.  Brown,  3  Edw.  Ch.  284  (N.  Y.) ; 
Schantz  v.  Oakman,  10  N.  Y.  App. 
Div.  151;  41  N.  Y.  Supp.  746;  and 
infra,  §  359. 

The  status  of  persons  who  form 
a  supposed  corporation  and,  assum- 
ing the  validity  of  the  incorporation, 
authorize  the  transaction  of  business 
is  elsewhere  considered.  See  supra, 
§  293. 

^  Button  V.  Thompson,  3  H.  L.  C. 
161 ;   Ward  v.  Brigham,  127  Mass.  24. 


274 


§  307-§  415]      WHETHER    PROMOTERS    ARE    PARTNERS  §  313 

who  are  the  active  organizers  of  the  corporation.'  The  rule  is 
the  same  in  equity  as  at  law,^  and  applies  whether  the  promoters 
anticipate  incorjjoration  by  royal  charter,  by  special  act,  or 
under  a  general  law.'' 

§  312.  Under  the  British  Companies  Act  of  1844  —  Outline 
of  Practice.  —  The  extent  to  which  the  doctrine  is  carried  that 
promoters  are  not  partners  is  shown  by  the  many  and  leading 
cases  which  arose  under  the  English  Companies  Act  of  1844.' 
Under  tliis  statute,  the  promoters  before  issuing  a  prospectus 
were  required  to  deposit  at  the  Registry  of  Joint  Stock  Com- 
panies a  schedule  containing  certain  particulars  as  to  the  pro- 
posed company,  including  its  name,  its  business  or  purpose,  etc., 
and  the  names  and  addresses  of  the  promoters.  Upon  the  regis- 
tration of  this  schedule,  the  promoters  became  entitled  to  a  cer- 
tificate of  provisional  registration,  upon  the  issuance  of  which  the 
company  was  said  to  be  "provisionally  registered."  The  pro- 
moters were  thereupon  permitted  to  publish  a  prospectus,  re- 
ceive subscriptions  to  the  company's  capital,  and  do  a  number 
of  other  acts  incidental  to  its  promotion.  The  subscribers  to  the 
capital  then  executed  a  "deed  of  settlement"  containing  such 
particulars  about  the  company  as  are  usually  inserted  in  the  in- 
corporation paper;  and  when  this  deed  of  settlement  was  re- 
corded the  company  was  said  to  be  "completely  registered,"  and 
was  thenceforth  a  corporation.  Companies  which  required  a 
special  act  of  parliament  for  their  successful  operation,  such  as 
railways,  turnpikes,  etc.,  were  in  the  same  way  registered  provi- 
sionally in  anticipation  of  the  passage  of  the  desired  special  act. 
It  seems  to  have  been  customary  for  the  affairs  of  the  company 
during  the  period  of  its  provisional  registration  to  be  managed 
by  a  "provisional  committee,"  ^  who,  in  turn,  seem  often  to  have 
delegated  their  active  duties  to  a  "committee  of  management."  ** 

§  313.'  Members  of  Provisional  Association,  Provisional 
Committees,  etc.,  not  Partners.  —  From  the  foregoing  sketch  one 
readily  perceives  how  much  more  formal  such  a  preliminary 

'   Bright  v.  Hutton,  3  H.  L.  C.  341  '  See  Rei/nell  v.  Lewis,  15  M.  & 

(distinguishing  Hutton  v.  UpfiU,  2  W.  517;  Wilson  v.  Curzon,  15  M.  & 
H.  L.  C.  674).  W.  532. 

2  Bright  v.  Hurlon,  3  II.  L.  C.  341.         «  See  Tanner's  Case,  5  De  G.  &  S. 

8  Hamiltony.Smith.5.]ur.,-N.f^.,32.     182. 

*  7  &  H  Viot..  c.  110.  repealed  by 
19  &  20  Vii't.,  c.  47,  §  107. 

275 


§  314  PROMOTERS  [Chap.  VI 

organization  was  than  an}i:hing  serving  a  similar  purpose  with 
which  Americans  are  in  practice  famiUar.  Nevertheless,  it  was 
held  in  England  that  neither  the  members  of  a  company  provi- 
sionally registered/  nor  its  provisional  committeemen/  nor  even 
the  members  of  the  innermost  circle,  the  committee  of  manage- 
ment,^ were  partners.  This  was  true  although  such  a  provision- 
ally registered  company  was  so  far  an  "association"  as  to  be 
within  the  acts  for  the  winding-up  of  companies  and  "associa- 
tions." *  For  instance,  a  provisionally  registered  company  al- 
though, as  just  stated,  held  to  be  within  the  winding-up  acts, 
could  not  be  wound  up  by  a  court  of  equity  as  a  partnership.^ 

§  314.  Provisional  Committees,  etc.,  under  other  Statutes.  — 
The  custom  of  promoting  a  projected  corporation  by  means  of 
provisional  committees,  etc.,  which  originated  in  the  Companies 
Act  of  1S44,  seems  to  have  to  some  degree  survived  in  England 
the  repeal  of  that  statute ;  and  we  accordingly  read  occasionally 
of  provisional  committees  and  provisional  directors  of  com- 
panies intended  to  be  organized  under  the  Act  of  1862.^  A 
"provisional  director"  has  been  defined  as  one  who  is  to  be  a 
director  if  the  scheme  succeeds  and  the  company  is  incorporated.^ 
A  fortiori,  however,  any  such  loose,  informal  association  of  the 
promoters  or  of  the  "provisional  directors"  which  has  no  place 
in  the  scheme  of  the  statute,  and  its  still  more  informal  Ameri- 
can counter-part,  cannot  amount  to  a  partnership. 

§  315.  Formation  of  Partnership  between  Promoters.  —  Of 
course,  no  rule  of  law  prevents  the  formation  of  a  partnership 
for  the  purpose  of  promoting  a  corporation ;  and  instances  might 
be  given  where  this  in  fact  has  been  done.^    But  to  establish  such 

'  Walstab  v.  Spottiswode,  15  M.  &  of  contributories  "  in  the  winding-up 

W.    501;   Ex  parte  Lloyd,    1    Sim.,  of  such  "associations." 

N.  s.,  248.  ^  Hamiltonv. Smith, 5 Jut. ,-s.s., 32. 

2  ^Reynell  v.  Lewis,  15  M.  &  W.  Cf.  Ward  v.  Brigham,  127  Mass.  24. 
517;  Norris  v.  Cottle,  2  H.  L.  C.  '  Maddick  v.  Marshall,  17  C.  B., 
647 ;  McEwan  v.  Campbell,  2  Macq.  n.  s.  ,  829. 

H.  L.  499.  *  ^  Burbidge  v.  Morris,  3    H.  &  C. 

3  Burnside  v.  Dayrell,  3  Ex.  224,    664,  669,  per  Martin,  B. 

230.  *  E.g.  Walker  v.  Anglo-American, 

*  Bright  V.  Button,  3  H.  L.  C.  341.  etc.  Co.,  72  Hun  (N.  Y.)  334,  340; 

Many  of  the  English  cases  on  the  25  N.  Y.  Supp.  432. 
Uabilities  of  promoters  to  tliird  per-        As  to  a  "syndicate"  as   equiva- 

sons  and  inter  sese  have  come  up  on  lent  to  a  partnersliip  in  such  matters, 

the  que.stion  whether  or  not  a  pro-  see  Hambleton  v.  Rhind,  84  Md.  456 ; 

moter  should  be  placed  on  the  "Ust  36  Atl.  597;  40  L.  R.  A.  216. 

276 


§  307-§  415]       RESPONSIBILITY    OF    CORPORATION  §  317 

a  condition  unusual  circumstances  must  be  shown,  since  the 
partnership  relation  cannot  be  inferred  from  the  fact  of  co- 
operating as  promoters. 


§  310.  Promotion  by  means  of  a  Preliminary  Corporation.  — 
As  promoters  may  form  a  partnership  to  cany  out  tiieir  enter- 
prise of  organizing  a  company,  so  they  may  form  a  preliminary 
corporation  for  the  same  purpose;  '  but  such  cases  are  uncom- 
mon except  where  a  very  large  company  is  forming.  Of  course, 
many  corporations  formed  for  the  transaction  of  a  general  finan- 
cial business,  such  as  trust  companies,  frequently  take  part  in  the 
promotion  of  other  corporations,  but  in  such  cases  the  trust  com- 
panies are  governed  by  the  same  rules  of  law  as  individual 
promoters. 


§  317-§  349.    RESPONSIBILITY  OF  CORPORATIOxN 
FOR  ACTS  OF  PROMOTERS. 

§  317-§  319.     Responsibility  for  Acts  done  after  Incorporation. 

§  317.  In  general.  —  While,  as  we  have  seen,^  a  person  may 
be  a  promoter  of  a  company  even  after  it  has  been  incorporated, 
yet  in  respect  to  the  power  of  promoters  to  bind  the  corporation 
by  their  acts  and  agreements,  the  law  draws  a  sharp  distinction 
between  those  acts  which  are  done  before,  and  those  which  are 
done  after,  the  incorporation.  After  the  company  has  acquired  a 
corporate  existence,  the  ordinary  principles  of  the  law  of  agency 
apply-;  and  all  that  is  necessary  in  order  to  make  the  company 
responsible  for  the  torts  or  contracts  of  its  promoters  is  to  show 
that  they  were  committed  or  made  in  the  scope  of  their  authority 
as  agents.  So,  the  liability  of  the  company  to  pay  for  services 
rendered  by  the  promoters  after  incorporation  will  depend 
entirely  upon  whether  or  not  the  understanding  was  that  the 
promoters  should  receive  compensation.^ 

'  An  instance  may  be  found  in         -  Supra,  §  310. 
Lagunas  Xitrate  Co.  y.  Layunas  Syn-         ^  Cf.   Powell  v.   Georgia,  etc.   Ry. 
dicatc  (1899),  2  Ch.  392.  Co.,  121  Ga.  S03 ;    49  S.  E.  759. 

277 


§  318  PROMOTERS  [Chap.  VI 

§  318.  What  is  Date  of  Incorporation  for  this  Purpose. — ^The 
question  may  be  raised,  however,  whether  the  technical  date  of 
incorporation  — 'that  is,  under  the  common  general  incorporation 
laws,  the  date  of  the  recording  of  the  memorandum  of  associa- 
tion or  incorporation  paper  —  or  the  date  of  the  first  organiza- 
tion of  the  company  for  the  transaction  of  business,  is  to  be 
regarded  as  the  crucial  time  within  the  meaning  of  this  rule. 
Untler  the  old  system  of  incorporation  by  special  act,  where  the 
corporation  did  not  come  into  being  until  the  act  was  accepted 
by  the  corporators  by  organizing  under  it,  this  question  could 
not  so  easily  arise.  But  under  the  modern  general  laws  where 
the  corporation  springs  into  existence  immediately  on  registration 
without  the  necessity  of  any  further  acceptance  or  organization,^ 
it  may  become  very  material.  The  argument  may  be  urged,  on 
the  one  hand,  that  while  the  company  has  from  its  registration 
a  technical  existence,  yet  it  is  still  in  a  period  of  helpless  infancy, 
and  that  not  until  it  organizes  for  business  does  its  career  actually 
commence.  On  the  other  hand,  it  may  be  said,  after  the  com- 
pany's existence  as  a  legal  person  begins,  the  technical  objection 
that  it  cannot  be  bound  by  what  occurred  prior  to  its  birth  van- 
ishes, and  it  would  therefore  seem  that  effect  should  be  given 
even  as  against  the  corporation  to  contracts  made  with  authority 
derived  from  the  corporators.  This  seems  to  be  the  law.^  The 
mere  execution  of  the  incorporation  paper  before  its  registration 
does  not,  however,  for  this  purpose,  effect  an  incorporation.^ 

§  319.  After  Incorporation  De  Facto  but  not  De  Jure.  — 
Acquisition  of  a  mere  de  facto  corporate  existence  gives  the  com- 
pany thenceforward  a  capacity  to  contract,  and  the  same  prin- 

'  Glymont    Improvement    Co.    v.  40  Md.  395 ;  Rathbone  v.  Tioga  Nav. 

Toler,  80  xMd.  278,  289 ;   30  Atl.  651,  Co.,  2  Watts  &  Serg.  (Pa.  )  74 ;  Low 

and  supra,  §  163.  v.  Connecticut,  etc.  R.  R.  Co.,  45T*J.  H. 

2  Hall  V.  Vermont,  etc.  R.  R.  Co.,  370. 
28  Vt.  401,  406-407;    Vermont  Cen-  But  see  Ex  parte  Ha7ily,  41  Ch. 

tral  R.  R.  Co.  v.  Clayes,  21  Vt.  .30,  D.  215,  223-226,  237  (headnote  in- 

35-36 ;    Harrison  v.    Vermont  Man-  adequate) ;       Whetstone     v.      Crane 

ganese  Co.,  1  N.  Y.  Misc.  402;    20  Bros.  Mfg.  Co.,  1   Kans.  App.  320; 

N.  Y.  Supp.  894;    Legrand  v.  Man-  41  Pac.  211;   Gent  v.  Manufacturers, 

hattan   Mercantile    Ass.,   80   N.    Y.  e<c.  /n.s.  Co.,  107  111.  652 ;    McVicker 

638  (headnote  inadequate);  Badger  v.  Cone,  21  Orcg.  353;    28  Pac.  76; 

Paper  Co.   v.   Rose,   95  Wise.    145;  A.'spen  Water,  etc.   Co.   v.   A.-^pen,  5 

70  N.  W.  302 ;   37  L.  R.  A.  162.  Colo.  App.  12 ;    37  Pac.  728. 

See  also  Kelner  v.  Baxter,  2  C.  P.  ^  See  cases  cited  infra,  §  323. 

174 ;   Grape  Sugar,  etc.  Co.  v.  Small, 

278 


§  3()7-§  415]       RESPONSIBILITY    OF    CORPORATION  §  322 

ciples  Hj)ply  as  if  the  incorporation  had  been  dc  jure}  It  has  Ijeen 
said  tliat  wliere  a  de  facto  corporation  becomes  incorporated  de 
jure,  the  legally  organized  corjx>ration  is  liable  for  the  debts  of 
the  irregularly  incorporated  company.'-  On  the  other  hand,  an 
estoppel  resting  upon  the  members  of  an  unincorj)orated  body 
to  deny  their  own  incorporation  cannot  bind  a  lawful  corpora- 
tion which  they  subsequently  organize.^ 


§  320-§  349.      RESPONSIBILITY  FOR  ACTS    DONE  PRIOR 
TO  INCORPORA  TION. 

§  320.  In  general.  —  The  responsibility  of  corporations  for 
acts  done  by  their  promoters  prior  to  incorporation  has  been  the 
sui)ject  of  contention  in  not  a  few  legal  battles.  Of  course,  no 
one  denies  the  power  of  promoters  to  bind  the  future  company 
by  moulding  its  constitution  as  expressed  in  the  incorporation 
paper.  This  very  power  is  the  raison  d'rfre  of  much  that  is  pecu- 
liar in  the  law  of  promoters.  But  the  question  now  in  hand  relates 
to  their  power  to  bind  the  intended  company  by  transactions 
dehors  the  record. 

§  321.  Responsibility  Ex  Delicto.  —  Probably  no  one  has  ever 
contended  that  the  corporation  should  be  liable  in  damages  for 
torts  committed  by  its  promoters  before  it  had  any  existence ;  and 
certainly  no  such  contention  could  be  maintained.* 


§   322- §   346.      RESPONSIBILITY   EX   CONTRACTU. 

§  322.  Subscriptions  to  Shares.  —  With  respect  to  contracts 
the  case  is  not  so  simple.  Subscriptions  to  shares  of  capital,  it 
should  be  premised,  differ  in  many  respects  from  other  con- 
tracts, and  have  therefore  received  separate  consideration.* 

'  See  Bergen  v.  Porpoise  Fishing  ^  Bradley  Fertilizer  Co.  v.  South 

Co.,  41  N.  J.  Eq.  238;    3  Atl.  404;  Publishing  Co.,  4  N.  Y.  Misc.   172, 

Grand  River  Bridge  Co.   v.   Rollins,  23  X.  Y.  Supp.  675. 
13  Colo.  4;  21  Pac.  897.  «    Karberg's    Case    (1892),    3    Ch. 

'  Georgia  Ice  Co.  v.   Meakin,   70  1,  13. 
Ga.  637.  See    also    McCallum    v.    Pursell 

Cf.  Calumet  Paper  Co.  v.  Stotts  In-  Mfg.  Co.,  1  N.  Y.  Supp.  42& 
vestment  Co.,  96  Iowa  147;  64  N.  \V.  *  Supra,  §  238-§  260. 

782 ;   59  Am.  St.  Rep.  362. 

279 


§  323 


PROMOTERS 


[Chap.  VI 


§  323-§  325.     Contracts  other  than  Subscriptions  to  Shares. 

§  323.  Rule  at  Law.  —  The  rule  at  law  is  very  simple,  and 
has  commanded,  it  is  believed,  universal  acceptance:  no  con- 
tract made  by  promoters  on  behalf  of  a  corporation  projected 
but  not  yet  formed,  can,  proprio  vigore  and  without  any  adoption 
or  confirmation  by  the  corporation,  bind  the  company  when  in- 
corporated,' unless  by  virtue  of  some  express  statute;  and  "this 
is  so  although  the  promoters  become,  at  the  creation  of  the  cor- 
poration, its  only  stockholders,  directors  and  officers."-  This 
rule  is  founded  upon  the  basic  principle  that  no  one  can  be  an 
agent  for  a  person  —  the  corporation  —  not  yet  in  existence. 
Consequently,  the  rule  clearly  applies  to  all  such  contracts  made 
at  any  time  before  the  very  moment  of  incorporation.  Hence,  it 
applies  to  a  contract  made  subsequent  to  the  execution  of  the 
memorandum  of  association  or  incorporation  paper  before  its 
registration.^     Other  questions  as  to  the  point  of  time  which 


1  Kelner  v.  Baxter,  2  C.  P.  174; 
Payne  v.  New  South  Coal  Co.,  10  Ex. 
283 ;  Gunn  v.  London,  etc.  Fire  Ins. 
Co.,  12  C.  B.,  N.  s.,  694;  Franklin 
Fire  Ins.  Co.  v.  Hart,  31  Md.  59; 
Munson  v.  Syracuse,  etc.  R.  R.  Co., 
103  N.  Y.  58,  75-76 ;  8  N.  E.  355 ; 
Western  Screw,  etc.  Co.  v.  Consley, 
72  111.  531 ;  Bufflngton  v.  Bardon, 
80  Wise.  635 ;  50  N.  W.  776 ;  Long 
V.  Citizens'  Bank,  8  Utah  104;  29 
Pac.  878 ;  Carey  v.  Des  Moines,  etc. 
Mining  Co.,  81  Iowa  674;  47  X.  W. 
882 ;  Tift  v.  Quaker  City  Xat.  Bank, 
141  Pa.  St.  550;  Gent  v.  Manu- 
facturers, etc.  Ins.  Co.,  107  111.  652 ; 
Battelle  v.  Northwestern  Cement,  etc. 
Co.,  37  Minn.  89  (semble) ;  33  N.  W. 
327;  Weatherford,  etc.  Ry.  Co.  v. 
Granger,  86  Tex.  350 ;  24  S.  W.  795 ; 
40  Am.  St.  Rep.  837;  Little  Rock, 
etc.  R.  R.  Co.  V.  Perry,  37  Ark.  164, 
192,  193  (rulings  on  plaintiff's  first 
and  defendant's  second  instruction) ; 
Winters  v.  Huh  Mining  Co.,  57  Fed. 
Rep.  287 ;  Adams  v.  Empire  Launn 
dry  Machinery  Co.,  4  N.  Y.  Supp. 
738 ;  Pittsburg,  etc.  Mining  Co.  v. 
Quintrell,  91  Tenn.  693,  695,  696; 
20  S.    W.    248    (semble);    Bash   v. 


Culver  Gold  Mining  Co.,  7  Wash. 
122  ;   34  Pac.  462. 

Cf.  Bluehill  Academy  v.  Witham, 
13  Me.  403. 

As  to  mechanics'  liens,  see  Davis 
V.  Maysville  Creamery  Ass'n,  63  Mo. 
App.  477;  McFall  v.  McKeesport, 
etc.  Co.,  123  Pa.  St.  2.59 ;  16  Atl.  478 ; 
Chicago  Bldg.  &  Mfg.  Co.  v.  Tal- 
botton  Creamery,  etc.  Co.,  106  Ga.  84 ; 
31  S.  E.  809;  Davis  v.  Ravenna 
Creamery  Co.,  48  Nebr.  471  (head- 
note  inadequate) ;  67  N.  W.  436 ; 
Coyote,  etc.  Co.  v.  Ruble,  8  Oreg. 
284 ;  Bank  of  Forrest  v.  Orgill  Bros., 
etc.  Co.,  34  So.  325;   82  Miss.  81. 

The  Uability  of  a  corporation 
quasi  ex  contractu  for  benefits  con- 
ferred upon  it  prior  to  its  formation 
is  discussed  infra,  §  338-§  340. 

^  Battelle  v.  Northern  Cement,  etc. 
Co.,  37  Minn.  89,  90 ;  33  N.  W.  327; 
Scadden  Flat,  etc.  Co.  v.  Scadden,  121 
Cal.  33  ;   53  Pac.  440  (semble). 

But  see  Paxton  v.  Bacon  Mill,  etc. 
Co.,  2  Nev.  257;  Chicago  Bldg.  & 
Mfg.  Co.  V.  Talbotton  Creamery,  etc. 
Co.,  106  Ga.  84;   31  S.  E.  809. 

3  Kelner  v.  Baxter,  2  C.  P.  174. 

But  see  argument  for  appellee  in 


280 


§  307-§  415]      RESPONSIBILITY    OF    COKF(JHATI.jN  §  .'^24 

should  be  taken  as  the  date  of  incorporation  for  the  purpose  of 
this  rule  have  been  considered  above.' 

§  324.  Rule  in  Equity.  —  In  equity  more  diversity  of  opinion 
has  existed.  In  some  comparatively  early  cases,  the  promoters 
of  a  special  act  of  incorporation  agreed  with  a  third  party,  in 
consideration  of  his  withdrawal  of  opposition  to  the  passage  of 
the  act,  that  the  company  when  incorporated  should  pay  a  sum 
of  money  or  exerci.se  its  franchise  in  some  particular  way.  Lord 
Cottenluun  held  that  the  corporation,  having  necessarily  re- 
ceived the  benefit  of  the  contract,  and  indeed  owing  its  very 
existence  thereto,  might  be  enjoined  from  violating  the  terms  of 
the  airreement."  But  the  House  of  Lords  subseciuentlv  held  that 
at  all  events  no  such  agreement  could  be  enforced  against  the 
company  unless  the  acts  to  be  done  thereunder  by  the  corpora- 
tion were  within  powers  conferred  in  the  act  of  incorporation ;  ^ 
and  the  opinion  was  emphatically  expressed  that,  even  if  they 
were,  a  court  of  equity  would  not  enforce  the  contract  against 
the  company.  Lord  Cottenham's  view  was  severely  criticised,* 
and  the  fallacy  lurking  in  the  notion  that  the  existence  of  the 
corporation  as  an  entity  distinct  from  its  corporators  is  a  mere 
technicality  was  exposed.  Upon  incorporation  new  rights  and 
interests  arise;  and  subsequent  shareholders  have  a  right  to 
insist  that  the  corporation  be  not  shackled  from  its  very  birth  by 
burdens  of  which  they  cannot  be  supposed  to  have  notice.  Al- 
though, in  a  later  case,  it  was  said  that  such  a  contract  by  pro- 
moters might  be  specifically  enforced  by  the  corporation,^  which 

Grape  Sugar,  etc.  Co.    v.  Small,  40  C.  C.  A.  502,  is  perhaps  based  on  the 

Md.  395,  397-398.     Cf.  supra,  §  133.  same  princii)lo. 

'  Supra,  §  318  and  §  319.  ^  Caledonian  Ry.   Co.  v.  Helens- 

^  Edwards  v.  Grand  Junction  Ry.  burgh,  2  Macq.  H.  L.  391 ;    Predion 

Co.,   1  Myl.   &  C.   650;   Statdey   v.  v.  Liverpool,  etc.  Ry.  Co..  5  H.  L.  C. 

Chester,  etc.  Ry.  Co.,  3  Myl.  &   C.  605     (semble).     Accord  :       Earl    of 

773.     Accord  :    Earl    of   Lindsey    v.  Shrewsbury    v.    North    Staffordshire 

Great    Xorthern   Ry.    Co.,    10    Hare  Ry.Co.,  1  Eq.  593 ;  Leominster  Canal 

664.  Nav.  Co.  v.  Shretvsbury,  etc.  Ry.  Co. 

See  also  Gooday  v.  Colchester,  etc.  3  K.  &  J.  654,  668. 
i?!/.  Co.,  17  Beav.  132.  Lord  Gotten-  *  Caledonian  Ry.  Co.  v.  Helens- 
hum's  views  were  referred  to  with  burgh,  2  Macq.  H.  L.  391;  Preston 
approval  in  Low  v.  Connecticut,  etc.  v.  Liverpool,  etc.  Ry.  Co.,  5  H.  L.  C. 
R.  R.  Co.,  45  N.  H.  370,  37.5-376;  605;  Earl  of  Shreu^sbury  v.  Xorth 
Little  Rock,  etc.  Ry.  Co.  v.  Perry,  37  Staffordshire  Ry.  Co.,  1  Eq.  593. 
Ark.  164,  187  et  seq.;  Cook  v.  Sterl-  *  Bedford,  etc.  Ry.  Co.  v.  Stanley, 
ing  Electric  Co.,   150  Fed.  706;    SO  2  Joiins.  &  H.  746. 

281 


§  325  PROMOTERS  [Chap.  VI 

dictum,  in  view  of  the  equitable  requirement  of  mutuality  as  to 
the  right  to  specific  performance,  would  perhaps  imply  that  the 
same  remedy  might  have  been  invoked  against  the  corporation, 
yet  there  can  be  little  doubt  that  the  views  of  the  members  of  the 
House  of  Lords  embody  sound  doctrine,  and  that  in  equity  as 
at  law  a  corporation  is  never  bound,  in  the  absence  of  some  ac- 
quiescence or  adoption,  to  abide  by  contracts  made  on  its  behalf 
before  its  creation.*  For  this  reason,  where  property  was  set- 
tled in  trust  for  a  corporation  to  be  thereafter  organized,  it  was 
held  that  the  company  after  its  formation  could  compel  the  trus- 
tee to  execute  the  trust  in  spite  of  its  refusal  to  carry  out  an  agree- 
ment made  by  the  settlor  of  the  trust,  who  was  a  promoter  of  the 
company,  that  the  corporation  should  pay  the  trustee  a  certain 
compensation  for  his  services."  The  ground  of  the  decision  was 
that  the  contract  of  the  promoter  bound  himself  alone,  and  that 
the  company  could  not  be  required  to  perform  a  contract  by 
which  it  was  not  bound  as  a  condition  to  the  enforcement  of  a 
valid  trust  in  its  favor.  So,  an  agreement  between  promoters 
that  one  of  them  shall  own  a  sixth  of  the  company's  capital  will 
not  justify  an  injunction  restraining  the  corporation  from  in- 
creasing its  capital  and  thereby  diminishing  the  proportionate 
interest  of  the  last-mentioned  promoter.^ 

§  325.  Contracts  by  Existing  Corporation  in  Anticipation  of 
Extension  of  Powers  distinguished.  —  From  the  class  of  con- 
tracts considered  in  the  last  paragraph,  one  should  carefully 
distinguish  contracts  made  by  an  existing  corporation  in  antici- 
pation of  an  extension  of  its  powers.  If  the  powers  are  enlarged 
as  expected,  such  contracts  are  binding  even  though  they  would 
have  been  ultra  vires  if  the  enlargement  had  not  been  had.  Thus, 
where  an  existing  railway  company  applied  for  an  act  of  parlia- 
ment to  extend  its  powers  by  conferring  authority  to  construct 
a  branch  line,  an  owner  of  land  lying  in  the  proposed  new  route 

^  Re  Rotherham  Alum  Co.,  25  Ch.  (Colo.),    86    Pac.    33.5;     Pennell   v. 

D.  103,  109  (headnote  inadequate);  Lothrop,  191  Mass.  357. 
Natal  Lan/l,  etc.  Co.  v.  Pauline  Col-  But  see  Paxton  v.  Bacon  Mill,  etc. 

liery  Syndicate   (1904),   A.   C.    120;  Co.,  2  Nev.  257. 
Munaon  v.  Syracuse,  etc.  R.  R.  Co.,  ^  Hecla,     etc.      Mining     Co.     v. 

103  N.  Y.  .58,  7.5-76;    8  N.  E.  355;  O'Neill,  19  N.  Y.  Supp.  592. 
Park  V.  Modern  Woodmen  of  Amer-  ^  Martin    v.     Remington-Martin 

ica,  181  111.  214,  232-2.34;   54  N.  E.  Co.,   95    N.  Y.    App.    Div.    18;    88 

932 ;    Mi.'ser  Gold,  etc.  Co.  v.  Moody  N.  Y.  Supp.  573. 

2S2 


§  307-§  415]      RESPONSIBILITY    OF    CORPORATION  §  326 

withdrew  his  opposition  to  the  bill  in  consideration  of  tlic  rail- 
way's agreement  to  purchase  the  land  from  him  at  a  certain 
figure  if  the  act  should  pass;  and  the  House  of  Lords  held  that 
this  contract  would  be  specifically  enforced  in  equity.'  In  such 
cases,  the  company  after  the  amendatory  act  remains  the  same 
1  gal  person  as  before,  and  there  is  therefore  no  question  of 
enforcing  against  a  corporation  contracts  made  before  it  came 
into  existence ;  the  distinction  is  obvious. 


§  326.  "  Ratification  "  of  Pre-incorporation  Contract.  —  Con- 
tracts made  on  behalf  of  a  company  prior  to  its  incorporation 
are  obviously  incapable  of  ratification  by  the  company,  if  "rati- 
fication "  be  used  with  the  ordinary  meaning  which  it  bears  in  the 
law  of  agency."  For,  in  order  that  a  contract  by  one  acting  as 
agent  should  be  ratified  by  the  party  on  whose  behalf  it  was 
made,  the  latter  must  have  been  in  existence  when  the  contract 
was  made.  Ratification,  properly  so  called,  must  relate  back 
to  the  time  of  the  making  of  the  contract.  There  can  be  no 
technical  ratification  of  a  contract  made  before  the  corporation 
had  existence ; '  and  this  is  true  not  only  at  law  but  also  in 
equity.^ 

»  Eastern    Counties    Ry.    Co.    v.  ^  gf.Q^l  y  ^^^j  Ebury.  2  C.  P.  255 ; 

Hawkes.  5  H.  L.  C.  331  (headnote  Re  Dale  A  Plant,  61  L.  T.  206;   Mc- 

misleading).  Arthur   v.    Times   Printing   Co.,    48 

Cf.    Great    Western    Ry.    Co.    v.  Minn.  319;    51  N.  W.  216;    31  Am. 

Birmingham,   etc.   Ry.   Co.,   2   Phill.  St.  Rep.  653;    Stainsby  v.  Frazer's 

597;    Gooday  v.  Colchester,  etc.  Ry.  Metallic  Life  Boat  Co.,  3  Daly  N.  Y. 

Co.,  17  Beav.  132;    Scottish   N.  E.  98;    Koppel  v.  Mass.  Brick  Co.,  192 

Ry.  Co.  V.  Stewart,  3  Macq.  H.  L.  Mass.  223 ;   78  N.  E.  128. 
382;    Low  v.  Connecticut,  etc.  R.  R.         Contra:    Stanton   v.   Nero    York, 

Co.,  46  N.  H.  284,  295.  etc.  Ry.  Co.,  59  Conn.   272;  22  Atl. 

'  "Ratification"  is  often  vised  in  300;  21  Am.  St.  Rep.  110  (semble) ; 

this  connection  as  synonymous  with  Whitney  v.  Wyman,  101  U.  S.  392. 
"adoption";      Schreyer    v.     Turner         Cf.    Dubuque    Female    College    v. 

Flouring  Mills  Co.,  29  Oreg.   1,  6;  Township    District,    13     Iowa    555, 

43  Pac.  719;   Queen  City,  etc.  Co.  v.  560-561. 

Crawford,   127  Mo.  356;    30  S.  W.  *  Re    Empress    Engineering    Co., 

163.  16  Ch.  D.  125 ;    .\atal  Land,  etc.  Co. 

See  also  Wood  v.  Whelen,  93  111.  v.  Pauline  Colliery  Syndicate  (1904), 

153,  164-165;   Alexander  \.  Winters,  A.  C.  120;    Pennell  v.  Lothrop,  191 

23  Nev.  475,  485;   49  Pac.  116.  Mass.  357. 

233 


§  327  PROMOTERS  [Chap.  VI 

§  327-§  337.     Adoption  of  Contract  —  New  Contract  mi 
same   Terms. 

§  327.  In  general.  —  In  many  American  cases  it  has  been 
thought  that  the  company  may  be  rendered  liable  by  adoption  of 
the  contract.'  If  "  adoption  "  be  used  as  synonymous  with  ratifi- 
cation,- it  is  open  of  course  to  the  same  objections;  and  if,  as  is 
generally  the  case,  it  is  used  in  a  different  sense,  it  merely  ob- 
scures the  real  nature  of  the  transaction,  which  consists  in  the 
making  of  a  new  contract  by  the  corporation.  For,  nice  reason- 
ing leads  irresistibly  to  the  conclusion  that  no  merely  unilateral 
act  on  the  part  of  the  company  with  reference  to  such  a  contract 
can  establish  contractual  relations  between  the  company  and 
the  third  party.  In  order  to  effect  that  result,  there  must  be 
mutual  assent,  a  meeting  of  minds,  between  the  corporation 
and  the  third  party.^  In  other  words,  there  must  be  a  new  con- 
tract; and  it  is  in  the  sense  of  the  making  of  a  new  contract 
that  "adoption  "  is  generally  used.* 

§  328.  English  Rule.  —  The  making  of  a  new  contract  is, 
then,  the  only  logical  and  thoroughly  satisfactory  method  of 
rendering  such  ante-incorporation  contracts  obligatory  between 
the  company  and  the  third  party;  and  the  English  cases  carry 
this  doctrine  to  the  uttermost.  Thus,  it  is  held  in  England 
that  adoption  and  confirmation  by  the  deed  of  settlement  or  its 
modern  equivalent,  the  memorandum  of  association,  or  by  the 
articles  of  association,  will  not  render  the  contract  binding  on 
the  company ;  ^    and  this  is  so  because  the  memorandum  or 

'  E.  g.  Schreyer  v.  Turner  Flour-  Natal  Land,  etc.  Co.  v.  Pauline  Col- 

ing  Mills  Co.,  29  Oreg.  1;    43  Pac.  liery  Syndicate  (1904),  A.  C.  120. 

719;     Colorado    Land,    etc.    Co.    v.  *  "There    can    be    no    difference 

Adams,  5  Colo.  App.  190;    37  Pac.  between  its  making  a  contract  by 

39 ;     Pittsburg,   etc.   Mining   Co.   v.  adopting    an    agreement    originally 

Quintrell,  91   Tenn.  693;   20  S.   W.  made  in  advance  for  it  by  promoters, 

248 ;   Thistle  v.  Jones,  45  N.  Y.  Misc.  and  its  making  an  entirely  new  con- 

21.5;    92  N.  Y.  Supp.  113;    Robbins  tract."       Battelle     v.     Northwestern 

V.  Bangor  Ry.,  etc.  Co.,  62  Atl.  136;  Cement,  etc.  Co..  37  Minn.  89,  90; 

100  Me.  496;  1  L.  R.  A.,  n.  s.,  963;  33  N.  W.  327;   per  Gilfillan,  C.  J. 

and  many  other  cases.  See  also  Little  Rock,  etc.  Ry.  Co. 

'  Cf.     Pennell    v.     Lothrop,     191  v.  Perry,  37  Ark.    164,  193    (ruling 

Mass.  357  (where  it  was  said  that  on  defendant's  second  inti  ruction) ; 

the  contract  could  not  become  bind-  Wasser  v.  Western  Land,  etc.  Co.,  97 

ing  on  the  corporation  by  adoption).  Minn.  460;    107  N.  W.  160. 

^  Penn   Match    Co.    v.    Hapgood,  ^  Gunn  v.  London,  etc.  Fire  Ins. 

141   Mass.    145,   148;    7  N.   E.  22;  Co.,  12  C.  B.,  n.  s.,  694  (deed  of  set- 

284 


§  307-§  415]       RESPONSIBILITY    OF    CORPORATION  §  329 

articles  cannot  constitute  a  contract  between  the  company  and 
non-members.'  It  has  also  been  held  in  England  that  confir- 
mation by  the  directors  is  insufficient  to  l)iii(l  the  corporation 
to  the  contract.-  But  if  this  conclusion  is  to  be  supported,  the 
result  should  certainly  not  be  made  to  depend  on  a  mere  question 
of  words  —  whether  the  directors  use  the  word  "confirm"  or 
some  term  more  appropriate  to  the  making  of  a  contract.  A 
more  satisfactory  ground  is  that  confirmation  by  the  directors 
is  a  unilateral  act  to  which  the  intended  other  party  to  the  con- 
tract is  not  privy,  and  that  therefore  the  meeting  of  minds 
essential  to  the  formation  of  a  new  contract  is  lacking. 

§  329.  American  Rule  —  Theory  of  Continuing  Ofjer.  —  On 
the  other  hand,  when  a  person  makes  a  contract  w.th  one  who 
professes  to  act  on  behalf  of  a  corporation  to  be  thereafter 
formed,  it  would  seem  that  here  should  be  taken  to  be  a  con- 
tinuing offer  on  his  part  to  enter  into  a  like  contract  with  the 
company  when  incorporated.^  According  to  this  view,  any 
action  on  the  company's  part,  communicated  to  the  other  party, 
evincing  a  desire  to  abide  by  the  contract  would  amount  to  an 
acceptance  of  the  offer,  and  therefore  complete  the  formation 
of  a  new  contract.  This,  it  is  believed,  represents  the  law  in 
most  of  the  United  States ;  and  this  is  usually  what  is  meant  when 
it  is  said  that  a  pre-incorporation  contract  may  be  adopted  by 
the  company  so  as  to  become  binding  on  it.  In  England,  how- 
ever, as  the  cases  cited  in  the  last  paragraph  indicate,  this  theory 
of  a  continuing  offer  seems  not  to  have  met  with  approval ;  and 
accordingly  in  England  a  new  offer  and  acceptance  (both  of 
which,  however,  may  be  implied  rather  than  express)  are  neces- 
sary in  order  to  bind  the  company.  Right  here  lies  the  differ- 
ence, and,  it  is  believed,  the  only  difference  between  the  English 
and  American  law  on  this  subject.  In  America,  a  unilateral  act, 
namely,  acceptance  by  the  company  of  what  is  deemed  to  be 

tlement);  Re  Northumberland  Ave.  '  Pratt  v.  Oshkosh  Match  Co.,  89 
Hotel  Co.,  33  Ch.  D.  16  (articles  of  Wise.  406;  62  N.  W.  84;  Perm 
association).  Match  Co.   v.   Hapgood,    141   Mass. 

1  Eley  V.  Positive  Life  Ass.  Co.,  1  145,  148,  149;  7  N.  E.  22  (semble); 
Ex.  D.  20;  Browne  v.  La  Trinidad,  Holyoke  Envelope  Co.  v.  U.  S.  En- 
37  Ch.  D.  1.  velope  Co.,  182  Mass.  171 ;  65  N.  E. 

^  Re  Dale  &  Plant,  61  L.  T.  206;    54  (semble). 
Xortli  Sydnci/  Investment,  etc.  Co.  v. 
Higyins    (1899),    A.    C.    263,     271 
(semble). 

285 


§  330  PROMOTERS  [Chap.  VI 

an  existing  offer  is  enough :  in  England,  there  must  be  a  new 
offer  bv  the  other  party  to  the  contract,  and  of  that  offer  an 
acceptance  by  the  company. 

§  330.  What  is  suflacient  Evidence  to  establish  Adoption,  or 
Making  of  New  Contract  —  In  general. — At  all  events,  it  is 
everywhere  agreed  that  if  the  evidence  is  sufficient  to  establish 
a  new  contract  the  company  is  bound ;  ^  and  whether  or  not  the 
proof  is  sufficient  for  that  purpose  is  a  question  of  fact  in  each 
case,  which  in  actions  at  law  must  be  left  to  the  jury,  so  that 
uniformity  of  decision  could  not  be  expected.^ 

§  331.  Effect  of  Mistake  of  Law  or  Fact.  —  It  has  been  held 
in  England  in  the  matter  of  the  Northumberland  Avenue  Hotel 
Company,  that  a  new  contract  cannot  be  inferred  from  acts  done 
bv  the  company  in  the  belief  that  the  anterior  agreement  was 
binding  upon  it ;  for  example,  where  under  such  mistaken  belief 
the  company  assented  to  a  modification  in  the  terms  of  the  old 
agreement,  there  was  held  to  be  no  new  contract.^  But  this 
principle  is  of  doubtful  soundness;  for  while  stronger  evidence 
of  intention  would  be  required  where  the  company  was  laboring 
under  such  a  mistake,  yet  if  a  mutual  intent  on  the  part  of  the 
company  and  the  stranger  that  the  agreement  should  be  carried 
out  is  clearly  proved,  it  would  seem  to  be  immaterial  how  that 
intention  came  about,  whether  by  mistake  of  law  or  otherwise. 
Accordingly,  a  tendency  to  distinguish  the  Northumberland 
Avenue  Hotel  Case  is  observable.*     But  a  Missouri  court  has 

'  Re  Dale  &  Plant,  61  L.  T.  206.  has  been  held  bound  are:    Touche  v. 

Regarded   as   a   new   contract,    the  Metropolitan  Warehousing  Co.,  6  Ch. 

adoption  of  a  promoters'  agreement  671 ;    Spiller  v.  Paris  Skating  Rink 

in    order   to    be    binding,    must    be  Co.,    7    Ch.    D.    368;     Seymour    v. 

supported  by  a  consideration.     Cf.  Spring  Forest,    etc.  Ass'n,  144  N.  Y. 

Reichwuld  v.  Commercial  Hotel  Co.,  33.3,  341 ;   39  N.  E.  365;  26  L.  R.  A. 

106  111.  439;  Holyoke  Envelope  Co.  859;   Bomer  v.  Am.  Spiral,  etc.  Co., 

V.   U.  S.   Envelope   Co.,   182    Mass.  81   N.  Y.  468;   Colorado  Land,  etc. 

171;   65  N.  E.  54.  Co.  v.  Adams,  5  Colo.  App.  190;   37 

'  See  Davis  v.  Hillshoro  Creamery  Pac.   39 ;    Reichwald  v.   Commercial 

Co.,  10  Ind.  App.  42;    37  N.  E.  549  Hotel  Co.,   106   111.  439;    Bruner  v. 

(a  case  wliich  goes  very  far  in  holding  Brown,     139     Ind.     600,     602;    38 

that   "adoption"   by  the  company  N.  E.  318;    Dubuque  Female  College 

had  not  been  proved).  v.   Township  District,  13  Iowa  555 ; 

'  Northumberland  Ave.  Hotel  Co.,  Davis  v.  Dexter  Butter,  etc.  Co.,  52 

33  Ch.  D.  16.  Kans.  693  ;  35  Pac.  776 ;  Bridgeport, 

*  Howard    v.    Patent    Ivory    Co.,  etc.  Ice  Co.  v.  Header,  72  Fed.  115, 

38Ch.  D.  156.  119-120;     18  C.   C.    A.    451;     Mc- 

Other  cases  in  which  the  company  Donough   v.    Bank   of   Houston,    34 

286 


•^  307-§  415]     Hi:si'<)NsiBiuTY  of  coitruiiATiON  §  332 

held  that  the  "adojjtion"  of  an  ante-incorporation  contract,  or 
the  making  of  a  new  (Mie  on  the  same  terms,  will  not  in  general  be 
binding  uidess  made  with  knowledge  of  all  material  fads}  This 
decision  as  well  as  the  Northumberland  Avenue  Case  w^ould  seem 
to  rest  upon  the  unwarranteil  assumption  that  any  circumstance 
which  would  vitiate  a  principal's  ratification  of  unauthorized 
acts  of  his  agent  would  vitiate  the  adoption  by  a  corporation  of  a 
pre-incorporation  contract  or  the  making  of  a  new  contract  on 
the  same  terms.  This  assumption  overlooks  the  fact  that  a  new 
contract  is  not  necessarily  voidable  on  account  of  mistake  of  law 
or  fact  which  would  vitiate  a  mere  ratification. 

§  332.  Implied  Adoption  or  Implied  New  Contract.  —  Cer- 
tainly, the  "adoption"  of  a  contract  of  the  promoters,  or,  what 
is  the  same  thing,  the  making  of  a  new  contract,  need  not  be 
express  but  may  be  impUed  from  circumstances,  and  no  formality 
is  required  except  such  as  would  be  requisite  in  an  entirely  new 
contract  of  a  similar  character.  Thus,  "if  it  could  make  an 
entirely  new  similar  contract,  without  the  use  of  its  seal  or  without 
writing,  or  without  formal  action  of  its  board  of  directors,  it  may 
also  adopt  an  agreement  assumed  to  be  made  for  it  in  advance 
by  promoters."  -  If  the  promoters  employ  an  advertising  agent 
for  a  year  and  the  corporation  when  formed  retains  him  in  its 
service,  that  fact  is  sufficient  evidence  to  warrant  the  jury  in  find- 
ing a  new  contract  by  the  corporation  for  the  same  period  and 
on  the  same  terms.^    Mere  failure  to  repudiate  liability  has  been 

Tex.  309;   Hoag  v.  Lamont,  16  Abb.  327;     Bond   v.    Pike    (Minn.),    Ill 

Pr.,    N.  s.    (N.  Y.).   91 ;    Church  v.  N.  W.  916. 

Church  Cementico  Co.,  75  Minn.  85,  Qucere,   is    the    adoption    of   the 

92;     77   N.    W.    548;     Kaeppler   v.  contract  by  the  corporation  a  proin- 

Red field  Creamery  Co.,    12   S.   Dak.  ise    to    pay  the    debt    of    the    pro- 

483;    81  N.  W.  907;    Ennis  Cotton  motens,  and  so  within  the  Statute 

Oil  Co.  V.  Burke,  39  S.  W.  966  (Tex.) ;  of  Frauds?    See  Stainsby  v.  Frazer's 

Pittsburg,  etc.  Mining  Co.  v.  Quintrell,  Metallic  Life  Boat  Co.,  3  Daly  (N.  Y.) 

9lTenn.  693;   20S.  W.  248;   Esper  98;     Little    Rock,    etc.    Ry.    Co.    v. 

V.  Miller,  91  N.  W.  613;    131  Mich.  Perry,  37  Ark.   164,   194  (headnote 

334  ;  Selover  v.  /.s/e  Harbor  Land  Co.,  misleadino;). 

91  Minn.  451;    98  N.  W.  .344  (con-  ^  McArthur    v.     Times    Printing 

tract  to  issue  stock  in  exchange  for  Co..  48  Minn.  319;    51  X.  W.  216; 

property);     Bond  v.    Pike   (Minn.),  31  Am.  St.  IJep.  653. 

Ill  N.  W.  916.  See    also    Pittsburg,    etc.    Mining 

'  Pitts  V.   Steele  Mercantile   Co.,  Co.   v.  Quintrell,  91  Tenn.  693 ;  20 

75  Mo.  App.  221,  231.  S.  W.  248. 

*  Battelle  v.  Xorthwestern  Cement,  But  see  Horowitz  v.  Broads  Mfg. 

etc.  Co.,  37  Minn.  89,  90;    33  N.  W.  Co.,  104  N.  Y.  Supp.  988. 

287 


§  333  PROMOTERS  [Chap.  VI 

held  insufficient  evidence  of  "adoption."*  It  has  been  said 
that  "whatever  would  amount  to  a  ratification  of  the  unauthor- 
ized acts  of  an  agent  would  be  sufficient  evidence  of  the  adoption 
of  the  contracts  of  a  promoter ; "  ^  but  the  authorities  generally 
hardly  justify  this  sweeping  assertion,  which  seems  to  involve 
the  same  confusion  of  ideas  criticised  in  the  last  paragraph. 

It  is  scarcely  necessary  to  say  that  if  the  company  confesses 
judgment  in  an  action  brought  against  it  on  the  contract,  it 
thereby  adopts  the  agreement  in  toto.'^ 

§  333.  Retention  of  Benefits  as  Evidence  of  Adoption.  —  The 
circumstance  most  often  seized  upon  to  prove  an  adoption  of 
promoters'  contracts  is  the  retention  by  the  company  of  the  bene- 
fits of  the  contracts.  And  indeed  the  voluntary  reception  of  the 
benefits  of  a  promoters'  contract  is  strong  evidence  to  establish 
a  contract  by  the  corporation  on  the  same  terms,  and  ought  in 
all  ordinary  cases  to  be  conclusive,  the  company  being  estopped 
to  deny  its  liability  on  a  contract  of  which  it  has  voluntarily 
received  the  benefits.* 

It  is  well,  however,  to  bear  in  mind  the  limits  upon  this  doc- 
trine. Thus,  the  Supreme  Court  of  Texas  speaking  through 
Associate  Justice  Gaines  said:  "Now  when  it  is  said  that  when 
a  corporation  accepts  the  benefits  of  a  contract  made  by  its 
promoters,  it  takes  it  cum  onere,  it  is  important  to  understand 
distinctly  what  is  meant.  There  is  so  far  as  this  matter  is  con- 
cerned a  radical  difference  between  a  promise  made  on  behalf 
of  the  future  corporation  in  the  contract  itself  the  benefits  of 
which  the  corporation  has  accepted,  and  the  promise  in  a  pre- 
vious contract  to  pay  for  services  in  procuring  the  latter  to  be 
made.    This  is  well  illustrated  by  the  facts  of  the  present  case : 

»  Tift  V.  Quaker  City  Nat.  Bank,  v.  N.  Y.,  etc.  Land  Co.,  134  N.  Y. 

141  Pa.  St.  550;   21  Atl.  660.  197,  211;    32  N.  E.  27;     Frankfort, 

*  Arapahoe  Investment  Co.  V.  Piatt,  etc.  Turnpike  Co.  v.  Churchill,  6 
5Colo.  App.  515,  518;  39Pac.  584.  T.   B.    Mon.    (Ky.)    427;    17    Am. 

^  Williams  v.  St.  George's  Harbor  Dec.   159;    Davis  v.   Valley  Electric 

Co.,  2  De  G.  &  J.  546.  Light    Co.,    61    N.    Y.    Supp.    580; 

*  Bomer  v.  American  Spiral,  etc.  Kaeppler  v.  Redfield  Creamery  Co., 
Co.,  81  N.  Y.  468;  Schreyer  v.  12  S.  Dak.  483;  81  N.  W.  907; 
Turner  Flouring  Mills  Co.,  29  Oreg.  Streator  Independent  Tel.,  etc.  Co. 
1;  43Pac.  719;  Paxton  Cattle  Co.  w.  v.  Continental  Tel.  Const.  Co.,  -217 
First  Nat.  Bank,  21  Nebr.  621,  644-  111.  577;  75  N  E.  546;  Chilcott  v. 
645;  33N.  W.  271;  59  Am.  St.  Rep.  Washington,  etc.  Colonization  Co. 
852;  Davis  V.  Dexter  Butter,  etc.  Co.,  (Wash.),  88  Pac.  113;  PosseU  v. 
52  Kans.  693;   35  Pac.  776;    Rogers  Smith  (Colo.),  88  Pac.  1064. 

288 


§  307-§  415]      RESPONSIBILITY    OF    CORPORATION  §  ooo 

Here  a  proposition  was  made  on  behalf  of  the  company,  by  its 
promoters,  that  if  a  bonus  should  be  subscribed  and  paid  to  it, 
it  would  build  its  road  between  certain  points,  and  would  carry 
coal  at  a  certain  stipulated  rate.  By  accepting  the  bonus,  the 
company  became  bound  to  fulfil  the  stipulations  of  the  contract. 
That  was  the  i)urden  which  it  took  with  the  benefit  of  the  agree- 
ment. But  it  also  appears  that  one  of  the  promoters  promised 
the  plaintiff  that  if  he  would  assist  in  procuring  subscribers  to 
the  i)onus,  the  company  would  pay  him  for  his  services.  This 
was  not  part  of  the  contract  the  benefits  of  which  were  taken 
by  the  defendant."  ' 

Moreover,  the  implicadon  of  a  contract  on  the  part  of  the 
company  from  the  retention  of  benefits  will  not  arise  where  the 
acceptance  of  the  benefits  is  without  knowledge  of  the  terms 
of  the  contract ;  ■  nor  unless  the  original  contract  was  made 
with  the  intent  that  the  company  should  become  bound.^  Furth- 
ermore, the  corporation  cannot  be  required  to  pay  for  legal 
expenses  incurred  for  the  drafting  of  its  incorporation  papers 
and  by-laws  merely  because  it  used  the  papers  so  prepared ;  * 
for  in  such  cases  the  benefits  of  the  contract  enure  to  the  com- 
pany without  any  voluntary  action  on  its  part.  So,  too,  where  a 
license  to  use  a  patent  is  granted  to  P,  the  consideration  being 
gauged  by  the  profits  of  a  company  intended  to  be  formed  to 
work  the  patent,  if  P  assigns  his  rights  to  a  trustee  for  the  pro- 
jected company  by  which  after  its  incorporation  the  contract 
between  P  and  the  trustee  is  adopted,  the  use  of  the  patent  by 
the  company  will  be  referable  to  the  contract  between  it  and  P 
and  will  therefore  furnish  no  ground  to  infer  a  contract  between 
it  and  the  original  licensor.^  So,  where  goods  are  sold  to  a 
promoter,  the  use  of  the  goods  by  the  corporation  in  pursuance 
of  a  transfer  from  the  promoter  does  not  tend  to  prove  the 

"  Weatherford,    etc.    Ry.     Co.     v.  Creamery,  etc.  Co.,  73  Pac.  83;    67 

Granger,  86  Tex.  350,  356 ;  24  S.  W.  Kans.  489.    See  also  infra,  §  344. 
795 ;  40  Am.  St.  Rep.  837.  *  Jones  v.  Smith  (Tex.),  87  S.  W. 

Cf.  also  Ilecla,  etc.  Mining  Co.  v.  210;     English    it    Colonial    Produce 

O'Xeill,  19  N.  Y.  Supp.  592.  Co.    (1906),  2   Ch.  435.     Cf.    infra, 

■  Pitts   V.   Steele   Mercantile   Co.,  §  338-§  340. 
75  Mo.  App.  221,  231.  *  Bagot    Pneumatic    Tyre    Co.    v. 

*  Davis,     etc.     Co.     v.    Hillsboro  Clipper  Pneumatic  Tyre  Co.  (1902), 

Creamery    Co..    10    Ind.    App.    42;  1  Ch.  146. 
37    N     E.    549;     Tryber    v.    Girard 
VOL.  I,  —  19                                   289 


§  334  PROMOTERS  [Chap.  "VT 

"  adoption  "  by  the  company  of  the  contract  between  the  original 
vendor  and  the  promoter.^ 

^  334.  Miscellaneous  Illustrations  of  Principle  that  "  Adoption  " 
is  really  a  New  Contract.  —  As  the  so-called  "adoption"  by  a 
corporation  of  a  contract  made  for  it  by  its  promoters  is  really 
the  making  of  a  new  contract,  the  agreement  is  not  within  that 
provision  of  the  Statute  of  Frauds  respecting  contracts  not  to 
be  performed  within  one  year  if  it  is  to  be  performed  within 
a  year  from  the  date  of  its  "adoption"  by  the  company.-  So, 
in  pleading,  it  is  not  necessary  to  set  out  that  the  agreement  was 
originally  made  by  the  promoters  and  adopted  by  the  company ; 
but  it  may  be  described  as  made  by  the  corporation.^  Where 
the  "adoption"  is  by  parol,  the  correct  form  of  action  against 
the  company  is  assumpsit  aUhough  the  original  contract  be  under 
seal.* 

The  adoption  of  a  contract  made  by  promoters,  being  in  legal 
effect  a  new  contract,  is  voidable  if  any  of  the  directors  who  took 
part  in  the  "adoption"  were  individually  interested  in  the  con- 
tract.^ But  the  contract  may,  it  has  been  held,  be  adopted  on 
behalf  of  the  company  by  the  very  promoter  by  whom  prior  to 
incorporation  it  was  made.® 

>  Koppel  V.  Mass.  Brick  Co.,  192  *  Swisshelm  v.  Sivissvale  Laundry 

Mass.  223  ;   78  N.  E.  128.  Co.,  95  Pa.  St.  367. 

2  McArthur  v.  Times  Printing  But  see  Wood  v.  Whelen,  93  111. 
Co.,  48  Minn.  319;  51  N.  W.  216;  153,  167  (where  the  facts  showed  an 
31  Am.  St.  Rep.  653.  adoption  by  the  corporation  of  the 

3  McArthur    v.     Times    Printing  seal  previously  attached) ;    Wiley  v. 
Co.,  48  Minn.  319,  322;    51  N.  W.  Borough  of  Towanda,  26  Fed.  594. 
216;  31  Am.  St.  Rep.  653  fBemble).  *  Munson  v.  Syracuse,  etc.  R.  R. 

But    see    Paxton    Cattle    Co.    v.  Co.,  103  N.  Y.  58,  63-64  ;  8N.  E.  355. 

First  Nat.  Bank,  21  Nebr.  621:  33  «  Pratt  v.  Oshkosh  Match  Co.,  89 

N.  W.  271;    59  Am.  St.  Rep.  852,  Wise.  406;    62  N.  W.  84;    Oakes  v. 

where   the   plaintiff   declared   on    a  Cattaraugus   Water  Co.,    143   N.   Y. 

promissory  note  made  by  the  pro-  430 ;  38  N.  E.  461 ;  26  L.  R.  A.  544 

moters   of   the   defendant   company  (but  see  strong  dissenting  opinion  of 

in  its  name  before  its  incorporation.  Gray,  J.).     It  has  been  said  that  less 

and  was  allowed  to  recover.     It  is  evidence    of    adoption    will    suffice 

submitted  that  the  plaintiff  should  where     the     officers    adopting     the 

have  counted  on  the  promise  of  tlie  contract    were    also    the    promoters 

corporation  to  pay  the  amount  of  by  whom  it  was  made  than  where 

the  note  which  was  to  be  implied  the     officers     and     promoters     are 

from    its    retaining    and    using    the  different    persons.     Hall    v.    Herter 

property  in  payment  for  which  the  Bros.,  83  Hun  19,  22  ;  31  N.  Y.  Supp. 

note  was  given.     See  Scadden  Flat,  692 ;  affirmed  short,  157  N.  Y.  694 ; 

etc.  Co.  V.  Scadden,  121  Cal.  33;  53  51  N.  E.  1091. 
Pac.  440. 

290 


§  307-§  415]      RESPONSIBILITY    OF    CORPORATION  §  337 

§  335.  Adoption  of  Ultra  Vires  Contract.  —  Clearly,  no  "  adop- 
tion "  by  a  c()rj)()ration  of  a  contract  made  by  promoters  on 
its  behalf  prior  to  its  incorporation  can  render  the  contract 
binding  upon  it,  if  the  contract  was  one  which  the  company  had 
no  power  to  enter  into  and  which  would  have  been  ultra  vire.f 
and  unenforceable  if  made  in  the  first  instance  by  the  company 
after  incorporation.' 

§  330.  Corporation  adopting  Lease  liable  as  Original  Lessee. 
—  The  efl'ect  of  "adoption  "  by  the  company  of  promoters"  con- 
tracts is  well  illustrated  by  ]^an  Schaick  v.  Third  Ave.  R.  R.  Co.- 
There,  a  lease  was  made  to  S,  who  by  a  contemporaneous 
collateral  agreement  declared  himself  trustee  for  a  certain  vol- 
untary association  or  for  any  company  that  might  be  organized 
to  take  its  place.  The  formation  of  a  corporation  was  then 
contemplated  for  this  purpose,  and  shortly  thereafter  the  de- 
fendant company  was  accordingly  incorporated.  This  corpo- 
ration, having  adopted  the  lease,  became  liable  in  equity,  so 
the  New  York  Supreme  Court  held,  to  pay  the  rent  reserved 
thereby  as  if  it  had  been  the  original  lessee,  so  that  the  liability 
could  not  be  avoided  by  any  assignment.  In  a  very  similar 
case,  the  Pennsylvania  Supreme  Court  went  even  further,  and 
held  that  the  lessor  could  not  collect  the  rent  from  the  pro- 
moter in  whose  name  as  lessee  the  lease  had  been  made,  the 
corporation  when  organized  having  adopted  the  contract  of 
lease ;  ^  but  this  decision  is  contrary  to  what  is  submitted  to  be 
the  sounder  doctrine  —  viz.,  that  a  promoter  who  incurs  lia- 
bility on  a  contract  is  not  discharged  by  the  subsequent  adop- 
tion of  the  contract  by  the  company.* 

§  337.  Effect  of  Fraud  of  Promoters  procuring  Original  Con- 
tract.—  Where  the  original  contract  was  ol)tained  by  the  fraud 
or  other  improper  conduct  of  the  promoters,  the  new  contract, 
or  contract  by  adoption,  with  the  company  is  not  necessarily 
tainted  with  the  same  infirmity.^  If,  however,  the  company 
at  the  time  of  the  "adoption"  of  the  contract  knows  that 
the  other  party  has  been  deceived  by  the  promoters  and  is  still 

■  First    Nat.     Bank    v.     Church         «  Hecknmn's  Estate,   172  Pa.  St. 
Federation,    105    N.    W.    578;     129    185;   33  .\tl.  552. 
Iowa  26S.  *  Infra,  §  361. 

'  Van  Schaick  v.  Third  Ave.  R.  R.  '  See  Central  Park  Fire  Ins.  Co. 
Co.,  49  Barb.  409.  v.  Callaghan,  41  Barb.  448. 

291 


§  338  PROMOTERS  .  [Chap.  VI 

laboring  under  a  mistake,  doubtless  the  defrauded  party  would 
be  relieved,  in  equity  at  least,  against  the  contract  with  the  cor- 
poration. The  question  has  most  frequently  arisen  in  the  case 
of  contracts  of  subscription  to  shares,^  which  are  peculiar  in 
some  respects,  so  that  one  cannot  be  sure  that  the  same  principles 
would  be  applied  to  other  contracts. 


§  338-§  340.     Quasi-contractual  Liability  for  Benefits  received 
under  a  Contract  which  has  not  been  Adopted. 

§  338.  On  Principle.  —  It  is  often  said  that  where  the  com- 
pany has  received  the  benefit  of  a  promoter's  contract,  it  should 
be  estopped  to  repudiate  its  own  liability  thereunder.  The  vol- 
untary reception  of  the  benefits  by  the  corporation  goes  a  great 
way  towards  establishing  a  new  contract,  and,  as  already  stated, 
ought  generally  to  be  conclusive.-  But  oftentimes  the  benefit 
enures  to  the  company  without  any  voluntary  acceptance  on  its 
part,  and  in  such  cases  on  principle  no  estoppel  seems  possible. 
The  liability  there  must  be  worked  out,  if  at  all,  on  some  theory 
of  quasi-contract.  But  if  the  general  principles  of  that  branch 
of  the  law  be  rigorously  applied,  recovery  is  not  possible;  for 
the  benefits  were  voluntarily  bestowed  upon  the  company  with- 
out any  request  on  its  part.  On  the  other  hand,  the  circum- 
stances attending  the  formation  of  a  corporation  are  in  many 
respects  so  peculiar  as  perhaps  to  justify  an  exception  to  the 
general  rules  of  quasi-contracts;  and  it  would  certainly  seem 
that  no  harm  could  result  from  holding  a  corporation  liable 
to  pay  a  reasonable  sum,  equivalent  to  the  benefit  actually 
received  by  it,  for  necessary  services  rendered,  or  necessary 
expenses  incurred,  on  its  behalf  prior  to  its  incorporation. 
Upon  this  principle,  it  should  be  observed,  the  measure  of 
recovery  would  not  be  the  value  of  the  promoter's  services  or 
the  amount  of  his  expenses  but  the  extent  of  the  benefit  to  the 
company. 

§  339.  The  English  Cases.  —  The  English  cases  decline  to 
adopt  any  sucli  doctrine,  and  clearly  hold  that  no  recovery  can 
be  had  against  a  corporation  for  benefits  conferred  upon  it  or 
expenses  incurred  on  its  behalf  prior  to  its  formation;  and  this 

*  See  supra,  §  257.  ^  See  supra,  §  333. 

292 


§  307-§  415]      RESPONSIBILITY    OF    CORPORATION  §  340 

is  the  rule  both  at  law  '  and  in  (-(luity.-  Somewhat  (lifficult  to 
reconcile  with  this  principle  are  tiie  cases  holding  tiiat  a  {pro- 
moter may  recoup  out  of  a  claim  of  the  company  for  his  secret 
profits  the  amount  which  he  has  expended  in  promoting  the 
company.''  These  latter  cases  proceed  upon  the  theory  that  the 
promoter  is  liable  only  for  his  net  profits ;  but  if  such  expenses 
are  properly  chargeable  to  the  private  pocket  of  the  promoter 
and  not  to  the  company,  then  the  former's  net  profit  should  be 
estimated  without  deducting  such  expenses.  However,  this  aj>- 
parent  inconsistency  seems  not  to  have  troubled  the  English 
courts. 

§  340.  The  American  Cases.  —  In  the  United  States,  the  Eng- 
lish rule  exempting  a  corporation  from  any  quasi-contractual 
liability  for  preliminary  expenses  is  adopted  by  some  courts;* 
but  otliers  recognize  a  quasi-contractual  liability  for  necessary 
preliminary  expenses  to  the  extent  of  the  benefits  received,  upon 
some  such  theory  as  that  suggested  in  the  preceding  paragraph.^ 

'  Melhado  v.  Porto  Allegre  Ry.  Ch.),  61  Atl.  721 ;  Wright  v.  St. 
Co.,  9  C.  P.  503.  Louis  Sugar  Co.  (Mich.),  109  N.  W. 

2  Re  Rotherham  Alum  Co.,  25  Ch.     1062. 

D.    103    (overruling    dictum    in    Re         As     to     whether    a    corporation 

Hereford  Waggon  Co.,  2  C\\  .Y).<S2\);  which    refuses  to  adopt   a  contract 

English     A     Colonial    Produce    Co.  made  with  promoters  is  liable  upon 

(1906),  2  Ch.  435.  a  quantum  meruit  for  benefits  con- 

CL  Otto  Electrical  Mfg.  Co.  (1906),  ferred  upon  it  in  pursuance  of  that 

2  Ch.  390.  contract,  see  Sullivan  v.  Detroit,  etc. 

3  Bagnall  v.  Carlton,  6  Ch.  D.  371 ;  Ry.  Co.  (Mich.)  64  L.  R.  A.  673 ;  135 
Emma  Silver  Mining  Co.  v.  Grant,  Mich.  661 ;  98N.  W.  756;  106  Am. 
11  Ch.  D.  918;    Lydney,  etc.  Co.  v.  St.  Rep.  403. 

Bird,  33  Ch.  D.  85.    See  infra,  §  382.         *  Low  v.  Connecticut,  etc.   R.   R. 

*  Rockford,  etc.  R.  R.  Co.  V.  Sage,  Co.,  45  N.  H.  370;  Grand  River 
65  111.  328;  16  Am.  Rep.  587;  Bridge  Co.  v.  Rollins,  13  Colo.  4; 
Hall  v.  Vermont,  etc.  R.  R.  Co.,  28  21  Pac.  897;  Morton  v.  Hamilton 
Vt.  401,  406;  Weatherford,  etc.  Ry.  College,  100  Ky.  281;  38  S.  W.  1; 
Co.  v.  Granger,  86  Tex.  350,  357;  35  L.  R.  A.  275;  Grier  v.  Hazard, 
24S.  W.  795;  40  Am.  St.  Rep.  837;  Hazard  &  Co.,  13  N.  Y.  Supp. 
Marchand  v.  Loan  S:  Pledge  Ass'n,  583;  Partners'  Bank  of  Vine  Grove 
26  La.  Ann.  389 ;  Tuttle  v.  George  H.  v.  Smith,  49  S.  W.  Rep.  810; 
Tw«/e  Co.  (Me.),  64  Atl.  496.  105    Ky.    816;    88    Am.    St.    Rep. 

See  also  Bell's  Gap  R.  R.  Co.  v.  341;  Perry  v.  Little  Rock,  etc.  Ry. 
Christy,  79  Pa.  St.  54  (headnote  Co.,  44  Ark.  383  (semble) ;  Taussig 
misleading);  Schmidt  v.  Xelke  Art  v.  St.  Louis,  etc.  R.  R.  Co.,  186  Mo. 
Litfwgraphing  Co.,  16  X.  Y.  Misc.  269;  85  S.  W.  378  (lawyer's  fees 
300,  37  N.  Y.  Supp.  113S;  Jones  v.  for  preparing  certificate  of  incor- 
Smith  (Tex.),  87  S.  W.  210.  poration). 

Cf.    Porch  V.  Agnew    Co.  (N.   J. 

293 


§  341  PROMOTERS  [Chap.  VI 

But  even  according  to  these  latter  authorities,  no  liabihty  exists 
unless  the  services  or  expenses  were  reasonahly  necessary  to  the 
organization  of  the  company.'  Where  the  English  rule  prevails, 
a  promise  by  the  company  after  its  incorporation,  and  therefore 
after  the  services  were  rentlered,  to  pay  for  them  is  nudum  'pac- 
tum and  unenforceable.-  The  distinctively  American  rule,  it  is 
submitted,  would  nowhere  be  applied  unless  the  services  were 
rentlered  under  a  general  understanding  that  they  should  be 
paid  for  by  the  company.^ 


§  341.  Effect  of  Provision  in  Incorporation  Paper  directing 
Payment  of  Preliminary  Expenses.  —  If  the  memorandum  or 
articles  of  association  of  an  English  company  authorize  or  direct 
the  payment  of  preliminary  expenses  out  of  the  company's  funds, 
the  other  party  acquires  no  right  of  action  against  the  corpora- 
tion to  enforce  such  payment;  but  the  directors  have  power  to 
pay  if  they  choose.* 

§  342.  Voluntary  Payment.  —  If  no  such  provision  is  con- 
tained in  the  memorandum  or  articles,  it  seems  that  in  England 
such  payment  is  without  consideration  and  therefore  ultra  vires;  ^ 
but  in  Connecticut  a  promissory  note  given  by  a  company  on  ac- 
count of  expenses  preliminary  to  its  incorporation  was  held  to  be 
enforceable.®  Where  the  memorandum  or  articles  authorize  the 
payment  of  a  specified  sum  to  a  promoter  for  his  labor  in  form- 

'  Weatherford,    etc.    Ry.    Co.    v.  314,  323;    BelVs  Gap  R.  R.  Co.  v. 

Granger,  86  Tex.  350 ;  24  S.  W.  795 ;  Christy,  79  Pa.  St.  54;  21  Am.  Rep.  39. 
40  Am.  St.  Rep.  837.  ■•  Bank  of  Turkey  v.  Ottoman  Co., 

^  New    York,    etc.    R.    R.    Co.    v.  2  Eq.  366 ;   Melhado  v.  Porto  Allegre 

Ketchum,  27  Conn.    170;     Tuttle  v.  Ry.  Co.,  9  C.  P.  503.     Cf.  Hawkeye 

George  H.Tutde  Co.  (Me.),  GiAtl.49G.  Co.  v.  Bank,  157  Fed.  253. 

^  West  Point  Tel.,  etc.  Co.  v.  Rose,         As  to  the  right  of  a  solicitor  to 

76  Miss.  61 ;  23  So.  629.  apply  sums  paid  him  by  the  com- 

Cf.    Savin    v.    Hoylake    Ry.    Co.,  pany  to  payment  of  his  charges  for 

L.  R.  1  Ex.  9;    Hinkley  v.  Sac  Oil,  preparing  the  incorporation  papers, 

etc.  Co.  (Iowa),  107  N.  W.  629,  631.  see  English  &  Colonial  Produce  Co. 

By  some  courts  it  seems  to  have  (1906),  2  Ch.  435,  440-441  (head- 
been  thought  that  the  corporation  note  inadequate), 
is  liable  if  the  benefits  were  conferred  ^  Ex  parte  Pelly,  21  Ch.  D.  490. 
at  the  request  of  a  majority  of  the  *  Smith  v.  New  Hartford  Water 
promoters  but  not  otherwise  —  a  Co.,  73  Conn.  626;  48  Atl.  754. 
rule  very  difficult  of  application.  Cf.  Bond  v.  Pike  (Minn.),  Ill 
Clarke  v.  0.  &  S.  W.  R.  R.,  5  Nebr.  N.  W.  910. 

294 


§  307- §  415]       RESPONSIBILITY    OF    CORPORATION  §  343 

ing  the  corporation,  the  directors  have  authority  to  pay  him  that 
amount  without  retjuiriiif^  from  liim  any  itemized  account,'  or 
indeed  even  if  the  amount  l)e  excessive.-  Hut  where  the  authority 
given  to  the  directors  is  simply  in  general  terms  to  pay  tiic  ex- 
penses of  the  company's  formation,  they  may  not  pay  a  lump 
sum  for  that  pur|X)se;^  and  if  the  lump  sum  so  paid  be  clearly 
in  excess  of  the  expenditures,  it  seems  that  the  payment  is  ulfra 
vires  of  the  corporation.* 

§  343.  Effect  of  Statutes  directing  Payment.  —  Sometimes 
statutes  expressly  direct  the  payment  by  corporations  of  the  ex- 
penses preliminary  to  their  formation ;  and  in  that  case,  a  pro- 
moter may  sue  the  company  in  an  action  of  debt  grounded  on 
the  statute  for  his  labor  and  outlay  in  and  about  its  incorpora- 
tion.^ This  statutory  right  does  not  extend,  however,  to  a  case 
where  the  promoter  agrees  with  his  co-promoters  to  render  his 
services  gratuitously;  and  the  corporation  may  plead  such 
agreement  as  an  equitable  defence  to  the  action.^  But  a  promise 
by  the  promoter  with  certain  of  the  subscribers  to  the  capital  of 
the  company  that  they  shall  incur  no  liability  if  the  scheme  prove 
abortive  does  not  prevent  him  from  proceeding  against  the  cor- 
poration under  this  statute ;  the  only  remedy  of  the  shareholders 
is  by  an  action  against  the  promoter  on  his  contract,  which  was 
really  one  of  indemnity.''  Such  statutes  give  no  right  of  recourse 
against  the  company  to  a  person  who  was  employed  by  one  of 
the  promoters  as  clerk  or  otherwise,  and  that  whether  he  be  a 
servant  or  independent  contractor,*  The  effect  of  such  statutes 
is  to  make  the  preliminary  expenses  a  debt  of  the  company  and 
as  such  enforceable  in  the  same  way  as  other  debts,  for  example, 
by  scire  facias  against  the  shareholders,  where  such  a  proceeding 
for  enforcement  of  debts  of  the  company  is  authorized  by  law.* 
Where  a  statute  imposes  upon  the  company  a  liability  for  certain 

'  Crosky  v.  Bank  of  Wales,  4  Giff.  253 ;    Low  v.  Connecticut,  etc.  R.  R. 

314.  Co.,  45  N.  H.  370,  380. 

"  Anglo-Greek  Steam  Co.,  2  Eq.  1,        '  Savin  v.  Hoylake  Ry.  Co.,  L.  R. 

7  (semble),  per  Lord  Romilly.  1  Ex.  9. 

^  Re    Englefield    Colliery    Co.,    8         ^  Re  Brampton  &  Longtown  Ry. 

Ch.  D.  388.  Co.,  10  Ch.  177. 

*  Mann    v.    Edinburgh    Northern         *  Re  Kent  Tramways  Co.,  12  Ch. 

Tramways  Co.  (1893).  A.  C.  69.  D.  312:   Ex  parte  Hanly,  41  Ch.  D. 

»  Tilson   V.    Warwick    Gas   Light  215. 
Co.,   4    B.    &    C.    962;     Carden    v.        »  Clowes  v.  Brettell,  11  M.  &  "W. 

General  Cemetery  Co.,  5  Bing.  N.  C.  461. 

295 


§  344  PROMOTERS  [Ch.\p.  VI 

preliminary  expenses,  such  as  fees  for  registration  of  the  incor- 
poration paper,  a  soHcitor  who  pays  such  charges  is  entitled  to 
reimbursement  from  the  company.^ 

§  344-§  346.     Rule  in   Cases  where  Promoters  when  making 
Contract  did  not  intend  a  Future  Corporation  to  be  bound. 

§  344.  In  general.  —  In  all  the  cases  considered  above,  the 
promoters  contemplated  at  the  date  of  the  contract  the  forma- 
tion of  a  company,  and  intended  that  the  latter  should  be  bound. 
Different  considerations  apply  where  those  who  afterwards  or- 
ganized the  company  did  not  at  the  time  of  the  contract  intend 
that  a  prospective  corporation  should  be  bound  —  did  not,  so  to 
speak,  make  the  contract  on  behalf  of  a  prospective  corpora- 
tion.^ In  an  Alabama  case,  the  members  of  a  partnership  con- 
tracted not  to  engage  in  selling  plough-stocks  or  plough-blades. 
Subsequently,  they  formed  a  corporation,  in  which  they  them- 
selves held  nearly  if  not  quite  all  the  shares,  to  carry  on  that  very 
business.  The  court  held  that  this  company  was  not  bound 
by  this  contract  of  its  promoters;  and,  therefore,  could  not  be 
enjoined  from  selling  plough-stocks  and  plough-blades,  unless 
its  formation  were  a  mere  fraud,  to  enable  its  promoters  and 
members  to  evade  their  obligations.^  If  fraud  had  existed,  the 
corporation  would  have  been  liable,  not  because  it  was  bound  by 
the  contract,  but  because  its  members  would  not  be  allowed  in 
equity  to  work  a  fraud  under  cover  of  the  corporate  fiction.*  A 
corporation  is  a  legal  entity;  but  it  must  not  commit  torts  or 
perpetrate  frauds.  Similarly,  a  court  of  equity  will  enjoin  a 
corporation  from  infringing  a  patent  the  validity  of  which  the 
chief  promoter  was  estopped  to  deny,  the  company  having  been 
organized  to  enable  him  to  perpetrate  the  fraud.^ 

1  English  &  Colonial  Produce  Co.  87  Md.  400,  424 ;    40  Atl.  171 ;    67 
(1906),  2  Ch.  435,  439.  Am.  St.  Rep.  357 ;  40  L.  R.  A.  632. 

2  Tryber  v.  Girard  Creamery,  etc.         *  See  Higgins  v.  California  Petro- 
Co.,  73  Pac.  83  ;  67  Kans.  489.  leum,  etc.  Co.,  122  Cal.  373  ;  55  Pac. 

Cf.   Grand  Rapids  Furniture  Co.  155;    Iliggins    v.    California    Petro- 

V.  Grand  Hotel,  etc.  Co.,  70  Pac.  838 ;  leum,  etc.  Co.,  81  Pac.  1070 ;  147  Cal. 

72  Pac.  687;    11  Wyo.  128.  363;    First  Nat.   Bank   v.    Trebein, 

See  also  supra,  §  3.30.  59  Oh.  St.  316;   52  N.  E.  834. 

8  Moore,    etc.    Hardware    Co.    v.         '^  Siemens-Halske  Electric  Co.  v. 

Towers  Hardware  Co.,  87  Ala.  206;  Duncan  Electric  Mfg.  Co.,  142  Fed. 

6  So.  41 ;    13  Am.  St.  Rep.  23.  157 ;   73  C.  C.  A.  375. 

Cf.  Bagby  &  Rivers  Co.  v.  Rivers, 

296 


§  307-§  415]       RESPONSIBILITY    OF    CORPORATION  §  346 

§  345.  Assumption  of  Contract  by  Company.  —  A  corporation 
may  expressly  agree  to  assume  the  hunleii  of  contracts  which 
were  made  before  its  formation,  Vjut  not  on  its  behalf  or  with  a 
view  to  its  creation,  just  as  any  individual  may  for  a  considera- 
tion assume  the  indebtedness  of  another.'  For  instance,  in  the 
Alabama  case  stated  in  the  last  paragraph,  it  was  held  that  the 
company  might  adopt,  or  assume  the  burden  of,  the  contract  not 
to  sell  plough-stocks  or  plough-blades.-  The  facts  may  be  suffi- 
cient to  establish  a  novation.^ 

§  346.  Corporation  formed  to  take  over  Business  of  a  Firm. 
—  These  principles  have  found  their  most  frequent  application 
in  cases  where  a  corporation,  formed  to  take  over  a  business  pre- 
viously carried  on  by  a  co-partnership,  assumes  the  burden  of 
the  firm's  debts  and  contracts."     It  is  sometimes  thought  that 

'  See     Waterman's     Appeal,    26  Supp.  692;  90  Hun  280;   35  N.  Y. 

Conn.  96.  Supp.    769;     157    N.    Y.    694;    51 

Cf.  White     V.      Westport     Cotton  N.     E.     1091 ;    Reed    Bros.    Co.    v. 

Mfg.     Co.,     1     Pick.    (Mass.)    215  First  X at.   Bank.  46  Nebr.  168;  64 

(headnote  inadequate) ;  11  Am.  Dec.  N.  W.  701 ;  Johnston  v.  Grumble,  19 

168;   North  American,  etc.  Trust  Co.  So.  Rep.   100  (Mis.s.);    Bremen  Sav- 

V     Colonial,    etc.    Mortgage    Co.,    83  ings    Bank  v.    Branch-Brookes   Saw 

Fed.  796;    28  C.  C.  A.  88.     In  the  Co.,   104  Mo.  425;    16  S.  W.  209; 

following  cases,   assumption  of  the  Lamkin  v.  Baldwin,  etc.  Co.,  72  Conn. 

contract    by    the    corporation    was  57;    43  .\tl.  593,  1042;    44  L.  R.  A. 

held    not    to    have    been    proved.  786;     Williams  v.    Colby,   6  N.   Y. 

Church    v.    Church    Cementico    Co.,  Supp.    459;    53    Hun    637;   Andres 

75  Minn.  85 ;  77  N.  W.  548 ;  Minne-  v.    Morgan,   62   Ohio    St.   236 ;    56 

apolis  Trust  Co.  v.  Clark,  47  Minn.  N.  E.  875;   78  Am.  St.  Rep.    712; 

108;     49    N.    W.    386;     Austin    v.  Schufeldt  v.  Smith,  139  Mo.  367 ;   40 

Tecumseh  Bank,  49  Nebr.  412;    68  S.  W.  887;    Lemars  Shoe  Co.  v.  Le- 

N.  W.  628:    59  Am.  St.  Rep.  543;  mars  Shoe  Mfg.  Co.,  89  111.  App.  245, 

35  L.  R.  A.  444.  254-255     (voluntary    payment    by 

2  Moore,  etc.  Hardware  Co.  v.  corporation  held  not  ultra  vires) ; 
Towers  Hardware  Co.,  87  Ala.  206,  Qiiee  Drug  Co.  v.  Plaid,  55  N.  Y. 
213;   6  So.  41;    13  Am.  St.  Rep.  23.  App.  Div.  87;    67  N.  Y.  Supp.  10. 

3  See  Louis  Cook  Mfg.  Co.  v.  See  also  Haslett  v.  Wotherspoon,  2 
Randall,  62  Iowa  244;  17  N.  W.  Rich.  Eq.  (S.  Car.)  395;  Louis  Cook 
507 ;  Whitwell  v.  Warner,  20  Vt.  Mfg.  Co.  v.  Randall,  62  Iowa  244 ; 
425,  443;  Snow  v.  Thompson  Oil  17N.  W.  507;  Calumet  Paper  Co.  y. 
Co.    59  Pa.  St.  209.  Stotts  Investment  Co.,  96  Iowa  147; 

♦'  In  the  following  cases,  an  as-  64  N.  W.  782 ;  59  Am.  St.  Rep.  362. 
sumption  by  the  corporation  of  the  In  the  following  cases  an  as- 
firm  indebtedness  was  held  to  have  sumption  by  the  corporation  was 
been  proved.  Waterman's  Appeal,  held  not  to  have  been  proved.  Dur- 
26  Conn.  96;  Burke  v.  Lincoln-  latcher  v.  Frazer,  S  Wyo.  59;  55 
Valentine  Co.,  28  N.  Y.  Misc.  202;  Pac.  306;  80  Am.  St.  Rep.'  918; 
58  N.  Y.  Supp.  1077,  1124;  Hall  v.  White  v.  Westport  Cotton  .Mfg.  Co., 
Herter  Bros.,  83  Hun  19;  31  N.  Y.  1  Pick.  215;   11  Am.  Dec.  168;  Mc- 

297 


§346 


PROMOTERS 


[Chap.  VI 


where  a  firm  transfers  all  its  assets  to  a  corporation  in  which  the 
former  partners  own  all  the  shares,  the  corporation  becomes  liable 
for  the  debts  of  the  firm  without  any  express  or  implied  assump- 
tion thereof;  '  but  this  notion  rests  on  the  unfounded  belief  that 
in  no  other  way  can  the  firm  creditors  be  protected.  That  such 
belief  is  without  foundation  is  evident.  For  if  the  transfer  of  the 
partnership  property  to  the  corporation  hinders  or  delays  the  firm 
creditors,  they  may  treat  the  transfer  as  a  fraudulent  convey- 
ance, and  subject  the  property  to  payment  of  their  claims  in  the 
hands  of  the  corporation  as  a  fraudulent  grantee."  This  remedy 
is  ample ;  and,  therefore,  to  hold  the  corporation  liable  as  debtor 
in  the  firm's  stead  without  any  voluntary  assumption  by  it  of 
that  position  would  be  a  gratuitous  violation  of  legal  principle, 
and  has  not  met  with  general  favor.^    Where,  however,  the  cor- 


Lellan    v.    Detroit    File    Works,    .56    having  expressly  assumed  all  debts 


Mich.  579;  23  N.  W.  321;  Dingel- 
dein  v.  Third  Ave.  R.  R.  Co.,  9 
Bosw.  (N.  Y.)  79 ;  Ruby  Chief,  etc. 
Co.  V.  Gurley,  17  Colo.  199,  202 ;  29 
Pac.  668;  Hand  v.  Evans  Marble 
Co.,  88  Md.  226;  40  Atl.  899  (where 
recovery  was  denied  on  the  ground 
of  lack  of  privity  between  the  plain- 
tiff and  the  corporation) ;  Cidherson 
v.  Ala.  Const.  Co.  (Ga.),  56  S.  E.  765. 

Cf.  Bradley  Fertilizer  Co.  v. 
South  Publishing  Co.,  17  N.  Y.  Supp. 
587. 

As  to  the  bearing  of  the  statute 
of  frauds  on  such  transactions,  see 
Georgia  Co.  v.  Castleberry,  43  Ga. 
187;  Schufeldt  v.  Smith,  1.39  Mo. 
367,  377;  40  S.  W.  887;  Water- 
man's Appeal,  26  Conn.  96,  109; 
Calumet  Paper  Co.  v.  Stotts  Invest- 
ment Co.,  96  Iowa  147;  64  N.  W. 
782 ;   59  Am.  St.  Rep.  362. 

As  to  the  conversion  of  a  firm 
into  a  corporation  in  pursuance  of 
a  provi-sion  in  the  partnership  arti- 
cles, see  Hennessy  v.  Griggs,  1 
N.  Dak.  .52 ;    44  N.  W.  1010. 

'  Cf.  Baker  Furniture  Co.  v.  HaU 
(Nebr.),  107  N.  W.  117  (reversed  on 
re-hearing  in  111  N.  W.  129);  Du 
Vivier  v.  Gallice,  149  Fed.  118;  80 
0.  C.  A.  556  (where  the  corjwration 


shown  on  the  books  of  the  partner- 
ship was  held  liable  for  a  debt  not 
so  shown). 

^  Bank  v.  Hollingsworth,  135 
N.  Car.  556;  47  S.  E.  618  (semble) ; 
Colorado  Trading,  etc.  Co.  v.  Acres 
Commission  Co.  (Colo.),  70  Pac.  954 ; 
18  Colo.  App.  253. 

Cf.  Shumaker  v.  Davidson,  87 
N.  W.  441;  116  Iowa  569 ;  Bristol, 
etc.  Trust  Co.  v.  Jonesboro.  etc.  Trust 
Co.,  101  Tmin.  545;  48  S.  W.  228 
(similarity  between  name  of  cor- 
poration and  name  of  firm  not 
sufficient  to  establish  fraud  in  law 
where  no  fraud  in  fact  intended) ; 
Thorpe  v.  Pennock  Mercantile  Co. 
(Minn.),  108  N.  W.  940;  Fi^st  Nat. 
Bank  v.  Trebein,  59  Ohio  St.  316; 
52  N.  E.  834.     See  also  infra,  §  1089. 

'  McLellan  v.  Detroit  File  Works, 
56  Mich.  579;  23  N.  W.  321  (where 
the  members  of  the  corporation 
were  the  members  of  the  firm) ; 
Georgia  Co.  v.  Castleberry,  43  Ga. 
187 ;  Hand  v.  Evans  Marble  Co., 
88  Md.  226 ;  40  Atl.  899 ;  Bank  v. 
Hollingsworth,  135  N.  Car.  556;  47 
S.  E.  618;  Culberson  v.  Ala.  Const. 
Co.  (Ga.),  56  S.  E.  765;  Baker  Fur- 
niture Co.  v.  HaU  (Nebr.),  Ill  N,  W. 
129. 


298 


§  307-§  415]      RESPONSIBILITY    OF    CORPORATION  §  347 

poration  was  composed  chiefly  or  entirely  of  the  members  of  the 
firm  and  has  taken  a  transfer  of  all  its  assets,  an  intention  on 
the  corporation's  part  to  assume  the  firm  indebtedness  may  be 
the  more  readily  implied;  less  evidence  of  an  actual  intention 
to  assume  such  burden  is  re(juired  than  where  the  corporation  is 
composed  of  strangers.  It  has  been  held  that  creditors  of  a  cor- 
poration whose. claims  arose  in  the  course  of  its  business  are 
entitled  to  a  preference  in  respect  to  the  corporate  a.ssets  over 
partnership  creditors  whose  claims  the  corjjoration  has  a.ssumed ;' 
but  the  contrary  view  has  at  least  equal  support,  and  is,  it  is  sub- 
mitted, preferable.^  Where  the  firm  is  indebted  to  one  of  the 
partners,  by  way  of  compensation  for  sums  drawn  out  by 
the  other  partners,  such  indebtedness  upon  its  assumption  by 
the  corporation  does  not  become  a  lien  on  the  property  trans- 
ferred by  the  firm  to  the  corporation,  but  the  creditor  partner 
becomes  merely  a  general  creditor  of  the  corporation.^ 


§  347.  Appointment  of  Agents  for  Future  Corporation.  — 
As  promoters  cannot  bind  the  future  corporation  by  contract,  so 
neither  can  they  bestow  on  others  any  authority  to  contract  on 
the  company's  behalf ;  and  if  they  purport  to  do  so,  the  attempt 
is  wholly  nugatory,  and  remains  so  even  after  the  corporation  is 
formed,  unless  their  acts  be  confirmed  by  the  directors  or  other 
competent  authority.  Hence,  a  mortgage  executed  by  the  com- 
pany's officers  in  pursuance  of  an  authority  attempted  to  be  con- 
ferred by  the  promoters  prior  to  incorporation  is  not  binding  on 
the  company. ''  It  would  perhaps  be  otherwise  if  the  authority 
were  conferred  by  the  incorporation  paper ;  for  as  already  stated, 
promoters  have  unquestionable  power  to  bind  the  future  corpora- 
tion by  shaping  its  constitution.  Thus,  the  directors  named  in 
the  incorporation  paper  have  the  same  power  as  other  directors.^ 

'  Lamkin  v.  Baldwin,  etc.  Co.,  72         '  Francklyn  v.  Sprague,  121  U.  S. 

Conn.   57;    42   Atl.   593,    1042;     44  215;  7  Sup.  Ct.  951. 
L.  R.  A.  786.  *  Blood  v.  La  Sererja,  etc.  Co.,  113 

CL  Thorpe  y.  Pennock  Mercantile  Cal.   221;  41     Pac.     1017;    45   Pac. 

Co.  (Minn.).  108  N.  W.  940.  252. 

'  Schufeldt  V.  Smith,  139  Mo.  367;         »  Supra,  §  168. 
40  S.   W.  8S7:    Loit(ion   v.   Bynum, 
136  N.  Car.  411;  48  S.  E.  764. 

299 


§348 


PROMOTERS 


[Chap.  VI 


§  348.  Whether  Knowledge  of  Promoters  imputable  to  Cor- 
poration. —  As  promoters  are  not  prior  to  incorporation  agents 
of  the  company  or  capable  of  binding  it,  their  knowledge  of  an 
outstanding  equity  against  property  to  be  transferred  to  the 
corporation  is  not  imputable  to  the  latter,  and  will  not  deprive 
it  of  the  rights  of  a  bona  fide  purchaser.'  But  this  doctrine 
cannot  be  used  as  a  cover  for  fraud,  for  the  protection  of  parties 
who  organize  themselves  into  a  corporation  to  escape  from  a 
trust  to  which  they  are  subject.^  Indeed,  cases  of  this  latter  sort 
may  be  supported  on  the  ground  that  the  company  is  affected 
witii  notice,  not  of  what  its  promoters  knew  before  its  organiza- 
tion, but  of  what  its  members  and  officers  knew  after  its  forma- 
tion when  it  acquired  title  to  the  property. 

§  349.  Admissions  of  Promoters.  —  Admissions  of  promoters 
made  prior  to  incorporation  are  not  evidence  against  the 
company.^ 

§   350- §   356.      RIGHT    OF    CORPORATION    TO    THE    BENEFIT    OF 
ACTS    OF    PROMOTERS. 

§  350.  Suits  on  Contracts  made  prior  to  Incorporation.  — 
The  right  of  a  corporation  to  sue  on  a  contract  made  on  its  behalf 
prior  to  incorporation  depends  in  general  upon  the  same  prin- 


1  Davis,  etc.  Wheel  Co.  v.  Davis, 
etc.  Wagon  Co.,  20  Fed.  699;  Burt 
v.  Batavia  Paper  Mfg.  Co.,  86  111. 
66;  Mercantile  Nat.  Bank  v.  Par- 
sons, 54  Minn.  56;  .55  N.  W.  825; 
40  Am.  St.  Rep.  299 ;  Grand  Rapids 
Furniture  Co.  v.  Grand  Hotel,  etc. 
Co.,  70  Pac.  8.38;  72  Pac.  687;  11 
Wyo.  128. 

Cf.  Brennan  v.  Emery-Bird- 
Thayer  Dry  Goods  Co.,  99  Fed.  971  ; 
Mercantile  Nat.  Bank  v.  Parsons,  54 
Minn.  56,  65;  55  N.  W.  825;  40 
Am.  St.  Rep.  299  (where  the  court 
said  that  notice  to  some  of  the  cor- 
porators would  not  be  imputed  to 
the  company  but  tliat  notice  to  all 
of  them  would  be). 

But  see  Oregon,  etc.  Nav.  Co.  v. 
Balfour,  90  Fed.  295,  .300;  3.3 
C.  C.  A.  57;  Zeigler  v.  Valley  Coal 
Co.  (Mich.),  113  N.  W.  775. 


2  National  Conduit  Co.  v.  Con- 
necticut Pipe  Mfg.  Co.,  73  Fed.  Rep. 
491,  495;  Holloway  &  McRaney  v. 
Brame,  36  So.  1 ;  83  Miss.  335 ;  Re 
Slobodinsky  (1903),  2  K.  B.  517; 
Carter  v.  Gray  (Ark.),  96  S.  W.  377; 
Cumberland  Coal  Co.  v.  Sherman,  30 
Barb.  (N.  Y.)  ,553;  Hoffman  Coal 
Co.  V.  Cumberland,  etc.  Co.,  16  Md. 
456;    77  Am.  Dec.  311. 

Cf.  Young  Reversible  Lock-Nxd 
Co.  V.  Young  Lock-Nut  Co.,  72  Fed. 
Rep.  62,  6-5-66 ;  McElwee  Mfg.  Co. 
V.  Trowbridge,  62  Hun  471;  17 
N.  Y.  Supp.  3;  Texas  Loan  Agency 
V.  Hunter,  13  Tex.  Civ.  App.  402, 
409  ;  35  S.  W.  399  ;  California  Con- 
solidated Mining  Co.  v.  Manley,  81 
Pac.  50;  10  Idaho,  786;  McCourl 
V.  Singers-Bigger,  145  Fed.  103. 

«  McCallum  v.  Pur  sell  Mfg.  Co., 
1    N.    Y.    Supp.    428;     Horowitz   v. 


300 


I 


§  307-§  415]  KiGJiTs  (IF  couroKA'i'ioN  §  ;j.j1 

ciples  us  govern  its  lial)ility  on  such  contracts.  Unless  \x)t\\  are 
hound,  neitlier  is  hound,  is  the  rule  in  such  cases.'  But  in  juris- 
<iictions  where  a  stranger  to  a  contract  of  which  he  is  a  benefi- 
ciary is  alio  well  to  sue  thereon,  a  corporation  may  .sometimes  sue 
as  a  beneficiary  of  contracts  entered  into  with  its  j)romoters  be- 
fore its  incorjjoration.  ^Moreover,  a  corjwration  may  clearly 
become  entitled  by  assignment  to  sue  on  such  contracts,-  or  by 
novation,  the  company  may  become  the  obligee.^  Moreover,  ex- 
press statutes  sometimes  enable  corporations  to  enforce  contracts 
made  on  their  behalf  prior  to  incorporation.^ 

§  351-§  354.     Conveyances  made  for  Company's  Benefit  prior 
to  Incorporation. 

§  351.  In  general. — -The  right  of  a  company  to  avail  itself 
of  conveyances  of  property  made  for  its  benefit  stands  on  a 
wholly  different  footing.  For  in  the  nature  of  tilings,  there  is  no 
reason  why  a  corporation  when  formed  should  not  be  entitled 
to  the  benefit  of  unilateral  conveyances  —  e.  g.,  by  deed  poll  — 
which  require  no  execution,  or  contemporaneous  assent,  by  the 
grantee.  As  soon  as  the  company  is  formed  the  previous  con- 
veyance should  enure  to  its  benefit,  although  possibly  the  trans- 
fer might  in  the  meantime  be  revocable  by  the  grantor.  In  the 
case  of  real  property,  the  feudal  principle  invalidating  convey- 
ances of  freehold  interests  to  take  efi'ect  ///  fnturo  would  have  con- 
stituted an  insuperable  obstacle  at  common  law ;  for  ob\iously 

Broads  Mfg.  Co.,   104  N.  Y.  Supp.  erty  to  be  turned  over  to  it,  they 

988.  would  return  some  of  the  shares  to 

Cf.  First  Xat.  Bank  v.  Armstrong,  the  company  as  trea-sury  stock). 
42  Fed.   193.   ,  Cf.  Wiley  v.  Borough  of  Towanda, 

'  Penn    Match  Co.   v.   Hapgood,  26  Fed.  594. 
141  Mass.   145;    7  X.  E.  22.     For         =»  Cf.  S]/racuse,  etc.  R.  R.  Co.  v. 

cases  in  which  corporations  sought  Gere,  4  Hun  (N.  Y.),  392. 
ill  vain  to  enforce  agreements  made         '  Cf.   Valk  v.  Crandall,   1  Sandf. 

by   their  j)romoters,   see   Ireland  v.  Ch.  (N.  Y.)   179,   182;    Re  Thomas, 

(ilohe    Milling,    etc.    Co.,    20    R.    I.  14  Q.  B.  D.  379  (where  the  original 

190;     38    Atl.    116;     Flanagan    v.  contract   was  illegal  and   void   but 

Lyon,    105  N.   Y.   Supp.    1049;    54  where   the   new   contract   ^\•ith   the 

N.   Y.   Misc.  372   (holding  tliat  the  corporation  was  valid), 
corporation   cannot   sue   for  breach         *  See    Cumberland    Land    Co.    v. 

of  an  agreement  among  promoters  Daniel  (Tenn.),  52  S.  W.   446,  ap- 

inter   sese   whereby    they    promised  plying  Tenn.  Acts,  1875,  Chap.  142 

tliat  upon   receiving  from   the   cor-  §  29. 
poration  stock  in  exchange  for  prop- 

301 


§352 


PROMOTERS 


[Chap.  VI 


there  could  he  no  conveyance  in  presenti  to  a  non-existent  per- 
son. But  since  the  Statute  of  Uses,  a  conveyance  of  land  may  be 
made  to  take  effect  in  futiiro  as  a  springing  use,  and  such  a 
springing  use  may  be  raised  in  favor  of  a  corporation  formed 
after  the  execution  of  the  deed ;  and  a  similar  limitation  in  a  will 
may  be  effective  as  an  executory  devise/  So,  conveyances  to 
charitable  and  pious  uses  may  be  made  to  remain  in  abeyance 
until  the  incorporation  of  the  grantee,  after  which  they  become 
operative.-  The  notion,  therefore,  which  must  be  admitted  to 
be  to  some  extent  prevalent,  that  a  corporation  when  organized 
cannot  take  advantage  of  conveyances  made  in  its  favor  before 
its  organization,  would  seem  not  to  represent  the  law.^  A  lease, 
or  other  bilateral  conveyance,  requiring  execution  both  by 
grantor  and  grantee,  stands  on  a  different  footing.* 

§  352.  Trusts  for  Future  Corporation.  —  A  fortiori,  property 
may  be  settled  in  trust  for  a  corporation  to  be  thereafter 
formed,  and  this  trust  may  be  enforced  in  chancery  upon  the 
ordinary  principles  of  equity  by  the  company,  when  organized, 


'  Inglis  V.  Trustees  of  Sailors' 
Snug  Harbour,  3  Pet.  99,  II0-II6. 

2  Town  of  Pawlet  v.  Clark,  9 
Cranch  292. 

Cf.  Fadness  v.  Baunberg,  73 
Wise.  257;    41  N.  W.  84. 

See  Gray  on  Perpetuities,  2d  ed., 
§§  607  et  seq. 

3  Dijer  V.  Rich,  1  Mete.  (Mass.) 
180,  190;  Hatch's  Wharf  Co.  v. 
Judd,  108  Mass.  224;  American 
Silk  Works  v.  Salomon,  4  Hun  135 ; 
Bank  v.  Lumber  Co.,  32  W.  Va.  357 ; 
9  S.  E.  243  ;  3  L.  R.  A.  583 ;  Sumter 
Tobacco  Warehouse  Co.  v.  Phoenix 
Ins.  Co.  (S.  Car.),  56  S.  E.  654 
(headnote  inadequate). 

Cf.  Sayward  v.  Gardner,  5  Wash. 
247,  256;  31  Pae.  761 ;  33  Pac.  .389; 
Rathbone  v.  Tioga  Nav.  Co.,  2  Watts 
&  Serg.  (Pa.)  74,  78-79;  African 
M.  E.  Church  v.  Conover,  27  N.  J.  Eq. 
157  ;  Cumberland  Land  Co.  v.  Daniel 
(Tenn.),  52  S.  W.  446  (decided  under 
a  statute  wliich  was  construed  to 
entitle  the  corporation  to  the  benefit 
of  the  conveyance) ;  Mt.  Carmel 
Td.  Co.  V.  Mt.  Carmel  &  Fleming 


Tel.  Co.  (Ky.),  84  S.  W.  515  (holding 
that  where  a  majority  of  the  sub- 
scribers to  stock  of  a  projected 
corporation  refuse  to  accept  the 
incorporation  paper  drawn  up  by  a 
committee  and  organize  a  corpora- 
tion under  a  different  incorporation 
paper,  the  latter  corporation  rather 
than  that  organized  by  the  com- 
mittee is  entitled  to  property  ac- 
quired by  the  promoters). 

But  see  Aspen  Water,  etc.  Co.  v. 
Asjien,  5  Colo.  App.  12 ;  37  Pac. 
728;  Jones  v.  Aspen  Hardware  Co., 
21  Colo.  263;  40  Pae.  457;  52 
Am.  St.  Rep.  220 ;  29  L.  R.  A.  143 ; 
BroadweU  v.  Merritt,  87  Mo.  95 
(conveyance  upheld,  but  on  ground 
of  estoppel);  Dunning  v.  Bates,  186 
Mass.  123;  71  N.  E.  309  (notice, 
however,  the  well-reasoned  dissent- 
ing opinion). 

See  also  cases  cited  supra,  §  294. 

*  Utah  Optical  Co.  v.  Keith,  18 
Utah  464  ;    56  Pac.  155. 

Cf.  Thistle  v.  Jones,  45  N.  Y. 
Mi.sc.  215;    92  N.  Y.  Supp.  113. 


302 


I  307-§  415]  RIGHTS    OF    CORPORATION  §  355 

as  cestui  que  trust.'  So,  money  paid  to  a  promoter  by  way  of  de- 
posits or  earnest  uj)f)n  suhscriptions  to  shares  may  \)e  recovered 
by  the  company  when  incorporated  as  money  had  and  received 
to  its  use.'' 

§  353.  Cases  distinguished.  — On  the  other  hand,  a  convey- 
ance or  a  devise  which  is  made  to  an  unincorporated  a.s-socia- 
tion  as  an  existing  entity  and  which  is  incapable  of  taking  efiect 
because  the  grantee  is  not  incorporated  cannot  be  availed  of  by  a 
corporation  which  is  subsequently  formed  as  the  successor  of  the 
unincorporated  body.^  As  explained  elsewhere,  such  a  convey- 
ance will  either  vest  title  in  the  members  of  the  supposed  corpora- 
tion or  voluntary  a.ssociation  as  tenants  in  common,  or  else  it  will 
be  void  for  indefiniteness.^  Moreover,  a  deed  to  certain  persons 
as  "incorporators"  will  not  without  any  assignment  from  them 
vest  title  in  a  corporation  which  they  subsequently  organize.* 

§  354.  Property  acquired  by  Promoters  in  Course  of  Pro- 
motion. —  As  will  presently  be  more  fully  explained,  promoters 
will  not  be  allowed  to  hold  for  their  own  benefit  property  ac- 
quu-ed  by  them  on  behalf  of  the  company  which  they  were  en- 
gaged in  organizing,  and  will  therefore  be  required  by  a  court  of 
equity  to  execute  an  alignment  of  such  property  to  the  company.* 


§  355.  Assignments  from  Promoters  to  Company  —  Taking 
over  Property  of  a  Firm.  —  Of  course,  a  company  after  its  incor- 
poration may  take  an  assignment  from  its  promoters,^  or  indeed 
from  any  other  persons,  of  any  property  they  may  ovra ;  and  in 

»  Heda  Consolidated,   etc.    Co.  v.  ^  State  use  M.  E.  Church  v.  War- 

O'NeiU,  19  N.  Y.  Supp.  592 ;  African  ren,   28   Md.   338.      Cf.   Douthitt   v. 

M.  E.  Church  v.  Conover,  27  N.  J.  Eq.  Stinson,  63  Mo.  268.    In  the  ca.se  of 

157;  McCandless  \.  Inland  Acid  Co.,  charities,  the  object  of  the  deed  or 

42S.  E.  449;    115  Ga.  968.  will    may    be    effectuated    in    some 

Cf.    Van  Schaick    v.    Third  Ave.  states  by  the  doctrine  of  cy  pres. 

R.  R.  Co.,  49  Barb.  409;    Church  of  *  Supra,  §  294. 

St    Stanislaus  v.  Algemeine  Verein.  *  McCandless  v.  Inland  Acid  Co., 

31  N.  Y.  App.  Div.  133;    52  N.  Y.  112  Ga.  291  ;  37  S.  E.  419. 

Supp.  922 ;    affirmed  short,  164  N.  "  Seacoast  R.  R.  Co.  v.  Wood,  56 

Y.  606;  58  N.  E.  1086.  Atl.  337;  65  N.  J.  Eq.  530. 

2  San  Joaquin,  etc.  Co.  v.   West,  See  infra,  §  399. 

94  Cal.  399;  29  Pac.  785.     See  also  '  Cf.  Alexander  v.  ToUeston  Club, 

supra,  §  255,  and  infra,  §  399.  1 10  111.  65  (holding  that  a  lease  to  a 

303 


§  356 


PROMOTERS 


[Chap.  VI 


some  cases  such  an  assignment  from  the  promoters  to  the  com- 
pany will  be  presumed,  or  regarded  as  implied.^  Thus,  where  a 
company  was  formed  for  the  express  purpose  of  operating  a  street 
railway  franchise  recently  acquired  by  the  promoters,  a  formal 
transfer  of  the  franchise  to  the  company  has  been  thought  un- 
necessary." So,  where  a  corporation  is  formed  by  special  act  to 
manage  and  dispose  of  certain  real  estate  formerly  held  by  the 
corporators  in  common,  the  terms  of  the  act  may  be  such  as, 
upon  its  acceptance,  to  transfer  the  legal  title  to  the  company.^ 
But  these  cases  must  be  deemed  exceptional;  for  ordinarily 
when  a  partnership  or  other  voluntary  association  becomes  in- 
corporated, that  mere  fact  does  not  invest  the  corporation  with 
title  to  the  property  of  the  voluntary  association;  and  this  is 
true  whether  the  incorporation  is  effected  by  special  act/  or 
under  a  general  law.^ 

§  356.  Survey  for  Railway  made  before  Incorporation.  —  A 
survey  for  a  railway  made  by  promoters  may  be  availed  of  by 
the  company  after  incorporation  without  making  a  new  survey, 
so  as  to  constitute  compliance  with  a  statute  requiring  the  loca- 


club  which  is  unincorporated  but  is 
about  to  become  incorporated  "for 
and  during  the  existence  of  said 
club"  is  not  terminated  by  the  in- 
corporation of  the  club,  accompanied 
by  a  transfer  of  all  its  property  to 
the  corporation). 

'  See  Thistle  v.  Jones,  45  N.  Y. 
Misc.  215;    92  N.  Y.  Supp.  113. 

As  to  the  appUcation  of  the 
Statute  of  Frauds  to  such  an  assign- 
ment, see  Roth  Tool  Co.  v.  Champ- 
Spring  Co.,  93  Mo.  App.  530;  67 
S.  W.  967  (headnote  inadequate). 

-  Santa  Rosa  R.  R.  v.  Central 
Street  Ry.  Co.,  38  Pac.  Rep.  986, 
989  (Cal.). 

Cf.  Spring  Valley  Water  Works 
v.  San  Francisco,  22   Cal.  434,  442. 

*  Colquitt  V.  Howard,  11  Ga.  556. 
Cf.    African    M.    E.    Church    v. 

Conover,  27  N.  J.  Eq.  157;  Scots 
Charitable  Soc.  v.  Shaw,  8  Mass.  532. 

*  Holland  v.  Cruft,  3  Gray  162; 
Lefjingwell  v.  Elliott,  8  Pick.  455; 
19  Am.  Dec.  343 ;  Frank  v.  Drenk- 
hahn,    76    Mo.    508;     McLeary    v. 


Dawson,  87  Tex.  524;  29  S.  W. 
1044;  Mears  v.  Movlton,  30  Md. 
142  (headnote  inadequate) ;  Catho- 
lic Church  V.  Tobbe  n,  82  Mo.  418. 

^  Manahan  v.  Varnum,  11  Gray, 
405;  Rau  v.  Union  Paper  Mill  Co., 
95  Ga.  208;  22  S.  E.  146;  Mc- 
Candless  v.  Inland  Acid  Co.,  112 
Ga.  291;  37  S.  E.  419;  Ruettell  v. 
Greenwich  Ins.  Co.  (N.  Dak.),  113 
N.  W.  1029. 

But  see  Church  of  St.  Stanislaus  v. 
Algemeine  Verein,  31  N.  Y.  App. 
Div.  133;  52  N.  Y.  Supp.  922, 
affirmed  short  in  164  N.  Y.  606 ;  58 
N.  E.  1086;  American  Silk  Works 
V.  Salomon,  6  T.  &  C.  (N.  Y.)  352 ; 
White  Oak  Grove  Benev.  Soc.  v. 
Murray,  145  Mo.  622 ;   47  S.  W.  501. 

Cf.  Re  Cussons,  73  L.  J.  Ch.  296 
(where,  by  virtue  of  certain  provi- 
sions in  the  Companies  Act  of  1862, 
the  incorporation  of  a  firm  under 
the  statute  was  held  to  invest  the 
corporation  with  equitable  but  not 
legal  title  to  the  firm  real  estate). 


304 


§  307-§  41.3]        LIABILITIES    TO    THIRD    PERSONS  §  357 

tion  of  the  company's  route  by  survey  in  order  to  give  a  right 
of  condemnation;  '  but  on  the  other  hand  it  lias  been  held  that 
such  an  adoption  of  the  survey  without  actually  taking  possession 
of  the  land  will  not  give  any  prior  right  as  against  another  com- 
pany which  takes  actual  possession  by  retracing  the  line  as  its 
own.^ 


§  357-§  362.     LIABILITIES  OF    PROMOTERS  TO  PERSOXS 
NOT  CONNECTED   WITH   THE  COMPANY. 

§   357-§   3G1.      CONTRACTUAL   LIABILITY. 

§  357.  After  Incorporation.  —  The  contractual  liabilities  of 
promoters  to  persons  other  than  the  corporation  are  controlled 
after  its  formation  by  the  ordinary  principles  of  the  law  of  agency. 
That  is  to  say,  if  the  promoter  contracts  avow^edly  as  agent  for 
an  already  incorporated  company,  he  is  not  personally  liable 
unless  authority  to  act  for  the  corporation  is  lacking.  On  the 
other  hand,  if  he  does  not  disclose  his  agency  or  his  principal, 
he  is  personally  liable  on  the  contract.  Whether  the  date  of 
technical  incorporation  or  of  organization  for  business  is  to  be 
deemed  the  point  from  which  these  ordinary  principles  of  agency 
come  into  play  depends  upon  the  same  considerations  weighed 
above  in  respect  to  the  similar  and  indeed  identical  question  as 
to  when  the  company  becomes  capable  of  being  bound  by  con- 
tracts entered  into  on  its  behalf.^  The  embryonic  condition  of 
the  corporation,  even  though  it  has  attained  a  technical  existence, 
may  be  a  circumstance  tending  to  show  that  credit  was  given  to 
the  promoters  individually  rather  than  to  the  corporation.*  If 
the  corporation  is  formed  to  take  over  the  business  of  a  firm, 
customers  of  the  firm  w^ho  have  no  notice  of  the  change  may, 
upon  familiar  principles  of  the  law-  of  partnership,  continue  to 
look  for  payment  to  the  members  of  the  firm,  who  will  be  es- 

'  Chesapeake,  etc.  Ry.  Co.  v.  Deep-  Pittsburgh,  etc.  R.  R.  Co.,   105  Pa. 

water  Ry.   Co.,   50   S.    E.   890;    57  St.   13. 
W.  Va.  641.  3  Supra,  §  318. 

Cf.    Milwaukee    Light,    Heat    &         *  I  jams    v.    Andrews,    151    Fed. 

Traction  Co.  (Wi.sc.),  112  N.  W.  663.  725,  731. 

*  New  Brighton,  etc.  R.  R.  Co.  v. 
VOL.  I.  —  20  305 


§  358  PROMOTERS  [Chap.  VI 

topped  from  denying  their  liability  for  debts  contracted  after 
incorporation.^ 

§  358- §  361.     Before  Incorporatioji. 

§  358,  In  general.  —  Before  incorporation,  promoters  who 
contract  without  disclosing  that  they  are  not  acting  on  their  own 
account  are  of  course  liable  personally  just  as  agents  for  an 
undisclosed  principal  would  be  liable ;  and  even  if  they  contract 
expressly  on  behalf  of  the  company,  they  cannot  shield  them- 
selves under  the  rule  which  protects  an  authorized  agent  for  a 
named  principal,  since  the  corporation  not  being  in  existence, 
they  cannot  be  authorized  to  bind  it.  On  the  contrary,  having 
contracted  for  a  non-existent  principal,  they  are  liable  on  their 
implied  warranty  of  authority  unless  they  disclosed  that  their 
supposed  principal  was  not  then  incorporated.  In  most  cases 
such  disclosure  is  made,  so  that  no  implied  warranty  of  authority 
is  broken.^  If  the  disclosure  be  made,  no  liability  is  incurred 
unless  the  promoter  and  the  third  party  mutually  intended  to 
contract  on  the  footing  of  the  former's  personal  liability ;  and  it 
is  a  question  of  fact  for  the  jury  whether  such  was  the  intention.^ 
If  the  contract  is  in  writing,  so  that  its  construction  is  for  the 
court,  in  the  absence  of  anything  in  the  document  itself  indicative 
of  a  different  intention,  it  will  be  construed  as  imposing  a  personal 
liability  on  the  promoter,  since  otherwise,  the  corporation  not 
being  in  existence,  it  would  have  no  binding  effect  whatever ;  * 
and  parol  evidence  in  such  a  case  is  not  admissible  to  show  an 

*  Perkins  v.  Rouss,  29"  So.  92 ;  been  submitted  to  the  jury  and  an- 
78  Miss.  343  ;  Martin  v.  Fewell,  79  swered  by  them  in  favor  of  the  plain- 
Mo.  401,  412;  Henry  v.  Simanton,  tiff);  Shields  v.  Clifton  Hill  Land 
54  Atl.  153;   64  N.  J.  Eq.  572.  Co.,  94  Tenn.  123;    28  S.  W.  668; 

2  See   Hersey   v.    Tidly,   8   Colo.  45  Am.  St.  Rep.  700;    26  L.  R.  A. 

App.  110,  112;   44  Pac.  854.  509. 

^  Higgins  v.  Hopkins,  3  Ex.  163.  *  Kelner  v.  Baxter,  2  C.  P.  174. 

See    also    Queen    City    Furniture         See  also  Hopcroft  v.   Parker,    16 

Co.  V.  Crawford,  127  Mo.  356  (head-  L.  T.,  n.  s.,  123,  561 ;  Hurt  v.  Salis- 

note    misleading);     30    S.    W.    163;  bury,  55  Mo.  310;    Holland  v.  Lee, 

Hub  Publishing  Co.   v.   Richardson,  71    Md.    338;     18    Atl.    661.     First 

13  N.  Y.  Supp.  665 ;    Bailey  v.  Ma-  Nat.    Bank    v.    Church    Federation, 

caulay,   13  Q.  B.  815;    Carmody  v.  105  N.  W.  578;    129  Iowa  268. 
Powers,  60  Mich.  26;   26  N.  W.  801         But   see  Landman  v.   Entwistle, 

(where    the    question    whether    de-  7  Ex.  632. 
fendants  contracted  personally  had 

306 


§  307- §  415]        LIABILITIES   TO   THIRD    PERSONS  §  359 

intention  that  the  promoter  should  not  l)e  personally  lK)un(i.* 
On  the  other  hand,  where  the  contract  is  oral  merely,  so  that  its 
terras  must  be  found  by  the  jury,  a  peremptory  instruction  to 
find  the  defendant  individually  liable  if  he  promised  that  the 
projected  company  would  jKiy  is  erroneous; ''  for  the  jury  should 
be  required  to  find  in  addition  that  the  parties  intended  to  con- 
tract on  the  footing  of  the  promoter's  individual  responsibility. 
If  the  contract  is  made  by  one  promoter  expressly  as  agent  for 
another  promoter,  from  whom  sufficient  authority  was  had,  the 
latter  promoter  is  liable,  but  the  former  is  not.^  Any  liability 
which  a  promoter  incurs  is  necessarily  an  original  liability  as 
distinguished  from  a  liability  as  guarantor  for  the  projected 
corporation.* 

As  there  can  be  no  stockholders  in  a  non-existing  corporation, 
subscribers  to  the  capital  of  a  company  about  to  be  formed  are 
not  liable  to  persons  with  whom  the  promoters  contract  under 
any  statute  imposing  a  liability  in  favor  of  corporate  creditors 
on  the  stockholders  of  a  corporation.^ 

§  359.  What  is  sufficient  Evidence  of  Authority  of  Co-promoter 
as  Agent.  —  As  we  have  seen,  promoters  are  not  partners,  nor 
is  co-promotership  any  evidence  of  partnership ;  ®  and  hence 
there  is  no  implied  authority  in  any  one  or  more  promoters  to 
bind  the  others.^    In  each  case,  the  plaintiff  must  prove  as  a  fact 


»  Kelner  v.  Baxter,  2  C.  P.  174.  ^  Hersey  v.   Tully,  8  Colo.  App. 

But  see  Case  Mfg.  Co.  v.  Soxman,  110  (lieadnote  misleading) ;   44  Pac. 

138  U.  S.   431,  436-438   (headnote  854. 

misleading) ;    1 1  Sup.  Ct.  360.  Cf .    McFall    v.    McKeesport,  etc. 

2  Durgin    v.    Smith    (Mich.),    94  Ice  Co.,   123  Pa.  St.  259;     16  Atl. 

N.  W.  1044;    133  Mich.  331.     The  478. 

inclination  of  the  courts  even  where  *  Clergue  v.  Humphrey,  31   Can. 

the  contract  is  oral  Is  to  hold  that  Sup.  Ct.  66. 

all  who  concur  in  its  making  intend  *  Bufjington  v.  Bardon,  80  Wise, 

to    be    personally    bound    thereby.  635 ;    50  N.  W.  776. 

Sandusky   Coal    Co.    v.    Walker,    27  «  Supra,  §  31 1-§  314. 

Ont.    677;     Roberts    Mfg.    Co.    v.  '  Bright   v.   Ilutton,  3   H.   L.   C. 

Schlick,  62  Minn.   332;    64  N.  W.  341;   McEwan  v.  Campbell,  2  yiacq. 

826 ;     Roberts  Mfg.   Co.   v.    Wright,  H.  L.  499. 

62  Minn.  337 ;  64  N.  W.  827 ;  Kcr-  Cf.  Long  v.  Citizens'  Bank,  8 
ridgev.  Hesse,  9  C.&F.  200;  Reges-  Utah  104,  107;  29  Pac.  878;  Wil- 
ier v.Medcalf,  71  Md.  528;  IS  .\tl.  son  v.  Hntchkiss,  2  Ont.  L.  Rep. 
966  (where  defendant's  liability  261  (where  agency  was  held  to  have 
seems  to  have  been  as.sumed).  been  proved). 

Cf.  Enni.'i  Cotton-Oil  Co.  v.  B^irke, 
39  S.  W.  9r>6  (Te.x.  Civ.  App.). 

307 


§  359  PROMOTERS  [Chap.  VT 

actual  authority  from  the  defendant  to  the  co-promoter  or  other 
person  who  purported  to  bind  him ;  and  if  no  legally  sufficient 
evidence  of  such  authority  be  adduced,  the  plaintiff  will  be  non- 
suited.^ So,  an  advertising  agent  who  was  unable  to  give  the 
names  of  the  promoters  who  were  present  at  the  meeting  at  which 
his  claim  was  contracted  has  no  enforceable  claim  against  any- 
bodv.^  That  the  defendant  consented  to  the  publication  of  a 
prospectus  in  which  his  name  appeared  as  a  member  of  the  "  pro- 
visional committee  "  and  as  a  promoter  of  the  company  does  not 
amount  to  evidence  sufficient  to  go  to  the  jury  of  a  holding  out 
of  the  other  promoters  as  his  authorized  agents ;  ^  since  the  fact 
of  being  co-promoters  does  not  create  any  agency,  the  publica- 
tion of  that  fact  cannot  constitute  any  representation  of  agency. 
The  mere  fact  that  promoters  appoint  from  among  their  number 
a  "committee  of  managers"  does  not  make  the  members  of  that 
committee  their  agents.*  But  where  promoters  by  resolution 
direct  their  secretary  to  have  certain  advertising  done,  there  is 
evidence  to  go  to  the  jury  of  authorization  of  the  secretary  to 
pledge  their  credit  for.  the  necessary  expense;*  and,  in  such  a 
case,  one  of  the  promoters  cannot  shield  himself  behind  a  secret 
agreement  with  his  associates  that  he  should  incur  no  liability.* 
So,  where  the  defendant  joins  a  provisional  committee,  stating 
that  he  "concluded  his  hability  would  be  limited  to  the  amount 
of  his  shares,"  the  court  instructed  the  jury  that  he  was  liable 
for  the  price  of  stationery  ordered  by  the  secretary  and  used  by 
the  committee.'    In  some  cases,  slight  evidence  of  authorization 

>  Reynell  v.  Lewis,   15  M.  &  W.  for  the  prosecution  of  the  project, 

517;    Baker  v.  Stead,  3  C.  B.  946;  the  authority  must  be  exercised  by 

Patrick  V.Reynolds,  I  C.B.,N.!i.,727.  all  the  members  of  the  committee, 

But  see  Sproat  v.  Porter,  9  Mass.  else  the  intended  principals  will  not 

300.  be  bound.    Brown  v.  Andrew,  13  Jur. 

Cf.  Railroad  Gazette  v.  Wherry,  58  938. 

Mo.  App.  423.  *  Maddick  v.  Marshall,  17  C.  B., 

2  ExporieLioyfi,  1  Sim.,  N.S., 248.  N.  s.,  829  (affirming  s.  c.  16  C.  B., 

3  Reynell  v.  Lewis,   15  M.  &  W.  N.  s.,  387);   Riley  v.  Packington,  2 
517;    liaUey  v.  Macatday,  13  Q.  B.  C.  P.  536. 

815 ;    Barker  v.  Stead,  3  C.  B.  946.  But    see    Burbidge   v.  Morris,   3 

Cf.    CoUingwood   v.    Berkeley,    15  H.  &  C.  664. 
C.  B.,  N.  s.,  145.  '  Riley  V.  Packington, 2C.'P.  536. 

*  Williams  v.  Pigott,  2  Ex.  201 ;         Cf.  Rennie  v.  Clarke,  5  Ex.  292. 
Tanner's   Case,   5   De  G    &   S.  182.         ^  Barnett  v.  Lambert,  15  M.  &  W. 

And  even  where  the  promoters  ex-  489. 

pressly  direct  a  committee  of  man-        Cf.    Collingivood   v.    Berkeley,    15 

agement  to  take  energetic  measures  C.  B.,  N.  s.,  145. 

308 


§  307-§  415]        UABILITIKS    TO    THIRD    PERSONS  §  301 

or  ratification  of  the  contract  has  been  held  sufficient  to  render  a 
promoter  personally  liable  thereon.'  But  a  promoter  is  not  made 
liable  for  expenses  by  attending  a  meeting  at  which  such  liability 
was  recognized,  and  by  endeavoring  to  devise  expedients  for 
raising  funds  to  defray  them ;  -  nor  by  part  payment  in  ignorance 
of  his  rights.^  Unless  under  very  exceptional  circumstances,  a 
promoter  cannot  be  held  liable  on  a  contract  made  by  his  co- 
promoter  before  he  participated  in  the  project;*  he  cannot  be 
rendered  liable  on  the  ground  of  having  ratified  the  contract. 

Where  the  plaintiff  was  himself  a  promoter,  the  fact  has  been 
thought  an  additional  obstacle  to  his  recoverv.^ 

§  300.  Liability  distinguished  from  Liability  of  Members  of 
Defectively  Incorporated  Company.  —  Inasmuch  as  promoters  are 
not  partners,  a  suit  framed  upon  the  theory  that  the  defend- 
ants have  incurred  a  partnership  liability  as  members  of  a  de- 
fectively incorporated  association  cannot  be  sustained  by  proof 
that  defendants  had  incurred  a  liability  as  promoters  of  a 
prospective  corporation." 

§  301.  How  Promoter's  Liability  Discharged — Effect  of  Com- 
pany's Adoption  of  Contract.  —  Where  a  promoter  incurs  before 
incorporation  a  personal  contractual  liability,  he  is  not  dis- 
charged by  the  mere  "  adoption "  of  the  contract  by  the  cor- 
poration ;  ^  nor  can  he  be  reheved  because  by  express  statute  the 

'  Roberts  Mfg.  Co.  v.  Scfdick,  62  Co.,  94  Tenn.  123;   45  Am.  St.  Rep. 

Minn.  332 ;    64  N.  W.  826 ;    Roberts  700 ;   26  L.  R.  A.  509. 

Mfg.  Co.  V.    Wright,  62  Minn.  337;         '  Kelner  v.  Baxter,  2  C.  P.  174. 

64  N.   W.    827;     Pearsoti's  Case,   3         See  also  American  Paper  Bag  Co. 

De  G.  M.  &  G.  241.  v.   Van  Nortvjick.   52  Fed.   752;    3 

"  Tanner's  Case,  5DeG.SzS.lS2.  C.  C.    A.    274;    Broyles   v.    McCoy, 

As  to   explaining  admissions   of  5    Sneed    (Tenn.)    602;    Haslett   v. 

liability,  see  Xeivton  v.  Belcher,   12  Wotherspoon,  2  Rich.  Eq.  (S.  Car.) 

Q.  B.  921;    Newton  y.  Liddiard,  12  395,    400-401;     Henderson    Woolen 

Q.  B.  925;    Bailey  v.  Macaulay,  13  Mills  v.  Edirards,  84  Mo.  App.  448; 

Q.  B.  815.  Bonsall  v.  Piatt,  153  Fed.  126  (where 

*  Ex  parte  Besley,  3  Mac.  &  G.  an  agent  employed  by  a  promoter 
287.  recovered  from  him  for  services  ren- 

*  Beale  v.  Mouls,  10  Q.  B.  976.        dered    after    incorporation    as    an 
But  see  Lefroy  v.  Gore,   1  Jo.  «&    officer  of  the  company). 

Lat.  571,  587-588.  But  see  apparently  contra :  Whit- 

*  Wilson  v.  Curzon,  15  M.  &  W.  ney\.  Wytnan,  101  U.  S.  392 ;  Smith 
532;  ParArm  V.  Fry,  2  C.  &  P.  311;  v.  Parker,  148  Ind.  127,  133-134; 
Baily  v.  Burgess,  48  N.  J.  Eq.  411;  45  X.  E.  770;  Wiley  v.  Borough  of 
22  Atl.  73.  Towarida.  26  Fed.  594  ;  Ennis  Cotton- 

<>  Shields    v.    Clifton    Hill    Land    Oil  Co.  v.  Burke,39S.W. 966  (Tex.); 

309 


§  362  PROMOTERS  [Chap.  VI 

other  party  to  the  contract  has  a  remedy  against  the  company,* 
The  facts  may,  however,  be  sufficient  to  estabhsh  a  novation 
whereby,  with  the  consent  of  the  other  party  to  the  contract,  the 
corporation  is  substituted  in  the  place  of  the  promoter,  who  will 
then  be  discharged  from  liability  for  the  future.'-  Moreover,  the 
promoter's  liability  may,  of  course,  by  the  terms  of  the  contract, 
be  made  expressly  conditional  on  the  receipt  of  sufficient  funds,^ 
or  the  failure  of  the  company  to  adopt  the  agreement,*  or  indeed 
any  other  event. 


§  362.  Liability  for  Torts.  —  The  liabilities  of  promoters 
€X  delicto  to  persons  other  than  the  company  both  before  and 
after  incorporation  are  governed  by  the  usual  principles  of  the 
law  of  torts.  The  principle  that  promoters  are  not  partners  ^ 
protects  them  from  any  liability  for  the  torts  of  each  other  unless 
there  is  actual  agency."  But,  of  course,  they  are  jointly  and 
severally  responsible  for  all  torts  in  which  they  participate.  In 
other  words,  they  are  not  protected  from  liability  because  they 
are  acting  for  a  corporation,  either  to  be  formed  or  already  in 
existence  —  a  self-e^adent  proposition.  For  instance,  promoters 
who  fraudulently  organize  a  corporation  under  a  name  unduly 
similar  to  that  of  an  existing  concern  are  personally  liable  for  all 
damages  sustained  by  the  latter.^  So,  where  a  corporation  is 
formed  for  the  purpose  of  violating  an  injunction  against  infring- 
ing a  patent,  the  promoters  are  liable  individually  for  the  infringe- 
ment and  for  the  contempt  of  court.^    In  some  cases,  promoters 

Chicago  Bldg.  &  Mfg.  Co.  v.  Talbotton  =  Supra,  §  311-§  314. 

Creamery,  etc.  Co.,  106  Ga.  84;    31  *  Wilson    v.    Hotchkiss,    2    Ont. 

S.  E.  809;    Heckman's  Estate,   172  L.  R.  261  (semble),  affirmed  in  A/iZ- 

Pa.    St.    185;     33    Atl.    552    (com-  6um  v.  TT'i/son,  31  Can.  Sup.  Ct.  481. 

mented  upon  supra,  §  326).  But  see  Getty  v.  Devlin,  54  N.  Y. 

'  Scott  V.  Lord  Ebury,  2  C.  P.  255;  403,  413-414  (reported  on  a  subse- 

Witmer  v.  Schlatter, 2  Rawle(Pa.)  359.  quent  appeal  in  70  N.  Y.  504) ;  Horn- 

*  Tliis  may  be  the  explanation  blower  v.  Crandall,  7  Mo.  App.  220, 
of  the  cases  cited  in  the  latter  part  2.30,  231,  affirmed,  78  Mo.  581. 

of  note  7,  p.  309.  ^  Societe   Anonyme,    etc.   v.   Pan- 

^  Higgins  v.  Hopkins,  3  Ex.  163;  hard-Levassor   Motor  Co.    (1901),  2 

Landman  v.  Entwistle,  7  Ex.  632.  Ch.  513,  516-517. 

*  Cf.  Case  Mfg.  Co.  v.  Soxman,  ^  Diamond  Drill,  etc.  Co.  v.  Kelley 
1.38  U.  S.  431  (headnote  misleading) ;  Bros.,  130  Fed.  893. 

11  Sup.  Ct.  360. 

310 


§  307-§  415]  LIABILITIES    TO    CORPORATION  §  364 

may  be  held  liable  as  principals  for  torts  committed  by  a  sul)or- 
dinate  without  their  authority,  although  if  the  corporation  had 
been  in  existence,  it  would  have  been  the  principal  and  therefore 
liable  instead  of  the  promoters.  For  instance,  promoters  who 
prior  to  incorporation  employ  an  agent  to  solicit  subscriptions  to 
the  shares  of  tiie  projected  company  are  liable  for  deceit  practised 
by  the  agent  in  procuring  subscriptions.'  In  some  cases,  pro- 
moters have  been  held  to  stand  in  a  fiduciary  relation  towards 
the  several  shareholders,  and  the  latter  have  accordingly  i>een 
allowed  to  maintain  actions  for  damages  sustained  in  consequence 
of  the  promoters'  failure  to  disclose  material  facts;''  but  tliis 
result  is  difficult  to  justify  on  principle.^ 


§  363.  Suits  by  Promoters  on  Contracts  made  on  behalf  of 
Projected  Corporation.  —  The  promoters  may,  of  course,  sue 
upon  any  contract  made  by  them  on  behalf  of  a  projected  cor- 
poration upon  which  according  to  the  principles  stated  above 
they  might  themselves  be  sued.*  A  judgment  for  the  defendant 
in  an  action  by  the  corporation  on  such  a  contract  is  clearly  no 
bar  to  a  suit  bv  the  promoters  thereon.^  And  in  estimating  the 
damages  sustained  by  the  promoters  from  the  breach  of  a  con- 
tract to  furnish  them  machinery  for  the  use  of  the  corporation, 
the  jury  may  take  into  account  losses  sustained  by  them  as  mem- 
bers of  the  company.® 

§  364-§  403.    LIABILITIES  OF  PROMOTERS   TO  THE 
COMPANY. 

§  364.  No  Duty  of  Active  Care  for  Interests  of  Company.  — 
The  relation  of  promoters  to  the  projected  company  is  not  such 
as  to  cast  upon  them  any  positive  duty  of  caring  for  its  interests. 

'  Milburn    v.    Wilson,    .31    Can.    248;  22N.  E.  907;   15  Am.  St.  Rep. 
Sup.   Ct.   481,   affirming   Wilson  v.    193;   5  L.  R.  A.  586. 
Hotchkiss,  2  Ont.  L.  R.  261.  But  .see  Smith  v.  Parker,  148  Ind. 

=  Brewster  v.   Hatch,    122   N.   Y.    127,  13.3-134;    45  N.  E.  770. 
349;  25  N.  E.  505;  19  Am.  St.  Rep.         *  Abbott   v.  Hapgood,   150    Mass. 
498.  248 ;  22  N.  E.  907 ;   15  Am.  St.  Rep. 

See  infra,  §  413.  193 ;   5  L.  R.  A.  586. 

»  See  infra,  §  413.  *  Abbott    v.  Hapgood,    150  Mass. 

*  Abbott  V.   Hapgood,   150  Mass.    248;  22  N.  E.  907;  15  Am.  St.  Rep. 

193 ;  5  L.  R.  A.  586. 
311 


§  365  PROMOTERS  [Chap.  VI 

For  instance,  they  are  under  no  obligation  to  use  diligence  in 
procuring  subscribers  to  its  capital;  nor  to  provide  it  with  a 
satisfactory  constitution.  So,  if  they  should  negligently  omit  to 
insert  in  the  incorporation  paper  clauses  essential  to  the  success- 
ful working  of  the  company,  nevertheless  the  latter  would  doubt- 
less have  no  claim  against  them.  In  a  word,  their  duties  to  the 
company  are  wholly  negative;  and  their  liabilities  to  it  arise 
entirely  from  their  disabilities. 

§  305.  Fiduciary  Relation  to  Company  —  Three  Consequences. 
—  Being,  however,  in  a  position  in  which  profits  may  readily 
be  made  at  the  expense  of  the  company  and  its  future  mem- 
bers and  in  wliich  they  may  practically  shape  the  destinies 
of  the  enterprise,  promoters  are  deemed  in  law  to  occupy  a 
fiduciary  relation  toward  the  projected  corporation.'  And  from 
this  relation  tlu'ee  important  consequences  flow.  In  the  first 
place,  all  contracts  or  other  dealings  by  the  promoter  with  the 
corporation  are  voidable  at  the  option  of  the  latter  unless  full 
disclosure  is  made  by  the  former  of  all  material  circumstances ;  ^ 
secondly,  the  promoter  must  account  to  the  corporation  for  all 
secret  profits  made  by  him  out  of  his  fiduciary  relation ;  ^  and 
thirdly,  the  promoter  is  liable  in  damages  for  any  consequences 
injurious  to  the  company  that  may  result  from  action  on  his  part 
inconsistent  with  his  fiduciary  position.*  While  these  several 
principles  of  law  are  entirely  distinct,  yet  in  many  cases  and 
many  text-books,  a  failure  to  discriminate  accurately  between 
them  has  resulted  in  much  confusion.  For  although  these  princi- 
ples are  distinct,  yet  they  overlap,  so  that  to  many  cases  two  or 
more  of  them  apply.  Thus,  secret  profits  for  which  a  promoter 
is  accountable  are  often  made  out  of  dealings  with  the  company, 

'  Old  Dominion  Copper  Mining,  full  disclosure  was  in  fact  performed. 

etc.  Co.  V.  Bigelow,   188  Mass.  315;  Densmore  Oil   Co.   v.   Densmore,   64 

74N.  E.  65.3;   108  Am.  St.  Rep.  479;  Pa.  St.  43,  apparently  proceeds  on 

and    numerous    other    cases.      The  the   theory    that   a   promoter   does 

case  of  St.  Louis,  etc.  R.  R.  Co.  v.  not  occupy  a  fiduciary  relation  to 

Tierwan,  37  Kans.  606, 629 ;    15  Pac.  the   company    unless    he   is   also   a 

544,    stands  almost,   if  not    quite,  director  or  at  least  a  shareholder; 

alone   in   denying  the   fundamental  but  this  distinction  is  not  supported 

proposition  stated  in  the  text,  and  by  the   authorities  generally.     The 

is  justly  critici-sed  in  Alger  on  Pro-  case  is  commented  on  infra,  §  384. 
moters,    §   9.     The  actual  decision         ^  See  infra,  §  368- §  374. 
may  be  supported   on   the  ground         *  See  infra,  §  375- §  399. 
that  the  fiduciary  duty  of  making        *  See  infra,  §  400-8  402. 

312 


§  307-§  415]  LIAUIUTIES    TO    COKI'OHATIUX  §  3GG 

and,  moreover,  the  profit  made  by  a  promoter  on  a  contract 
with  the  company  is  a  material  circumstance  so  that  unless  it 
he  disclosed  the  corporation  may  avoid  the  transaction.'  Indeed, 
wiiere  the  promoter  engages  in  dealings  with  the  company  with- 
out disclosing  some  material  circumstance  the  company  has 
three  possible  remedies:  (1)  rescission  of  the  contract,  (2) 
afhrmance  of  the  contract  coupled  with  a  suit  to  compel  the 
promoter  to  account  for  his  profits  on  the  transaction,  and  (3) 
a  suit  for  damages.  Hence,  much  of  the  difficulty  and  com- 
plexity attending  the  sul)ject. 

§  3G0.  Compaxison  with  Directors.  —  The  position  of  pro- 
moters with  reference  to  secret  profits  and  with  reference  to  deal- 
ings with  the  corporation  is  naturally  often  compared  with  that  of 
directors.  The  relation  l)etween  directors  and  corporation,  how- 
ever, is  a  legal  status  of  a  definite  kind.  One  may  with  com- 
parative ease  determine  when  the  relationship  begins  and  ends. 
Moreover,  a  director's  duties  are  largely  prescribed  by  statute; 
and  the  corporation  or  cestui  que  trust  is  generally  tliroughout 
their  continuance  sui  juris  and  able  to  care  for  its  own  interests. 
A  promoter  on  the  other  hand  is  a  self-appointed  fiduciary. 
Indeed,  a  quibbler  might  object  that  he  is  not  a  fiduciary  at  all, 
since  no  other  person  has  reposed  a  trust  in  him.-  Consequently, 
much  practical  difhculty  is  encountered  in  determining  when 
this  self-assumed  trust  originates.  Further,  a  director  may, 
and  in  general  should,  abstain  wholly  from  contracting  or  deal- 
ing with  the  company.  But  with  a  promoter,  not  merely  is  such 
abstention  impracticable,  but  indeed  the  sale  of  his  property  to 
the  corporation,  or  other  dealing  with  it,  is  often  the  prime 
motive  impelling  him  to  promote  the  company.  Lastly,  a 
director  owes  positive  duties  of  vigilance  and  so  forth,  while  a 
promoter  as  above  stated  inciu's  no  such  obligation.  Neverthe- 
less, after  full  effect  is  given  to  all  these  differences,  the  disabili- 
ties of  directors  and  promoters  in  respect  to  secret  profits  and 
dealings  with  the  company  are  very  similar.  In  considering  a 
case  relative  to  a  promoter,  the  reader  is,  therefore,  cautioned 
not  to  neglect  the  decisions  relative  to  directors,  and  vice  versa. 

'  Maxwell  v.  Port  Tcntiant  Co.,  ment  Ass^n,  99  Wise.  54;  74  N.  W. 
24  Beav.  495;    Hebgen  v.   Koeffler,    633. 

97  Wise.  313;  72'N.\Y.  745;  Limited  ^  Lydney  Iron  Co.  v.  Bird,  33 
Investment  Ass'n  v.  Glcndale  Invest-    Ch.  D.  85. 

313 


§  367  PROMOTERS  [Chap.  VI 

§  367.  Liability  for  Actual  Fraud  and  Deceit.  —  In  cases  of 
actual  affirmative  fraud  by  promoters,  relief  can  generally  be 
obtained  by  virtue  of  the  general  law  of  torts,  without  resorting 
to  any  peculiar  principles  of  the  law  of  promoters.  Thus,  if 
promoters  obtain  a  contract  from  a  corporation  by  fraudulent 
misrepresentation,  the  company  may  rescind  the  contract  or 
may  aflfirm  the  transaction  and  at  the  same  time  sue  in  an  action 
of  deceit  for  damages.  In  such  an  action  of  deceit  against  pro- 
moters for  inducing  a  corporation  which  they  are  promoting  to 
purchase  their  property,  the  company  cannot  charge  them  with 
the  expenses  of  its  own  organization;  such  damages  are  too 
remote.^  Moreover,  not  merely  may  the  corporation  sue  the 
fraudulent  promoters  for  deceit,  but  every  shareholder  or  other 
person  who  is  intended  to  and  does  rely  upon  the  misrepresenta- 
tion has  the  same  remedy.  If  all  the  existing  members  of  the 
company  are  concerned  in  the  fraud  or  otherwise  acquainted 
with  the  facts,  the  corporation  as  a  legal  entity  cannot  be  said  to 
rely  on  the  misrepresentation,  and  consequently  would  have  no 
action  for  deceit.  Individual  shareholders  or  bondholders,  how- 
ever, who  subscribe  on  the  faith  of  the  misstatement,  might  sue 
the  promoters  at  law  for  deceit.  A  natural  reluctance  to  make, 
or  to  sustain,  the  serious  charge  of  fraud  prevents  many  cases 
from  being  placed  on  that  ground.  The  peculiar  principles  of 
the  law  of  promoters  come  into  play  only  when  the  ordinary 
liability  for  fraud  or  other  tort  cannot  be  made  out  or  is  not 
sought  to  be  enforced. 

§  .368-§  374.     Rescission  by  Corporation  of   Contracts  with 

Promoters. 

§  368.  In  general.  —  As  already  implied,  a  promoter  is  not 
precluded  from  selling  property  to  the  corporation,  or  otherwise 
dealing  with  it,  provided  full  disclosure  is  made  of  all  circum- 
stances likely  to  affect  the  action  of  the  company  as  to  the 
proposed  contract.  But  unless  full  disclosure  of  all  material 
facts  is  made  by  the  promoter,  the  company  may  rescind  any 
contract  between  itself  and  him.^     The  promoter  is  a  fiduciary 

»  Cortes  Co.  v.  Thannhauser,  45  N.  E.  653 ;  108  Am.  St.  Rep.  479 ; 
Fed.  7.30,  739-740.  Camden  Land  Co.  v.  Lewis,  101  Me. 

*  Old  Dominion  Copper  Mining,  78;  63  Atl.  523  (semble),  and  many 
etc.  Co.  V.  Bigelow,  188  Mass.  315 ;  74    other  cases  cited  below. 

314 


§  307-§  415]  CONTRACTS    WITH    COMPANY  §  370 

and  the  company  is,  so  to  speak,  the  cestui  que  trust;  and  con- 
sequently deahngs  between  the  promoter  and  the  company  are 
subject  to  the  rules  which  govern  transactions  between  a  trustee 
and  his  cestui  que  trmt,  but  are  not  entirely  prohibited  as  are 
contracts  between  a  trustee,  acting  on  behalf  of  the  trust 
estate,  and  himself  acting  on  his  own  behalf.  For  instance,  a 
failure  to  disclose  that  a  foreign  concession  which  the  promoter 
is  selling  to  the  company  has  become  liable  to  forfeiture  will 
entitle  the  latter  to  avoid  the  contract.'  Indeed,  transactions 
between  a  promoter  and  his  corporation  are  fyrirna  facie  voidable; 
and  the  burden  of  sustaining  them  by  proof  of  full  disclosure 
rests  upon  the  promoter,-  although  when  the  corporation  sues 
to  recover  a  promoter's  secret  profits,  the  rule  is  otherwise,  the 
burden  of  proving  non-disclosure  resting  on  the  company.^  A 
provision  in  the  contract  between  the  corporation  and  the  pro- 
moter that  it  shall  not  be  voidable  for  non-disclosure  is  ineffec- 
tive.* A  court  of  equity  has  jurisdiction  of  a  bill  by  the  company 
for  rescission  of  the  contract.^ 

§  309.  What  Disclosure  sufficient,  and  to  whom  it  must  be 
made,  to  render  Contract  binding.  —  As  to  what  form  of  dis- 
closure is  sufficient  and  to  whom  the  disclosure  must  be  made, 
the  same  principles  would  seem  to  apply  in  these  rescission  cases 
as  in  cases  of  alleged  secret  profits;  and  therefore  the  whole 
matter  is  treated  below."  It  should  be  borne  in  mind,  however, 
as  stated  in  the  preceding  paragraph,  that  in  the  former  class 
of  cases  the  burden  of  proving  disclosure  is  on  the  promoter 
while  in  the  latter  the  company  must  prove  non-disclosure. 

§  370.  Return  of  Consideration  as  Condition  of  Rescission. 
—  Ordinarily  an  ofler  by  the  company  to  return  the  considera- 
tion received  by  it  is  a  condition  precedent  to  rescission,  but 
where  the  consideration  has  ceased  to  exist  without  the  com- 
pany's fault  a  failure  to  make  such  an  offer  is  excused.^     ^Vhere 

>  Phosphate  Sewage  Co.  v.  Hart-  '  Old  Dominion  Copper  Mining, 

mont,  5Ch.  D.  394.  etc.  Co.  v.  Bigelow,   188  Mass.  315; 

'  See  Rice's   Appeal,   79   Pa.    St.  74  N.   E.  653 ;     108  Am.   St.   Rep. 

168   204  479;   Fred  Macey  Co.  v.  Macey,  143 

^  ~Bentinck  v.  Fetin,  12  A.  C.  652.  Mich.  138;   106  N.  W.  722. 

See  infra.  §  392.  «  Infra,  §  39;>-§  398. 

*  Gluckstein    v.     Barnes    (1900),  '  Phosphate  Sewage  Co.  v.  Hart- 

A.  C.  240.  rnont,  5  Cb.  D.  394. 

Cf.    Watts    v.    Bucknall    (1902), 
2  Ch.  628. 

315 


§  371  PROMOTERS  [Chap.  VI 

the  consideration  consists  of  land  sold  to  the  company,  for 
which,  however,  no  deed  had  been  executed,  an  offer  to  restore 
possession  to  the  vendor  is  a  sufficient  tender  of  a  return  of 
the  consideration.* 

§  371.  Waiver  of  Right  to  Rescind.  — The  right  of  rescission 
is  a  privilege  which  the  company  may  elect  to  refrain  from  ex- 
ercising. Consequently,  the  contract  may  be  confirmed  by  the 
companv  either  expressly  or  impliedly,  and  thereafter  will  be 
unimpeachable.  The  right  of  the  company  to  rescind  cannot, 
however,  be  barred  by  any  confirmation  of  the  contract  by  the 
companv  or  its  shareholders  without  full  knowledge  of  the  facts, 
including  the  promoter's  profit.-  The  confirmation  is  itself 
voidable  unless  the  company  was  then  apprised  of  all  material 
facts. 

§  372.  Laches  of  Company.  —  The  corporation's  right  to 
rescind  the  transaction  may  be  barred  by  laches.^  But  in  com- 
puting laches,  time  during  which  the  company  had  a  board  of 
directors  controlled  by  the  promoters  is  not  to  be  reckoned.* 
The  failure  of  a  shareholders'  meeting,  which  was  regarded  as 
merely  formal  and  was  attended  by  a  small  minority  of  the  mem- 
bers, to  take  steps  looking  to  rescission  cannot  bar  the  company.^ 
Nor  is  it  laches  for  a  shareholders'  meeting,  instead  of  rescinding 
the  contract  at  once,  which  would  involve  an  abandonment  of 
the  undertaking,  to  appoint  a  committee  of  inquiry.^  Where, 
however,  the  property  sold  to  the  company  by  the  promoters 
is  of  a  wasting  character,  such  as  a  nitrate  bed,  rescission  will 
not  be  granted  after  the  property  has  been  impoverished.''  At 
all  events,  rescission  or  anything  in  the  nature  of  rescission  is 
clearly  impossible  after  the  corporation  has  parted  with  the 


*  Cortes  Co.  v.    Thannhauser,  45         *  Lagunas  Nitrate  Co.  v.  Lngunas 

Fed.  731,  739.  Sijndicate  (1899),  2  Ch.  392,  433. 

^  See  Ilebgen  v.  Koeffler,  97  Wise.         °  Erlanger  v.  New  Sombrero  Phos- 

313;  72  N.  W.  745.  phate  Co.,  3  A.  C.  1218,  1251,  1258. 

'  Cf.  Fred  Macey  Co.  v.  Macey,         ^  Erlanger  v.  Neio  Sombrero  Phos- 

143    Mich.    1.38;     106    N.    W.    722  p/iate  Co.,  3  A.  C.  1218. 
(where    the    company    having    pro-         '  Lagunas  Nitrate  Co.  v.  Lagunas 

tested  promptly  on  discovery  of  the  Syndicate  (1899),  2  Ch.  392;    Vigers 

facts  and  having  consumed  time  in  v.  Pike,  8  CI.  &  Fin.  562. 
a  fruitless  effort  to  reach  a  settle-         Cf.    Erlanger    v.    New    Sombrero 

ment  out  of  court  was  held  not  to  Phosphate  Co.,  3  A.  C.  1218. 
be  barred). 

316 


§  307-§  415]  ACCOUNTABILITY    FOR    PROFITS  §  370 

property ;  '  for  the  company  is  then  unable  to  restore  the  con- 
sideration. 

§  373.  EflEect  of  Dissolution  of  Corporation  on  Right  of  Rescis- 
sion. —  Question  has  been  made  whether  rescission  can  l>e 
granted  after  corporate  existence  has  expired ;  -  but  it  would 
seem  that  the  powers  of  chancery  ought  to  be  capable  of  pre- 
venting such  an  accident  from  defeating  an  equity. 

§  374.  Rights  of  individual  Shareholders.  —  The  right  of 
rescission  when  it  exists  is  vested  in  the  company,  and  cannot  be 
exercised  by  any  individual  shareholder.^  An  individual  .share- 
holder can  sue  for  rescission  only  where  the  circumstances  are 
such  as  to  entitle  him  to  maintain  a  shareholder's  bill  on  behalf 
of  the  corporation. 

§   375-§   399.      LIABILITY   OF   PROMOTERS  TO   ACCOUNT  TO   COR- 
PORATION   FOR   THEIR   PROFITS. 

§  375.  In  general.  —  The  right  of  the  principal  or  cestui  que 
trust  to  all  secret  profits  made  by  the  agent  or  trustee  out  of  his 
fiduciary  position  is  well  recognized  and  long  established,  and 
applies  with  full  force  as  between  corporation  and  promoter. 
The  doctrine  is  an  equitable  one,  and  therefore  a  court  of  equity 
has  jurisdiction  of  a  suit  by  the  company  to  recover  a  promoter's 
secret  profits  although  it  may  be  only  a  money  demand.^  Profits 
so  made  by  a  promoter  belong  in  equity  to  the  company,  and  if 
the  company's  treasurer  knowingly  pays  out  the  money  from  the 
company's  funds  to  the  promoter,  his  official  bond  is  Uable 
therefor.'' 

§  376.  Classification  of  Cases  in  which  unlawful  Profits  are 
made.  —  Such  secret  profits  are  usually  made  either  (1)  on 
gome  transaction  l^etween  the  promoter  and  a  person  selling 
property  to  the  corporation  or  otherwise  dealing  with  it,  or  else 
(2)  on  some  direct  dealing  between  the  promoter  and  the  cor- 
poration. 

•  Salomon  v.  Salomon  &  Co.  *  McElhenny's  Appeal,  61  Pa.  St. 
(1897),   A.    C.    22,    54    (per    Lord    188. 

Macnagliten).  *  First  Ave.  Land  Co.  v.   Hilde- 

^  Limhay  Petroleum  Co.  \.  Hurd,  brand,  103  Wise.  530;  79  N.  W. 
L.  R.  5  P.  C.  221.  753. 

*  Urner  v.   SoUenberger,   89   Md. 
316;  43  All.  810. 

317 


§  377  PROMOTERS  [Chap.  VI 

§  377-§  382.     Profits  made  on   Transactions  between  Promoter 
and  Persons  having  Dealings  with  Company. 

§  377.     Outright   Bribes.  —  In  the    first   class    of   cases,   the 
secret  profit  in  its  grossest  form  takes  the  shape  of  an  out-and- 
out  bribe,  or  present,  given  by  one  dealing  or  intending  to  deal 
with  the  corporation,  for  the  corrupt  purpose  of  inducing  the 
promoter  to  exercise  his  control  over  the  company  rather  for  the 
interests  of  the  bribe-giver  than  for  the  interest  of  the  corpora- 
tion.   Such  a  bribe  or  present  belongs  in  equity  to  the  company, 
and  cannot  be  retained  by  the  promoter.    An  instance  may  be 
found  in  Emma  Silver  Mining  Co.  v.  Lewis.^    There  the  owners 
of  a  mine  in  America  who  were  organizing  a  corporation  to  pur- 
chase the  property  agreed  to  give  their  London  agent  a  portion 
of  the  purchase  money,  to  induce  him,  when  applied  to  for  infor- 
mation by  intending  subscribers  to  the  capital,  to  refrain  from 
statinof  certain  facts  which  might  throw  doubt  on  the  value  of 
the  property.    This  agreement  having  been  carried  out,  it  was 
held,  of  course,  that  the  company  could  recover  the  bribe  from 
the  London  agent.    In  a  comparatively  early  case  in  the  House 
of  Lords,  it  was  held,  or  said,  that  where  the  bribe  consists  in 
land,  the  company  cannot  treat  the  promoter  as  holding  it  upon 
trust  for  itself,  but  is  Umited  to  the  recovery  of  such  damages  as 
it  may  have  suffered  from  his  dereliction  of  duty.^    But  it  is  sub- 
mitted that,  in  spite  of  this  high  authority,  the  law  is  otherwise 
both  in  England  and  the  United  States.^    The  company  need 
not  show  that  the  bribe  has  produced  any  effect  or  influenced 
the  promoter's  conduct,  much  less  that  the  company  has  suf- 
fered any  damage.*    Recovery  is  not  sought  because  of  damages 
sustained,  but  for  profits  made  by  the  company's  fiduciary  and 
belonging  in  equity  to  the  company  as  cestui  que  triist. 

§  378.  Commissions  and  other  Veiled  Bribes.  —  A  bald  bribe 
rather  rarely  occurs.  The  company,  however,  is  entitled  to 
all  undisclosed  profits  made  by  a  promoter  by  gifts  from  or  deal- 

»  Emma    Silver    Mining    Co.    v.  accepted  as  a  bribe,  compare  cases 

Lewis,  4  C.  P.  D.  396.  with    reference   to   directors,    infra, 

'  Tyrrell  v.  Bank  of  London,  10  §  1617-§  1019. 
H.  L.  C.  26,  59.  *  Yale  Gas  Stove  Co.  v.  Wilcox, 

=>  For  the  whole  subject  of  the  64  Conn.  101,  125;   29  Atl.  303;   42 

rights  and  liabilities  of  the  parties  Am.    St.    Rep.    159;     25    L.   R.  A. 

where  stock  or  property  has  been  90. 

31S 


§  307-§  415]  ACCOUNTABILITY    FOR    PROFITS  §  380 

ings  with  a  vendor  to  the  company  or  other  person  having  to  do 
with  it.  No  actual  hrihery  is  necessary  to  recovery;  it  is  enough 
that  the  tendency  of  such  secret  profits  is  to  lead  the  promoter 
from  the  path  of  duty.  Thus,  a  promoter  must  account  to  the 
company  for  all  sums  secretly  received  by  liira  from  one  .selling 
property  to  it,  whether  as  commission  for  his  services  in  organ- 
izing the  company,'  or  otlierwi.se.-  Where  a  promoter  holds  an 
option  for  the  purchase  of  land  from  W,  its  owner,  for  S2rj,0UU, 
and  the  company  agrees  to  buy  the  land  from  W  for  a  larger 
sum,  the  promoter  cannot  exerci.se  his  option,  transfer  the  title 
from  himself  to  the  company,  and  pocket  the  dilference  between 
the  $25,000  and  the  amount  which  the  company  agreed  to  pay; 
to  do  so  would  practically  be  to  receive  a  secret  commission  from 
W,  whom  the  company  understood  to  be  the  real  vendor  to  it.^ 

§  379.  Mutual  Rights  of  Bribe-giver  and  the  Company.  — 
Not  merely  may  the  corporation  recover  the  bribe  or  commi.s- 
sion  from  the  promoter  when  it  has  been  paid  to  him,  but  also 
may  treat  any  such  agreement  between  him  and  the  vendor  as 
made  for  its  own  benefit;  and  therefore  may  recover  from  the 
vendor  any  sums  which  he  has  agreed  to  pay  to  the  promoter  out 
of  the  purchase  money,  but  which  he  has  not  yet  actually  paid.* 
Indeed,  the  vendor  is  liable  to  the  company  for  the  amount  of 
the  bribe  although  he  has  already  paid  it  over  to  the  promoter ;  * 
and  in  such  a  case  the  fact  that  the  promoter  is  a  large  share- 
holder in  the  company  so  that  a  part  of  the  amount  recovered  by 
it  would  ordinarily  inure  to  his  own  benefit  is  no  defence  in 
whole  or  in  part  to  an  action  at  law  by  the  company  against  the 
vendor.' 

§  3S0.  Mutual  Rights  of  Bribe-giver  and  Promoter.  —  Of 
course,  if  the  secret  commission  has  been  collected  by  the  com- 
pany from  the  vendor,  the  promoter  cannot  recover  it  from  the 

'  Lyclmy  Iron  Co.  v.  Bird,  33  Ch.  Gaa  Stove  Co.  v.   TT^i7co.r,   G4  Conn. 

D.  85;    The  Telegraph  v.  Loetscher,  101,  125;    29  Atl.  303;    42  Am.  St. 

101  N.  W.  773;    127  Iowa  383.  Rep.  159;   25  L.  R.  A.  90. 

^  Bland's  Case  (1893>,  2  Cli.  612;  ^  Plaquemines,   etc.  Co.  v.   Buck, 
Hichens  v.   Congreve,  4   Rus.s.   562;  52  N.  J.  Eq.  219.  230-237. 
Cook  v.   Climber  Co.,  75  Mis.s.   121;  *   Whaleij    Bridge    Calico    Co.    v. 
21  So.  795;   Koster  v.  Pain,  41  N.  Y.  Green,  5  Q.  B.  D.  109. 
App.  Div.  443 ;   58  N.  Y.  Supp.  865.  *  Grand  Rapids,  etc.  Co.  v.  Cm- 
It    makes    no    difference    that    the  cinnati,  etc.  Co.,  45  Fed.  671. 
property   may   be   fully   worth   the  *  Grand  Rapids,  etc.   Co.  v.  Cin- 
price  paid  by  the  company.      Yale  cinnati,  etc.  Co.,  45  Fed.  671. 

319 


§  381  PROMOTERS  [Chap.  VI 

company.'  Indeed,  the  agreement  between  the  promoter  and 
the  vendor  being  illegal,  the  former  cannot  in  any  case  maintain 
an  action  thereon  against  the  latter  to  recover  the  promised  bribe 
or  present.- 

§  381.  Company's  Right  to  recover  Bribe  independent  of  its 
Right  to  avoid  its  Contract  with  Bribe-giver.  —  While  the  fact 
that  a  bribe  or  secret  profit  has  been  received  by  a  promoter 
from  a  vendor  or  other  person  deaUng  with  the  company  gives 
the  corporation  the  right  to  rescind  the  sale  or  other  contract,^ 
yet  that  right  is  entirely  independent  of  its  right  to  recover  the 
secret  profit  made  by  the  promoter.  Accordingly,  the  secret 
profit  may  be  recovered,  although  the  company  chooses  to  affirm 
the  sale.*  Or,  if  the  company  receives  from  the  vendor  a  sum  of 
money  in  consideration  of  its  abandonment  of  the  claim  for  re- 
scission, it  may  nevertheless  recover  the  full  amount  of  the 
secret  profit  made  by  the  promoter,  who  is  not  entitled  to  deduct 
or  recoup  the  sum  so  received  from  the  vendor.^  But  it  has  been 
held  that  where  the  company  abandons  its  claim  to  rescission, 
its  case  also  falls  against  one  whose  only  misconduct  or  indis- 
cretion consisted  in  acting  as  solicitor  both  for  the  corporation 
and  the  vendors.^ 

§  382.  Promoter's  Right  to  set-ofE  or  recoup  Expenses  in- 
curred on  Company's  behalf.^ The  English  courts  have  sev- 
eral times  held  that  where  a  secret  payment  is  made  by  a  vendor 
to  a  promoter  out  of  the  purchase  money,  the  promoter  may  re- 
duce the  company's  claim  therefor  by  the  amount  of  his  ex- 
penses incurred  in  organizing  the  corporation.^    As  pointed  out 

'  Centred  Land  Co.  v.  Obenchain,  Congreve,  4  Russ.  562,  4  Sim.  420; 
92  Va.  130 ;   22  S.  E.  876.  Tyrrell  v.  Bank  of  London,  10  H.  L. 

2  Wilcox  V.  Foley,  64  Conn.  101,  C.  26;  Yale  Gas  Stove  Co.  v.  WUcox, 
129;  29  Atl.  303;  42  Am.  St.  Rep.  64  Conn.  101 ;  29  Atl.  303;  42  Am. 
159;  25  L.  R.  A.  90.  'St.  Rep.  159;  25  L.  R.  A.  90;  Hay- 

Cf.   Harrington   v.    Victoria,   etc.    ward  v.  Leeson,  176  Mass.  310,  322; 
Dock  Co.,  3  Q.  B.  D.  549,  a  case  of   57  N.  E.  656;   49  L.  R.  A.  725. 
an    ordinary    agent    instead    of    a         *  Bag^naM  v.  Cariton,  6  Ch.  D.  371. 
promoter.  '  Bagnall    v.    Carlton,    6   Ch.    D. 

But  see  Mayor,  etc.  of  Salford  v.    371.     See  also  infra,  §  385. 
Lever  (1891),  1  Q.  B.  168.  '  Bagnall   v.    Carlton,   6   Ch.    D. 

*  Supra,  §  368  et  seq.  371 ;    Lydney  Iron  Co.  v.  Bird,  33 

*  Emma  Silver  Mining  Co.  v.  Ch.  D.  85;  Emma  Silver  Mining 
Lewis,  4  C.  P.  D.  396;  Lydney  Iron  Co.  v.  Grant,  11  Ch.  D.  918.  Accord : 
Co.  v.  Bird,  33  Ch.  D.  85;  Bland's  Hayward  v.  Leeson,  176  Mass.  310, 
Case  (1893),  2  Ch.  612;    Hichens  v.    322;  57N.  E.656;  49L.R.A.725. 

320 


§  307- §  415]  ACCOUNTABILITY    FOR    PROFITS  §  384 

in  another  place,'  so  far  as  the  promoter  is  allowed  for  expenses 
prior  to  incorix)ration,  this  doctrine  seems  inconsistent  with  the 
English  rule  by  which  promoters  are  not  permitted  to  recover 
from  the  company  their  expenses  in  l)ringing  it  out.  The  [>ay- 
ments  for  which  the  promoter  may  obtain  allowance  need  not  l>e 
strictly  moral  or  such  as  to  commend  themselves  to  the  court: 
for  instance,  promoters  have  in  such  cases  lx;en  allowed  for 
money  spent  to  induce  prominent  men  to  serve  as  directors  and 
for  "bulling"  the  company's  securities.^  No  payment  can  be 
allowed,  however,  which  is  ultra  vires  of  the  company.^  Xor 
will  the  promoters  be  permitted  to  retain  a  commission  for  their 
own  services.* 

§  383-§  390.     Profits  made  on  a  Transaction  between  Promoters 
and  the  Company. 

§  383.  In  general.  —  The  second  class  of  cases  in  which 
secret  profits  are  commonly  made  by  promoters  is  on  direct  deal- 
ings between  themselves  and  the  company.  As  already  stated, 
such  contracts  are  voidable  by  the  corporation  unless  full  dis- 
closure is  made  of  all  material  circumstances  including  the  pro- 
moter's interest  in  the  transaction.^  If  this  right  of  rescission  is 
exercised  by  the  company,  the  promoter  must  be  restored  to  his 
status  in  quo,  so  that  necessarily  he  can  derive  no  profit  from  the 
transaction;  and  hence  no  question  as  to  the  company's  right 
to  recover  profits  could  arise.^  But  if  the  company  elects  to 
aflfirm  the  contract,  or  if  the  right  to  rescind  is  lost  by  laches  or 
otherwise,  the  question  becomes  very  important  how  far  the  cor- 
poration is  entitled  to  the  promoter's  profit.  In  general,  it  seems 
clear  that  such  profit  unless  disclosed  may  be  recovered  by  the 
company  in  spite  of  the  failure  to  rescind.^ 

§  384.  Piirchase  of  Property  by  Promoter  and  Resale  to 
Company  —  Measure  of  Promoter's  Profit.  —  Thus,  where  a  pro- 
moter after  starting  to  organize  a  corporation,  purchases  prop- 

1  Supra,  §  339.  '  It  is  said  that  an  election  to 

»  Emma    Silver    Mining  Co.    v.    rescind,   once  made,   cannot  be  re- 

Grant.  11  Ch.  D.  918.  tracted   by  the  company.     Limited 

8  Lydney    Iron    Co.    v.    Bird,    33    Investment   Ass.    v.  Glendal£    Invest- 

Ch.  D.  85.  "if"'  -^ss-.  99  Wise.  54, 58;  74  N.  W. 

«  Bagnall   v.    Carlton,   6  Ch.    D.    633. 

371  '  Ex-Mission   Land,    etc.    Co.    v. 

'  Supra,  §  308  et  seq.  Flash,  97  Cal.  610,  636 ;  32  Pac.  600. 

VOL.  I.  — 21  321 


§384 


PROMOTERS 


[Chap.  VI 


erty  for  the  purpose  of  selling  it  to  the  company  at  an  advance, 
and  afterwards  does  so  sell  it,  but  without  disclosing  his 
ownership,  or  the  price  at  which  he  purchased,  or  other  material 
fact,  the  corporation  may  recover  from  him  his  profit  on  the  pur- 
chase and  resale.'  In  other  words,  the  corporation  may  treat 
the  purchase  made  by  its  fiduciary  as  made  for  its  benefit.^  But 
where  the  promoter's  purchase  was  completed  before  any  step 
toward  forming  the  corporation  was  taken,  the  question  is  more 
difficult.  In  that  case,  clearly  the  company  cannot  recover  from 
the  promoter  the  excess  of  the  price  paid  by  it  over  that  at  which 
the  promoter  at  some  time  past  may  have  bought.  For  that  is 
not  the  measure  of  the  promoter's  profit ;  his  purchase  antedating 
the  promotion  of  the  corporation  cannot  be  taken  as  made  for 
the  company's  benefit.^  His  profit  is  the  difference  between  the 
price  paid  by  the  corporation  and  the  actual  saleable  value  of 
the  property  at  the  time  of  the  purchases  by  the  company ;  and 
unless  such  a  difference  is  proved,  the  company's  claim  to  the 
promoter's  profit  must  fail  for  the  simple  reason  that  the  promoter 


'  Tyrrell  v.  Bank  of  London,  10 
H.  L.  C.  26  (failure  to  disclose  fact 
of  promoter's  ownership) ;  South 
Joplin  Land  Co.  v.  Case,  104  Mo. 
572 ;  16  S.  W.  390  (failure  to  state 
price  paid  by  promoter) ;  Woodbury 
Heights  Land  Co.  v.  Loudenslager, 
55  N.  J.  Eq.  78;  35  Atl.  436  (re- 
versed in  part  in  Loudenslager  v. 
Woodbury  Heights  Land  Co.,  58  N.  J. 
Eq.  556;  43  Atl.  671);  Plaquemines, 
etc.  Co.  V.  Buck,  52  N.  J.  Eq.  219, 
237-240;  27  Atl.  1094;  Burbank 
V.  Dennis,  101  Cal.  90;  35  Pac. 
444  (a  case  of  affirmative  fraud) ; 
McElhenny's  Appeal,  61  Pa.  St.  188, 
195;  Exter  v.  Sawyer,  146  Mo.  302  ; 
47  S.  W.  951  (failure  to  disclose 
price  paid  by  promoter) ;  Pietsch 
v.  Milbrath,  101  N.  W.  388;  123 
Wise.  647;  107  Am.  St.  Rep.  1017 
(rehearing  denied,  102  N.  W.  342) ; 
Walker  v.  Pike  County  Land  Co.,  139 
Fed.  608;  71  C.  C.  A.  593  (pro- 
moter falsely  representing  that  he 
had  no  interest  in  property  and  that 
owners  would  not  .sell  for  less  than 
company     was     paying) ;      Central 


Tru^t  Co.  v.  East  Tennessee  Land 
Co.,  116  Fed.  743;  Yeiser  v.  U.  S. 
Board,  etc.  Co.,  107  Fed.  340;  46 
C.  C.  A.  567;   52  L.  R.  A.  724. 

Cf.  Dickerman  v.  Northern  Trust 
Co.,  176  U.  S.  181,  203-206;  20 
Sup.  Ct.  311 ;  Leeds  and  Hanley  The- 
atres (1902),  2  Ch.  809,  813-814, 
821-822,  825  (where  the  proposition 
stated  in  the  text  was  approved  by 
Wright,  J.,  but  questioned  by  the 
Court  of  Appeal). 

-  See  infra,  §  399. 

^  Burbank  v.  Dennis,  101  Cal.  90, 
98 ;  35  Pac.  444 ;  Densmore  Oil  Co. 
V.  Densmore,  64  Pa.  St.  43 ;  Hess 
Mfg.  Co.,  23  Can.  Sup.  Ct.  644 
(affirming  S.  C,  21  Ont.  App.  66) ; 
Milwaukee  Cold  Storage  Co.  v. 
Dexter,  99  Wise.  214 ;  74  N.  W.  976 ; 
40  L.  R.  A.  837;  Lady  Forrest 
(Murchison)  Gold  Mine  (1901),  1  Ch. 
582. 

Cf.  Spavlding  v.  North  Mil- 
waukee Town  Site  Co.,  106  Wise. 
481 ;  81  N.  W.  1064;  Highway  Ad- 
vertising Co.  V.  Ellis,  7  Ont.  L.  R. 
504. 


322 


§  307-§  415]         ACCOUXTAUILITY    FOR    PROFITS  §  385 

made  no  profit.'  This  would  seem  to  be  the  true  ground  for  the 
decision  in  Dcnsmorc  Oil  Co.  v.  Denamorc.-  There,  an  owner  of 
property  organized  a  corporation  to  purchase  it,  and  the  com- 
pany afterwards  brought  suit  to  recover  the  difference  between 
the  price  it  liad  paid  and  that  at  which  the  vendor  had  bought; 
and  it  was  quite  properly  lield  that  the  company  could  not  re- 
cover that  amount.  And  moreover,  since  the  land  was  wcjrth  on 
the  market  the  full  i)ricc  paid  for  it  by  the  company,  the  pro- 
moter really  made  no  profit,  and  could  therefore  be  accountable 
for  none,  so  that  a  judgment  for  the  defendant  was  properly 
entered.  In  that  way,  the  actual  decision  may  be  suj)ported; 
but  the  court  took  the  ground  that  a  vendor  who  had  owned 
property  before  beginning  the  promotion  of  a  company  to  pur- 
chase it,  deals  with  the  corporation  at  arm's  length,  and  is  under 
no  duty  of  disclosure  —  a  position  which  under  the  existing  au- 
thorities can  hardly  be  maintained,  and  which  on  principle  seems 
clearlv  unsound.  It  is  therefore  submitted  that  the  decision 
should  be  rested  on  the  ground,  not  that  the  vendor  and  pro- 
moter was  entitled  to  retain  his  profit,  but  that  he  had  in  the  eye 
of  the  law  made  no  ])rofit. 

§  385.  Continuation  —  Cape  Breton  Company's  Case.  —  But 
what  if  a  property-owner  whose  ownership  preceded  his  idea  of 
organizing  a  corporation  secures  from  the  company  which  he 
subsequently  causes  to  be  formed  a  good  price  for  his  prop- 
erty—  more  than  what  the  court  finds  to  have  been  the  saleable 
value  of  the  property  —  and  that,  too,  although  without  actual 
misrepresentation,  yet  without  disclosing  the  fact  of  his  owner- 
ship ?  May  the  company  recover  the  difference  between  the  price 
paid  to  the  promoter  and  the  true  value  ?  It  has  been  twice  held 
by  the  English  Court  of  Appeal  that  the  company  cannot  do  so 
if  the  promoter  practised  no  actual  fraud  or  misrepresentation, 
his  only  default  being  a  failure  to  disclose  his  interest  in  the  prop- 
erty sold.^    The  only  remedy  of  the  corporation,  it  was  held,  was 

>  Bentinck  v.  Fenn,  12  App.  Cas.  795  (affirmed  on  another  grounil  by 

652    (approved   in   Mihcaukce   Cold  House  of  Lords  in  Bentinck  v.  Fenn, 

Storage  Co.  v.  Dexter,  99  Wise.  214,  12  A.  C.  Go2) ;   Ladywell  Minitig  Co. 

230;    74  N.  W.  976;    40  L.  R.  A.  v.    Brooks,   35   Ch.    D.    400;     Lady 

837).  Forrest     (Murchison)     Gold     Mine 

»  Densmore  Oil  Co.  v.  Dcnsmore,  (1901),    1    Ch.    582.      In    the    Cape 

64  Pa.  St.  43.  l^reton   Case    the    corporation   had 

*  Re  Cape  Breton  Co.,  29  Ch.  D.  voluntarily  refused  to  rescind  while 

323 


§  386  PROMOTERS  [Chap.  VI 

by  rescission  of  the  sale.  This  doctrine  seems  to  create  an  arbi- 
trary exception  to  the  usual  principle  with  respect  to  secret 
profits;  and  accordingly  it  has  been  much  criticised.'  But  it 
has  recently  been  reaffirmed  by  the  Privy  Council,"  and  there- 
fore seems  to  represent  the  law  of  England  and  the  British  Colo- 
nies.   In  America  different  results  may  yet  be  hoped  for.^ 

§  386.  Continuation  —  Gluckstein  v.  Barnes.  —  A  decision 
not  easy  to  square  with  the  doctrine  of  the  Cape  Breton  Case 
discussed  in  the  last  paragraph  is  Gluckstein  v.  Barnes.*  In  that 
case,  a  joint-stock  company  was  being  wound-up;  and,  as  its 
assets  were  currently  believed  to  be  insufficient  to  pay  its  deben- 
ture-holders, the  debentures  were  selling  below  par.  A  syndi- 
cate bought  a  number  of  these  debentures  at  less  than  par,  and 
also  purchased  the  business  of  the  defunct  company  from  its 
liquidator  for  £140,000.  Of  course,  by  reason  of  their  owner- 
ship of  the  debentures,  a  large  part  of  this  purchase  price  would 
eventually  find  its  way  back  to  their  own  hands ;  and  in  fact  they 
realized  a  profit  of  £20,000  on  the  debentures.  The  syndicate 
sold  the  business  of  the  old  company  to  a  corporation  organ- 
ized by  themselves  for  the  sum  of  £180,000.  They  stated  pub- 
licly that  they  had  bought  the  property  at  £140,000,  but  did  not 
disclose  their  ownership  of  the  debentures.  The  House  of  Lords 
held  that  the  corporation,  although  it  had  failed  to  rescind  the 
sale,  could  nevertheless  recover  from  the  syndicate  the  profit  of 
£20,000  derived  from  the  ownership  of  the  debentures.  The 
ease  may  be  distinguished  from  the  Cape  Breton  Case,  and  the 
cases  following  it,  in  two  ways.  In  the  first  place,  the  immediate 
organization  of  the  company  was  contemplated  at  the  time  the 

in  the  Ladywell  Case  rescission  had  promoter  a  secret  profit  made  by 

become    impracticable   by   the    im-  him  at  its  expense). 

possibiUty  of  returning  the  consid-         '  Lindley  on  Companies,  6th  ed., 

eration;     but   this    distinction    was  501-503. 

held  to  make  no  difference  in  the         ^  Burland  v.  Earle  (1902),  A.  C. 

result.  83,  98-99. 

Cf.  Ely  V.  Hanford,  65  111.  267;         ^  Cf.   Yeiser  v.   U.  S.  Board,  etc. 

Olympia  Ltd.  (1893),  2  Ch.  153,  170  Co.,  107  Fed.  340;   46  C.  C.  A.  567; 

(where  Lindley,  M.  R.,  said  that  the  52  L.  R.  A.  724. 
Cape  Breton  Case  did    not    decide         But  see  Insurance  Press  v.  Mon- 

that,  as  a  general  proposition,  the  tauk,  etc.  Wire  Co.,  103  N.  Y.  App. 

mere  impossibility  of  rescinding  a  Div.  472 ;    93  N.  Y.  Supp.  134. 
contract  for  a  purchase  by  a  com-         *  Gluckstein    v.     Barnes    (1900), 

pany  precludes  the  company  from  A.    C.    240    (affirming   Re    Olympia 

obtaining  from  the  vendor  if  he  is  a  (1898),  2  Ch.  153). 

324 


§  307- §  415]         ACCOUNTABILITY    FOR    PROFITS  §  389 

syndicate  purchased  the  business  and  the  debentures;  and  in  the 
second  j)lac('  tlie  statenuMit  that  the  syncHfate  were  niakin<^  a 
profit  of  £40,UUU,  wliercas  inchidin<;  the  del>enture  transaction 
the  profit  was  £60,000,  was  a  half-truth  very  nearly  if  not  quite 
equivalent  to  a  {xjsitive  misrepresentation.  Yet,  one  may  well 
doubt  whether  these  distinctions  constitute  a  real  ditlerence.  At 
all  events,  whether  or  not  the  cases  can  be  reconciled  in  princi- 
ple, everyboily  will  agree  that  Gluckstein  v.  Barnes  is  a  sound 
decision. 

§  387.  Dicta  that  Promoter  in  making  Resale  deals  at  Arm's 
Length.  —  In  a  few  American  cases  the  opinion  has  Ix'cn  inti- 
mated that  one  who  has  owned  property  before  beginning  the 
promotion  of  the  company  may  deal  at  arm's  length  with  the 
corporation  which  he  organizes,  and  dispose  of  such  prof)erty 
to  it  without  disclosing  the  price  he  paid  for  it,  or  other  material 
circumstances.^  But  it  is  submitted  that  these  dicta  are  not  law. 
As  promoter,  he  stands  in  a  fiduciary  relation  towards  the  com- 
pany which  he  organizes,  and  may  not  deal  with  it  "at  arm's 
length."  But  if  he  comes  short  of  that  standard  of  frankness 
which  the  law  requires,  he  cannot  be  treated  as  if  his  original 
acquisition  of  the  property  had  been  as  trustee  for  the  company 
—  the  corporation  must  find  some  other  remedy. 

§  388.  Effect  of  false  Representation  that  Property  is  resold 
at  same  Price  paid  by  Promoter.  —  If  promoters  represent  to  the 
company  that  they  are  selling  to  it  at  the  price  at  which  they 
themselves  bought,  they  have  been  held  liable  to  it  for  the  differ- 
ence between  that  price  and  the  price  at  which  they  really  bought, 
irrespective,  apparently,  of  the  circumstance  that  their  owner- 
sliip  antedated  the  conception  of  the  corporation  ;  -  having  repre- 
sented to  the  company  that  it  might  purcliase  from  them  for  the 
price  which  they  themselves  had  paid,  they  will  be  required  to 
make   good    tlie    a.ssertion. 

§  389.  Sale  to  Company  by  Promoter  holding  Option  of  Pur- 
chase. —  So,  too,  where  a  promoter  having  acquired  options  for 
the  purchase  of  property  before  beginning  the  organization  of  a 

'  Densmore  Oil  Co.  v.  Densmore,    N.  Y.  App.  Div.  382  ;  87  N.  Y.  Supp. 
64    Pa.    St.    43     (discussed    supra,    369  (per  Ingrahain,  J.). 
§  384);  Milwaukee  Cold  Storage  Co.         •  Simons  v.    Vulcan  Oil  Co.,  61 
v.  Dexter,  99  Wise.  214;   74  N.  W.    Pa.  St.  202;   100  Am.  Dec.  628. 
976 :  40  L.  R.  A.  837. 

Cf.    Hutchinson    v.    Simpson,    92 

325 


§  390  PROMOTERS  [Chap.  VI 

company,  afterwards  disposes  of  it  to  the  corporation  for  a  price 
in  excess  of  the  amount  of  his  options  without  disclosing  this  fact, 
he  is  Hable  to  the  company  for  the  difference : '  he  as  a  fiduciary 
is,  under  the  circumstances,  to  be  regarded  in  equity  as  exercis- 
ing the  option  for  the  benefit  of  the  company,  his  cestui  que  trust. 
§  390.  Albion  Steel  Co.  v.  Martin.  —  An  instructive  case  is 
Alhion  Steel  Co.  v.  Martin.'  There,  M  agreed  to  serve  as  direc- 
tor in  a  company  which  was  being  formed  for  the  purpose  of 
purcliasing  F's  business.  Subsequently,  both  before  and  after 
incorporation,  M  entered  into  a  number  of  contracts  with  F  in 
the  usual  course  of  trade;  and  these  contracts,  in  accordance 
with  an  ante-incorporation  arrangement,  the  company,  on  pur- 
chasing F's  business,  agreed  to  carry  out.  It  was  held  that  M 
was  not  liable  to  the  company  for  his  profits  on  such  of  these  con- 
tracts as  were  made  before  incorporation.  The  case  proceeds 
upon  the  ground  that  as  to  those  contracts,  IVI  was  not  acting  in 
a  dual  capacity,  but  exclusively  for  his  own  interest.  Perhaps 
the  most  satisfactory  reason  for  the  decision  is  that  profits  de- 
rived from  such  contracts  made  bona  fide  in  the  regular  course  of 
business  and  not  directly  with  the  company  cannot  be  regarded 
as  made  by  the  promoter  by  virtue  of  his  fiduciary  position. 


§  391.  Profits  made  with  Money  realized  upon  Illegal  Sale  of 
Stock.  —  The  fact  that  the  money  out  of  which  promoters  make 
clandestine  profit  was  obtained  by  the  company  by  an  illegal 
sale  or  issue  of  its  stock  is  no  objection  to  a  recovery  of  that 
profit  by  the  company.^ 

§  392.  Company's  Claim  founded  on  Breach  of  Trust  —  Bank- 
ruptcy of   Promoter  —  Limitations   and  Laches.  —  Promoters   are 

'  Exter  V.  Sawyer,  146  Mo.  302;  Mass.    310    (headnote   inadequate); 

47  S.  W.  951 ;   Pittsburg  Miniyig  Co.  57  N.  E.  656 ;    49  L.  R.  A.  725. 
V.  Spooner,  74  Wise.  307;   42  N.  W.  But  see  Hutchinson  v.  Simpson, 

259;    17  Am.  St.  Rep.   149  (where  92  N.  Y.  App.  Div.  382;    87  N.  Y. 

the  case  was  made  clearer  by  the  Supp.  369. 

positive  misrepresentation  of  which  ^  Albion  Steel  Co.  v.  Martin,  1  Ch. 

the    promoters    had    been    guilty) ;  D.  580. 

Yeiser  v.  U.  S.  Board  &  Paper  Co.,         ^  Pittsburg  Mining  Co.  v.  Spooner, 

107  Fed.  340;    46  C.  C.  A.  567;    52  74  Wise.  307,  324-328;    42  N.  W. 

L.  R.  A.  724.  259;   17  Am.  St.  Rep.  149. 

See  also  Hayward  v.  Leeson,  170 

326 


§  307- §  415]         ACCOUNTABILITY   FOR    PROFITS  §  394 

deemed  so  far  fiduciaries  that  a  claim  against  them  for  secret 
profits  has  Ix^en  held  to  arise  from  "breach  of  trust  "so  as  not 
to  be  barred  by  a  discharge  in  bankruj)tcy  under  the  English 
statute.'  By  parity  of  reasoning,  the  ordinary  statute  of  limita- 
tions would  not  begin  to  run  against  it  until  the  facts  are 
comnumicated  to  a  disinterested  board  of  directors."  Clearly, 
therefore,  such  a  claim  will  not  be  barred  by  laches  for  a  shorter 
time  than  the  statutory  period  of  limitations.^  The  right  of  a 
company  to  resci-ssion  of  a  contract  made  with  a  promoter  may, 
however,  be  lost  by  laches.* 

§  393.  Whether  Liability  is  Several  or  Joint.  ■ —  Where  several 
promoters,  out  oi  one  transaction  and  in  pursuance  of  one 
common  scheme,  make  clandestine  profits,  each  is  liable,  accord- 
ing to  what  is  probably  the  prevailing  view,  for  the  full  amount 
of  such  profits,  and  not  merely  for  the  share  which  he  has  re- 
ceived ;  ^  but  the  New  Jersey  Court  of  Errors  has  held  that  each 
promoter  is  liable  only  for  his  own  share.^ 

§  394.  Burden  of  Proof  —  Fact  of  Profit  and  Non-disclosure. 
—  A  corporation  seeking  to  recover  a  promoter's  secret  profits, 
Hke  any  other  plaintiff,  must  prove  its  case.  It  must  prove 
that  the  promoter  made  a  profit;^  and  that  such  profit  was 
not  disclosed  so  fully  and  frankly  as  the  law  requires.  There 
is  no  presumption  of  secrecy ;  but  the  burden  of  proving  it  rests 

*  Emma  Silver  Mining  Co.  v.  '  Loudenslager  v.  Woodbury 
Grant,  17  Ch.  D.  122.                              Heights  Land  Co.,  58  N.  J.  Eq.  556; 

«  The  Telegraph  v.  Loetscher,  101  43  Atl.  671. 
N.  W.  773 ;    127  Iowa  383.  ^  Bentinck   v.   Fenn,    12    A.    C. 

But  cf.  Re  Fitzroy  Bessemer  Steel  652. 
Co.,  50  L.  T.  144;    Pietsch  v.  Mil-         Cf.   Milwaukee  Cold  Storage  Co. 

bro^/i,  IOIN.W.388;   102N.W.342;  v.  Dexter,  99  Wise.  214;    74  N.  W. 

123 Wise. 647;  107 Am.St.Rep.  1017.  976;    40  L.  R.  A.  837  (where  the 

'  Ex-Mission,    etc.    Land    Co.    v.  promoter  paid  large  sums  of  money 

FZas/i.  97  Cal.  610,632;  32  Pac.  600.  out  of  his  own  poeket  to  induce  a 

*  Supra,  §  372.  capitalist    to    subscribe    or    procure 

*  Zinc  Carbonate  Co.  v.  First  Nat.  subscriptions  to  the  company's  cap- 
Bank,  103  Wise.  125,  135;  79  N.  W.  ital,  and  to  content  a  subscriber  to 
229  ;   74  Am.  St.  Rep.  845.  shares  from  wiiom  the  promoter  had 

Cf.     Fountain    Spring    Park    v.  purchaseii   land   afterwards   sold   to 

Roberts,   92   Wise.   345;     66  N.   W.  the   corporation   and   who   was   dis- 

399;     53   Am.    St.    Rep.    917;     Old  satisfied  with  the  low  price  he  had 

Dominion   Copper   Mining,   etc.    Co.  received    and    the   larger   price    the 

V.  Bigelow,  188  Mass.  315;   74  N.  E.  promoter  was  receiving). 
653 ;    108  Am.  St.  Rep.  479. 

See   also    cases   as   to   tlirectors, 
infra,  §  1629. 

327 


§  395  PROMOTERS  [Chap.  VI 

upon  the  company.'  On  the  other  hand,  an  agreement  by  the 
promoter  to  keep  the  matter  secret  is  as  against  him  sufficient 
proof  of  non-disclosure  in  the  absence  of  any  evidence  to  the 
contrary.- 

§  395- §  398.     What  w  sufficient  Disclosure  of  Profit  by  Promoter. 

§  395.  Question  the  same  whether  Company  seeks  Rescission 
of  Transaction  or  Recovery  of  Profit.  —  The  n^xt  question  is,  what 
sort  of  disclosure  is  sufficient,  and  to  whom  must  it  be  made? 
As  already  stated,  this  question  is  the  same  whether  the  cor- 
poration is  asking  the  recovery  of  a  promoter's  profits  or  the 
rescission  of  a  transaction  between  him  and  the  company.^ 

§  396.  Disclosm-e  must  be  Actual,  Full,  and  Frank.  —  In 
either  case  there  mu.st  be  actual  disclosure;  mere  lack  of  con- 
cealment is  no  protection."  And  it  is  not  enough  merely  to  give 
warning  or  even  to  afford  means  of  discovery.^  "Refined  equi- 
table doctrines  of  constructive  notice  have  little,  if  any,  applica- 
tion to  such  matters  as  are  now  being  dealt  with.  To  inform  a 
person  of  a  fact  is  one  thing;  to  give  him  the  means  of  finding  it 
out,  if  he  will  take  trouble  enough,  is  another  thing.  A  promoter 
of  a  company  whose  duty  it  w^as  to  disclose  what  profits  he  has 
made,  does  not  perform  that  duty  by  making  a  statement  not 
disclosing  facts,  but  containing  something  which,  if  followed  up 
by  further  investigation,  will  enable  the  inquirer  to  ascertain  that 
profits  have  been  made  and  what  they  amount  to."  "  Upon  some- 
what the  same  principle,  a  statement  that  the  price  of  property 
sold  to  the  company  is  to  be  paid  to  the  vendor  "or  his  nomi- 
nees "  is  not  a  sufficient  disclosure  that  part  of  it  is  to  be  paid  to 

»  Bentinck  v.  Fenn,  12  A.  C.  652.  ^  Supra,  §  369. 

Contra:    Colton  Improvement  Co.  v.  *  Hayward  v.  Leeson,   176  Mass. 

Richter,  26  N.  Y.  Misc.  26 ;  5.5  N.  Y.  310,  320  ;  57  N.  E.  656 ;  49  L.  R.  A. 

Supp.  486  (semble).  725.     Difficult  to  reconcile  is  Blum 

As  stated  supra,  §  368,  the  burden  v.  Whitney,  185  N.  Y.  232. 

of  proof  is  probably  different  where  ^  Gluckstein    v.     Barnes     (1900), 

the   company   seeks   rescission   of  a  A.  C.  240. 

contract  with  a  promoter,  in  which  But  see  Hodge  v.  U.  S.  Steel  Corp., 

case  the  promoter  has  tlie  burden  of  64  N.  J.  Eq.  807 ;     54  Atl.   1 ;     60 

establishing  disclosure  of  all  mate-  L.  R.  A.  742. 

rial  facts.  *  Per  Lindley,  M.  R.,  in  Re  Olym- 

2  See  Archer's  Case  (1892),  1  Ch.  pia  (1898),  2  Ch.  1.53,  166  (affirmed 

322  —  a  case  of  a  director  instead  of  by  House  of  Lords  in  Gluckstein  v. 

a  promoter.  Barnes,  ubi  supra). 

328 


§  307-§  415]  ACCOUNTAHILITY    FOR    PROFITS  §  307 

a  promoter.'  Also,  where  a  promoter  who  had  no  interest  in  cer- 
tain land  purported  to  unite  with  the  owners  in  selling  it  to  a  cor- 
poration, he  is  accountable  for  the  portion  of  the  purcha.se 
money  paid  to  him  for  his  services  in  promoting  the  company, 
since  the  disclosure  of  his  pretended  interest  as  vendor  cannot 
protect  him  as  to  profits  made  not  in  that  capacity  but  as  pro- 
moter.- Disclosure  of  the  fact  that  promoters  are  making  a  profit 
is  not  enough ;  the  amount  also  must  be  disclosed.^  Disclosure 
in  order  to  be  effective  must  be  both  full  and  frank. 

§  307.  To  whom  the  Disclosure  should  be  made  —  To  Direc- 
tors, Shareholders,  the  Public,  etc.  —  Uncpiestionably,  the  .safest 
course  for  promoters  is  to  provide  the  company  with  an  inde- 
pendent board  of  directors  to  whom  to  make  this  full  and 
frank  disclosure.  An  independent  boarfl  of  directors  means  a 
board  not  under  the  control  of  the  interested  promoters;  but  a 
board  may  be  independent  although  nominated  by  the  inter- 
ested promoters.  Ordinarily,  where  there  is  no  disclosure  to  the 
shareholders  an  independent  board  of  directors  is  indispensably 
necessary  for  the  protection  of  the  promoters.*  Of  course,  a  so- 
called  disclosure  by  the  promoters  to  themselves  as  directors  of 
the  company  is  illusory,  and  wholly  ineffective.^  So  also,  where 
a  prospectus  is  issued  misstating  material  facts,  "disclosure"  to 
the  directors  of  the  untruth  of  the  prospectus  is  wholly  nuga- 
tory, since  the  public  have  a  right  to  act  on  the  prospectus,  and 
the  directors  by  failing  to  publish  the  disclosure  practically  make 
themselves  parties  to  the  fraud,  and  so  cease  to  be  "independ- 
ent." ®  In  one  or  two  American  cases,  the  existence  of  an  in- 
dependent directorate  has  been  apparently  thought  to  obviate 
the  necessity  for  any  disclosure  at  all ;  ^  but  this  could  not  be 
held  without  overturning  the  whole  law  of  promoters  as  estab- 
lished by  the  decisions. 

»  McKay's  Case,  2  CIi.  D.  1,  3.  '  Gluckstein    v.     Barnes    (1900), 

'  Bland's  Case  (1893).  2  Ch.  612.  A.  C.  240;    Lagunas  Nitrate  Co.  v. 

'  Lady  Forrest  {MurchLson)  Gold  Lagunas    Syndicate    (1899),    2    Ch. 

Mine  (1901),  1  Ch.  582.  392,  431;    Hayward  v.  Leeson,   176 

*  Erlamjer  v.  New  Sombrero  Phos-  Mass.  ^10.  319-320  ;    57  N.  E.  656; 

phate  Co.,  3  A.  C.  1218.  49  L.  R.  A.  725. 

Cf.  Burhank  v.  Dennis,   101  Cal.  «  Simons  v.    Vulcan  Oil   Co.,   61 

90,    101 ;    35   Pac.    444    (where      it  Pa.  St.  202.  221  ;    100  Am.  Dec.  028. 

seems  to  be  laid  down  that  in  a  case  ^  Densmore  Oil  Co.  v.  Densmore, 

of  actual  fraud,  disclosure  todirectors  64  Pa.  St.  43  (criticised,  supra  §  384). 
will  never  be  suOicient.   Sed  quaere). 

329 


§  397  PROMOTERS  [Chap.  YL 

By  some  authorities  the  rule  has  been  laid  down  so  broadly  as 
apparently  to  exclude  the  possibility  of  any  effectual  disclosure 
unless  the  board  of  directors  is  independent ;  but  such  is  not  the 
law.  For,  if  the  shareholders  and  the  public  are  notified  of  all 
the  material  circumstances  of  the  proposed  transaction,  and  also 
of  the  fact  that  the  board  of  directors  is  not  independent,  that  is 
sufficient  disclosure.' 

If  the  corporation  is  what  in  England  is  called  a  "public  com- 
pany "  —  that  is,  a  company  whose  securities  are  intended  to  be 
offered  to  the  public  —  there  can  be  no  effective  disclosure  (in 
the  absence  of  an  independent  board  of  directors)  unless  it  is 
made  to  all  intending  subscribers,  that  is  to  say,  to  the  public ;  ^ 
and  hence,  in  the  case  of  such  a  company,  if  the  prospectus  pub- 
lished by  the  promoters  is  not  frank,  the  corporation  may  re- 
scind a  sale  from  them  to  it.^  If,  however,  the  corporation  is 
what  the  English  term  a  "private  company"  —  that  is,  a  com- 
pany whose  securities  are  not  intended  for  public  subscription  — 
full  disclosure  to  all  those  persons  who  are  shareholders  when 
the  transaction  in  question  occurs  will  be  sufficient,  although 
there  be  no  independent  board  of  directors.*  In  one  English 
case.  In  Re  Ambrose  Lake  Tin  Co.,^  the  whole  of  the  original 
issue  of  capital  stock  was  subscribed  by  the  very  promoters  who 
were  selling  a  mine  to  the  company,  and  who  therefore  knew  all 
the  facts.  The  same  promoters  were  also  the  directors.  The 
mine  was  taken  by  the  company  at  a  great  overvaluation ;  but 
it  was  held  that  the  corporation,  some  of  whose  shares  had  passed 
into  other  hands  could  not  compel  the  promoters  to  account  for 
their  profits  on  the  sale ;  since  all  the  existing  members  of  the 

^  Lagunas  Nitrate  Co.  \.  Lagunas  (1897),    A.    C.    22;     Tompkim    v. 

Syndicate  (1899),  2  Ch.  .392.  S-perry,  96  Md.  560;    54  Atl.  254. 

2  Hayward  v.  Leeson,   176  Mass.         Cf.  St.  Louis,  etc.   R.  R.  Co.  v. 

310,  .320;  57N.  E.  656;  49  L.  R.  A.  Tiernan,   37   Kans.   606,   633,   634; 

725';   Pietsch  V.  MUbrath,  101  N.  W.  15  Pac.  544  (a  case  of  a  public  com- 

388;    123  Wise.  647;    107  Am.  St.  pany  in  the  English  sense) ;   Innes  & 

Rep.    1017    (rehearing   denied,    102  Co.  (1903),  2  Ch.  254  (headnote  in- 

N.  W.  342).  adequate) ;    Blum  v.   Whitney,   185 

But  see  Garretson  v.  Pacific  .Crude  N.  Y.  232  (where  it  seems  at  least 

Oil  Co.,  146  Cal.  184;  79  Pac.  838;  doubtful  whether  the  principle  was 

Hutchinson   v.   Simpson,   92   N.    Y.  properiy   applied    inasmuch   as    the 

App.  Div.  382 ;  87  N.  Y.  Supp.  369.  disclosure  to  the  shareholders  seeme 

"  Lagunas  Nitrate  Co.  v.  Lagunas  not  to  have  been  frank). 
Syndicate  (1899),  2  Ch.  392.  '  Ambrose  Lake  Tin  Co.,   14  Ch. 

*  Salomon    v.    Salomoji    &    Co.  D.  390. 

330 


§  307-§  415]  ACCOUNTABILITY    FOR    PROFITS  §  398 

company  had  complete  knowledge  of  the  circumstances;  and 
the  court  intimated  that  tlie  only  remedy  of  purchasers  of  the 
shares  would  be  by  individual  actions  of  deceit  against  the  pro- 
moters for  inducing  them  to  purchase  by  a  fraudulent  overval- 
uation of  the  property.  The  decision  certainly  goes  very  far, 
and  if  it  be  inconsistent  with  the  doctrine  as  to  "public  com- 
panies" laid  down  above,  does  not  represent  the  English  law. 
Perhaps  the  true  distinction  is  that  where  all  the  authorized 
capital  has  been  issued,  the  knowledge  and  consent  of  all  the 
existing  shareholders  will  forever  prevent  any  complaint  being 
made  by  the  corjx»ration,  even  though  the  original  subscribers 
intended  to  dis{X)se  of  their  shares  to  the  public;'  but  that, 
where  only  a  portion  of  the  authorized  capital  has  been  taken 
at  the  time  of  the  transaction  complained  of,  the  knowledge  and 
consent  of  all  the  existing  shareholders  will  not  bar  a  subsequent 
complaint  by  the  company  if  the  intention  was  that  the  re- 
mainder of  the  capital  should  be  offered  by  the  corporation  for 
public  subscription.'-  In  this  way  the  Ambrose  Lake  Case  may 
be  reconciled  with  Lagunas  Case.  If  the  promoters  interested 
in  the  transaction  hold,  nominally,  all  the  stock  of  the  company, 
but  really  (as  to  much  the  larger  part)  as  trustees  for  outside 
subscribers,  a  disclosure  to  and  ratification  by  the  promoters  as 
shareholders  will  not  prevent  the  corjX)ration,  representing  the 
real  or  equitable  holders  of  the  shares  —  that  is,  the  subscrib- 
ers —  from  recovering  the  promoters'  profits.^ 

§  308.  Where  Gift  of  Profit  to  Promoter  is  Ultra  Vires  of 
Corporation.  —  Where  a  promoter  receives  a  "profit"  from  the 
company  as  a  mere  gratuity,  the  proceeding  may  be  ultra  vires 

•  Accord:    Parsons  v.  Hayes,  14  etc.  Co.  v.  Bigelow,  188  Mass.  315;    74 

Abb.,  N.  C,  419  (N.  Y.) ;  Foster  v.  N.  E.  653 ;  108  Am.  St.  Rep.  479. 
Seynwur,  23   Fed.   65 ;    Seymour  v.         But     see     Garretson     v.     Pacific 

Spring  Forrest   Cemetery  Ass'n,  144  Crude    Oil    Co.,    146    Cal.    184;    79 

N.  Y.  333  ;  39  N.  E.  365 ;  26  L.  R.  A.  Pac.  838  :   Old  Dominion  Copper  Co. 

859.  V.  Lewisohn,  136  Fed.  915,  affirmed, 

Cf.   Tompkins  v.  Sperry,  96  Md.  148    Fed.    1020    (disapproving    Old 

560;   54  Atl.  254.  Dominion  Copper  Mining,  etc.  Co.  v. 

But  see  Fred  Macey  Co.  v.  Ma-  Bigclow,  ubi  supra) ;  Flagler  Engrav- 

cey,  143  Mich.  138;  106  N.  W.  ingMachineCo.  v.  Flagler, l9Fed.4m. 
722.  Cf.   Tompkins  v.  Sperry,  96  Md. 

»  Pietsch  V.  Milbroth,  101  N.  W.  560;   54  Atl.  254. 
388 ;  123  Wise.  647  ;  107  Am.  St.  Rep.         ^  Dorris  v.  French,  4  Hun  (N.  Y.), 

1017  (rehearinp;  denied.   102  N.  W.  292;   Arnold  v.  Searing  (N.  J.  Ch.), 

342);  Old  Dominion  Copper  Mining,  67  Atl.  831. 

331 


§  399  PROMOTERS  [Ch,\p.  VI 

of  the  corporation ;  and  therefore  no  amount  of  disclosure  to  the 
shareholders  and  acquiescence  by  them  will  enable  the  pro- 
moter to  retain  it.'  Even  in  such  cases,  according  to  the 
relaxed  rules  of  ultra  vires  prevailing  in  many  of  the  United 
States,  the  unanimous  consent  of  the  shareholders  would  prob- 
ably entitle  the  promoter  to  retain  the  profit. 


§  399.  Liability  of  Promoter  to  account  for  Property  acquired 
on  behalf  of  Company.  —  The  corporation  may  of  course  com- 
pel a  promoter  to  account  for  any  property  which  he  acquires 
on  its  behalf  after  its  incorporation.  In  order  to  reach  this  result, 
it  is  not  necessary  to  resort  to  any  peculiar  principles  of  the  law 
of  promoters.  WTiere,  however,  the  purchase  is  made  by  the 
promoter  prior  to  incorporation,  the  matter  is  not  so  simple,  for 
there  is  an  apparent  difficulty  in  holding  the  purchase  to  have 
been  made  on  behalf  of  a  corporation  which  the  promoters  were 
under  no  obligation  to  form.  Nevertheless,  it  is  submitted  that 
the  company  when  incorporated,  especially  if  third  persons  are 
interested  in  it  as  shareholders,  should  be  entitled  to  the  property 
on  the  ground  that  its  corporate  existence  for  this  purpose  relates 
back  to  the  original  purchase  by  the  promoters.  Accordingly, 
it  has  been  held  that  where  a  promoter  purchases  property  on 
behalf  of  the  as  yet  unborn  company,  the  corporation  when 
formed  may  treat  the  purchase  as  made  on  its  behalf  and  may 
require  the  promoter  to  convey  the  property  to  it.^  In  most  of 
the  cases  of  this  sort,  the  promoter  has  subsequently  sold  the 
property  to  the  company  at  an  advance  and  the  company  has 
sought  to  recover  his  profit  on  the  resale.^  But,  as  just  stated, 
the  same  principle  applies  if  the  promoter  attempts  to  hold  the 
property  as  his  own.  Where  promoters  transfer  to  the  corpora- 
tion an  option  held  by  them  for  the  purchase  of  certain  real  estate, 

*  Mann  v.  Edinburgh  Northern  822,  825  (where  the  doctrines  ad- 
Tramways  Co.  (1893),  A.  C.  69.  vocated  in  the  text  were  approved 

*  Seacoast  R.  R.  Co.  v.  Wood,  by  Wright,  J.,  in  the  Chancery 
56  Atl.  337;  65  N.  J.  Eq.  530;  Division  but  ((uestioned  by  the 
CeMtral  Trust  Co.  v.  Lappe  (Pa.),  65  judges  of  the  Couri;  of  Appeal  on 
Atl.  1111.  appeal). 

Cf.     Leeds    cfc    Hanley     TJieatres         ^  See  supra,  §  384. 
(1902),  2    Ch.    809,    813-814,    821- 

332 


I  307-§  415]  LIAI5II.11V    IN    DAM.UiKS  §    iOl 

and  the  corporation  allows  the  option  to  expire,  the  j)roinotcrs 
are  at  liberty,  it  has  been  held,  to  purchase  the  pro[K?rty  on  tli«-ir 
own  account.' 


§  400-§  402.     LiahiUfii  of  Promoters  in  Damages  for  Breach 
of  Fidnciarij  Duty  to  Cutnpainj. 

§  400.  In  general.  —  The  third  consequence  of  the  princi- 
ple that  promoters  occupy  a  fiduciary  relation  towards  the  com- 
pany is  that  for  any  breach  of  the  equitable  obligations  which 
attach  to  such  a  relationship  the  promoters  are  liable  in  damages. 
This  liability  is  in  the  nature  of  a  liability  for  a  breach  of  trust 
or  for  an  "equitable  tort."  Naturally,  the  liability  cannot  be 
founded  merely  on  transactions  which  occurred  prior  to  the  in- 
corporation of  the  company;  but  if  after  incorporation  the 
promoters  conduct  themselves  in  a  way  which  is  inconsistent 
with  their  duties  as  al)Ove  outlined  they  subject  themselves  to 
this  liability.  As  pointed  out  above,  promoters  are  under  no 
duty  of  taking  care  for  the  interests  of  the  unborn  or  infant 
company.  They  are  entirely  at  liberty  to  di.ssociate  themselves 
from  the  enterprise  and  let  it  drift  to  ruin.  On  the  other  hand, 
they  may  be  guilty  of  an  equitable  tort  if  they  intermeddle  in 
the  enterprise.  This  doctrine,  which,  although  not  often  in- 
voked, may  nevertheless  in  many  cases  furnish  a  valuable 
resource  to  corporations,  should  not  be  confused  with  the  ordi- 
.nary  rules  of  the  common  law  as  to  liability  for  torts,  such  as 
deceit  or  fraud.  The  liability  is  a  peculiar  one  dependent 
entirely  on  the  fiduciary  relation  of  the  promoters  and  is  addi- 
tional to  the  liability  for  torts  which  are  independent  of  that 
relationship. 

§  401.  Examples.  —  Thus,  where  promoters  sell  property  to 
the  company  through  their  own  nominees  or  tools  as  directors, 
if  the  prospectus  which  is  issued  to  the  public  to  induce  subscrip- 
tions to  its  shares  contain  misrepresentations,  the  promoters  can- 
not exculpate  them.selves  l)y  disclosing  all  the  material  facts  to 
the  dummy  directors;  and  consequently,  as  we  have  seen,  the 
company  may  in  such  a  case  rescind  the  contract  or,  at  least 
according  to  the  better  view,  affirm  it  and  require  the  promoters 

'  GiUett  V.  Dodge  (Oreg.),  89  Pac.  741. 
333 


§  402  PROMOTERS  [Chap.  VI 

to  account  for  their  profits;  but  if  both  of  these  remedies  are 
for  any  reason  impracticable,  or  if  for  any  cause  the  company 
prefer  a  diiYerent  remedy,  the  promoters  are  Hable  in  damages 
for  breach  of  their  fiduciary  duty.'  It  will  be  observed  that  in 
such  a  case,  even  if  the  misrepresentations  in  the  prospectus  were 
fraudulent,  the  common  law  action  of  deceit  would  not  lie  by 
the  company  against  the  promoters ;  for  disclosure  having  been 
made  to  the  dummy  directors  who  acted  for  the  company  in  the 
transaction,  it  could  not  be  maintained  that  the  company  relied 
upon  the  representations,  so  that  the  only  liability  of  the  promo- 
ters for  deceit  would  be  to  the  individual  subscribers  for  shares, 
who  relied  upon  the  prospectus.  Upon  the  same  principle,  if 
promoters  sell  property  to  the  company  without  disclosing  some 
material  fact  —  such  as  the  price  at  which  they  themselves  had 
purchased  —  but  without  any  actual  misrepresentation,  although 
an  action  of  deceit  would  not  lie  against  them  because  they  were 
guilty  of  no  actual  misrepresentation,  yet  having  violated  their 
equitable  fiduciary  duty,  which  required  the  utmost  frankness  — 
uberrima  fides  —  they  are  liable  to  the  company  in  damages  as 
for  an  equitable  tort.^ 

§  402.  Liability  assimilated  to  Liability  for  Torts  —  Non-joinder 
of  Defendants.  —  Inasmuch  as  this  liability  of  promoters  for  a 
breach  of  their  equitable  fiduciary  duty  is  deemed  an 
"equitable  tort,"  it  is  assimilated  as  far  as  possible  to  liability 
for  common  law  torts.  Hence,  a  bill  in  equity  to  enforce  such  a 
liability  will  lie  against  one  of  the  promoters  without  joining  as 


'  Leeds  &  Hanley  Theatres  (1902),  been  made  on  behalf  of  the  company 

2  Ch.  809  (note,  that  although  the  would  be  the  difference  between  the 

liability  of  the  promoters  was  fre-  actual  value  of  the  property  sold  and 

quently  denominated  by  the   court  the     price    paid    therefor    by    the 

a  liability  to  the  company  for  its  company). 

damages,    yet    in    speaking    of    the  ^  Old  Dominion  Copper  Mining, 

amount  of  recovery  the  court  said  etc.  Co.  v.  Bigelow,   188  Mass.  315; 

[p.    8.33]     that     "the     measure    of  74  N.  E.  G">3 ;   108  Am.  St.  Rep.  479 

damages    is    the    amount    of   profit  (note  that  the  company  had  offered 

which  was  made  by "  the  promoters,  to  restore  the  property  to  the  pro- 

60   that   some    doubt    may   be   felt  moters) ;     Lagunas    Nitrate    Co     v. 

whether  after  all  the  court  does  not  Lagunas    Symlicate    (1899),    2    Ch. 

really  decide  merely  that  the  pro-  392    (where    the    right    to    rescind 

moters     must     account     for     their  the   transaction   had   been  lost  by 

profits,  which  if  their  original  pur-  laches), 
chase  could  not  be  deemed  to  have 

334 


§  307-§  415]  LIABILITIES    TO    ONE    ANOTHER  §  405 

defendants  others  wlio  were  jointly  implicated  with  him  in  the 
wrong.' 


§  403.  Penal  Liability  of  Promoters  to  Company.  —  Pro- 
moters who  act  fraiuhilently,  or  otiicrwisc  contrary  to  law,  may 
incur  statutory  penalties,  for  wliich  the  statutes  of  each  jurisdic- 
tion must  be  consulted;  but  even  in  the  absence  of  express 
statute  they  have  Ix^en  held  subject  to  one  disability  which  can 
projx'rly  be  deemed  nauglit  but  a  penalty  for  misconduct.  The 
rule  is  thus  laid  down  in  the  leading  case:  "If  the  promoter  of 
a  company  procures  a  company  to  be  formed  by  improper  and 
fraudulent  means,  and  for  the  purpose  of  securing  a  profit  to 
himself,  which,  if  the  company  was  successful,  it  would  be  unjust 
and  unequitable  to  allow  him  to  retain,  and  the  company  proves 
abortive  and  is  ordered  to  be  wound  up  without  doing  any 
business,  the  promoter  cannot  be  allowed  to  prove  against  the 
company  in  the  winding-up,  either  in  respect  to  his  ser\ices  in 
forming  the  company,  or  in  respect  to  his  services  as  an  officer  of 
the  company  after  the  company  was  registered." '  This  rule, 
if  indeed  it  be  universally  accepted,  does  not  seem  to  have 
attracted  the  attention  one  would  have  anticipated. 

§    404-§    411.       LIABILITIES    OF    PROMOTERS    TO    ONE    ANOTHER. 

§  404.  Classification.  —  The  liabilities  of  promoters  to  one 
another  may  be  divided  into  three  classes:  (1)  liability  to  ac- 
count for  profits,  (2)  liability  to  contribute  to  losses  and  expenses, 
and  (3)  liability  upon  express  contracts. 

§  405-§  408.     Accountability  for  Profits. 

§  405.  In  general  —  Fiduciary  Relation  of  Promoters  to  One 
Another.  —  Upon  ordinary  j)rinciples  of  equity,  promoters  occupy 
a  fiduciary  relation  to  their  associates  or  co-promoters,^  as 
well  as  to  the  companyy«and  therefore  they  must  account  to 
their  fellows  for  any  profits  made  on   this  joint  enterprise  and 

'  Old  Dominion  Copper  Mining,         '  Hereford,    etc.    Waggon    Co.,    2 
etc.  Co.  V.  Bigelow,   188  Mass.  315,    Ch.  D.  621,  626-627. 
328-329  (headnote  misleading) ;    74         ^  Cf.  ,S>i>r  v.  Hi/de,  92  N.  Y.  App. 
N.  E.  653 ;    108  Am.  St.  Rep.  479.         Div.  467 ;  87  N.  Y.  Supp.  285. 

335 


§  406  PROMOTERS  [CUAP.  VI 

not  disclosed  to  them.  This  is  true  ahhoiigh  promoters  are  not 
partners.'  If  the  profit  in  question  be  disclosed  fo  the  corporation, 
but  not  to  the  co-promoters,  the  latter  may  demand  their  share 
therein.  If,  however,  the  profit  be  not  disclosed  to  the  company, 
then  on  the  piinciples  considered  above,  it  belongs  to  the  cor- 
poration, which  may  recover  it  from  the  misconducting  pro- 
moters ;  and  this  right  of  the  corporation  seems  clearly  to  exclude 
any  right  of  the  other  promoters  thereto.  As  the  whole  profit 
belongs  to  the  company,  the  courts  ought  not  to  be  concerned 
with  enforcing  an  equal  division  thereof  among  the  several  pro- 
moters. In  cases  of  this  sort,  however,  some  high  authorities 
have  directed  an  accounting  between  the  several  promoters.- 

§  406.  Liin^en  v.  Peiinell.  —  A  Pennsylvania  case  affords  a 
neat  illustration  of  the  limits  of  the  doctrine  that  promoters  oc- 
cupy a  fiduciary  relation  to  each  other.  The  owners  of  real 
estate  sold  to  various  persons  equal  undivided  eighty-fourth 
shares  therein,  and  subsequently,  together  with  the  purchasers, 
organized  a  corporation  to  take  over  the  property.  The  Supreme 
Court  of  Pennsylvania  held  that  the  vendors  occupied  no  fidu- 
ciary relation  towards  the  purchasers  of  the  undivided  shares, 
and  were  therefore  under  no  legal  obUgation  to  make  disclosure 
to  them.^  This  decision  seems  clearly  sound,  since  the  only 
fiduciary  relation  was  that  of  all  the  parties  —  vendors  and 
purchasers  —  to  the  company. 

§  407.  Deducting  from  Profit  Expenses  incurred  for  Benefit  of 
all  Promoters.  —  As  there  is  no  implied  agency  among  pro- 
moters, it  follows  that  a  promoter  who  has  transferred  property 
to  his  associates  under  an  agreement  that  the  property  so  trans- 
ferred together  with  other  property  shall  be  assigned  over  to  the 
corporation  in  exchange  for  bonds  and  shares  which  sha'l  there- 
upon be  divisible  among  the  promoters  according  to  a  fixed 
proportion,  even  upon  the  occurrence  of  an  emergency  necessitat- 

>  Cf.  Boice  V.  Jones,  106  N.  Y.  Franey  v.  Warner,  96  Wise.  222 ;  71 

App.  Div.  547;   94  N.  Y.  .Supp.  896.  N.  W.  81  (where  the  plaintiffs  were 

But  see  Schantz  v.  Oakman,  10  clearly    entitled    to    recover    from 

N.Y.  App.  Div.  151;  41N.  Y.  Supp.  defendants     damages     as     in     the 

746.  common  law  action  for  deceit). 

'^  Emery  v.  Parrott,  107  Mass.  95 ;  Cf.  Boice  v.  Jones,  106  N.  Y.  App. 

Dole  V.  Wooldredge,  135  Mass.  140;  Div.  547;   94  N.  Y.  Supp.  896. 

Getty  V.  Devlin,  54  N.  Y.  403,  and  *  Lungren  v.  Pennell,  10  W.  N.  C. 

(on  subsequent  appeal)  70  N.  Y.  504 ;  (Pa.)  297. 

336 


§  307-§  415]         LIABILITIES    TO    ONE    ANOTHER  §  409 

ing  a  borrowing  of  money  in  order  to  prevent  a  failure  of  the 
enterprise,  the  promoters  have  no  right  to  use  any  of  the  stocks 
and  bonds  in  securing  such  a  loan,  and  therefore  they  must  ac- 
count to  the  transferor  for  his  full  proportion  of  the  securities 
without  deduction  for  any  which  they  have  used  in  procuring  the 
loan.' 

§  408.  Termination  of  Fiduciary  Relation  —  Abandonment  of 
Enterprise.  —  If  tiie  scheme  of  j)romotion  is  i)y  common  con- 
sent abandoned,  any  of  the  promoters  is  entitled  sul)sequently 
to  organize  a  new  scheme  for  the  formation  of  a  company ;  and 
in  the  new  scheme  he  may  avail  himself  of  the  efforts  of  his 
associates  in  the  abandoned  enterprise  without  incurring  any 
liability  to  account  to  them  for  his  profits  on  the  new  enterprise.^ 


§  409.  Contribution  to  Losses  and  Expenses.  —  Where  pro- 
moters have  incurred  expenses  in  the  prosecution  of  the  enter- 
prise, all  those  who  have  concurred  in  the  expenditure  or  in  the 
contracting  of  the  debt  are  bound  to  contribute  to  the  payment, 
each  one  bearing  his  proportionate  part  measured  by  the  number 
of  persons  so  liable ;  ^  and,  since  such  joint  contractors  are  not 
partners,  one  of  them,  paying  the  whole  debt,  may  enforce  his 
right  to  contribution  in  an  action  at  law,*  although  he  may  at 
his  election  proceed  in  equity.^  Where  the  promoters  have  be- 
come liable  on*  a  covenant  to  pay  rent,  contribution  may  be 
enforced  against  one  of  their  number  who  has  severed  his  con- 
nection  with  the  project  before  the  rent  in  question  accrued.® 
Under  some  circumstances,  a  promoter  who  would  not  be  directly 
liable  to  the  other  party  to  the  contract  may  be  called  upon  by 
co-promoters  for  contribution.^ 

1  McXeil  v.  Fultz,  38  Can.  Sup.         «  Lefroy  v.  Gore,  1  Jo.  &  Lat.  571, 

Ct.  198.  582. 

=  Parks  V.  Gates,  84  N.  Y.  App.         •  Boulter    v.    Peplow,    9     C.    B. 

Div.  534 ;  82  N.  Y.  Supp.  1070.  493. 

3  Batard  v.  Hawes,  2  E.  &  B.  287 ;  '  Norbury's  Case,  5  De  G.  &  Sm. 

Sanduski/   Coal    Co.    v.    Walker,    27  423;    Spottiswoode's    Case,    6    De  G. 

Ont.  677;    Lefroy  v.  Gore,  1  Jo.  &  M.  &  G.  345,  371. 
Lat.  571,  582.  But   see  Lefroy  v.  Gore,  1  Jo.  & 

*  Batard  v.  Harves,  2  E.  &  B.  287.  Lat.  571,  581. 

Cf.  Denton  v.  Macniel,  2  Eq.  352. 

But  see  Croiv  v.  Green,  111  Pa. 
St.  637,  641 ;   5  Atl.  23. 

VOL.  I.  — 22  337 


§  410  PROMOTERS  [Chap.  VI 

§  410-§  411.     Liability  on  actual  Contracts  between 
Promoters. 

§  410.  Liability  on  Contract  to  form  Corporation.  —  Often, 
indeed  usually,  promoters  either  expressly  or  impliedly  contract 
between  themselves  to  form  the  corporation.  Such  a  contract, 
however,  involving  as  it  necessarily  does  the  performance  of  a 
succession  of  acts,  cannot  be  specifically  enforced  in  equity.^  No 
chancellor  could  undertake  to  supervise  the  complicated  ques- 
tions of  policy  that  arise  in  the  organization  of  a  corporation. 
On  the  other  hand,  where  two  promoters,  A  and  B,  agreed 
together  that  A  should  acquire  title  to  certain  land  to  be  conveyed 
to  the  projected  corporation  in  exchange  for  its  entire  capital 
stock,  part  of  which  was  to  be  transferred  to  B,  and  where  after 
the  corporation  was  formed  and  its  stock  issued  to  A,  he  refused 
to  convey  the  real  estate  to  the  corporation  or  to  transfer  to  B 
the  shares  due  him  under  the  agreement,  it  was  held  that  a  person 
claiming  by  assignment  under  B  might  maintain  a  suit  for  specific 
performance  against  A  to  compel  him  to  convey  the  land  to  the 
company  and  to  transfer  the  stock  to  B's  assignees.-  It  was 
further  held  that  such  a  suit  is  not  a  shareholder's  suit  based 
upon  equitable  ownership  of  the  stock  and  filed  in  the  right  of 
the  corporation,  but  is  founded  upon  B's  individual  rights  under 
the  contract,  so  that  although  the  corporation  was  a  proper 
party  defendant  yet  its  joinder  as  defendant  did  not  oust  the 
jurisdiction  of  a  federal  court,  which  was  invoked  on  the  ground 
of  diverse  citizenship,  although  the  corporation  was  formed 
under  the  laws  of  the  state  of  which  some  of  the  plaintiffs  were 
citizens.^ 

§  411.  Effect  of  Illegal  Features  of  projected  Corporation  upon 
Legality  of  Contracts  between  Promoters.  —  In  the  course  of 
the  promotion  of  a  corporation,  promoters  may  enter  into 
many  contracts  or  agreements  inter  sese  which  are  governed  by 
the  principles  of  the  law  of  contracts.  The  circumstance  that 
such  contracts  contemplate  the  incorporation  of  a  company  in 

'  Henreich    v.    Lddberg,    105    111.  '  Rogers  v.  Penobscot  Mining  Co., 

App.  495;  Rudiger  v.  Coleman,  112    154  Fed.  606. 
N.  Y.  App.  Div.  279.  ^  Rogers  v.  Penobscot  Mining  Co., 

Cf.  Stocker  v.   Wedderburn,  3  K.     154  Fed.  606. 
&  J.  393. 

338 


§  307-§  415]  LIABILITY    TO    SHAREHOLDERS  §  413 

no  manner  affects  the  rules  of  law  which  apply  to  them.'  If, 
however,  the  scheme  of  the  projected  corporation  is  unlawful, 
such  contracts  may  he  tainted  by  the  illrgahty,  and  on  tliat  ac- 
count be  unenforceable.  For  example,  where  promoters  agreed 
with  certain  brokers  that  the  hitter  should  sell  some  bonds  of 
the  projected  company  and  should  receive  in  compensation  for 
their  services  in  the  sale  of  the  bonds  and  organization  of  the 
company  an  amount  of  stock  the  par  value  of  which  exceeded 
the  market  value  of  such  services,  the  court  held  that  the  con- 
tract was  illegal  under  a  state  constitution  which  forbade  either 
propertv  or  labor  to  be  received  in  payment  for  stock  at  a 
greater  value  than  the  market  price,  and  that  consequently,  upon 
the  abandonment  of  the  enterprise  by  the  promoters,  the  brokers 
could  not  maintain  an  action  for  damages.-  On  the  other  hand, 
an  agreement  between  promoters  for  the  formation  of  a  corpora- 
tion will  not  generally  be  deemed  illegal  or  contrary  to  pul)lic 
policy  because  it  may  fix  the  price  at  which  certain  property  is 
to  be  transferred  to  the  company  in  payment  for  shares,-'  unless 
there  be  affirmative  proof  that  the  valuation  was  fraudulently 
excessive. 

§  412-§  415.     Liability  of  Promoters  to  individual  Share- 
holders and  Subscribers  to  Shares. 

§  412.  Subscribers  to  Shares  as  Promoters.  —  In  one  sense, 
every  subscriber  to  shares  in  a  projected  corporation  is  a  pro- 
moter. Hence  the  liabilities  of  promoters  to  subscribers  to  shares 
mav  properly  be  considered  under  the  general  head  of  liabilities 
of  promoters  to  one  another.  Nevertheless,  it  should  be  observed 
that  it  is  the  act  of  subscribing  to  shares  which  makes  the  sub- 
scribers co-promoters.  Prior  to  that  time,  they  were  strangers 
to  the  enterprise. 

§  413.  Whether  Promoters  occupy  Fiduciary  Relation  to  Sub- 
scribers—  Liability  for  Non-disclosure.  —  In    some  cases,  it   has 

'  Cf.  A.  J.  Cranor  Co.  v.  Miller  »  LoriUard  v.  Clyde,  86  N.  Y.  384; 
(Ala.),  41  So.  678  (where  the  con-  Electric  Fireproof ing  Co.  v.  Smith, 
tract  was  rescinded  for  fraud).  113  N.  Y.  App.  Div.  615,  621. 

'  Altenberg  v.  Grant,  85  Fed.  345;  Cf.  Arnold  v.  Searing  (N.  J.  Ch.), 

29  C.  C.  A.  185.  67  Atl.  831. 

Cf.  Garrett  v.  Kansas  City  Coal 
Mining  Co.,  113  Mo.  330;  20  S.  W. 
965;  35  Am.  St.  Rep.  713. 

339 


§  414  PROMOTERS  [Chap.  VI 

been  said,*  and  in  others  .held,-  that  promoters  occupy  a 
fiduciary  relation  towards  the  subscribers  to  shares  in  the 
company  being  promoted,  and  that  therefore  they  are  bound  to 
disclose  to  them  all  material  circumstances,  and  will  be  liable 
to  them  in  case  of  failure  so  to  do.  But  in  general,  according 
to  the  weight  of  authority,  promoters  occupy  no  fiduciary  rela- 
tion towards  individual  shareholders,  to  whom,  therefore,  their 
liabilities  must  be  worked  out  on  the  ordinary  principles  of  the 
law  of  torts.  Hence,  they  are  not  responsible  to  an  individual 
shareholder  for  a  mere  failure  to  disclose  material  facts,  nor  for 
misrepresentations  made  wdth  an  honest  belief  in  their  truth.^ 
This  latter  consequence  of  the  doctrine  that  promoters  occupy 
no  fiduciary  relation  towards  subscribers  to  shares  has  been 
abrogated  in  England  by  the  Directors'  Liability  Act  of  1890.* 
ISIoreover,  in  certain  cases  of  non-disclosure  without  actual 
misrepresentation,  promoters  were  made  Uable  to  subscribers  to 
shares  by  §  39  of  the  Companies  Act  of  1867;^  but  by  the 
Companies  Act  of  1900  this  section  has  been  repealed.^ 

§  414.  Assximption  by  Promoters  of  Fiduciary  Relation  to 
Shareholders.  —  Of  course,  the  indi\idual  shareholders  may  vol- 
untarily constitute  the  promoters  their  agents  or  trustees,  and 
if  so,  the  latter  then  occupy  towards  them  a  fiduciary  relation. 
Thus  in  Williamson  v.  Krohn,^  certain  promoters,  being  the 
holders  of  all  the  shares  in  a  bridge  company,  agreed  with  the 
plaintiff  for  a  consideration  to  give  him  an  interest  of  eight  per 
cent  in  the  enterprise.  Subsequently,  they  entered  into  a  con- 
tract with  a  construction  company  by  which  the  latter  agreed  to 
build  the  bridge  in  consideration  of  a  transfer  to  it  of  all  the  stock 
of  the  bridge  company  and  a  large  amount  of  its  bonds.  The 
contract  further  stipulated  that  the  construction  company  should 
return  $200,000  worth  of  the  stock  to  the  promoters.    By  a  con- 

»  Shcrrt  v.  Stevenson,  63  Pa.  St.         *  53  &  54  Vict.,  c.  64. 
95;     Teachout   v.    Van   Hoesen,    76         *  30  &  31  Vict.,  c.  131,  §  138. 
Iowa  113;  40N.  W.  96;    14  Am.  St.         See    Cackett   v.    Kesvnck    (1902), 

Rep.  206 ;    1  L.  R.  A.  664.  2  Ch.  456. 

*  Brewster  v.   Hatch,    122  N.  Y.         «  63  &  64  Vict.,  c.  48,  §  33.     See 

349 ;  25  N.  E.  505 ;    19  Am.  St.  Rep.  also  §  9  and  §  10. 
498;    Goodvnn   v.    Wilbur,    104    111.         ^  Williamson  v.   Krohn,  66  Fed. 

App.  45.  655 ;  13  C.  C.  A.  668,  affirming  a.  c. 

«  Derry  v.   Peek,   14  A.   C.   337.  62  Fed.  869. 
Cf.  Duryea  v.  Zimmerman,  106  N.  Y. 
Supp.  237. 

340 


§  307-§  415]      LIABILITY   FOR    RETURN    OF   DEPOSITS         "    §  415 

temporaneous  agreement  between  the  promoters  and  the  con- 
struction company,  the  former  undertook  to  prtx^ure  the  necessary 
land  for  approaches  to  the  bridge  in  consideration  of  $300,000  in 
cash  and  S(»00,000  in  the  bridge  company's  shares.  The  cash 
portion  of  this  premium  was  in  fact  ample,  and  was  so  regarded 
by  the  parties  at  tiie  time,  for  the  purpose  of  Iniying  the  land.  The 
existence  of  the  second  contract  was  not  disclosed  to  the  plaintiff, 
who  was  given  eight  per  cent  of  the  stock  returned  to  the  pro- 
moters under  the  contract,  as  the  full  extent  of  his  rights.  On 
discovery  of  the  facts,  the  plaintiff  filed  a  bill  against  the  pro- 
moters for  an  accounting  for  eight  percent  of  the  stock  acquired 
by  them  under  the  second  contract.  The  court  held  that  the 
promoters  were  his  trustees  or  agents  in  respect  to  the  eight  per 
cent  interest  in  the  stock  which  they  had  agreed  to  give  him,  that 
this  profit  had  been  accpiired  by  them  by  dealing  with  this  stock, 
and  should  have  been  disclosed  to  the  plaintiff,  and  that  accord- 
ingly he  was  entitled  to  the  relief  prayed.  That  the  promoters 
did  occupy  a  fiduciary  relation  to  the  plaintiff  was  apparent,  and 
that  they  had  grossly  violated  their  duty  to  him  was  equally 
patent.  The  only  difficulty  in  the  case  was  to  determine  what 
part  of  the  secret  profits  belonged  to  the  plaintiff  and  what  part 
to  the  corporation.  That  the  plaintiff  was  entitled  to  some 
portion   of  it,   no  one   would  question. 

§  415.  Liability  for  Return  of  Subscribers'  Deposits  upon 
Abandonment  of  Enterprise.  —  In  some  cases  promoters  prior 
to  the  incor}X)ration  of  the  company  receive  subscriptions  to  its 
shares  and  accept  deposits  from  the  subscribers.  Under  such 
circumstances,  if  the  scheme  prove  abortive,  the  corporation 
never  being  org-anized,  the  subscribers  mav  bv  action  at  law 
recover  back  their  deposits  from  the  persons  by  whom  they  were 
received ;  *  but  no  such  recovery  can  be  had  if  the  moneys  have 
been  applied  in  furtherance  of  the  scheme  either  under  the  terms 
of  the  subscription  contract  -  or  with  the  acquiescence  of  the 

'  Wahtab  v.  Spottiswoodc,   15  M.  =  Garwood    v.    Ede,    1    Ex.    264; 

&   W.    501;    Ashpitd    v.   Sercombe,  Jones  v.  Harrison,  2  Kx.  52;   WiUey 

19L.  J.  Ex.  82;   Xockells  v.  Crosby,  v.    Parratt,    3    Ex.    211;     Baird    v. 

3  B.  &  C.  814;    Hayes  v.  Stirling,  Ross,    2    Macq.    H.    L.    60,    68-^9; 

14  Ir.  C.  L.  Rep.  277;    Hudson   v.  Watts  v.  Salter,  IOC.  B.  477. 

West,  1S9  Pa.  St.  491;   42  .\tl.  190;  Cf.   Vane  v.  Cobbold,   1  Ex.  79S, 

FitzwUliam  v.   Travis,  05  111.  App.  where   the   subscriber   alleged,    but 

183  (semble).  failed  to  prove,  that  his  payment  of 

341 


§  415  PROMOTERS  [Chap.  VI 

subscribers.'     ^Yhe^e  the  promoters  are  authorized  to  expend 
tlie  deposits  in  furthering  the  project,  their  authority  to  do  so 
cannot  be  revoked  by  a  discontented  subscriber,  so  as  to  entitle 
him  to  recover  his  deposit  without  deductions  for  subsequent 
expenthtures  bv  the  promoters."    Of  course,  by  special  contract 
a  promoter  may  agree  to  return  a  deposit  without  deduction  if 
the  scheme  prove  abortive,  aUhough  by  the  terms  of  the  general 
ac^reement  among  the  subscribers  the  expenditure  of  the  deposits 
for  the  promotion  of  the  company  is  authorized.^    One  promoter 
is  not  Uable  for  the  return  of  deposits  received  by  other  pro- 
moters,"' unless  the  latter  are  his  duly  authorized  agents.    A  com- 
plete change  in  the  nature  of  the   projected  incorporation  is 
clearly  a  sufficient  abandonment  of  the  scheme  to  entitle  the 
subscribers  to  recover  back  their  deposits.^    And  if  no  time  is 
fixed  for  the  completion  of  the  incorporation,  the  subscriber  is 
entitled  to  treat  the  scheme  as  abandoned  unless  the  company 
is  formed  within  a  reasonable  time.®    If  the  project  was  a  mere 
fraud  or  bubble,  the  deposits  may  be  recovered  in  equity ;  ^  and 
suits  in  equity  have  been  maintained  by  one  subscriber  on  be- 
half of  himself  and  all  others  to  require  the  promoters  to  account 
for  the  deposits.^    But  in  case  of  abandonment  of  a  bona  fide 
scheme,  it  seems  that  in  general  the  subscriber's  only  remedy 
is  at  law.^     Very  clearly,  all  the  subscribers  must  be  treated 
equally,  and  a  court  of  equity  will  require  the  promoters  to  turn 
the  deposits  pro  rata  without  preferring  any  subscriber  or  class 

the  deposit   had   been   induced   by  ^  Green  v.  Barrett,  1  Simons  45; 

fraud  of  the  promoters.  Cridland  v.  De  Mauley,  1  De  G.  &  S. 

'  Ashpitel  V.  Sercombe,   19  L.  J.  459. 

Ex.  82  (semble).  *  Clements  v.   Bowes,   17  Simons 

'  Baird  v.  Ross,  2  Macq.  H.  L.  61.  167,   1  Drewry  684  (headnote  mis- 

3  Mowatt  V.  Londesborough,  4  E.  leading) ;      WUUams    v.     Page,    24 

&  B.  1.  Beav.    654. 

*  Burnside  v.  Dayrell,  3  Ex.  224.  But  see  Williams  v.  Salmond,  2 
See  also  Hayes  v.  Stirling,  14  Ir.  Kay  &  J.  463 ;    Moseley  v.  Cressey's 

C.    L.    Rep.    277;     FitzmUliam    v,  Co.,  1  Eq.  405  (semble). 
Travis,  65  111.  App.  183.  Cf.   Busker  v.  Land  Co.,  89  Va. 

^  Hayes  v.  Stirling,  14  Ir.  C.  L.  455;    16  S.  E.  360;  37  Am.  St.  Rep. 

Rep.  277,  282-283.  879   (where  the  company  had  been 

•  Hudson  V.    West,    189   Pa.   St.  incorporated). 

491,495;  42  Atl.  190.  *  See  Denton  v.  Macniel,  2  Eq. 

See  further  as  to  evidence  of  352;  Stewart  v.  Austin,  3  Eq.  299. 
abandonment,  Chaplin  v.  Clarke,  But  see  Apperly  v.  Page,  1  Phill. 
4  Ex.  402.  Ch.  779. 

342 


§  307-§  415]       LIABILITY    FOR    HETURN    OF    DEPOSITS  §  415 

of  suhscTii)ers.'  So,  promoters  may  be  enjoined  from  misap- 
plying deposits  paid  by  intending  siiareholders  even  though  the 
proposed  form  of  the  intended  company  be  legally  impossible.^ 
Although  it  be  expressly  stipulated  that  deposits  shall  be  returned 
unless  shares  are  allotted,  yet  if  the  moneys  received  are  placed 
in  bank  to  the  company's  credit  the  latter  on  its  incorporation 
will  not  be  enjoined  from  dealing  with  them  as  its  own ;  the 
depositors  have  no  lien  on  the  deposits,  and  their  remedy,  and 
only  remedy,  is,  in  case  of  no  allotment  being  made,  by  an  action 
against  the  promoters  for  money  had  and  received.^  If  the  pro- 
moters misapply  the  deposit,  the  applicant  for  shares  cannot,  on 
abandonment  of  the  projected  incorporation,  treat  the  deposited 
moneys  as  a  trust  fund  capable  of  l)eing  followed  in  ecjuity.^  If 
a  sul)scriber  to  shares  has  agreed  to  pay  a  deposit  but  has  not 
actually  done  so,  an  abandonment  of  the  project  before  the 
company  is  incorporated  relieves  him  from  the  obligation  to 
pay  the  deposit.^ 

'  Williams  v.  Page,  24  Beav.  654,         *  Capper's   Case,    1    Sim.,    n.  s., 

663-664.  178;     Bradford  v.  Harris,   77    Md. 

»  Butt  V.  Monteaux,  1  K.  &  J.  98.  153 ;   26  All.  186. 

'  Moseley  v.  Cressey's  Co.,  1  Eq.         But  see  Aldham  v.  Brown,  7  E.  <fe 

405.  B.  164 ;  2  E.  &  E.  398. 

*  Stewart  v.  Austin,  3  Eq.  299. 


343 


CHAPTER  VII 

UNDERWRITING 

Section 
Application  of  principle  of  insurance  to  promotion  of  corporations   .     416 

Risks  insured  against  by  underwriting  agreements 417 

Advantages  of  underwriting  to  persons  interested  in  the  company     418 

Definition  of  underwriting  as  applied  to  shares,  bonds,  etc 419 

Parties  to  underwriting  agreements      420-422 

Agreements  between  the  underwriter  and  the  company   ....     420 
Agreements  of  underwriters  inter  sese  and  with  a  trustee  for  a 

corporation  or  a  projected  corporation 421 

Device  for  enabling  company  to  take  advantage  of  underwriting 

agreement  to  which  it  is  not  party 422 

Other  and  miscellaneous  kinds  of  underwriting,  real  or  so-called    .    .      423 

Acceptance  of  offer  to  make  underwriting  agreement 424-426 

Necessity  for  acceptance 424 

What  amounts  to  acceptance 425 

Time  of  acceptance      426 

Consideration  for  underwriting      427-430 

Nature  of  the  consideration 427 

By  whom  consideration  is  paid  —  in  general 428 

Legality  of  payment  by  company 429 

Actions  or  suits  by  underwriter  to  recover  his  consideration   .    .     430 
The  offer  of  the  securities  underwritten  to  the  public  for  subscrip- 
tion          431-433 

Necessity  for  offer  of  the  securities  to  the  public 431 

Time  for  offer  to  public 432 

What  is  such  a  taking  by  the  pubHc  as  will  discharge  the  under- 
writer  433 

Conditions  in  underwriting  agreements 434-435 

Imphed  conditions 434 

Express  condition  that  a  certain  number  of  the  securities  be 

underwritten 435 

Discharge  of  underwriter  by  alteration  of  risk 436 

Right  of  vmderwriter  of  bonds  to  overdue  coupons 437 

How  far  underwriting  agreements  are  subject  to  the  special  rules 
applicable  to  subscriptions  to  securities  of  the  kind  under- 
written       438-441 

In  general      438 

Underwriting    agreement    binding    although    conditional  —  dis- 
tinguished from  other  conditional  subscriptions  to  shares     439 
Underwriter  of  bonds  not  discharged  by  insolvency  of  company     440 
Plight   of   underwriter  to   rescind   underwriting   agreement   for 

fraud  or  misrepresentation 441 

Enforcement  of  underwriter's  agreement 442-445 

Enforcement  by  company  directly 442 

344 


§  41()-§  440]  UNDEUWIUTIXG  §  417 

Enforcement  of  un(len\'riter's  agreement  (continued)  Section 
Enforcement  hy  means  of  a  power  of  attorney  given  by  the  under- 
writer   to    accept    on    his    behalf    the    securities    under- 
written        443-445 

Wiiether  the  power  of  attorney  is  revocable 443 

Conditions  of  exercise  of  power 444 

Advantages  of  taking  a  power  of  attorney  from  underwriter     445 
Assignments  of  underwriting  agreements 446 


§  416.  Application  of  Principle  of  Insurance  to  Promotion  of 
Corporations.  —  One  of  the  modern  devices  by  which  the  pro- 
motion or  '*  flotation  "  of  a  corporation  is  nowadays  generally 
facilitated  is  the  underwriting  of  its  securities.  Business  men  are 
wisely  sensible  of  the  advantage  of  insuring  against  all  possible 
risks  and  uncertainties;  and  consequently  recent  years  have  wit- 
nessed enormous  extensions  in  the  application  of  the  principle  of 
insurance.  In  respect  to  the  promotion  of  corporations,  this  fact 
is  illustrated  by  the  growth  of  the  practice  of  underwriting 
securities. 

§  417.  Risks  insured  againsi  by  U ndcrirriting  Agreements.  — 
When  any  corporate  enterprise  is  launched,  the  most  immediate 
object  of  solicitude  to  the  promoters  is  the  procurement  of  sub- 
scriptions to  the  shares,  bonds,  debentures,  or  other  securities 
that  may  be  put  upon  the  market.  Prospectuses  are  published, 
and  all  the  other  familiar  and  elaborate  advertising  devices  are 
resorted  to  for  the  purpose  of  inducing  the  public  to  subscribe. 
But  in  spite  of  such  efforts,  accidental  circumstances  —  a  rumor 
of  war,  the  circulation  of  a  false  report  as  to  the  company's  pros- 
pects, or  any  one  of  a  thousand  similar  accidents  —  may  defeat 
the  best  grounded  expectations  and  prevent  the  successful  mar- 
keting of  the  company's  securities.  The  promoters  will  natu- 
rally exert  themselves  to  prevent  such  a  frustration  of  their  plans ; 
and  if  skilled  financiers  are  included  among  their  number,  they 
are  apt  to  be  measurably  successful.  But  the  possibility  of  fail- 
ure in  this  endeavor  to  float  the  securities  can  be  reduced  to 
a  minimum  if  only  some  responsil)le  person  or  persons  can  be 
found  who,  for  a  consideration,  a  commission,  or  premium,  will 
guarantee  that  the  securities  or  some  part  of  them  shall  be  taken 
by  the  public  before  a  certain  date,  and  will  agree  to  take  any 
that  may  not  be  subscribed  by  the  public  before  that  time.  Such 
an  agreement  is  called  an  underwT-iting  agreement. 

345 


§  418  UNDERWRITING  [ChAP.  VII 

§  418.  Advaniages  of  Underwriting  to  Persons  interested  in 
the  Company.  —  Frequently,  undenvriting  is  done  by  a  banker 
or  finance  company  '  not  previously  interested  in  the  promotion 
of  the  new  enterprise.  In  such  cases,  in  consideration  of  the  pay- 
ment of  a  premium,  or  of  a  promise  to  pay  a  commission  on,  or 
a  comparatively  small  proportion  of,  the  price  obtained  by  the 
company  for  any  of  the  securities  taken  by  the  public,  the  pro- 
moters are  assured  that  their  undertaking  will  not  perish  for 
want  of  the  funds  calculated  to  be  necessary  for  its  initiation. 
In  addition  to  this,  the  underviTiters,  who  are  necessarily  men  of 
large  means,  and  are  usually  financiers  of  ability  and  repute,  are 
thereby  interested  in  the  success  of  the  undertaking.  It  is  often 
no  small  advantage  to  the  promoters  to  be  able  merely  to  point 
to  men  of  that  class  as  associated  with  the  enterprise.  Their 
very  names  may  inspire  confidence.  Then  also,  to  enlist  on  the 
side  of  the  infant  corporation  the  sympathies  and  advice  and 
assistance  of  men  of  skill  and  experience  in  financial  affairs  is 
often  a  very  real  benefit.  All  these  circumstances  combine  to 
justify  the  promoters  and  the  corporation,  as  a  matter  of  practi- 
cal business,  —  the  legality  of  the  course  will  be-  considered 
below,  —  in  pa}ang  large  sums  to  the  underwriters. 

§  419.  Definition  of  Underwriting  as  applied  to  Shares, 
Bonds.,  etc.  —  Underwriting  agreements  may  take  a  variety  of 
forms ;  but  before  considering  the  several  kinds  of  underwriting 
contracts,  it  is  proper  to  examine  the  authorities  which  define 
what  underwTiting  is.  An  underwriting  agreement,  in  the  law  of 
corporations,  may  be  defined  as  an  agreement  to  take  such  part 
of  a  specified  number  of  shares,  bonds,  or  other  securities  as  may 
not  be  subscribed  for  by  the  public  before  a  specified  date.^    An 

'  As  to  the  power  of  a  trust  com-  ber  mentioned    in    the    agreement, 

pany    to    act    as    underwriter,    see  the  underwriter  will,  for  an  agreed 

Gause  v.  Commonwealth   Trust  Co.,  commission,  take    an    allotment    of 

106  N.  Y.  Supp.  288,  291  (a  decision  such  part  of  the  shares  as  the  pub- 

wliich  tends  to  deny  the  existence  he    has  not  applied    for."     42  Ch, 

of  the  power).  D.  6.    See  also  London  Paris  Finan- 

'  Ex  parte  Audain,  42  Ch.  D.  1.  cial,  etc.  Corp.,  13  Times  L.  R.  569. 

Said  Cotton,    L.   J.:     "An   'under-  Said  Lindley,  L.  J. :  "To  underwrite 

writing '  agreement  means  an  agree-  as  applied  to  shares  means  to  take 

ment  entered  into  before  the  shares  and    pay    for    them    if    the   public 

are  brought  before  the  pubhc,  that  do  not."      13  Times  L..  R.  570.     Said 

in  the  event  of  the  pubUc  not  taking  Ludlow,    L.    J. :    "  To     underwrite 

up  the  whole  of  them,  or  the  num-  means  to  take  and  pay  for  shares 

346 


§  416-§  446]  PARTIES   TO    UNDERWRITING  §  421 

agreement  underwriting  shares  must  be  distinguished  from  an 
agreement  to  "  phice  "  a  certain  number  of  shares  or  to  guarantee 
that  a  certain  number  of  shares  will  be  taken  by  the  public.  A 
person  who  underwrites,  shares  becomes  l)oun(l  himself  to  take 
the  shares  if  the  public  do  not;  and  the  company  may  accord- 
ingly in  that  contingency  place  his  name  uj)on  the  list  of  share- 
holders and  hold  him  as  a  shareholder.'  But  a  mere  guarantee 
that  shares  shall  be  taken  by  the  public  subjects  the  guarantor 
to  no  such  liability.-  The  only  claim  against  him  is  for  breach 
of  an  ordinary  contract  which  is  not  governed  by  the  peculiar 
principles  applicable  to  agreements  to  take  shares;  for  ex- 
ample, the  guarantor  may  raise  the  defence  of  fraud  in  cases 
where  that  defence  would  not  be  open  to  a  subscriber  to 
shares.^ 


§  420-§  422.     Parties  to  Undertoriting  Agreements. 

§  420.  Agreements  between  the  Underwriter  and  the  Com- 
pany. —  An  underwTiting  agreement  is  a  contract,  and  like 
other  contracts  it  must  be  between  definite  parties.  When  the 
underwriting  takes  place  after  the  incorporation  of  the  com- 
pany, the  agreement  may  be  made  between  the  company  of 
the  one  part  and  the  under\M'iter  of  the  other.  This  is  a  simple 
method,  and  accomplishes  the  desired  result  in  that  the  corpo- 
ration, being  a  party  to  the  agreement,  has  the  legal  right  to 
enforce  it. 

§  421.  Agreements  of  Underwriters  Inter  Sese  and  with  Trustee 
for  Corporation  or  projected  Corporation. —  This  simple  scheme 
is  not  feasible  where,  as  is  usually  the  case  when  a  new  enter- 
prise is  launched,  the  underwriting  takes  place  prior  to  incor- 
poration. Under  those  circumstances,  in  the  United  States, 
a  practice  is  for  the  underwTiters  to  sign  a  contract  in  which 
they  purport  to  agree,  each  for  himself,  with  a  trustee  for  the 
proposed  corporation,  and  to  and  with  each  other.  The  legal 
effect  of  such  a  contract  is  involved  in  some  obscurity.     The 

if  other  persons  do  not,  and   other         -  Gorrissen's  Case,  8  Ch.  507. 
persons  prima  facie  means  the  pub-         ^  Gorrissen's    Case,    8    Ch.    507, 
lie."      13  Times  L.  R.  571.  516.     As  to  liow  far  this  defence  of 

'  Ex  parte  Audain.  42  Ch.  D.  1.  fraud  is  available  to  an  underv.riter, 
Of.  Re  Hooky  (1S99),  2  Q.  B.  579.         see  infra,  §  438  and  §  4  11. 

347 


§  422  UNDKRWRITING  [ChAP.  VII 

matter  has  never  been  judicially  determined  in  this  country.* 
Undoubtedly,  the  courts  would  strive  to  uphold  the  agreement, 
and  to  carry  it  out  according  to  the  intention  of  its  framers ;  and 
this  endeavor  would  be  facilitated  by  the  somewhat  loose  doc- 
trines which  have  been  established  in  many  states  as  to  the  right 
of  a  stranger  to  a  contract  to  enforce  performance.  Nevertheless, 
the  lawvers  who  conduct  such  enterprises  should  recognize  that 
the  enforceability  of  many  American  underwi'iting  agreements 
according  to  their  tenor  is  by  no  means  as  free  from  techni- 
cal legal  objections  as  could  be  desired  in  the  case  of  in- 
struments involving,  sometimes,  many  millions  of  dollars.  The 
corporation,  not  being  in  existence,  cannot  be  bound  by  the 
agreement-  and  might  have  difficulty  in  taking  advantage 
thereof.^  Probably,  some  way  would  be  found  to  surmount 
these  and  all  other  difficulties,  but  the  element  of  uncertainty 
cannot  be  said  to  be  wholly  lacking.  In  one  case  where  an  un- 
derwriting agreement  was  made  between  a  company  described 
as  "syndicate  managers"  and  the  several  underwriters,  a  pro- 
vision in  the  agreement  whereby  the  several  underwriters  agreed 
to  guarantee  the  payment  of  a  loan  to  be  made  by  a  trust 
company  to  the  "syndicate  managers"  was  enforced  at  the  suit 
of  the  trust  company  which  made  the  loan.'* 

§  422.  Device  for  enabling  Company  to  take  Advantage  of 
Underwriting  Agreement  to  which  it  is  not  Party.  —  In  Eng- 
land, where  the  rule  is  strictly  adhered  to  that  a  contract 
cannot  be  enforced  by  a  stranger  thereto,  these  difficulties  ad- 
verted to  in  the  last  paragraph  would  be  far  more  formidable. 
Accordingly,  an  expedient  has  been  devised  which  may  be  worthy 
of  imitation  by  American  lawyers.  The  under\\Titing  agree- 
ment is  made  between  the  underwriter  and  the  leading  promoter 
of  the  intended  company,  generally  taking  the  form  of  a  printed 
letter  addressed  by  the  underwriter  to  the  promoter  and  by  him 
accepted  at  the  foot  or  end  thereof  by  signing  a  printed  accept- 
ance.^      By    the   agreement   the    underwriter  constitutes   and 

'  Compare,      however,      Electric  ^  For   form    of    such    an    under- 

Welding  Co.   v.   Prince   (Mass.),   81  writing   letter   and   acceptance,    see 

N.  E.  306,  311.  Hamilton's     Manual     of     Company 

*  Supra,  §  323  et  seq.  Law,  2d  ed.,  pp.  75  et  seq. ;  Palmer's 
3  Supra,  §  350.  Company  Precedents,   9th  ed.,  241 

*  Knickerbocker     Trust     Co.     v,    et  seq. 
Davis,  143  Fed.  587. 

348 


§  41G-§  446]  KINDS    OF    UNDERWRITING  §  423 

appoints  the  vendor  or  promoter  his  attorney  to  apply  for  and 
accept,  on  his  behalf,  the  shares  or  bonds  underwritten,  in  case 
the  contingency  arises  in  which  by  the  terms  of  the  agreement 
he  is  bound  to  take  them.  By  means  of  this  power  of  attorney, 
as  we  shall  presently  see,  the  person  designated  as  attorney  is 
able  at  any  time  to  a{)ply  for  and  accept  on  behalf  of  the  under- 
writer the  securities  which  the  latter  may  Ix'come  bound  to 
take.  The  company  although  not  a  party  to  the  underwriting 
agreement  is  enabled,  with  the  co-operation  of  the  attorney, 
to  secure  for  itself  the  same  rights  as  if  it  had  been  a  party. 
INIoreover,  any  necessity  for  a  suit  for  specific  performance  of 
the  agreement  is  obviated :  the  attorney  simply  performs  it  on 
behalf  of  the  underwriter. 


§  423.  Other  and  Miscellaneous  Kinds  of  Underwriting  Agree- 
ments. —  Still  other  forms  of  real  or  so-called  underwriting 
agreements  are  sometimes  encountered.  Sometimes  the  so- 
called  underwTiter  subscribes  absolutely  for  the  securities  in 
question,  with  the  idea  that  he  himself  will  "unload"  them  on 
the  public  as  best  he  may.  Obviously,  such  an  agreement  is  not 
properly  a  contract  of  under\NTiting  or  insurance,  and  does  not 
differ,  legally,  from  any  other  subscription  to  bonds  or  shares. 
A  recent  Connecticut  case  discloses  a  still  dift'erent  form  of 
"underwriting."  There,  each  " under^v^iter "  signed  a  so- 
called  "underwriter's  certificate"  whereby  he  promised  to  pay  a 
certain  sum  of  money  to  a  payee  named  therein  or  his  order,  upon 
delivery  of  a  certain  amount  of  stock  and  bonds  of  a  certain  cor- 
poration.^ In  the  case  referred  to,  the  court  held  that  no  tender 
of  the  stock  and  bonds  had  been  proved  sufficient  to  hold  the 
"underwriter."  Obviously,  such  an  agreement  is  not  under- 
writing in  any  proper  sense  of  the  word.  Indeed,  as  such  an  in- 
strument is  certainly  not  a  negotiable  note,  its  enforcement  would 
be  likely  to  encounter  many  obstacles,  some  of  which  will  readily 
occur  to  any  lawyer. 

'  Litchfield   Sav.    Soc.  v.  Dibble  (Conn.),  67  Atl.  476. 


349 


§  424  UNDERWRITING  [ChAP.  VII 

§  424-§  426.     Acceptance  of  Ojjer  to  Underwrite  Securities. 

§  424.  Necessity  for  Acceptance.  —  An  offer  to  underwrite 
shares,  bonds,  or  other  securities,  Uke  any  other  offer,  should  reg- 
ularly be  accepted  by  the  other  party  to  the  intended  contract 
before  the  offerer  becomes  bound.  When  the  underwriting 
ac^reenient  is  made  prior  to  incorporation  in  the  somewhat  an- 
omalous form  which  is  not  uncommon  in  America  and  which  has 
already  been  described, ^  considerable  difficulty  might  be  experi- 
enced in  determining  who  constitutes  the  other  party  to  the 
proposed  contract  by  whom  the  underwriting  offers  should  be 
accepted.  In  practice,  each  underwriter  signs  a  certain  printed 
form  which  contains  a  clause  stating  that  the  agreement  shall  be 
binding  as  soon  as  a  certain  proportion  of  the  securities  shall 
be  underwritten ;  and  no  further  acceptance  is  contemplated. 
^Yhether  or  not  this  intention  that  the  agreement  shall  thence- 
forward be  binding  will  be  effectuated  by  the  law  is  a  question 
to  which  reference  has  already  been  made.^  But  wherever  the 
under^\Tidng  agreement  is  not  in  this  anomalous  shape,  but 
where  an  offer  to  underwrite  securities  is  made  to  a  corporation 
or  to  some  vendor  or  promoter,  the  offer  will  not  be  binding  until 
it  is  accepted  by  the  corporation  or  other  person  to  whom  it  is 
addressed.^  This  is  true  although  the  offer  may  purport  to  be 
a  contract,  using  terms  such  as  "agree,"  "engagement,"  etc., 
which  are  properly  applicable  to  a  completed  contract  rather 
than  a  mere  open  offer.*     This  circumstance  accentuates  the 

1  Supra,  §  421.  rather  than  to  the  company,  but  that 

^  Supra,  §  421.    Cf.  Electric  Weld-  having  been  made  at  the  offeree's  so- 

ing  Co.  w' Prince  (Mass).,  81  N.  E.  Hcitation,  it  was  then  and  there  im- 

306,    311,    where   the   court   distin-  pUedly  accepted   by  the  person  to 

guished    an    agreement    of    under-  whom  it  was  addressed, 

writing  made  with  the  corporation  ^  Gutta   Percha    Corp.,   15  Times 

itself  from  an  agreement  made  with  L.   R.    183;  Ex  parte  Stark   (1897), 

a   person   who   had    himself   under-  1  Ch.  575. 

written  the  shares  —  a  contract  of  But  see  Ex  parte  Harrison,  69 
reinsurance  —  and  held  that  the  L.  T.  204  (as  to  which  case,  see  ex- 
latter  form  of  agreement,  being  en-  planation  of  Smith,  L.  J.,  in  Ex  parte 
tered  into  by  the  reinsurers  at  the  Stark  (1897),  1  Ch.  575,  596-597). 
solicitation  of  the  first  underwriter,  Cf.  North  Charterland  Explora- 
required  no  further  acceptance  to  tion  Co.  v.  Riordan,  13  Times  L.  R. 
make  it  binding.  It  is  submitted  80  (where  a  written  offer  was  ac- 
that  the  crucial  point  was  not  that  cepted  orally). 

the    proposition    of    the    reinsurers  *  Hindley's  Case  {\S%Q>),  2  Ch.l2\, 

was  made  to  the  first  underwriter  129,  133  (headnote  inadequate). 

350 


§  41G-§  446]  ACCEPTANCE  §  426 

doubt  whether  an  Americ:in  underwriting  "agreement"  would 
not  be  held  to  be  a  mere  oiler  until  accepted  by  some  one  to 
whom  the  underwriter  could  look  for  his  compensation  or 
commission. 

§  425.  What  amounts  to  Acceptance.  —  The  acceptance 
may  be  oral  although  the  offer  be  in  writing,  and  may  be  implied 
from  conduct.  Thus,  where  the  underwriter  handed  his  propo- 
sition in  writing  to  the  secretary  of  the  company  to  whom  it  was 
addressed,  the  court  inferred  an  acceptance  by  the  secretary  from 
his  mere  receipt  of  the  paper  without  objection  and  placing  it  on 
the  list  of  underwriting  offers.' 

§  426.  Time  of  Acceptance.  —  The  acceptance  of  an  under- 
writing offer  must  be  made  and  communicated  to  the  under- 
writer within  the  time,  if  any,  limited  and  specified  for  that 
purpose  in  the  offer;  and  if  no  time  be  expressed,  then  within  a 
reasonable  time.  Inasmuch  as  the  underwriter's  obligation  is  to 
subscribe  for  such  of  the  shares,  bonds,  or  other  securities  under- 
written as  may  not  be  taken  up  by  the  public  before  a  certain 
named  date,  and  therefore  partakes  of  the  nature  of  a  wager 
upon  the  amount  which  the  public  will  subscribe,  fairness  to  the 
underwriter  requires  that  his  offer  should  be  accepted  before 
that  date.  The  company  should  not  be  permitted  to  lie  by  until 
the  offer  to  the  public  has  proved  a  failure,  and  then  accept  the 
underwriter's  proposition.  No  one  would  say  that  an  offer  to 
insure  a  building  against  fire  for  the  period  of  a  year  could  be 
accepted  after  the  year  has  elapsed  and  after  the  building  has 
burned  down ;  and  the  principle  is  similar  in  the  case  of  an  offer 
to  insure  the  public  subscription  of  corporate  securities.  Hence, 
a  proposition  to  underwrite  shares,  bonds,  or  other  securities 
must  in  general  be  accepted  by  the  opposite  party  before  the 
close  of  the  time  within  which  the  securities  are  to  be  offered  to 
the  public.^  Still,  this  rule  is  not  invariable;  for  while  under- 
writing agreements  do  have  some  elements  of  wagers,  yet  they 
are  not  mere  bets.^    At  any  rate,  if  the  offer  to  underwrite  by  its 

'  North    Charterland    Exploration  (Mass.),    81    N.    E.    306    (explained 

Co.  V.  Riordan,  13  Times   L.   R.  80  supra,  p.  350  n.  2). 

and  281.  -  ^'•r    parte    Stark   (1897),    1    Ch. 

Cf.     Bultfontein     Sun     Diamond  575.      But    see    Dadson's    Case,    12 

Mine,    12   Times    L.    R.    461,    462  Times  L.  R.  482. 

(affirmed  in   13  Times  L.  R.  156);  »  Ex   parte   Stark   (1897),   1    Ch. 

Electric     Welding     Co.     v.     Prince  5Z5,  592. 

351 


§  427  UNDERWRITING  [ChAP.  VII 

terms  is  to  remain  open  for  a  certain  length  of  time,  it  may  be 
accepted  at  any  time  within  that  period  even  after  the  securities 
have  been  offered  to  the  pubUc' 

§  427-§  430.     The  Consideration  for  Underwriting. 

§  427.  Nature  of  the  Consideration.  —  The  consideration  for 
underwriting  may,  in  theory,  be  any  consideration  sufficient  to 
support  an  assumpsit.-  In  England,  the  consideration  is  usu- 
ally the  promise  of  the  company,  or  of  the  promoter  with  whom 
the  underwriting  agreement  is  made,  to  pay  to  the  underwriter  a 
premium  in  the  shape  of  a  commission  at  a  certain  rate  per  cent 
on  the  par  value  of  the  shares  or  securities  underwritten,  this  com- 
mission being  payable  whether  the  shares  or  securities  be  taken 
by  the  public  or  whether  the  underwriter  is  compelled  to  take 
them.^  Sometimes,  a  person  who  is  interested  as  a  shareholder  in 
the  company  will  agree  to  transfer  to  the  underwriters  some  of 
his  shares  as  a  consideration  or  bonus  for  acting  as  underwriter." 
In  the  United  States,  another  method  of  compensating  the  under- 
wTiter  is  frequently  adopted.  A  price  will  be  named  at  which 
the  securities  will  be  offered  to  the  public,  and  a  lower  price  at 
wliich  the  underwTiter  is  to  take  them  in  case  they  are  not 
subscribed  by  the  public :  the  underwriter  is  to  receive  as  his 
compensation  or  commission  the  difference  between  such  under- 
WTiting  price  of  any  of  the  securities  that  may  be  subscribed  by 
the  public  and  the  price  paid  by  the  public  subscribers.  In  this 
way,  the  under\\Titer's  compensation  is  contingent.^  If  none  of 
the  securities  underwTitten  are  taken  by  the  public,  the  under- 
writer will  receive  nothing;   and  the  more  securities  the  public 

»  Hindley's   Case    (1896),    2    Ch.  *  Cf.  Eastern  Tube  Co.  v.  Harri- 

121.  son,  140  Fed.  519. 

'  Cf.  London  Paris  Financial,  etc.  *  Cf.     Philadelphia     Construction 

Corp.,  1.3  Times   L.  R.  569  (where  Co.  v.  Cramp,  1.38  Fed.  999  (where 

the    consideration    consisted    in    an  the     court     construing     an     under- 

option  given  to  the  underwriter  of  writing  agreement,  held  that  a  cash 

subscribing   at   par   for   the   shares  commission  was  to  be  paid  to  the 

before  they  should  be  offered  to  the  underwriters  only  in  case  the  bonds 

public).    See  13  Times  L.R.  570-571.  underwritten    should    be    taken    by 

3  Cf.    Booth   V.    New   Afrikander  the  public,  while  a  "bonus"  in  the 

Gold  Mining  Co.  (1903),  1  Ch.  295  shape  of  full-paid  shares  was  to  go 

(as  to  the  meaning  of  a  provision  to  the  underwriters  in  any  event); 

authorizing  payment  of  compensa-  Knickerbocker   Trust   Co.   v.    Davis, 

tion  to  underwriters  "at  a  rate  not  143  Fed.  587, 
exceeding  50  per  cent."). 

352 


§  416-§  440]  CONSIDERATION'  §  429 

subscribe  for,  tlie  greater  will  be  the  underwriter's  profit.  The 
advantage,  from  the  company's  point  of  view,  of  a  contingent 
compensation  of  that  sort  is  very  doubtful.  It  complicates  the 
matter,  and  enables  the  underwriters  in  case  the  flotation  of  the 
company  is  successful  to  reap  profits  so  enormous  as  to  consti- 
tute almost  a  scandal. 

§  428.  By  whom  the  Consideration  is  paid  —  In  (jcneral.  — 
For  most  purposes,  it  is  immaterial  by  whom  the  underwriter's 
compensation  is  paid,  whetlier  by  the  company  or  some  vendor 
or  other  promoter.*  If  the  American  scheme  of  compensation 
mentioned  in  the  last  paragraph  be  adopted,  the  burden  of  pav- 
ing the  underwriter  falls  on  the  corporation.  The  benefits  de- 
rived by  the  company  from  the  underwTiting  of  its  shares,  bonds, 
or  other  .securities  have  been  ah'eady  mentioned,'-  and  are  so  ob- 
vious that  no  practical  business  man  would  doubt  the  propriety 
of  drawing  a  reasonable  sum  from  the  company's  treasury  for 
the  purpose  of  securing  them. 

§  429.  Legality  of  Payment  by  Compaiiy.  —  Xo  legal  ob- 
jection has  ever  been  raised  to  payment  by  a  corporation  for 
underwTiting  its  bonds,  debentures,  or  other  similar  securities. 
But  in  the  case  of  underwriting  of  shares,  the  contention  has  been 
made  in  England  that  for  the  company  to  pay  any  compensa- 
tion to  the  under\\Titer  would  be,  in  effect,  an  issue  of  shares  at  a 
discount  equal  to  the  amount  of  such  commission.  A  corpora- 
tion, it  is  said,  has  no  right  to  pay  a  person  for  subscribing  to  its 
shares.  In  one  case,  this  contention  prevailed ;  ^  but  at  least  one 
other  decision  is  inconsistent  therewith.^  It  is  submitted  that 
the  doctrine  of  the  latter  case  is  preferable.  Very  large  propor- 
tions of  the  expenses  of  promotion  are  incurred  for  the  purpose 
of  inducing  subscriptions  to  the  company's  shares.  This  is  the 
object  for  which  prospectuses  are  printed  and  advertisements 
circulated ;  yet  who  has  ever  questioned  the  right  of  a  corpora- 
tion to  incur  expenses  for  prospectuses  and  advertisements? 
Moreover,  it  is  settled  that  a  corporation  may  pay  a  commission 

•  Milwaukee  Cold  Storage  Co.  v.         ^  Supra,  §  418. 
Dexter,  99  Wise.  214  ;  70  N.  W.  976 ;         «  Lydney  Iron  Co.  v.  Bird,  33  Ch. 
40  L.  R.  A.  837  (where  payment  by    D.  85. 

a  promoter  of  a  sum  of  money  to  a         *  Ex  parte  Audain,  42  Ch.  D.  1. 
capitahst    for    underwriting    sliares    Cf.  Ex  parte  Stark  (1897),  1  Ch.  575, 
was  held  to  be  no  evidence  of  fraud    598. 
on  the  promoter's  part). 

VOL.  I. —23  353 


§  430  UNDERWRITING  [ChAP.  VII 

to  a  broker  for  placing  its  shares.^  If  such  expenses  are  legiti- 
mate, would  it  not  be  sticking  in  the  bark  to  object  to  payments 
bona  fide  made  for  underwriting  the  company's  shares?  Even 
where  the  underwriter  is  paid  in  the  first  instance  by  a  vendor 
or  other  promoter,  the  expense  must  ultimately  be  made  up  or 
recouped  out  of  the  corporation.^  It  is  unreasonable  to  object 
to  the  payment  being  made  by  the  corporation  directly  instead 
of  indirectlv.  Underwriting  agreements  are  not  mere  devices  to 
enable  shares  to  be  issued  at  a  discount.  If  they  were,  a  diilVrent 
result  would  be  reached.  Underwriting  is  becoming  almost  as 
much  a  normal  part  of  the  promotion  of  a  corporation  as  the 
publication  of  a  prospectus.  The  application  of  the  company's 
funds  to  that  purpose  ought  to  be  legitimate;  and  there  is  no 
doubt  that  it  would  be  so  held  in  America.  And  in  England, 
Parliament  stepped  in  and  resolved  all  doubts  by  a  statute  which 
establishes  the  legitimacy  of  reasonable  bona  fide  payments  by  a 
corporation  for  underwriting  its  own  shares,^  although  some- 
what stringent  conditions  and  restrictions  are  imposed  to  guard 
against  an  abuse  of  the  privilege.* 

§  430.  Actions  or  Suits  by  Underwriter  to  recover  his  Com- 
pensation. —  Wliere  the  underwi-iter's  commission  is  to  be  paid 
by  a  promoter,  with  whom  the  underwriting  agreement  is  made, 
the  underwriter  may  recover  his  commission  even  though  the 
atn-eement  contemplated  that  he  should  make  application  to  the 
company  for  allotment  of  the  shares  under\\Titten,  and  though 
no  such  application  has  in  fact  been  made :  ^  the  underwriter's 
breach  of  such  a  stipulation  is  at  most  ground  for  a  cross  action 
against  him. 

If  the  underwriting  agreement  contemplates  a  violation  of  law 
—  for  example,  an  infringement  of  a  statute  forbidding  property 

»  Metropolitan  Coal,  etc.  Ass'n  v.  575,  598.     Cf.  Milwaukee  Cold  Stor- 

Smm^eour  (1895),  2  Q.B.  604  (over-  age   Co.   v.   Dexter,   99    Wise.   214; 

ruling  Faure  Electric  Co.,  40  Ch.  D.  74  N.  W.  976;   40  L.  R.  A.  837. 

141);    Ross  V.  Sayler,  104  111.  App.  ^  Companies  Act,  1900  (62  &  63 

19;    Bauersmith    v.    Extreme    Gold,  Vict.,  c.  20),  §  8. 

etc.  Co.,  146  Fed.  95  (where  the  com-  ■•  See    Hilder    v.    Dexter    (1902), 

pany    raised    no    objection    on    this  A.  C.  474 ;  Burrows  v.  Matabele,  etc. 

Bcore  to  the  recovery  by  the  broker).  Co.  (1901),  2  Ch.  23 ;    Booth  v.  New 

Cf.  Keatinge  v.  Paringa  Consoli-  Afrikander  Gold  Mining  Co.  (1903), 

dated  Mines  (1902),  W.  N.  15  (where  1  Ch.  295. 

a  commission  of  ninety  per  cent  was  *  Sangster  v.  Netter,  9  Times  L.  R. 

held  illegal).  441. 

»  Ex   parte   Stark  (1897),    1   Ch. 

354 


§  416-§  446]  OFFER   TO   THE   PUBLIC  §  432 

or  labor  to  be  received  in  payment  for  stock  at  less  than  its  actual 
value  —  the  whole  contract  may  be  tainted  with  ill('<i;ality,  so 
as  to  prevent  tiie  underwriter  from  maintaining  an  action  for  his 
agreed  compensation  or  commission.' 

§  431-§  433.     The  0/Jcr  of  the  Securities  undcrwriiteii  to  the 
Public  for  Subscriptiou. 

§  431.  Necessity  for  Offer  of  the  Securities  to  the  Public.  — 
We  have  seen  above  that  every  underwriting  agreement  neces- 
sarily contemplates  that  the  .securities  underwritten  shall  be 
offered  to  the  public  for  subscription.  Indeed,  a  contract  to 
underwrite  securities,  sinipliciter,  implies  that  the  shares  must 
first  be  offered  to  the  public ;  and  hence  the  underwriter's  ol)li- 
gation  to  take  the  shares  does  not  arise  unless  they  are  fir.st  put 
on  the  market  for  public  subscription,  even  though  the  circum- 
stances were  such  that  an  offer  of  the  shares  to  the  pui)lic  would 
necessarily  have  been  futile.'  It  would  seem  that  an  offer  of 
securities  to  some  limited  class  of  persons  —  for  example,  the 
shareholders  in  some  existing  company  —  cannot  be  deemed  an 
offer  of  the  securities  to  the  public.^  The  necessity  for  an  offer 
to  the  public  is  not  obviated  by  the  fact  that  the  underwritten 
shares  were  offered  pro  rata  to  the  existing  shareholders  of  the 
company.* 

§  432.  Time  for  Offer  to  the  Public.  —  It  would  seem  clear 
that  the  offer  to  the  public  must  take  place  strictly  within  the 
time  limited  for  it  in  the  underwriting  agreement,  or  if  no  time 
be  expressed  then  within  a  reasonable  time ;  or  else  the  under- 
writer will  be  discharged.  The  underwriter  may  be  willing  to 
assume  the  risk  of  a  panic  or  "slump"  in  the  market  for  a  short 
but  not  for  an  indefinitely  long  period ;  and  therefore  time  is  of 
the  essence  of  the  agreement.  Thus,  where  the  underwriter  con- 
tracted on  the  faith  of  a  prospectus  which  stated,  "  Lists  of  appli- 
cations will  open  on  the  —  day  of  1S90,  and  will  close  on  or 
before  the  —  day  of  1890,"  the  Massachusetts  Supreme  Court 

>  Cf.  Altenberg  v.  Grant,  85  Fed.  ^  Booth  v.  Xew  Afrikander  Gold 

345;  29  C.  C.  A.  185.  Mining  Co.  (1903),  1  Ch.  295. 

^  London    Paris    Financial,    etc.  *  London     Paris    Financial,    etc. 

Corp.,  13    Times  L.   R.  509;    Paul  Corp.,  13  Times  L.  R.  569  (headnote 

Boyer,  Ltd.  v.   Edwardcs,   17   Times  inadequate). 
L.  R.  16  (headnote  inadequate). 

355 


§  433  UNDERWRITING  [ChAP.  VII 

thought  that  the  iinderwTiter  would  be  discharged  unless  the 
shares  were  offered  to  the  public  within  the  year  1890,  or  at  any 
rate  within  a  reasonable  time,  and  that  fifteen  months  was  more 
than  a  reasonable  time.^  The  court  also  thought  that  the  exist- 
ence of  a  panicky  market  which  rendered  impossible  the  success- 
ful flotation  of  a  new  company  at  that  time  would  not  excuse  a 
postponement  of  an  offer  to  the  public.-  In  the  same  case,  how- 
ever, the  court  concluded  (although  they  did  not  find  it  necessary 
to  decide  the  point)  that  if  the  underwTiter  after  the  expiration  of 
the  time  for  offering  the  shares  to  the  public  treated  his  contract 
as  still  binding  by  acquiescing  in  the  retention  of  deposits  which 
he  had  made,  he  thereby  waived  the  defence.^ 

§  433.  What  is  such  a  Taking  by  PubUc  as  will  discharge 
the  Underwriter.  —  In  determining  how  many  of  the  shares 
underwritten  have  been  subscribed  by  the  public  so  as  to  as- 
certain the  extent  of  the  underwriter's  obligation,  any  shares 
which  the  underwriter  may  himself  have  subscribed  "firm"  — 
i.  e.,  unconditionally  and  independently  of  the  underv^Titing 
agreement  —  are  to  be  reckoned  as  subscribed  by  the  public.^ 


§  434-§  435.     Conditions  in   Underwriting  Agreements. 

§  434.  Implied  Conditions.  —  The  courts  will  not  read  into 
the  contract  conditions  which  are  not  part  of  the  very  meaning 
of  the  term,  underwrite,  as  used  in  this  connection.  Hence, 
where  a  corporation  is  projected  for  the  purpo.se  of  acquiring  a 
lease  of  certain  land,  a  person  who  underwrites  its  shares  is  not 
discharged  from  the  obligation  to  take  them  because  the  nego- 
tiation for  the  acquisition  of  that  property  falls  through.^  So, 
an  underwriter  who  under\^Tites  a  certain  number  of  bonds  is 
not  discharged  because  the  total  number  of  bonds  proposed  to  be 
issued  is  never  underwritten.* 

'  Electric  Welding  Co.  v.  Prince  v.  Grey,  14  Times  L.  R.  373  (affirm- 

(Mas.s.),  81  N.  E.  306,  .309  (semble).  ing  13  Times  L.  R.  564). 

2  Electric  Welding  Co.  v.  Prince  Cf.  Paul  Boyer,  Ltd.  v.  Edwardes, 

(Mass.),  81    N.    E.  306,    309  (sem-  17  Times  L.  R.  16. 

ble).  ^  Crown   Lease    Proprietary    Co., 

'  Electric  Welding  Co.  v.  Prince  14  Times  L.  R.  47. 

(Mass.),  81  N.  E.  306,  309.  '  Knickerbocker     Trust     Co.     v. 

*  Sydney   Harbour  Collieries  Co.  Davis,  143  Fed.  587. 

356 


§  41C-§  44G]         DISCHARGE    OF    UNDERWRITER  §  43G 

§  435.  Express  condition  that  a  certain  Number  of  the  Secu- 
rities be  Underwritten.  —  Underwriting  ui^rcenient.s  u.sually  fix 
a  certain  number  of  .securitie.s  which  mu.st  l)e  underwTitten  be- 
fore the  several  underwriters  can  be  lx»und.  \Vliere  this  is  the 
case,  a  third  person  who  is  party  to  the  underwriting  agreement 
and  who  thereby  agrees  to  deUver  stock  as  a  bonus  to  the  under- 
writers is  not  debarred  from  acting  as  underwriter  by  reason  of 
the  rule  that  no  man  can  be  both  obligor  and  obligee;  but,  his 
agreement  for  delivery  of  the  stock  being  regarded  as  severable, 
securities  underwritten  l)y  that  person  may  be  counted  in  deter- 
mining whether  the  recjuired  minimum  has  been  underwTitten 
so  as  to  make  the  agreement  binding  on  the  other  underwriters.^ 


§  436.  Discharge  of  Underwriter  by  Alteration  of  Risk.  — 
Inasmuch  as  an  underwriting  agreement  is  a  contract  of  insur- 
ance, the  underwriter  w^ill  be  discharged  if  without  his  consent 
any  alteration  is  made  in  the  risk.  For  example,  if  the  amount 
of  the  securities  to  be  offered  to  the  public  be  changed,  the  under- 
writer's risk  is  altered,  and  he  should  be  discharged.  This  is 
very  clear  where  the  amount  of  the  securities  offered  to  the  public 
is  increased.  For  the  underwTiter  may  have  been  willing  to  guar- 
antee that  the  public  would  take  a  small  number  of  shares  or 
bonds,  and  yet  be  unwilling  to  guarantee  that  a  larger  number 
could  be  "  floated."  Where  the  number  of  the  securities  offered 
to  the  public  is  diminished,  the  case  is  not  quite  so  clear,  for  it 
mav  be  argued  that  the  public  is  more  likely  to  take  all  of  a  small 
than  a  larcre  number  of  securities,  so  that  the  underwriter's  risk 
is  rather  diminished  than  increased.  Nevertheless,  the  under- 
wTiter should  be  discharged  by  the  change.  For  he  may  have 
thought  that  if  the  company  is  launched  as  a  great  enterprise  by 
an  offer  of  a  large  number  of  the  securities  for  public  subscrip- 
tion, the  public  would  be  more  likely  to  take  them  all  than  if  a 
smaller  numlier  had  been  offered  —  a  number  so  small  as,  per- 
haps, to  attract  no  attention  from  financiers,  or  a  number  in- 
sufficient (in  the  judgment  of  some  possible  investors)  to  furnish 
the  capital  necessary  to  make  the  company  a  success.  At  all 
events,  the  diminution  has  produced  a  change  in  the  under- 

*  Eastern  Tube  Co.  v.  Harrison,  140  Fed.  519  (headnote  inadequate). 

357 


§  437  UNDERWRITING  [ChAP.  VII 

writer's  risk  without  his  consent,  and  as  an  insurer  he  should 
acconhnglv  be  discharged  without  pausing  to  inquire  whether 
the  chanc'e  is  prejuihcial  to  him.  Thus,  where  the  underwriting 
agreement  provides  that  each  underwriter,  who  underwrites,  say, 
fifty  shares  out  of,  say,  a  thousand  to  be  offered  to  the  pubHc, 
shall  only  be  called  upon  to  take  his  proportion  pro  rata  with  the 
other  underwriters,  a  reduction  in  the  number  of  shares  offered 
to  the  pubhc  will,  it  has  been  held,  discharge  the  underwriter.^ 
It  was  pointed  out  by  the  court  that  before  the  change  the  maxi- 
mum proportion  which  each  underwTiter  could  possibly  be 
called  upon  to  take  was  five  hundredths  of  the  number  of  shares 
to  be  offered  to  the  public,  whereas  if  only  five  hundred  shares 
should  be  offered  to  the  public,  each  under\\Titer  might  be  called 
upon  to  take  as  much  as  ten  hundredths  of  the  number  offered 
for  public  subscription.  In  this  particular  case,  the  most  sub- 
stantial grievance  was  manifestly  the  change  in  the  number  of 
shares  underwritten  or  in  the  number  of  underwriters  rather 
than  in  the  number  of  shares  offered  to  the  public.  But  as  al- 
ready stated,  even  if  the  only  change  had  been  in  the  number  of 
shares  offered  to  the  public,  it  is  submitted  that  the  result  should 
have  been  the  same. 

§  437.  Right  of  Underwriter  of  Bonds  to  overdue  Coupons. 
—  Where  bonds  are  underwritten,  it  seems  that  the  underwriter 
is  entitled  to  any  coupons  which  may  mature  after  the  execution 
of  the  underwriting  agreement,  but  before  he  is  called  upon  to 
take  or  pay  for  the  bonds.^ 

§  438-§  441.     How  far   Underwriting  Agreements  are  subject 
to  the  Special  Rules  applicable  to  Subscriptions  to  Securities 
"     of  the  Kind  underwritten. 

§  438.  In  general.  —  In  so  far  as  an  underwriting  agreement 
is  a  mere  contract  of  subscription  to  shares  or  bonds,  it  is  gov- 
erned by  the  peculiar  principles  which  are  applicable  to  sub- 
scriptions to  such  securities  and  which  are  elsewhere  considered. 
In  other  respects,  underwriting  agreements  are  in  general  sub- 
ject to  the  ordinary  principles  of  the  law  of  contracts.  This 
double  aspect  of  underwriting  agreements  —  as  ordinary  con- 

»  Electric  Welding  Co.  v.  Prince  nor,  95  N.  Y.  App.  Div.  6 ;  88  N.  Y. 
(Mass.),  81  N.  E.  306,  309.  Supp.  742  (stated  more  fully  infra, 

'  Hudson  Valley  Ry.  Co.  v.  O'Con-     §  1787). 

358 


§  41G-§  44G]     coMr'ARisuN  wixu  subsciaiTioNS  §  440 

tracts,  and  also  as  contracts  of  subscription  —  will  not  ira- 
prohably  lead  to  considerable  difficulty  wiien  the  matter  conies 
before  the  courts.  Take,  for  example,  the  question  of  how  far 
an  underwriter  is  entitled  to  repudiate  his  agreement  on 
account  of  misrepresentations  in  the  prospectus.  If  he  be  re- 
garded simply  as  a  subscriber  to  shares,  he  would  in  respect 
to  this  matter  come  under  certain  fairly  well-established  rules 
of  law.  If  he  be  regarded  as  an  ordinary  contractor  with  the 
company,  he  would  be  subject  to  other  and  different  rules.  In 
point  of  fact,  his  position  ought  to  be  somewhat  different  from 
that  of  either. 

§  439.  Underwriting  Agreement  binding  although  Conditional 
—  Distinguished  from  other  Conditional  Subscriptions  to  Shares.  — 
Conditional  agreements  to  sul)scribe  to  bonds  or  debentures 
are  obnoxious  to  no  legal  objection  merely  because  they  are 
conditional;  and  consequently,  even  if  an  under\v'riting  agree- 
ment be  regarded  as,  strictly,  a  contract  of  conditional  subscrip- 
tion, a  contract  for  the  underwriting  of  bonds  is  valid.  In 
the  case  of  shares  of  capital  stock,  subscriptions  upon  a  condi- 
tion precedent  are  not  in  general  binding  until  the  condition  is 
performed ;  but  this  rule  is  based  upon  the  principle  that  the 
conditional  subscriber  ought  not  to  have  the  right  to  prevent  the 
company  from  allotting  the  shares  to  some  one  else  while  he 
himself  may  never  be  bound  to  take  them.  Hence,  the  rule  has 
no  application  to  under\\Titing  agreements ;  '  for  although  they 
be  conditional  subscriptions,  yet  the  condition  is  of  such  a  pecu- 
liar character  that  the  company  is  at  liberty  to  allot  the  shares 
to  anybody  it  pleases  while  at  the  same  time  the  underwTiter 
is  bound  fast. 

§  440.  Underwriter  of  Bonds  not  Discharged  by  Insolvency 
of  Company.  —  A  subscriber  to  bonds  is  ordinarily  entitled  to 
repudiate  his  subscription  if  the  company  becomes  hopelessly 
insolvent  before  the  money  is  paid  and  the  bonds  are  issued ;  but 
although  an  underwTiter  of  bonds  or  debentures  is  a  condi- 
tional sub.scriber,  yet  his  agreement  is  governed  in  this  respect 
by  different  rules  from  an  ordinary  subscription  to  bonds."    The 

'  Burke  v.  Smith,   16  Wall.  390,  '  Eastern   Tube  Co.  v.   Harrison, 

396-397  (where  the  subscription  was    140  Fed.  519. 
in  all  its  essential  features  an  under- 
writing    agreement     although     not 
called  by  that  name). 

359 


§  441  UNDERWRITING  [ChAP.  VII 

underwT-iter  is  paid  for  guaranteeing,  as  it  were,  the  solvency  of 
the  company;  and  of  course  he  cannot  escape  liability  because 
the  company  turns  out  to  be  unsuccessful.  Indeed,  if  the  strict 
rules  applicable  to  subscriptions  to  bonds  were  applied,  the 
underwriter  would  not  be  liable  for  more  than  nominal  damages 
even  if  the  company  is  solvent.^ 

§  441.  Right  of  Underwriter  to  rescind  underwriting  Agree- 
ment for  Fraud  or  Misrepresentation.  —  If  the  underwriter  signs 
the  underwriting  agreement  in  reliance  upon  a  fraudulent 
prospectus,  he  is  undoubtedly  entitled  to  avoid  the  contract; 
although,  as  pointed  out  above,  it  may  be  doubted  whether  an 
underwTiter  of  shares  is  necessarily  subject  to  all  the  strict  rules, 
requiring  great  diligence  in  discovering  the  fraud  and  repudiating 
the  contract,  that  are  applicable  to  ordinary  subscribers  to 
shares.  This  right  of  the  underwriter  to  repudiate  the  agree- 
ment on  the  ground  of  fraud  is  not  tolled  because  the  under- 
writing agreement  provides  that  it  shall  continue  binding 
notwithstanding  any  variation  between  the  proof  prospectus  as 
exhibited  to  the  underwriter  and  the  prospectus  issued  to  the 
general  public.^ 

It  must  be  borne  in  mind  that  an  underwriter  is  influenced  by 
different  considerations  from  those  which  would  affect  an  in- 
vestor, and  that  this  fact  may  be  material  in  determining  whether 
the  underwi-iter  did  rely  upon  misrepresentations  in  the  pro- 
spectus. As  was  said  by  Farwell,  J.,  in  a  recent  English  case, 
"The  considerations  which  affect  the  careful  man  disposed  to 
invest  in  an  undertaking  are  very  different  from  those  that  affect 
the  underwriter,  who,  when  he  underwrote,  thought  that  the 
public  were  going  to  take  the  thing  up,  and  he  would  get  his 
20  per  cent,  without  being  liable  to  take  any  shares  at  all.  .  .  . 
The  investor  wants  a  sound  concern ;  the  underwriter  wants  an 
attractive  prospectus.  I  do  not  say  that  the  underwi-iter  sup- 
poses or  desires  that  there  should  be  any  misstatement  or  con- 
cealment, but  it  is  obvious  that  his  interest  is  that  the  public  be 
induced  to  subscribe."  ^  A  representation  by  one  of  the  nominal 
underwriters  that  he  is  really  risking  his  money  by  signing  the 
agreement  is  very  material,  and  any  other  person  who  signs  the 

»  Infra,  §  1720.  ^  Baty  v.  Keswick,  85  L.  T.,  n.  s., 

*  Dadson's  Case,  12  Times  L.  R.     18,  20,  per  Farwell,  J. 
482. 

360 


§  416-§  44G]  ENFORCEMENT  §  442 

agreement  as  an  underwriter  in  reliance  on  that  representation 
has  good  cause  for  coniphiint  if  the  fact  be  that  the  first  under- 
writer is  really  the  substantial  owner  of  all  the  securities  under- 
written, and  has  got  up  the  underwriting  plan  for  the  purpose  of 
"unloading  "  some  of  them.' 

It  has  been  held  that  a  person  who  is  induced  to  become  an 
underwriter  by  the  fraudulent  misrepresentations,  not  of  the  cor- 
poration but  of  a  fellow-underwriter  who  being  already  largely 
interested  in  the  securities  to  be  underwritten  had  organized  the 
underwriting  scheme  for  his  own  benefit,  may,  on  discovering 
the  fraud,  carry  out  his  underwriting  contract  so  far  as  the  corjxj- 
ration  is  concerned,  by  accepting  and  paying  for  the  securities 
underwritten,  and  may  then  maintain  a  suit  against  the  fraudu- 
lent co-underwriter,  without  making  the  corporation  a  party,  for 
a  rescission  of  the  agreement  —  that  is  to  say,  upon  handing 
over  to  the  co-underwriter  the  securities  which  he  (plaintiff)  had 
taken,  he  may  recover  from  the  co-underwriter  the  amount  he 
had  paid  the  company  for  them.^  Nobody  would  doubt  that  in 
such  a  case  the  plaintiff  might  have  an  action  of  deceit  against 
the  co-underwriter  to  recover  the  difference  between  the  price 
paid  for  the  securities  and  their  actual  value ;  but  the  relief  which 
was  actually  granted  can  only  be  sustained  upon  the  theory  that 
the  corporation  should  be  regarded  as  a  mere  alias  for  the  co- 
underwriter,  and  even  upon  that  theory  it  is  difficult  to  under- 
stand why  the  acceptance  of  the  securities  after  discovery  of  the 
fraud  should  not  bar  the  right  to  rescission.  The  court  seems 
to  have  regarded  the  corporation  for  some  purposes  as  a  mere 
alias  for  the  fraudulent  co-underwriter,  but  for  other  purposes 
as  an  independent  entity  —  a  not  altogether  consistent  position. 

§  442- §  445.   ENFORCEMENT  OF  UNDERWRITER'S  AGREEMENT. 

§  442.  Enforcement  by  Company  directly.  —  If  the  company 
be  a  party  to  the  underwriting  agreement,  it  may  doubtless 
pursue  the  same  remedies  against  the  underwriter,  in  case  he 
becomes  bound  to  take  any  of  the  securities  underwTitten,  as 
would  have  been  available  against  an  ordinary  subscriber.  In 
the  case  of  underwriters  of  shares,  these  remedies  are  ample. 

'  Rose  V.  Merchants'  Trust  Co.,  *  Rose  v.  Merchajits'  Trust  Co., 
96  N.  Y.  Supp.  946.  96  N.  Y.  Supp.  946. 

361 


§  443  UNDERWRITING  [ChAP.  VII 

Thus,  a  binding  underwriting  agreement  to  which  the  com- 
pany is  a  party  entitles  the  company  to  put  the  underwTiter's 
name  upon  its  register  of  members  in  respect  of  any  shares  which 
by  the  terms  of  the  agreement  he  may  be  bound  to  take.^  The 
same  thing  is  true  where  the  underwriter's  promise  is  "to  under- 
WTite  or  procure  to  be  underwritten  to  the  satisfaction  of  the 
directors":  the  original  underwriter  remains  liable,  in  such  a 
case,  except  in  so  far  as  approved  substitutes  may  have  been 
procured.-  Where  bonds  are  underwritten,  the  company's 
remedies  are  not  so  satisfactory ;  for  it  seems  that  equity  will 
not  specifically  enforce  a  subscription  to  bonds  or  debentures 
against  the  subscriber,^  while  at  law  only  nominal  damages 
can  in  general  be  recovered.* 

§  443-§  445.     Enforcement  by  means  of  Power  of  Attorney  to 
accept  on  behalf  of  Underwriter  the  Securities  underwritten. 

§  443.  Whether  Power  of  Attorney  is  Revocable.  —  We  have 
seen  above,  that  in  England,  for  the  purpose  of  enabling  the  com- 
pany to  enforce  an  underwriting  agreement  to  which  it  is  not  a 
party,  the  expedient  has  been  devised  of  taking  from  the  under- 
writer a  power  of  attorney  whereby  he  constitutes  and  appoints 
the  vendor  or  promoter  his  attorney  to  apply  for  and  accept,  on 
his  behalf,  the  shares  or  bonds  underwritten,  in  case  the  contin- 
gency arises  in  which  by  the  terms  of  the  agreement  he  is  bound 
to  take  them.  This  power  of  attorney,  being  given  for  a  valuable 
consideration,  and  the  donee  being  interested  in  the  flotation 
of  the  company,  is  deemed  to  be  "coupled  with  an  interest," 
and  has  been  accordingly  held  to  be  irrevocable  by  the  under- 
writer from  the  time  of  the  underwriting  agreement.^  To  be 
sure,  in  a  very  recent  Massachusetts  case  relating  to  an  agree- 
ment to  underwT-ite  shares  in  an  English  company,  Loring,  J., 
said  that  the  power  of  attorney  "could  be  revoked  by  the  under- 
writer, although  to  revoke  it  would  expose  the  underwriter  to 

»  Ex  parte  Audain,  42  Ch.  D.  1.         ^  Infra,  §  1720. 
See  also  supra,  §  419.  *  Infra,  §  1720. 

*  London    Paris    Financial,    etc.         *  CarmichaeV s  Case  (1896),  2  Ch. 

Ccnj).,    13    Times    L.    R.    569,    570  643.    Cf.   Ex  parte  Stark  (1897),  1 

(semble).  Ch.  575,  586,  588. 

Cf.  Globe  Blocks  Gold  Mining  Co., 
12  Times  L.  R.  92. 

362 


§  416-§  446]  ENFORCEMENT  §  444 

action  for  damages  for  breach  of  contract,"  '  but  this  remark 
was  unnecessary  to  the  (h'cision  of  the  case  before  the  court  and 
ought  not,  it  is  submitted,  even  in  Massachusetts,  to  be  deemed 
binding  authority  in  opposition  to  the  ICngUsh  decisions.  In- 
<leed,  if  such  a  power  of  attorney  is  revocable,  its  efficacy  is 
destroyed. 

§  444.  Conditions  of  Exercise  of  Power.  —  The  hmits  and 
conditions  of  the  authority  of  the  promoter  as  such  agent  or 
attorney  for  the  underwriter  must  l)e  strictly  fulfilled.  For  ex- 
ample, if  the  underwriter  agrees  to  subscribe  for  the  shares 
underwritten  if  and  when  called  upon  to  do  so,  and  constitutes 
the  promoter  with  whom  the  agreement  is  made  his  agent  to 
apply  in  his  name  for  any  shares  which  he  may  thus  be  bound 
to  take,  he  is  not  liable  upon  shares  which  are  allotted  in  pur- 
suance of  an  application  made  by  the  promoter  unless  he  (the 
underwriter)  was  first  called  upon  to  subscribe.^  So  if  the  under- 
writer agrees  to  subscribe  or  find  subscribers  for  certain  shares 
before  a  certain  date,  and,  in  the  event  of  his  failure  to  comply 
with  the  terms  of  the  agreement  authorizes  the  promoter  with 
whom  it  is  made  to  apply  for  the  shares  as  his  agent,  the  pro- 
moter's authority  does  not  arise  unless  the  underwTiter  be  first 
given  an  opportunity  to  subscribe  and  fails  to  avail  of  it.^  Where 
the  underwriting  agreement,  contemplates  that  the  underwriter 
will  accompany  it  with  a  ^^Titten  application  for  the  shares  under- 
written, and  confers  a  power  of  attorney  to  apply  for  the  shares 
in  case  that  application  is  withdrawn,  an  English  judge  held 
that  if  no  application  for  shares  did  in  fact  accompany  the  under- 
writing agreement  and  if  none  was  in  fact  executed  by  the  under- 
writer, such  failure  was  equivalent  to  a  withdrawal  within  the 
meaning  of  the  underwriting  agreement,  and  that  the  attorney 
was  therefore  authorized  to  apply  for  the  shares  in  the  under- 


'  Electric  Welding  Co.  v.  Prince  find  subscribers  for  such  of  a  number 

(Mass.),  81  N.  E.  306,  310.  of  shares  as  are  not  taken  by  the 

*  Ormerod's   Case    (1894),    2   Ch.  public,  the  attorney  may  apply  for 

474 ;  Brussels  Palace  of  Varieties  v.  the    shares    without    first   notifying 

Prockter,  10  Times  L.  R.   72 ;    Elec-  the   underwriter  of   the   number  of 

trie  Welding  Co.  v.  Prince  (Mass.),  shares  he  has  become  bound  to  take 

81  N.  E.  306.  or  find  subscribers  for). 

But  cf.  Shaw  V.  Benttey  &  Co.,         »  Ex   parte  Stark   (1897),    1   Ch. 

68   L.   T.   812  (holding  that  where  575,  592,  601 ;    Bultfontein  Sun  Dia- 

underwriter  agrees  to  subscribe  or  rnoiid  Mines,  13  Times  L.  R    156. 

3o3 


§  444  UNDERWEITIXG  [ChAP.  VII 

writer's  name.*  If  the  underwriter  authorizes  the  agent  to  "  hand 
my  application  for  shares  to  the  company  as  my  agent,"  the 
agent  is  not  authorized  to  sign  an  application  on  the  under- 
writer's behalf.-  Moreover,  if  the  untlerwriter  agrees  to  sub- 
scribe or  find  subscribers  for  a  certain  number  of  shares  and 
authorizes  the  agent  to  apply  for  "the  said  shares"  on  his  behalf, 
the  agent  has  no  power  to  apply  for  any  less  number,  although 
some  of  the  shares  may  have  been  taken  by  the  public.^ 

In  general,  the  apparent  authority  of  the  agent  does  not  ex- 
ceed his  actual  authority,  and  hence  the  underwriter  cannot  be 
estopped  from  showing  that  the  conditions  upon  which  the  agent's 
authority  to  act  for  him  were  to  arise  had  not  occurred,  or  from 
denying  that  any  contract  was  ever  consummated  because 
although  his  offer  to  underwrite  had  apparently  been  accepted 
yet  the  acceptance  had  not  been  communicated  to  him  in  due 
time.*  If,  however,  the  authority  contained  in  the  underwrit- 
ing letter  be  subject  to  secret  conditions  in  a  separate  paper 
which  is  not  shown  to  the  company,  the  underwriter  will  be 
estopped  from  setting  up  non-performance  of  the  secret  condi- 
tions if  the  company  has  allotted  the  shares  in  reUance  upon 
the  agent's  ostensible  authority  as  conferred  by  the  underwrit- 
ing letter.^ 

Moreover,  if  the  attorney  exceeds  his  authority  ratification 
by  the  underwriter  may  sometimes  be  shown.  When  the  under- 
writer receives  notice  that  shares  have  been  allotted  to  him  upon 
the  application  of  the  attorney  in  excess  of  his  authority,  the 
underwriter  must  repudiate  the  shares  promptly  if  he  desire  to 
escape  liability :  ^  his  position  is  not  that  of  a  person  to  whom 
shares  have  been  allotted  without  any  prior  application  on  his 
part  and  who,  as  explained  above,''  cannot  be  made  a  share- 
holder by  mere  inaction,  but  rather  that  of  a  principal  whose 
agent  has  exceeded  his  authority  and  who,  after  learning  of  the 
excess  of  authority  or  after  he  might  have  learned  of  it  by  the 

*  Globe  Blocks  Gold  Mining  Co.,  575.  Cf.  Gutta  Percha  Corp.,  15 
12  Times  L.  R.  92.  Times  L.  R.  183. 

^  Holophane     v.     Hesseltine,     13  *  Ex  parte  Harrison,  69  L.  T.  204 

Times  L.  R.  7.  (explained  in  Ex  parte  Stark  (1897), 

^  Holophane     v.     Hesseltine,     13  1  Ch.  575). 
Times   L.   R.    7    (per   Lord    Esher,         *  Electric  Welding  Co.  v.  Prince 

M.  R.).  (Mass.),  81  N.  E.  .306. 

*  Ex  parte  Stark   (1897),    1   Ch.         '  Supra,  §  194. 

364 


§  416-§  446]  ASSIGNMENTS  §  446 

exercise  of  due  diligence,  must  take  affirmative  steps  to  repudiate 
his  agent's  action  or  be  held  to  have  tacitly  ratified  and  acqui- 
esced in  it. 

§  445.  Advantages  of  taking  a  Power  of  Attorney  from  Under- 
writer. • —  This  expedient  of  taking  from  the  underwriter  an 
irrevocable  power  lA  attorney  to  apply  for  and  accept  on  his 
behalf  the  securities  which  under  his  agreement  he  may  become 
l)ound  to  take  not  merely  enables  the  company  to  avoid  any 
legal  obstacles  to'  the  enforcement  of  the  contract  where  the 
company  itself  is  not  a  party,  but  also  has  additional  advantage 
of  being  an  automatic  arrangement  for  securing  specific  per- 
formance of  the  underwriter's  contract.  In  the  case  of  under- 
AATiting  of  bonds,  or  debentures,  this  feature  is  particularly 
valuable;  for,  as  explained  below,  efjuity  will  not  specifically 
enforce  a  subscription  to  bonds  or  debentures  against  the  sub- 
scriber, while  at  law  only  nominal  damages  can  in  general  be 
obtained.'  Accordingly,  it  is  recommended  that  every  agree- 
ment for  the  underwriting  of  bonds  or  debentures  should 
contain  or  be  accompanied  by  such  a  power  of  attorney. 


§  446.  Assignments  of  Underwriting  Agreements.  —  An  un- 
derwriting agreement  is  a  contract,  and  it  would  therefore  seem 
that  pecuniary  rights  arising  under  it  may  be  assigned  in  the 
same  way  as  other  choses  in  action,  although,  to  be  sure,  where 
shares  are  underwritten,  an  assignment  by  the  corporation  may 
not  be  effective  unless  an  assignment  of  uncalled  capital  would 
be  valid.-  At  any  rate,  where  a  company  undertakes  to  assign 
an  underwriting  agreement  to  a  bank  as  collateral  security  for 
a  debt,  and  agrees  to  issue  to  the  bank  certificates  for  the 
requisite  number  of  shares  to  be  delivered  to  the  under- 
wTiters,  the  assignment  is  so  far  effectual  that  if  by  inadvertence 
or  otherwise  the  company  fails  to  issue  the  certificates  as 
agreed,  the  bank  may  require  it  to  do  so,  the  right  of  the  bank 
to  compel  the  underwriters  to  accept  the  certificates  and  make 
payment  according  to  the  underwriting  agreement  being  left 

>  Infra,  §  1720.     Cf.  supra,  §  440         ^  See  supra,  §  72. 
and  §  442. 

365 


§  446  UNDERWRITING  [ChAP.  VII 

an  open  question.*  Although  an  underwriting  agreement  is 
certainly  not  negotiable,  yet  where  it  expressly  contemplates 
assignment  as  collateral  security  for  loans  to  be  made  to  the 
company,  an  underwriter  cannot  set  off  against  a  claim  by  the 
assignee  a  debt  owing  to  the  underwriter  by  the  company :  ^ 
any  such  defences  the  under\STiter  should  be  estopped  to 
make. 

'  Kirkpatrick  v.  Eastern  Milling         '  Cf.  Eastern   Tube  Co.  v.  Harri- 
&   Export  Co.,   137   Fed.   387;    69    son,  140  Fed.  519. 
C.  C.  A.  579. 


366 


CHAPTER  VIII 

CORPORATE   NAMES 

Section 

Necessity  for  a  corporate  name 447 

Choice  of  corporate  name 448^50 

How  and  by  whom  chosen 448 

Statutory  restrictions  upon  choice 449 

Name  must  not  be  fraudulent  or  misleading 450 

Conflicting  claims  of  right  to  use  name  chosen  as  corporate  name .     451-459 
Nature  of  rigiit  to  use  of  corporate  name  —  when  not  exclusive     451 

When  right  of  corporation  is  exclusive 452 

Remedies  against  improper  use  of   names  by  or  of   corpora- 
tions        453-456 

Injunction  against  incorporation  under  a  name  to  which 

plaintiff  has  prior  right 453 

Injunction  against  use  of  improper  corporate  name  after 

incorporation 454 

Power  of  courts  to  forestall  or  overrule  decision  of  public 
officer  charged  with  duty  of  passing  on  propriety  of 

corporate  name 455 

Receipt  of  mail  intended  for  other  company  .......     456 

How  to  determine  whether  corporate  names  are  unduly  similar 

to  one  another 457 

Transfer  to  corporation  of  a  promoter's  right  to  carry  on  busi- 
ness under  his  own  name 458 

Conflicting  rights  of  domestic  and  foreign  corporations    ....     459 

Misnomer  of  corporations 460-461 

In  general      460 

Misnomer  in  pleadings 461 

Inferences  from  corporate  names 462—465 

In  construing  incorporation  paper 462 

Corporate  name  as  a  brief  description  of  company's  business  .  .  463 
Corporate  name  as  an  allegation  that  company  is  incorporated .  .  464 
Absence  of  word  "limited"  from  name  as  notice  that  liability 

of  shareholders  is  unlimited 465 

Change  of  corporate  name      466 

User  of  a  name  other  than  corporate  name 467 

Assignment  of  right  to  use  corporate  name 468 

§  447.  Necessity  for  a  Corporate  Name.  —  The  question  has 
been  mooted  whether  a  special  name  is  essential  to  corporate 
existence.  Some  authorities  have  said  with  Blackstone  that  when 
a  corporation  is  erected,  a  name  miui  be  given  to  it,  and  that  such 
a  name  is  the  very  being  of  its  constitution  and  the  knot  of  its 

367 


§  448  CORPORATE    NAMES  [ChAP.  VIII 

combination.^  Even  these  authorities  admit  that  if  no  name  is 
given  in  the  charter,  the  corporation  may  assume  an  appropriate 
name,  or  acquire  one  bv  usage.  Others  have  asserted,  with  much 
force,  that  stress  should  not  be  laid  on  the  mere  matter  of  name, 
but  that  the  essential  element  in  corporate  existence  is  the  fact 
of  the  union  of  several  natural  persons  into  an  ideal  or  artificial 
legal  personality,  and  not  the  designation  of  that  fact  by  an 
appropriate  name.  But  whatever  be  the  correct  theory,  certain 
it  is  tliat  in  practice  every  corporatioi  has  and  must  have  its 
individual  corporate  name. 

§  448- §  450.     Choice  of  Corporate  Name. 

1  448.  How  and  by  whom  chosen.  —  In  case  of  corpora- 
tions erected  by  royal  charter,  the  corporate  name  was  given  by 
the  king  in  the  charter.  In  the  case  of  corporations  created  by 
special  act,  the  name  is  usually  given  by  the  legislature  in  the 
act  of  incorporation.  On  the  other  hand,  when  a  corporation  is 
formed  under  a  general  law,  the  incorporation  paper  must  state 
the  corporate  name,-  which  is  chosen  by  the  promoters. 

§  449.  Statutory  Restrictions  upon  Choice.  —  Restrictions  as  to 
the  choice  of  corporate  names  are  often  contained  in  general  in- 
corporation laws.^  The  English  Companies  Act  of  1862  makes 
the  word  "Limited"  a  necessary  part  of  the  corporate  name  of 
every  company  the  liability  of  whose  shareholders  is  limited ;  * 
and  similar  provisions  are  sometimes  found  in  the  United  States.^ 

>  1  Black.  Comm.,  475.  ing  the  word  "company"  or  "cor- 

Cf.     Smith    V.     Tallahassee,     etc.  poration"  an  essential  part  of  the 

Plank  Road  Co.,  30  Ala.  650,  664-  name  of  every  corporation  assuming 

gQ5  the  name  of  a  person  or  firm  held  to 

2  Supra,  §  117.  apply  where  a  family  name  not  con- 

3  As  to  the  discretionary  power  joined  with  a  Christian  name  is  used 
under  the  laws  of  some  states  to  re-  as  part  of  the  corporate  title). 
fuse  a  "charter"  to  an  association  As  to  the  construction  of  a  statute 
whose  name  is  colorless  and  not  requiring  every  corporation  to  print 
distinctive,  see  Nether  Providence  the  word  "incorporated"  under  its 
Ass'n,  12  Pa.  Co.  Ct.  666.  name  on  all  "printed  or  advertising 

As'  to    the    discretionary    power  matter,"  see  Jung  Brewing  Co.  v. 

with    respect    to    amendments,    see  Commonwealth  (Ky.),  96  S.  W.  476; 

supra   §  151  Commonwealth    v.    American    Snuff 

*  Companies  Act,  1862,  §  14(2).  Co.  (Ky.),  101  S.  W.  364  (holding 

See  also  infra,  §  467.  that    the    use    of    the    abbreviation 

«  Cf.  State  ex  rel.  Mallinckrodt  v.  "Inc."  is  not  a  compliance  with  the 

McGrath,  lb  Mo.  424  (statute  mak-  statute);     T.   J.   Moss   Tie   Co.   v. 

368 


§  447-§  468] 


CHOICE    OF    NAME 


§  449 


Moreover,  it  is  provided  in  EntJjlaiid  and  in  some  of  the  American 
states  that  no  company  shall  he  incorporated  or  registered  under 
a  name  identical  with  or  so  similar  to  that  of  a  company  pre- 
viously formed  as  to  l)e  likely  to  deceive; '  but  as  \v'\\\  presently 
be  shown,  all  such  provisions  are  merely  declaratory  of  the 
common  law,-  except  perhaps  in  so  far  as  they  authorize  the 
registrar  to  refuse  to  receive  or  record  an  incorporation  paper 
for  a  company  whose  name  is  misleading,  instead  of  requiring 
him  to  register  the  instrument,  leaving  the  parties  aggrieved  to 
redress  by  action  at  law  or  bill  in  equity.^    Provisions  of  this  sort 


Commomvealth  (Ky.),  105  S.  W.  163 
(holding  tliat  a  letter  to  the  county 
attorney  in  reference  to  an  assess- 
ment against  the  company  is  not 
"advertising  matter"). 

The  use  of  the  abbreviation 
"Ltd."  is  not  a  compliance  with  a 
statute  requiring  the  word  "Lim- 
ited" to  be  written  or  printed  after 
the  name  of  the  company  in  all 
contracts;  Howell  Lithographic  Co. 
V.  Brethour,  30  Ont.  R.  204.  Where 
the  statutes  make  the  directors  in- 
dividually liable  upon  an  instru- 
ment in  which  the  name  of  the  cor- 
poration is  used  without  the  word 
"limited"  or  the  like,  a  drawer  of  a 
bill  of  exchange  may  hold  the 
directors  of  the  drawee  individually 
liable  upon  the  acceptance  notwith- 
standing the  fact  that  he  himself 
omitted  to  use  the  word  "limited  ": 
Penrose  v.  Martyr.  E.  B.  &  E.  499; 
Howell  Lithographic  Co.  v.  Brethour, 
30  Ont.  R.  204.  But  it  is  sufficient 
if  the  word  appear  in  the  body  of 
the  bill  without  being  annexed  to 
the  acceptance:  Dermatine  Co.  v. 
Ashworth,  21  Times  L.  R.  510.  Cf. 
Nassau  Steam  Press  v.  Tyler,  70 
L.  T.  370  (where  the  directors  were 
held  liable  because  although  they 
had  used  the  word  "Hmited,"  yet 
they  had  not  given  the  correct  cor- 
porate name  in  other  respects) ; 
Atkin  &  Co.  v.  War  die,  61  L.  T.  23 
(same  point  as  last  case) ;  Waterous 
Engine  Works  Co.  v.  McLean,  2 
Manitoba,  279   (where  it  was  said 


that  the  word  "limited"  although 
re(|uired  by  statute  to  be  used  was 
not  in  strictness  part  of  the  corpo- 
rate name). 

'  Companies  Act,  1862,  §  20. 

Cf.  Philadelphia  Trust,  etc.  Co.  v. 
Philadelphia  Trust  Co.,  123  Fed. 
534;  Dooley  v.  Cheshire  Glass  Co., 
15  Gray  494,  496  (holding  that  a 
violation  of  sucli  a  requirement  does 
not  enable  the  company  itself  to 
plead  that  it  is  not  incorporated) ; 
Glucose  Sugar  Refining  Co.  v.  Ameri- 
can Glucose  Sugar  Refining  Co. 
(N.  J.),  56  Atl.  861 ;  Young  Women's 
Christian  Ass'n  v.  St.  Louis  Women's 
Christian  Ass'n,  115  Mo.  App.  228; 
91  S.  W.  171  (holding  that  the  com- 
pany whose  corporate  name  is 
wrongfully  appropriated  has  no 
right  by  virtue  of  the  statute  to  ap- 
pear and  object  to  the  grant  of  a 
certificate  of  incorporation  to  the 
new  company). 

^  Cf.  British  Vacuum  Cleaner  Co. 
v.  New  Vacuum  Cleaner  Co.  (1907), 
2  Ch.  312. 

But  see  Aerators,  Ltd.  v.  Tollitt 
(1902),  2  Ch.  319,  322  (where  it  was 
said,  obiter,  that  such  a  statute  en- 
ables a  company  whose  name  is 
merely  a  common  English  word  to 
prevent  the  registration  of  a  com- 
pany with  a  name  absolutely  iden- 
tical). 

'  It  would  seem,  however,  that 
the  registrar  may  decline  to  receive 
any  paper  which  adopts  a  misleading 
name  even  wthout  any  such  express 


VOL.  I.  —  24 


369 


§  450  CORPORATE   NAMES  [ChAP.  VIII 

do  not  apply  to  "re-incorporation"  of  existing  organizations* 
nor  to  changes  in  the  name  of  existing  companies,  but  leave  such 
cases  to  be  governed  by  the  connnon  law  both  in  respect  to 
rights  and  remedies.  Moreover,  such  a  statutory  provision  does 
not  vitiate  the  incorporation  of  a  company  which  is  formed  with 
a  name  unduly  similar  to  that  of  an  existing  corporation. - 

§  450.  Name  must  not  be  Fraudulent  or  Misleading.  —  Even 
apart  from  any  explicit  statutory  prohibition,  the  promoters  of  a 
corjxtration  have  no  right  to  choose  a  name  which  involves  a  false 
statement  or  which  is  likely  to  mislead  the  public.  A  company- 
incorporated  under  such  a  name  is  in  one  aspect  not  organized 
for  a  lawful  purpose.  The  most  common  application  of  this 
principle  is  in  cases  where  the  corporate  name  is  unduly  similar 
to  the  trade  name  of  some  other  person  or  corporation.^  But 
occasions  for  other  applications  of  the  same  principle  sometimes 
occur.  For  instance,  the  formation  of  a  corporation  under  the 
name  of  "S.  G.  Rowell,  Dentist,  Limited,"  is  likely  to  lead 
the  public  to  conclude  that  either  S.  G.  Rowell  or  the  corporation 
is  licensed  to  practise  dentistry,  and  if  that  representation  is 
false,  the  formation  of  the  company  under  that  name  is  illegal.* 
Upon  a  similar  principle,  where  an  amendment  is  made  to  an 
incorporation  paper  whereby  the  old  name  becomes  misleading, 
the  courts  sometimes  insist  on  a  change  in  the  corporate  name.^ 
Similarly,  in  a  recent  case,  a  federal  judge  decided  that  an 
association  whose  corporate  name  was  the  Franz  Joseph  Bene- 
ficial Association  had  adopted  the  name  of  the  Austrian 
Emperor  for  the  purpose  of  inducing  Austrian  immigrants  to 
believe  that  the  society  was  officially  connected  in  some  way 
with  the  Emperor  Franz  Joseph,  and  accordingly  upon  a  bill 
filed  by  the  Austrian  consul  enjoined  the  use  of  the  Emperor's 
name  or  portrait." 

statutory     authority.       See     supra,         *  Rex    v.    Registrar    Joint    Stock 

p.  125,  note  3.     Ci.  Rex  v.  Registrar  Cojnpanies   (1904),   2   Ir.   634;     At- 

Joint  Stock  Companies  (1904),  2  Ir.  torney-General    v.    Appleton    (1907), 

634.  1  Ir.  252. 

*  People    ex    rel.     U.    S.    Grand         Cf.    Attorney-General   v.   Myddle- 

Lodge  v.  Payn,  161  N.  Y.  229;    55  tons  (1907),  1  Ir.  471. 
N.  E.  849.  '  Cf.  supra,  §  150. 

2    Dooley   v.    Cheshire   Glass   Co.,         ^  Von      Thodorovich      v.     Franz 

15  Gray  (Mass.)  494.  Joseph   Beneficial   Ass'n,    154    Fed. 

«  Infra  §  453-§  455.  911. 

370 


§  447-§  4G8] 


CONFLICTING    CLAIMS 


§451 


§  451-§  459.       CONFLICTING     CLAIMS    OF    RIGHT    TO    USE    NAME 
CHOSEN    AS    CORPORATE   NAME. 

§  451.  Nature  of  Right  to  Use  of  Corporate  Name  —  When  not 
Exclusive.  —  The  mere  fact  of  iiK-or{><>rati()n  does  not  iieecs- 
Siirily  give  the  company  any  riglit,  still  less  any  exclusive  right  in 
the  nature  of  a  patent,  to  the  use  of  the  corporate  name.'  Thus, 
no  monopoly  or  exclusive  right  can  be  acquired  to  the  use  of 
words  of  common  import  by  inserting  them  in  the  corporate 
name  ^  —  for  example,  by  inserting  words  descriptive  of  a 
particular  kind  of  goods,^  or  describing  a  particular  kind  of 
business,*  or  indicating  the  previous  unincorporated  associa- 
tion from  which  the  corporators  have  seceded.^  The  right 
to  the  use  of  a  corporate  name  is  not  a  franchise ;  ®  and  the 

'   Imperial  Mfg.  Co.  v.  Schivartz, 


105  111.  App.  525;  BlackweU's  Dur- 
ham Tobacco  Co.  v.  Am.  Tobacco 
Co.  (N.  Car.),  59  S.  E.  123.  See  also 
cases  cited  infra,  §  454. 

But  cf.  Fort  Pitt  B.  &  L.  Ass'n 
V.  Model  Plan  B.  d-  L.  Ass'n,  159 
Pa.  St.  308,  311;  28  Atl.  215. 

"  Aerators,  Ltd.  v.  Tollitt  (1902), 
2  Ch.  319. 

As  to  the  use  of  geographical 
names,  see  Elgin  Nat.  Watch  Co.  v. 
Loveland,  132  Fed.  41;  Fort  Pitt 
B.  &  L.  Ass'n  V.  Model  Plan  B.  & 
L.  Ass'n,  159  Pa.  St.  308  (where  at 
the  suit  of  a  corporation  whose  name 
included  a  geograpliical  name,  an- 
other corporation  was  enjoined  from 
using  the  same  name  imder  void  pro- 
ceedings for  a  change  of  name) ;  Erie 
Printing  Co.  v.  Erie  Lithographing 
&  Printing  Co.,  31  Pa.  Co.  Ct.  1. 

*  British  Vacuuyn  Cleaner  Co.  v. 
New  Vacuum  Cleaner  Co.  (1907),  2 
Ch.  312;  Goodyear  India  Rubber 
Glove  Mfg.  Co.  v.  Goodyear  Rubber 
Co.,  128  U.  S.  598;  9  Sup.  Ct.  166; 
Plant  Seed  Co.   v.   Michel  Plant   & 


American    Glucose    Sugar    Refining 
Co.  (N.  J.),  56  Atl.  861. 

*  Industrial  Mutual  Deposit  Co. 
V.  Central  Mutual  Deposit  Co.,  66 
S.  W.  1032;  112  Ky.  937;  Car  Ad- 
vertising Co.  V.  N^ew  York  City  Car 
Advertising  Co.,  107  N.  Y.  Supp.  547. 

Cf.  International  Committee  Y.  W. 
C.  A.  V.  Y.  W.  C.  A.,  194  lU.  194; 
62  N.  E.  551;  56  L.  R.  A.  888 
(where  an  injunction  was  granted); 
Colonial  Dames  of  America  v.  Co- 
lonial Dames  of  New  York,  29  N.  Y. 
Misc.  10;  60  N.  Y.  Supp.  302,  af- 
firmed short  in  63  N.  Y.  App.  Div. 
615;  71  N.  Y.  Supp.  1134  (where  an 
injunction  was  refused). 

*  Supreme  Lodge  Knights  of  Pyth- 
ias V.  Improved  Order  Knights  of 
Pythias,  113  Mich.  133;  71  N.  W. 
470;  38  L.  R.  A.  658;  Grand  Lodge 
V.  Graham,  96  Iowa,  592;  65  N.  W. 
837;  31  L.  R.  A.  133:  La  Tosca 
Club  V.  La  Tosca  Club,  23  App.  D.  C. 
96. 

But  see  Smith  v.  David  II.  Brand 
(t-  Co.  (N.  J.),  58  Atl.  1029:  67  N.  J. 
Eq.  529  (where  the  defendant  cor- 


Seed  Co.,  37  Mo.  App.  313  (where    poration    had    purchased    the   good 
the  word  "Plant"  in  plaintiff's  name    will  of  a  former  partnership). 


was  deriveil  from  the  surname  of  its 
promoters,  while  in  defendant's 
name  it  was  a  common  noun). 

Cf.  Glucose  Sugar  Refining  Co.  v. 

3i 


Ilazelton  Boiler  Co.  v.  Tripod 
Boiler  Co.,  137  111.  231;  28  N.  E. 
248. 

But  see  Boston  Rubber  Shoe  Co. 
1 


§  452  CORPORATE    NAMES  [ChAP.  VIII 

question  is  governed  by  the  same  principles  as  if  the  company 
were  unincorporated.' 

§  452.  When  Right  of  Corporation  is  Exclusive.  —  If,  how- 
ever, a  corporation  assumes  some  novel,  fancy  appellation  to 
which  others  have  no  prior  right,  the  fact  of  adoption  of  that 
title  confers  an  exclusive  right  to  its  use.^  So,  where  the  name  of 
a  corporation  includes  the  individual  names  of  certain  of  its 
shareholders  who  subsequently  sell  their  shares  and  form  a  new 
corporation  under  a  title  which  likewise  comprises  their  indi- 
%idual  names,  the  right  of  the  former  company  to  the  use  of  the 
name  is  superior  to  that  of  the  latter.^  Similarly,  a  corporation 
may  acquire  by  assignment  from  its  promoters  the  right  to  the 
exclusive  use  of  a  trade  name  to  which  they  were  entitled,  even 
as  against  a  person  who  (without  legal  right)  was  using  the  same 
name  at  the  time  of  the  incorporation.*  The  right  of  a  corpora- 
tion to  the  exclusive  use  of  its  corporate  name  is  not  forfeited 
because  the  company  may  be  engaged  in  an  illegal  business.^ 

§  453-§  456.     Remedies  against  Improper   Use   of   Names   by 
or  of  Corporations. 

§  453.  Injunction  against  Incorporation  under  Name  to  which 
Plaintiff  has  a  prior  Right.  —  An  unincorporated  company  may 

V.  Boston  Rubber  Co.,  149  Mass.  436,  plaintiffs  was  refused  so  far  as  de- 

439;   21  N.  E.  875.  fendant's     business     was     different 

'  See  infra,  §  456.  from  plaintiffs');    Legal  Aid  Society 

As  to  the  right  of  a  corporation  v.    Co-operative   Legal   Aid  Society, 

to  enjoin  an  individual  from  adopt-  41  N.  Y.  Misc.  127;   83  N.  Y.  Supp. 

ing  a  name  or  addition  tending  to  in-  926;     BlackwelVs    Durham    Tobacco 

duce  the  belief  that  he  is  a  member  Co.  v.  Am.   Tobacco  Co.   (N.  Car.), 

of  the  corporation,  see  Society  of  Ac-  59  S.  E.  123  (declaring  that  the  fact 

countants  and  Auditors  v.  Goodway  of    incorporation    under    a    certain 

(1907),  1  Ch.  489.  name    confers    no    exclusive    right 

2  Illinois     Watch    Case     Co.     v.  thereto  unless  followed  up  by  the 

Pearson,  140  111.  423;   31  N.  E.  400;  transaction  of  business  under  that 

16  L.  R.  A.  429;  Philadelphia  Trust,  name). 

etc.   Co.   V.   Philadelphia   Trust  Co.,         ^  Holmes,    Booth    &    Haydens    v. 

123  Fed.  534;    Koebel  v.  Landlords'  Holmes,  Booth  <fc  Atwood  Mfg.  Co., 

Protective  Bureau,  210  111.   176;    71  37  Conn.  278;  9  Am.  Rep.  324.    See 

N.  E.  362;    Glucose  Sugar  Refining  also  infra,  §  458. 
Co.  V.  American  Sugar  Refining  Co.         *  Corbin  v.  E.  Taussig  &  Co.,  132 

(N.  J.),  56  Atl.  861.  Fed.  662  (headnote  inadequate). 

But  see  Dodge  Stationery  Co.  v.         *  Grand    Lodge    v.    Graham,    96 

Dodge,  145  Cal.  .380;    78  Pac.  879  Iowa  592;   65  N.  W.  837;   31  L.  R. 

(where  an  injunction  against  the  use  A.  133. 
of    a    similar    corporate    name    to 

372 


§  447-§  4G8]      REMEDIES    AGAINST    IMPROPER    USE  §  454 

enjoin  the  formation  of  a  corporation  under  a  name  so  similar 
to  the  complainant's  as  to  be  misleading,'  and  of  course 
the  same  is  true  where  the  complaining  company  is  itself 
incorporated.^ 

§  454.  Injunction  against  Use  of  improper  Corporate  Name 
after  Incorporation.  —  Jf  a  company  has  been  incoiporated  and 
received  a  certificate  entitling  it  to  do  business  under  a  deceptive 
name,  the  injured  party  may  enjoin  it  from  carrying  on  business 
thereunder/  and  may  recjuire  the  directors  to  have  the  name 
removed  from  the  registry.*  But  where  the  complaining  com- 
pany was  organized  only  one  month  before  the  defendant  and 
had  done  no  business,  whereas  the  defendant  was  in  active 
operation,  an  injunction  was  refused.^  Where  a  corporate  name 
is  conferred  by  act  of  the  legislature  it  would  seem  that  its  use 

'  Hendricks  v.  Montagu,   17  Ch.  21  R.  I.  109;    42  Atl.  308;    79  Am. 

D.  638  (Universe  Life  Assurance  Co.,  St.  Rep.  786;  43  L.  R.  A.  9.5  (where 

enjoined  by  Universal   Life  Assur-  complainant    was    an    individual); 

ance   Co.);     Imperial   Mfg-    Co.    v.  People  ex  rel.  Columbia  Chemical  Co. 

Schwartz,   105  111.  App.  525  (where  v.  O'Brien,  101  N.  Y.  App.  Div.  296; 

plaintiff,    an    individual,    had    been  91  N.  Y.  Supp.  649  (semble) ;  Xesne 

trading   under   the   identical    name  v.  Sundet,  101  N.  W.  Rep.  490;    93 

afterwards  adopted  by  tlie  defend-  Minn.     299     (where     complainants 

ant  corporation).  were  co-partners);    American  Xov- 

"  Tussaud  V.  Tussaud,  44  Ch.  D.  elty    Mfg.     Co.     v.     Manufacturing 

678    ("Louis   Tussaud,    L't'd,"    en-  Electrical    Novelty    Co.,    36    N.    Y. 

joined  by   Mme.  Tussaud   &   Sons,  Misc.    450;     73   N.    Y.    Supp.    755; 

L't'd) ;     Boston  Rubber  Shoe  Co.  v.  Eureka   Fire   Hose   Co.    v.    Eureka 

Boston  Rubber  Co.,   149  Mass.  436;  Rubber  Mfg.  Co.  (N.  J.),  60  Atl.  561 

21  N.  E.  875  (where  plaintiff's  name  (where  the  injunction  was  limited 

was    given    by    a    special    act    of  to  using  the  name  in  dealing  in  the 

incorijoration).  same  class  of  goods  as  the  plaintiff). 

But  cf.  Elgin  Nat.  Watch  Co.  v.  Cf.   American  Clay  Mfg.   Co.   v. 

Loveland,  132  Fed.  41,  52.  American  Clay  Mfg.  Co.,  198  Pa.  St. 

3  Merchant  Banking  Co.  of  Lon-  189;   47  Atl.  936. 

don  V.  Merchants  Joint-Stock  Bank,  *  Societe    Anonyme    des    Anciens 

9  Ch.  D.  500;    Manchester  Breivery  Etablissements   Panhard  ei  Lcvassor 

Co.  V.  North  Cheshire  and  Manchester  v.     Panhard    Lcvasfsor     Motor     Co. 

Brewery  Co.  (1898).  1  Ch.  539  (where  (1901),  2  Ch.  513. 

the  name  of  the  defendant  company  As  to  whether  the  corporation  is 

was  held  to  suggest  deceitfully  an  a  necessary  party  to  a  suit  for  an 

amalgamation  between  the  plaintiff  injunction    against  its  officers,    see 

and  some  otlier  concern) ;    Holmes,  Elgin    Nat.     Watch    Co.    v.    Lore- 

Booth  A- Hoydens  \.  Holmes,  Booth  S:  land,    132    Fed.    41,    46    (headnote 

Atwood  Mfg.  Co.,  37  Conn.  278;    9  inadequate). 

Am.    Rep.    324;    Neivby   v.    Oregon  *  Hygeia   Water   Ice  Co.   v.  New 

Central  Ry.  Co.,  Deady  609;   Cdlv^  York  Hygeia  Ice  Co.,  140  N.  Y.  94; 

loid  Mfg.  Co.  v.  Cellonite  Mfg.  Co.,  35  N.  E.  417. 
32  Fed.  94;    Armington  v.  Palmer, 

373 


I  455  CORPORATE   NAMES  [ChaP.  VIII 

cannot  be  enjoined  on  the  ground  that  it  is  misleading  and  unduly 
similar  to  that  of  some  existing  company.* 

^  455.  Power  of  Courts  to  forestall  or  overrule  Discretion  of 
Public  Officer  Charged  with  Duty  of  passing  on  Propriety  of  Corpo- 
rate Name.  —  In  a  jNIassachusetts  case,  it  was  held  that  a  statute 
which  authorizes  some  public  official  to  refuse  a  certificate  of 
incorporation  if  the  name  of  the  proposed  company  is  so  similar 
to  a  name  already  in  use  as  to  be  misleading  and  provides  that 
the  certificate  if  granted  shall  be  conclusive  evidence  of  the 
existence  of  the  corporation,  confides  the  whole  matter  of  undue 
similarity  of  names  to  the  public  officer's  discretion,  so  as  to 
prevent  any  bill  in  equity  or  writ  of  mandamus  to  overrule  or 
forestall  his  conclusion,^  but  this  decision  is  directly  contrary  to 
the  English  cases  ^  as  well  as  to  the  trend  of  American  authority,^ 
and  ought  not,  it  is  submitted,  to  be  followed.  The  courts  will 
not  coerce  a  registrar  by  mandamus  to  record  an  incorporation 
paper  where  the  name  of  the  proposed  company  is  so  similar  to 
that  of  an  existing  company  that  an  injunction  would  be  granted 
against  its  use.^ 

§  456.  Receipt  of  Mail  intended  for  another  Company. — Ques- 
tions as  to  conflicting  rights  to  the  use  of  a  corporate  name  are 
usually  determined  upon  injunction  proceedings  by  one  company 
to  restrain  the  other  from  the  use  of  its  name.  In  a  recent  case 
the  question  arose  with  reference  to  the  mutual  rights  of  the  two 
corporations  with  respect  to  mail  addressed  in  such  a  way  as  to 
be  ambiguous.     In  such  a  case,  the  company  wliich  is  respon- 

'  Paulino    v.     Portuguese    Bene-  be  required  by  mandamus  to  grant 

ficwl  Ass'n,  18  R.  I.   165;    26  Atl.  the  certificate  except  in  a  clear  case) ; 

36;   20  L.  R.  A.  272.  People  ex  rel.  Columbia  Chemical  Co. 

But  see    Edison  Storage  Battery  v.  O'Bnen,  101  N.  Y.  App.  Div.  296; 

Co.   V.    Edison   Automobile   Co.,   56  91  N.  Y.   Supp.  649  (holding  that 

Atl.    861,    866;     67   N.    J.    Eq.    44  where  officer  registers  the  incorpora- 

(semble).  tion,  certiorari  will  not  lie  to  revoke 

^  American  Order  S.  C.  v.   Mer-  his  determination,  the  only  remedy 

rill,  151  Mass.  558;    24  N.  E.  918;  being  in  equity,  but  semble,  if  he 

8  L.  R.  A.  320.  erroneously  refuses  registration,  cer- 

*  Tussaud  v.  Tussaud,  44  Ch.  D.  tiorari  might  lie  to  compel  him  to  do 
678.  so);    Knights  of  Maccabees  v.  Searle 

*  Cf.  Grand  Lodge  v.  Graham,  96  (Nebr.),  106  N.  W.  448  (officer  en- 
Iowa  592 ;  65  N.  W.  837;  31  L.  R.  A.  joined  from  issuing  a  certificate). 
133;    Ex  -parte  Walker,  1  Tenn.  Ch.        «    People  v.  Rose,  219  111.  46;    76 
97,  100,  101;    State  ex  rel.  Hutchin-  N.  E.  42;    People  ex  rel.  Felter  v. 
son  v.  McGrath,  92  Mo.  355;  5  S.  W.  Rose,  80  N.  E.  293;  225  111.  496. 
29  (holding  tliat  the  officer  will  not 

374 


^  447-§  468]       WHAT  IS  undue  similarity  §  457 

sible  for  the  confusion  should  bear  the  inconvenience  of  having 
its  mail  opened  by  the  other  corporation.  Thus,  where  one 
corporation  was  named  the  Central  Trust  Company  of  Illinois 
and  the  other  the  Central  Trust  Company,  lx)th  being  engaged 
in  business  in  Chicago,  but  the  latter  having  obtained  the  right 
to  do  business  in  Illinois  after  the  incorjxjration  of  the  former, 
the  court  held  that  letters  addressed  to  the  "Central  Trust  Com- 
pany, Chicago,"  without  mentioning  street  or  lunnber,  should 
be  dehvered  to  the  Central  Trust  Company  of  Illinois.' 


§  457.  How  to  determine  whether  Corporate  Names  are  unduly 
similar  to  one  another.  —  Whether  two  corporate  names  are  so 
similar  as  to  be  deemed  misleading  is  to  be  decided  according  to 
the  general  principles  of  law  applicable  to  trade  names  and  not 
by  any  peculiar  rule  of  corporation  law.-  It  has  been  held  that 
"the  international  Loan  &  Trust  Co.  of  Kansas  City"  is  not 
unreasonably  similar  to  "The  International  Trust  Co.,"  stress 
being  laid  on  the  addition  of  the  words  "of  Kansas  City  " ;  ^  but 
by  other  courts  a  very  similar  distinction  has  been  thought  to  be 
insufficient."  "The  Columbian  Chemical  Co."  too  nearly  re- 
sembles "The  Columbia  Chemical  Co."  ^  "Aerators,  Limited," 
cannot  enjoin  the  registration  of  "x\utomatic  Aerators  Patents, 
Limited,"  «  nor  the  "British  Vacuum  Cleaner  Co."  the  "New 
Vacuum  Cleaner  Co."^;  for  in  such  cases  the  title  consists  of 

^Central    Trust    Co.    v.    Central  Mass.  271 ;  26  N.  E.  693;   10  L.  R.  A. 

Trust  Co.  of  Iliinois,  149  Fed.  789.  758. 

Cf.  Erie  Printing  Co.  v.  Erie  Cf.  Farmers'  Loan  &  Trtist  Co.  v. 
Lithographing  A  Printing  Co.,  31  Farmers'  Loan  &  Trust  Co.  of  Kan- 
Fa.  Co.  Ct.  1,  5  (where  the  court  sas,  1  N.  Y.  Supp.  44. 
held  that  the  two  names  were  not  *  Saunders  v.  Sun  Life  Assurance 
unreasonably  similar,  but  in  \'iew  Co.  of  Canada  (1894),  1  Ch.  537; 
of  the  fact  that  confusion  arose  Central  Trust  Co.  v.  Central  Trust 
through  the  carelessness  of  corre-  Co.  of  Illinms,  149  Fed.  789,  990 
spondents,  suggested  the  appoint-  (semble) ;  Bradley  Fertilizer  Co.,  19 
ment  of  a  receiver  to  open  the  Pa.  Co.  Ct.  271. 
mail).  *  People  ex  rel.  Columbia  Chemi- 

2  British  Vacuum  Cleaner  Co.  v.  cal  Co.  v.  O'Brien,  101  N.  Y.  App. 

New    Vacuum   Cleaner    Co.    (1907),  Div.  296;   91  N.  Y.  Supp.  649. 

2  Ch.  312.  '  Aerators,  Ltd.,  v.  Tollitt  (1902), 

»  International    Trust  Co.   v.    In-  2  Ch.  319. 

ternational  Loan   &    Trust  Co.,  153  "  British  Vacuum  Cleaner  Co.  v. 

375 


§  458  CORPORATE   NAMES  [ChaP.  VIII 

mere  descriptive  words.  ^  The  character  of  the  business  and  the 
location  of  the  two  companies  must  be  considered.^  The  fact, 
however,  that  the  defendant  company  does  not  intend  to  carry 
on  tlie  same  business  as  the  complainant  has  been  held  to  be 
immaterial  if  it  has  corporate  power  so  to  do.^  The  act  of  the 
complaining  corporation  in  organizing  subsidiary  corporations 
each  of  which  includes  in  its  corporate  name  the  words  of  which 
a  monopoly  is  claimed  may,  it  seems,  be  taken  as  an  admission 
that  those  words  are  merely  descriptive  of  the  character  of 
goods  sold  by  the  complainant  and  that  the  use  of  those  words 
by  other  corporations  will  not  necessarily  lead  to  confusion.*  But, 
on  the  other  hand,  the  fact  that  a  corporation  has  suffered  one 
company  to  infringe  its  right  to  exclusive  use  of  its  corporate 
name  will  not  prevent  it  from  enjoining  another  subsequently 
organized  company  from  so  doing.^  It  seems  that  there  is  no 
objection  to  the  assumption  by  a  new  corporation  of  a  name 
similar  to  or  even  identical  with  the  name  of  a  former  corpora- 
tion which  has  been  absorbed  by  another  organization  bearing  a 
very  different  name.^ 

§  458.  Transfer  to  Corporation  of  a  Promoter's  Right  to  carry 
on  Business  under  his  own  Name.  —  Although  an  individual  is 
entitled  bona  fide  to  carry  on  business  under  his  own  name  even 
though  it  resemble  that  of  some  established  concern,  yet  this  is 
a  personal  right  which  he  cannot  confer  upon  any  third  person, 
and  consequently  not  even  upon  a  corporation  organized  by  him, 
since  the  latter  is  a  distinct  legal  entity.^    In  a  very  recent  English 

New    Vacuum   Cleaner    Co.    (1907),         *  British  Vacuum  Cleaner  Co.  v. 

2  Ch.  312.  New    Vacuum   Cleaner   Co.    (1907), 

1  See  supra,  §  451.  2  Ch.  312,  330. 

^  State    ex    rel.     Hutchinson     v.         °  Atlas  Assurance  Co.  v.  Atlas  In- 

McOrath,  92  Mo.  355,  358;    5  S.  W.  surance  Co.  (Iowa),  112  N.  W.  232. 
29;    Dodge  Stationery  Co.  v.  Dodge,         ^  Re    Duquesrie    College    Charter, 

145Cal.  .380;    78  Pac.  879;    Dunlop  12  Pa.  Co.  Ct.  Rep.  491. 
Pneumatic  Tyre  Co.  v.  Dunlop  Motor         ''  Fine  Cotton  Spinners,  etc.  Ass^n 

Co.   (1907),   A.   C.   430,   438   ("The  \.  Harwood  Cash  &  Co.  {I'dOl),  2  Ch. 

objects  of  the  two  companies  need  184,  189,  190;    Tussaud  v.  Tussaud, 

not  be  absolutely  identical  in  order  44  Ch.  D.  678;    Charles  S.  Higgins 

to  entitle  the  complainers  to  reHef,  Co.  v.  Higgins  Soap  Co.,  144  N.  Y. 

but  there  must  be  great  similarity").  462;  39  N.  E.  490;  43  Am.  St.  Rep. 

*  Edison  Storage   Battery   Co.   v.  769;   27  L.  R.  A.  42;    R.  W.  Rogers 

Edison  Automobile  Co.,  56  Atl.  861;  Co.  v.  Wm.  Rogers  Mfg.  Co.,  70  Fed. 

67  N.  J.  Eq.  44.  Rep.  1017;    17  C.  C.  A.  576  (upon 

But    cf.  Aerators,  Ltd.   v.   Tollitt  the  ground  of  actual  fraud  in  as- 

(1902),  2  Ch.  319.  suming  the  name);    Dodge  Station' 

376 


§  447-§  408]       FOREIGN    AND    DOMESTIC    COMPANIES  §  459 

case,  the  suggestion  was  thrown  out  that  possibly  a  distinction 
might  exist  if  tlie  indivi(hial  before  attempting  to  assign  his 
personal  right  to  a  corj)oration  first  builds  up  a  business  in  his 
own  name  and  then  transfers  the  good  will  and  name  to  a 
corporation.' 

§  459.  Conflicting  Rights  of  Domestic  and  Foreign  Corporations. 
—  Where  a  dispute  arises  between  a  foreign  company  and  a 
domestic  company  respecting  the  right  to  the  use  of  a  trade  name, 
very  difficult  questions,  which  perhaps  are  not  in  strictness 
within  the  scope  of  this  treatise,  may  be  raised.  In  some  of  the 
United  States,  statutes  expressly  provide  that  no  foreign  corpora- 
tion shall  be  allowed  to  do  business  within  the  state  under  a 
name  so  similar  to  that  of  a  domestic  company  as  to  be  Hkely  to 
mislead.^  Under  such  a  statute  it  may  be  immaterial  whether 
the  foreign  or  the  domestic  company  was  first  incorporated,  or 
whether  the  one  or  the  other  had  first  transacted  business  within 
the  state.  But  apart  from  such  provisions,  the  maxim,  qui  prior 
est  tempore  potior  ed  jure,  would  seem  to  apply.  Thus,  a  foreign 
corporation  cannot  enjoin  a  domestic  company  from  using  a 
corporate  name  similar  to  that  of  the  complainant  but  adopted 
before   the   latter's  organization,^  unless  the  foreign  company 

erj/Co.v.  Dodgre,  145Cal.  380;  78Pac.  v.    Wyckoff,    Seamans    &    Benedict, 

879;  McFell  Eledricii- Telephojie  Co.  198    U.    S.    118     (lieadnote    inade- 

V.  McFell  Electric  Co.,  110  111.  App.  quale)  ;  25  Sup.  Ct.  609;  Donnell  v. 

182    (proceeding   in   part   upon   the  H err ing-H all-Marvin  Co.,  208  U.  S. 

ground  that  the  indiviilual  in  question  267. 

had  conferred  upon  the  complainant         '  Fine  Cotton  Spinners,  etc.  Ass'n 

company  the  right  to  use  his  name),  v.    Harwood    Cash    &    Co.     (1907), 

Cf.  Edison  Storage  Battery  Co.  v.  2    Ch.    184.    Cf.  Dunlop   Pneumatic 

Edison  Automobile  Co.   (N.  J.),  56  Ttjre  Co.  v.  Dunlop  Motor  Co.  (1907), 

Atl.  861;   67N.  J.  Eq.  44;    Interna-  A.  C.  430. 

tional  Silver  Co.  v.   Wm.  G.  Rogers         ^  International   Trust  Co.   v.    In- 

Co.,  113  Fed.  526;    Hall's  Safe  Co.  ternational  Loan  &   Trust  Co.,   153 

V.    Herring-Hall-Marvin    Safe    Co.,  Mass.  271;    26  JSf.   E.   693;     10    L. 

140  Fed.  37;   76  C.  C.   A.  495,  af-  R.  \.  758  (holding  that  the  material 

finned  with  mollifications,  208  U.  S.  point   is    not    the    corporate    name 

554  ;   Bagby  it-  Rivers  Co.  v.  Rivers,  of    the    foreign    company    but    the 

87  Md.  400;    40  Atl.    171;    67  Am.  name    under   which   its   business  is 

St.  Rep.  357;  40  L.  R.  A.  632;  In-  transacted). 

ternational    Silver    Co.    v.    Simeon,         *  Hazelton  Boiler  Co.  v.  Hazelton 

etc.  Rogers  Co.,  110  Fed.  955;  Peck  Tripod  Boiler  Co.,  142  111.  494;    30 

Bros.  &  Co.  V.  Peck  Bros.  Co.,  113  N.  E.  339  (criticised  in  Peck  Bros. 

Fed.  291;    51  C.  C.  A.  251;  Dunlop  &  Co.  v.  Peck  Bros.  Co.,  113  Fed. 

Pneumatic     Tyre     Co.     v.     Dunlop  291;   51  C.  C.  A.  251). 
Motor  Co.  (1907),  A.  C.  430. 

But  see  contra,  Howe  Scale  Co. 

377 


§  459  CORPORATE   NAMES  [ChAP.  VIII 

succeeds  bv  assignment  to  the  right  of  a  company  which  had 
been  previously  incorporated/  In  p]ngland,  it  was  held  that  a 
British  company  which  had  done  business  for  more  than  eighty 
years  under  the  name  of  the  Sun  Life  Assurance  Society  could 
not  enjoin  a  foreign  company,  called  the  Sun  I^ife  Assurance 
Company  of  Canada,  ■  from  transacting  business  in  Great 
Britain  under  its  corporate  name,  although  it  was  conceded  to 
resemble  the  plaintiff's  so  closely  as  to  be  likely  to  cause  con- 
fusion ;  but  it  was  also  held  that  the  Canadian  company  should 
be  strictly  confined  to  its  corporate  name,  and  should  be  enjoined 
from  abbreviating  the  same  by  omission  of  the  words  "of 
Canada"  or  otherwise.-  This  decision  is  extremely  liberal  to 
the  foreign  corporation,  and,  indeed,  in  view  of  the  priority  of 
organization  of  the  domestic  company  would  seem  to  be  more 
liberal  than  sound  principle  justifies;  and  accordingly  in 
America  in  such  a  case  the  prior  right  of  the  domestic  corpora- 
tion would  probably  be  recognized.^  The  mere  existence  of  a 
foreign  company  which  had  never  transacted  business  within 
the  state  and  whose  wares  or  manufactures  were  not  habitually 
imported  for  sale,  would  seem  to  furnish  no  reason  against  the 
adoption  of  a  similar  name  by  a  domestic  corporation.  But 
although  the  foreign  company  may  never  have  had  an  office  or 
agency  within  the  state,  yet  if  its  goods  are  in  fact  frequently 
imported  it  may  enjoin  a  domestic  corporation  from  using  a 
corporate  name  which  is  unreasonably  similar  to  the  plaintiff's 
name  and  which  has  been  adopted  for  the  fraudulent  purpose  of 
getting  the  benefit  of  the  plaintiff's  reputation.*  A  fortiori,  a 
foreign  company  which  has  lawfully  transacted  business  within 
the  state  may  enjoin  a  domestic  company  from  adopting  a  name 
unfairly  similar  to  its  own,  with  the  same  effect  as  if  the  com- 

'  Peck  Bros.  &  Co.  v.  Peck  Bros,  with    the    foreign    corporation    had 

Co.,  113  Fed.  291;   51  C.  C.  A.  251.  severed  the  connection   on  grounds 

^  Saunders    v.    Sun    Life    Assur-  which  were  held  sufficient). 

ance   Co.    of   Canada  (1894),   1    Ch.  ^  ■•  Societe    Anonyme    des    Anciens 

537.  Etablissements  Panhard  et    Levassor 

^  American    Clay    Mfg.     Co.     v.  v.     Panhard    Levassor     Motor     Co. 

American  Clay  Mfg.  Co.,  198  Pa.  St.  (1901),  2  Ch.  513  (where  the  com- 

189;   47  Atl.  936.  plaining     company     was     unincor- 

Cf.  State  Council,  etc.  v.  National  porated). 
Council,   etc.    (N.   J.),    64   Atl.    561         Cf.  Pinet  et  Cie.  v.  Maison  Louis 

(where    the    domestic    corporation  Pinet  (1898),  1  Ch.  179. 
after    several    years    of    affiliation 

378 


§  447- §  4G8]  MISNOMER  §  400 

plainant  had  been  a  domestic  corporation ;  *  and  conversely  in 
such  a  case  the  domestic  company  would  have  no  remedy  against 
the  foreign  company.-  A  domestic  corporation,  formed  while  a 
foreign  corporation  with  an  almost  identical  name  is  transacting 
business  within  the  state  in  violation  of  its  laws  as  to  the  trans- 
action of  business  by  foreign  corporations,  has  been  held  to 
have  a  better  right  than  the  foreign  company  to  the  use  of  the 
corporate  name.^ 

Where  the  statutes  of  a  state  refjuire  an  officer  to  issue  a 
license  to  do  business  within  the  state  to  all  foreign  corporations 
which  comply  with  certain  statutory  formalities,  it  has  been 
held  that  the  officer  cannot  refuse  a  license  on  the  ground  that 
the  applicant's  name  is  unreasonably  similar  to  that  of  some 
domestic  company ;  *  but  on  the  other  hand  even  if  the  Hcense  be 
granted,  the  domestic  company  may  enjoin  the  foreign  company 
from  using  the  misleading  name  within  that  state.^ 


§  460-§  461.     Misnomer  of  Corporations. 

§  460.  In  general.  —  INIisnomer  in  the  case  of  a  corporation  is 
attended  by  precisely  the  same  consequences  as  in  the  case  of  an 
individual.  Thus,  a  corporation  is  bound  by  its  contracts, 
whether  under  seal  or  not,  even  though  entered  into  under  an 
erroneous  name ;  ^   and  conversely,  a  corporation  is  entitled  to 

KPhiladdphia   Trust,  etc.  Co.  v.  Co.    v.    Van   Cleave,    183    111.    330; 

PhUadelphia    Trust    Co.,    123    Fed.  55  N.  E.  698;    47  L.  R.  A.  795. 

534;    Knights  of  Maccabees  V.  Searle  ^American    Clay    Mfg.     Co.    v. 

(Nebr.),  106  N.  W.  448;    Atlas  As-  American  Clay  Mfg.  Co.,  198  Pa.  St. 

surance  Co.  v.  Atlas   Insurance  Co.  189;   47  Atl.  936. 

(Iowa),    112   N.    W.    232;     Bradley  *  Clement  v.  City  of  Lathrop,   18 

i^erf i7i>er  Co.,  19  Pa.  Co.  Ct.  271.  Fed.    885;     Midland    Steel    Co.    v 

But  see  Lehigh   Valley  Coal  Co.  Citizens'  Xat.  Bank,  72  N.  E.  290; 

V.  Hamblen,  23   Fed.   225;     People  34   Ind.   App.    107   (where  the  cor- 

€X  ret.  Home  Life   Insurance  Co.  v.  poration  used  the  name  of  its  presi- 

Home  Life  Assurance  Co.,  Ill  Mich,  dent  as  a  business  name). 

405;   69  N.  W.  6,53.  But    see    Hambro    v.    Hull,    etc. 

^Ottoman   Cahvey   Co.    v.    Dane,  Fire  /«s.  Co.,  3  H.  &  N.  789. 

95    111.    203;      Blackwell's    Durham  Cf.  Robinson  v.  First  Xat.  Bank 

Tobacco    Co.    v.    Am.    Tobacco    Co.  (Tex.),   82   S.   W.    505    (where   the 

(N.  Car.),  59  S.  E.  123.  members   of   a   corporation,  having 

'  Central    Trust    Co.    v.    Central  begun  to  trade  under  a  new  name, 

Trust  Co.  of  Illinois,  149  Fed.  789.  were  sued  as  partners). 

*  People  ex  rel.  Traders'  Fire  Ins. 

379 


§  461  CORPORATE    NAMES  [ChAP.  VIII 

enforce  its  contracts  notwithstanding  any  such  error.  ^  So,  a 
corporation  may  have  the  benefit  of  a  legacy  or  devise  made  to 
it  by  an  erroneous  name.^  Similarly,  misnomer  in  an  appoint- 
ment of  a  corporation  as  executor  is  immaterial.^  So,  misnomer 
of  a  corporation  in  a  statute  is  immaterial.^  All  that  is  necessary 
in  any  of  these  cases  is  that  the  corporation  in  question  be  in  fact 
the  company  intended  to  be  designated.  In  order  to  show  that 
there  is  a  mere  case  of  misnomer  and  not  two  distinct  corpora- 
tions, the  identity  of  the  company  must  appear.^  Where  the 
similarity  of  name  is  very  close,  this  may  be  presumed;  but 
such  a  presumption,  unless  supported  by  affirmative  proof,"  is 
very  unreliable.  For  instance,  it  has  been  held  that  a  deed  to 
the  "Odd  Fellows  Building  and  Savings  Company"  will  not 
convey  title  to  a  corporation  whose  corporate  name  is  the 
"Odd  Fellows  Building  and  Exchange  Company,"  where 
there  is  no  sufficient  extraneous  proof  that  the  difference  of 
name  is  a  mere  misnomer.^ 

§461.  Misnomer  in  Pleadings.  —  Upon  the  same  principle 
that  misnomer  in  the  case  of  a  corporation  is  attended  with  the 
same  consequences  as  in  the  case  of  an  individual,  it  follows 

*  Hagerstown  Turnpike  Road  Co.  and    Agency    Company    of   Austra- 

V.  Creeger,  5  H.  &  J.   122;    9  Am.  lasia,   Limited,"    rather  than   "The 

Dec.    495;     Medway   Cotton  Manu-  Trustees     Executors     and     Agency 

factory   v.    Adams,    10    Mass.    360;  Company,  Limited"). 
Commercial  Bank  v.  French,  21  Pick.         *  Attorney-General  v .  Chicago,  etc, 

(Mass.)  486,  490;    Berks  &  Dauphin  %.  Co.,  35  Wi^c.  425,  556-558. 
Turnpike  Road  v.  Myers,  6  Serg.  &         ^  Langhorne    v.    Richmond    City 

R.  (Pa.)  12.  Ry.  Co.,  91  Va.  364;    22  S.  E.  357; 

^  Woman's    Foreign    Missionary  Smith    v.     Tallahassee,     etc.     Plank 

Soc.   V.   Mitchell,   93   Md.    199;     48  /goad  Co.,  30  Ala.  650. 
Atl.  737;    53  L.  R.  A.  711;    Reilly         Cf.  Robinson  v.  First  Xat.  Bank, 

V.    Union   Protestant    Infirmary,    87  82  S.  W.  505   (Tex.);    McCord-Col- 

Md.  664;    40  Atl.  894;    Jordan  v.  lins  Co.  v.  Prichard,  84  S.  W.  388 

Richmond   Home   for   Ladies    (Va.),  (Tex.);     Brassfield    v.    Quincy,    etc. 

56   S.   E.   730;     Doan  v.    Vestry  of  R.  R.  Co.,   109  Mo.  App.  710;    83 

Parish  of  Ascension  (Md.),   64  Atl.  S.  W.  1032  (where  the  alleged  error 

314;    Peckham  v.  Newton,  15  R.   I.  consisted     in     omitting     the     word 

321;  4  Atl.  758.  "Company"    from  the   defendant's 

'  Re  Maher,   18  Vict.  L.  R.  519  name);     Riemann    v.    Tyroler,    etc. 

(where  parol  evidence  of  the  testator's  Verein,  104  111.  App.  413. 
directions  to  the  solicitor  who  drew         "  As  to  the  use  of  parol  evidence, 

the  will  was  admitted  to  show  that  see  Jordan  v.   Richmond  Home  for 

by  an  appointment  of  "The  Trustees  Ladies  (Va.),  56  S.  E.  730. 
Executors    and    Agency    Company,         '  Cobb  v.  Bryan  (Tex.),  83  S.  W. 

Melbourne,"   the   testator   intended  887. 
"The  National  Trustees  Executors 

380 


§  447-§  468]  MISNOMER  §  401 

that  in  an  action  at  law  under  the  common  law  system  of  plead- 
ing, misnomer  of  either  the  plaintiff  or  defendant  nmst  i>e  plcach-d 
in  abatement  and  cannot  be  availed  of  under  the  general  issue 
or  other  plea  in  bar,  or  even  under  a  plea  of  nul  tiel  corporation} 
So,  in  ecjuity,  misnomer  of  a  corporation,  whether  plaintiff  or 
defendant,  must  be  pleaded  in  abatement  and  cannot  be  taken 
advantage  of  by  answer.-  If,  however,  the  objection  be  raised 
by  a  proper  form  of  pleading  a  very  slight  misnomer  may  be 
fatal,  as  in  the  case  of  an  individual.  For  instance,  the  use  of 
the  word  "the"  before  the  title  of  the  defendant  corporation, 
when  the  corporate  name  contains  no  definite  article,  has  been 
held  to  be  a  fatal  misnomer.^    If  an  act  of  incorporation  (and 

'  Baltimore,  etc.  R.  R.  Co.  v.  "The  Southern  Pac.  Co."  held  un- 
Fifth  Baptist  Church,  137  U.  S.  568;  authorized  where  the  writ  ran 
11  Sup.  Ct.  185;  Gilbert  y.  Nantucket  against  "The  Southern  Pacific  Rail- 
Bank,  5  Mass.  97  (arising  on  motion  way  Co.");  Tmim  of  East  Rome  v. 
in  arrest  of  judgment);  Wilhite  v.  City  of  Rome  (Ga.),  58  S.  E.  854 
Convent  of  Good  Shepherd,  78  S.  W.  (where  an  action  brought  in  the 
138;  25  Ky.  L.  Rep.  1375  (motion  name  of  the  "Town  of  E.  R," 
to  quash  summons,  which,  however,  whereas  the  corporate  name  was  the 
did  not  "give  plaintiff  a  better  "Mayor  and  City  Council  of  the 
writ ") ;  Riemann  v.  Tyroler,  etc.  town  of  E.  R.,"  was  held  to  be  a  mere 
Verein,  104  111.  App.  413;    Associate    nullity). 

Presbyterian  Congregation  v.  Hanna,  In  Glass  v.   Tipton,  etc.   Co.,  32 

113  N.  Y.  App.  Div.  12;  98  N.  Y.  Ind.  376,  condemnation  proceedings 
Supp.  1082  (denial  of  incorporation  taken  in  a  name  varjnng  somewhat 
not  sufficient  to  raise  the  defence  from  the  true  corporate  name  were 
under  N.  Y.  Code) ;   Gray  v.  Monon-    held  invalid. 

gahela  Nav.  Co.,  2  Watts  &  S.  156;  As  to  mechanics'  lien  proceed- 
37  Am.  Dec.  500;  President,  etc.  of  ings,  sec  Grafton  Grocery  Co.  v.  Home 
Hanover  Savings  Fund  v.  Suter,  1  Breunng  Co.  (W.  Va.),  54  S.  E.  349. 
Md.  502  (plea  of  non-assumpsit).  *   Young  v.  South  Tradegar  Iron 

Cf.    Smith    V.     Tallahassee,    etc.    Co.,  85  Tenn.  189;    2  S.  W.  202;    4 
Plank  Road  Co.,  30  Ala.  650  (where    Am.  St.  Rep.  752. 
an  amendment  was  allowed) ;    Bank         ^  Lapham    v.    Philadelphia,    etc. 
of  Utica  V.  Smalley,  2  Cow.  (N.  Y.)    R.  R.  Co.  (Del.),  56  Atl.  366;  4  Pen- 
770;    14  Am.  Dec.  526  (where  the    newill's  (Del.)  Rep.  421. 
point   was   left   open);     Washington         Contra:   Western,  etc.  Trust  Co.  v. 
County  Xat.  Bank  v.  Lee,  112  Mass.    Ogden  (Te.x.),  93  S.  W.  1102. 
521;      University    of    Louisville    v.  Cf.  Texas,  etc.  R.  R.  Co.  v.  Barber 

Hammock  (Ky.),  106  S.  W.  219  (ob-  (Tex.),  71  S.  W.  393;  31  Tex.  Civ. 
jection  not  available  for  the  first  App.  84  (where  the  words  "of  1874" 
time  on  appeal).  after    the    company's    name    in    a 

But  see  Illinois  State  Hospital  v.  petition  were  said  to  be  mere 
Higgins,  15  111.  185  (where  misnomer    surplusage). 

of  the  plaintiff  corporation  was  held  As  to  the  use  of  a  new  name  be- 
a  ground  for  demurrer) ;  Southern  fore  a  change,  has  been  completely 
Pac.  Co.  v.  Block,  84  Tex.  21;  19  effected,  and  use  of  old  name  after 
S.    W.    300    (a    judgment    against    the  change,  see  infra,  §  466,  §  467. 

381 


§  462  CORPORATE    NAMES  [ChAP.  VIII 

the  same  statement  might  doubtless  be  made  with  respect  to  an 
incorporation  paper  under  modern  general  laws),  refers  to  the 
company  by  an  abbreviated  form  of  the  corporate  name,  the  use 
of  such  abbreviated  form  is  thereby  sanctioned,  and  will  therefore 
not  be  deemed  a  misnomer.^ 

In  order  that  the  use  in  pleadings  of  an  erroneous  name 
may  have  no  consequences  more  serious  than  those  attaching 
to  misnomer,  the  erroneous  designation  must  have  been  actually 
intended  to  refer  to  the  company  in  question  and  not  to  another 
corporation.  There  is  sometimes  a  presumption  to  this  effect. 
So,  a  company  described  in  a  pleading  as  the  Campbell  and  Zell 
Company  will  be  presumed  to  be  identical  with  a  company 
whose  corporate  name  is  the  Campbell  and  Zell  Company  of 
Baltimore  City.-  Where  a  suit  is  brought  against  an  individual 
who  is  supposed  to  be  carrying  on  business  under  a  company 
name,  the  plaintiff  upon  learning  that  the  company  was  in  fact 
incorporated  cannot  treat  the  case  as  a  mere  misnomer  of  the 
defendant  so  as  to  make  the  corporation  by  its  corporate  name 
the  defendant.^  In  an  early  Maryland  case,  where  a  bill  was 
filed  against  the  president  and  the  directors  of  a  company  whose 
corporate  name  was  The  Chesapeake  and  Ohio  Canal  Company, 
the  real  complaint  being  against  the  corporation,  the  chancellor 
expressed  the  opinion  that  the  corporation  by  appearing  in  the 
suit  might  have  treated  the  defect  as  a  mere  misnomer.* 


§  462- §  465.     Inferences  from  Corporate  Name. 

§  462.  In  construing  Incorporation  Paper.  —  The  corjK)rate 
name  may  be  material  in  construing  an  incorporation  paper  and 
in  determining  the  company's  objects  and  powers.^  Thus,  powers 
to  engage  in  land  speculation,  a  promoting  business,  or  in  stock- 
jobbing, will  not  be  conferred  by  mere  general  words  where  the 

>  Cf.  Merrick  v.  Trustees,  etc.  of  App.    Div.    486;     79    N.    Y.    Supp. 

Bank  of  the  Metropolis,  8  Gill   (Md.)  631. 

59,    67-68    (headnote    inade(iuate).  *  Binney's    Case,    2    Bland    Ch. 

But  see  Town  of  East  Rome  v.  City  (Md.)    99,   106-107.     Cf.  Fortier   v. 

of  Rorm  (Ga.),  58  S.  E.  854  (stated  N.  0.  Nat.  Bank,  112  U.  S.  439. 

supra,  p.  107,  note  5).  ^  Van  Pelt  v.    Home   Bldg.,   etc. 

^  Campbell  (&  Zell  Co.  V.  American  Ass'n,    79   Ga.    439;     4    S.    E.    501; 

Surety  Co.,  129  Fed.  491.  Dorsey  Harvester  Revolving  Rake  Co. 

"  Licausi  v.  Ashworth,  78  N.  Y.  v.  Marsh,  7  Fed.  Cas.  939. 

382 


§  447-§  408]  INFEKENXES    FROM    NAME 


§  4G4 


name  of  the  company  is  "The  Crown  Bank."  ^  Of  course, 
however,  tlie  name  is  not  conchisive ;  -  and  therefore  if  the  objects 
of  the  company  as  expressed  in  its  incorporation  paper  clearly 
show  that  it  is  not  the  kind  of  corporation  its  name  would 
indicate,  the  courts  will  hold  that  the  company  may  enjoy  the 
powers  and  should  be  subject  to  the  duties  annexed  by  the  law 
to  the  class  of  corporations  to  which  it  really  belongs  rather  than 
to  the  class  which  its  name  would  indicate.^ 

§  463.  Corporate  Name  as  brief  Description  of  Company's 
Business.  —  So,  the  corporate  name  may  be  treated  for  other  pur- 
poses as  to  some  extent  a  description  of  the  company  and  its 
business.  For  instance,  under  an  English  statute  which  requires 
a  bill  of  sale  to  be  accompanied  by  an  affidavit  containing  a 
description  of  the  grantor's  occupation,  a  mere  statement  of  the 
company's  name  —  "The  Glucose  Sugar  and  Colouring  Com- 
pany" —  may  be  a  sufficient  compliance  with  the  act.* 

§  464.  Corporate  Name  as  Allegation  that  Company  is  incor- 
porated. —  Similarly,  a  statement  of  a  name  which  is  usually 
applicable  to  a  corporation  may,  in  pleading,  be  ecjuivalent  to  an 
averment  or  admission  that  the  company  is  incorporated.^    So, 


»  Crown  Bank,  44  Ch.  D.  634. 

So,  in  determining  a  company's 
"main  purpose,"  regard  may  be  had 
to  the  corporate  name:  Governments 
Stock  Investment  Co.  (1891),  1  Ch. 
649. 

*  Hamilton  Nat.  Bank  v.  Ameri- 
can Loan,  etc.  Co.,  92  N.  W.  189,  192 
(headnote  inadequate) ;  66  Nebr.  67. 

'  Minneapolis,  etc.  Surburban  Ry. 
Co.  (Minn.)  112  N.  W.  13. 

*  Shears  v.  Jacob,  L.  R.  1  C.  P. 
513. 

Cf.  Dyer  v.  Drucker,  108  N.  Y. 
App.  Div.  238;  95  N.  Y.  Supp.  749 
(the  name  "City  and  Resort  Hotel 
Co."  held  insufficient  to  show  that 
company  was  a  "stock  corporation" 
and  not  a  "monied  corporation  "). 

*  Adams  Express  Co.  v.  Harris, 
120  Ind.  73;  21  N.  E.  340;  16  Am. 
St.  Rep.  315;  7  L.  R.  A.  214 
("Adams  E.xpre.ss  Co.");  Norton  v. 
State,  74  Ind.  337  ("Terre  Haute  & 
Evansville  Railroad  Co.");  Ft. 
Wayne  Gas  Co.   v.   Xieman  (Ind.), 


71  N.  E.  59;  33  Ind.  App.  178  ("Ft. 
Wayne  Gas  Co.");  Perkins  Co.  v. 
Shewmake,  119  Ga.  617;  46  S.  E. 
832  ("C.  H.  Perkins  Co.");  Mattox 
V.  State,  115  Ga.  212,  219;  41  S.  E. 
709  ("Acme  Brewing  Co.") ;  Georgia 
Co-op.,  etc.  Ass'n  v.  Borchardt,  123 
Ga.  181;  51  S.  E.  429  ("Georgia 
Co-operative  Fire  Association) ; 
U.  S.  Express  Co.  v.  Bedbury,  34  111. 
459  ("  U.  S.  Express  Co.") ;  Stein  v. 
Indianapolis,  etc.  Ass'n,  18  Ind.  237 
("  Indianapolis  Bldg.  Loan  Fund  and 
Savings  Ass'n");  Harri.t  v.  Mus- 
kingum Mfg.  Co.,  4  Blackf.  (Ind.) 
267;  29  Am.  Dec.  372  ("Muskingum 
Mfg.  Co."). 

Cf.  Holcomb  V.  Cable  Co.,  119  Ga. 
466;  46  S.  E.  671  ("Cable  Co."); 
Snyder  v.  Philadelphia  Co.,  54  W.  Va. 
149;  46  S.  E.  366;  102  Am.  St.  Rep. 
941;  63  L.  R.  A.  896;  Whitt  v. 
Blount.  124  Ga.  671;  53  S.  E.  205 
(held,  that  "Artope  &  Whitt  Co." 
"  prima  facie  imports  a  corporation." 
but  that  this  presumption  is  over- 


383 


§  465  CORPORATE    NAMES  [ChAP.  VIII 

it  has  been  said  that  the  use  of  a  name  such  as  is  usually 
adopted  by  corporations,  and  not  containing  the  name  of 
any  individual  as  is  customary  in  the  case  of  simple  part- 
nerships, indicates,  prima  facie  at  least,  corporate  existence/ 
So,  a  reference  in  a  deed  to  an  organization  by  the  name 
of  the  " Anglo-Californian  Bank"  has  been  held  to  import  an 
admission  by  the  parties  to  the  deed  that  the  bank  is  in- 
corporated.- But  such  inferences  are  uncertain  ^  and  ought 
not,  it  is  submitted,  to  be  indulged."  Thus,  a  warranty  that 
certain  property  is  owTied  by  the  N.  S.  Company  does  not 
amount  to  a  warranty  that  the  property  is  owned  by  a  corpo- 
ration, but  is  fully  satisfied  if  the  owner  is  an  individual  or 
a  firm  trading  under  that   name.^ 

§  465.  Use  of  Name  without  word  "  limited  "  and  as  Notice  that 
LiabiUty  of  Shareholders  is  unUmited.  —  Moreover,  where  statutes 
require  the  word  "  limited,"  or  some  similar  word,  to  be  appended 
to  the  name  of  all  companies  the  Hability  of  whose  shareholders 
is  limited,  the  absence  of  the  word  from  the  name  used  by  a 
company  may  charge  an  applicant  for  shares  with  notice  that 
the  company  is  in  fact  unlimited.  Thus,  where  a  person  applied 
for  shares  in  a  company,  the  form  of  application  giving  the 

thrown    where    plea    refers    to    the  Field,   146  Cal.  644,  651   (headnote 

business  as  owned  by  the  defend-  inadequate) ;   80  Pac.  1080. 
ants);    Van  Winkle  Gin,  etc.  Co.  v.         *  E.  g.  —  the  name  "Adams  Ex- 

Mathews  (Ga.),  58  S.  E.  396.  press  Co."  has  been  held  to  import 

As  to  the  use  of  corporate  names  a  corporation  although  in  fact  the 

as    evidence   of    incorporation,    see  company  is  unincorporated, 
supra,  §  274.  *  Cf.  Guckert  v.  Hacke,   159  Pa. 

»  Jones  V.  Cincinnati  Type  Foun-  St.  303;    28  Atl.  249  ("Hughes  & 

dry   Co.,    14    Ind.    89    ("Cincinnati  Gawthrop  Co.");   State  v.  Patterson, 

Type  Foundry  Co.").  159  Mo.   98,    101;    59   S.   W.    1104 

Cf.  Williamsburg,  etc.  Ins.  Co.  v.  (Adler-Goldman    Commission    Co.); 

Frothingham,  122  Mass.  391  (where  Boyce  v.  Augusta  Camp,  U  Okl  642; 

the  word  successors  was  used  in  con-  78  Pac.  322 ;    Briggs  v.  McCullovgh, 

nection   with  a   company's   name);  36  Cal.    542,  550  ("Pac.  Mut.  Life 

Platte    Valley    Bank,    1    Nebr.    461  Ins.  Co.  of  Cal.");    Clark  v.  Jones, 

("Platte    Valley    Bank");      Sierra  87   Ala.    474,   481-482;    6   So.   362 

Land,  etc.  Co.  v.  Bricker  (Cal.),  85  ("Wetumpka  Lumber  Co.");    Cun- 

Pac.  665.  yus  v.  Guenther,  96  Ala.  564;    11  So. 

As  to  statutes  forbidding  the  use  649  ("Penn   Mut.  Life  Ins.   Co."); 

by  individuals  of  names  purporting  Austin   v.    M.    Ferst's   Sons    &   Co. 

to  be  corporate  names,  see  Imperial  (Ga.),  58  S.  E.  318  ("M.  Ferst's  Sons 

Mfg.  Co.  V.  Schwartz,  105  111.  App.  &  Co."). 
525.  *  Clark  v.  German  Mut.  Fire  Ins. 

'  Anglo-Californian      Bank      v.  Co.,  7  Mo.  App.  77. 

384 


§  447-§  468]  CHANGE    OF    NAME  §  406 

company's  name  without  the  addition  of  the  word  "limited," 
an  insertion  of  the  words  "if  limited"  in  the  application  was 
held  insufhcient  to  impoit  a  condition  into  the  subscription,  on 
tiie  ground  that  the  name  of  the  company  charged  the  applicant 
with  notice  that  the  company  was  not  Hmited.'  This  decision 
was  certainly  a  harsh  one,  and  in  view  of  the  fact  that  a  company 
may  use  a  name  other  than  its  proper  corporate  name,  the  sound- 
ness of  the  reasoning  may  well  be  questioned.  Moreover,  the 
facts  of  the  case  disclosed  another  ground  on  which  the  decision 
could  be  supported. 


§  460.  Change  of  Corporate  Name.  —  Where  a  corporate  name 
is  conferred  by  act  of  the  legislature,  it  can  only  be  altered  by 
another  act  of  the  legislature.  Where  the  company  is  incorpo- 
rated under  a  general  law,  the  name  as  specified  in  the  incorpo- 
ration paper  can  be  altered  only  in  the  method,  if  any,  provided 
by  statute  for  making  alterations  in  the  incorporation  paper.^ 
A  statute  providing  a  method  for  changing  the  corporate  name 
is  repealed  by  implication  by  a  subsequent  statute  providing 
another  method  for  making  any  change  in  the  incorporation 
paper.^  The  change  of  name  is  not  complete  until  all  statu- 
tory formalities,  such  as  registration  of  the  new  name,  have  been 
completed."  Thus,  until  that  time,  it  seems  that  the  company 
acquires  no  right  to  the  exclusive  use  of  the  new  name.^  ]More- 
over,  until  that  time,  calls  are  properly  made  and  actions  brought 
in  the  old  name ;  ^  and  until  that  time  where  the  new  name  is  so 
different  from  the  old  that  a  casual  reader  would  not  suspect 
that  the  same  company  was  designated,  a  notice  of  the  call  given 

1  Perrett's  Case,  15  Eq.  250.  Oxford,  83  Fed.  288,  296;   28  C.  C. 

'  As  to  the  necessity  of  changing  A.  404. 
the  corporate  name  when  a  change         '   Illinois  Watch  Case  Co.  v.  Pear- 
is  made  in  the  incorporation  paper  son,  140  111.  423;   31  N.  E.   400;    16 
that  would  render  the  old  name  mis-  L.  R.  A.  429. 
leading,  see  supra,  §  150  and  §  450.  But  see  infra,  as  to  acquiring  by 

*  Fort  Pitt  B.  &  L.  Ass'n  v.  Model  user  the  right  to  use  a  trade  name 
Plan  B.  (t-  L.  Ass'n,  159  Pa.  St.  308;  other  than  the  true  corporate  name, 
28  Atl.  215.  §  4G7. 

*  As  to  evidence  proving  compli-  "  Shackleford,  Ford  &  Co.  v. 
ancewith  the  statutory  requirements,  Dangerfield,  L.  R.  3  C.  P.  407. 

eee  Whitman  v.  National    Bank   of 
VOL.  I.— 25  385 


I  466  CORPORATE   NAMES  [ChAP.  VIII 

in  the  new  name  would,  it  seems,  bind  only  those  shareholders 
having  knowledge  of  the  change.^  It  has  been  held  that  the 
recrularitv  of  proceedings  to  effect  a  change  in  the  corporate 
name  cannot  be  impugned  collaterally  in  a  suit  to  which  the 
corporation  is  a  party.-  Where  a  statute  authorizes  a  change 
of  corporate  name  only  with  the  consent  of  a  court,  the 
matter  is  discretionary  with  the  judge,  and  he  may  withhold 
his  consent  if  the  new  name  resembles  somewhat  the  name 
of  another  company,  even  though  the  resemblance  be  not  so 
close  as  to  give  the  latter  company  an  absolute  right  to  pre- 
vent the  use  of  the  proposed  new  name.^  Of  course  a  change 
of  name  does  not  affect  the  identity  of  the  corporation.*  It 
has  been  said  that  where  the  name  of  a  corporation  is 
changed,  an  action  against  it  by  its  former  name  is  not 
irreo-ular;^  but  the  correctness  of  this  assertion  is  to  say 
the  least  open  to  grave  doubt,"  unless  the  change  of  name 
took  place  after  the  action  was  begun.''  An  unauthorized 
attempt  to  change  the  corporate  name  does  not  dissolve  the 

>  Shackleford,    Ford    &     Co.     v.  on  changing  its  name  is  not  required 

Danger/ieW,  L.R.  3  C.  P.  407, 41 1,412.  under  the  domestic  law  to  make  a 

2  International  Savings,  etc.  Co.  new  designation  of  an  agent  for 
V.  Stenger,  31  Pa.  Sup.  Ct.  294.  Cf.  service  of  process);  Watts  v.  Port 
supra,  §  157.  Deposit,  46  Md.  500. 

3  United  States  Mercantile,  etc.  But  see  Robinson  v.  First  Na- 
Agency,  115  N.  Y.  176;  21  N.  E.  tional  Bank  (Tex.),  79  S.  W.  103; 
1034.  State  ex  rel.  Osborne  v.  Nichols,  38 

**  Allen  V.  North  Des  Moines  Wash.  309;  80  Pac.  462  (statute 
M.  E.  Church,  102  N.  W.  808;  127  providing  that  no  company  "here- 
Iowa96;  109  Am.  St.  Rep.  366;  69  after  organized"  under  any  other 
L.  R.  A.  255  (semble);  Wilhite  v.  statute  should  use  the  word  "  trust " 
Convent  of  Good  Shepherd,  78  S.  W.  as  part  of  its  name  applied  to  a 
138;  25  Ky.  L.  Rep.  1375;  South  change  of  name  by  a  company  pre- 
Carolina  Mutual  Ins.  Co.  v.  Price,  \aously  incorporated  under  another 
o7  S.  Car.  207;  45  S.  E.  173;   Wright    law). 

Ccesar  Tobacco  Co.  v.  A.  Hoen  &  Co.  *  Wilhite  v.  Convent  of  Good 
(Va.),  54  S.  E.  309;  Bucksport,  etc.  Shepherd,  78  S.  W.  138;  25  Ky.  L. 
R.  R.  Co.  V.  Buck,  68  Me.  81,  84-85;    Rep.  1375. 

Howard  v.  Glenn,  85  Ga.  238;  11  "  See  Delaware,  etc.  R.  R.  Co.  v. 
S.  E.  610;  21  Am.  St.  Rep.  156;  Irick,  23  N.  J.  Law  321,  327;  Gray 
Priest  V.  Glenn,  51  Fed.  400;  2  C.  C.  v.  Mononxjahela  Nav.  Co.,  2  Watts 
A.  305;  Young  v.  South  Tradegar  &  S.  (Pa.)  156,  162;  37  Am.  Dec. 
Iron  Co.,  85  Tenn.  189,  201  (head-  500;  Young  v.  South  Tradegar  Iron 
note  inadequate);  2  S.  W.  202;  Co.,  85  Tenn.  189,  201-202;  2  S.  W. 
4  Am.  St.  Rep.  752;  Cable  Co.  v.  202;  4  Am.  St.  Rep.  752. 
Rathgeber  (S.  Dak.),  113  N.  W.  88  '  East  Tennessee,  etc.  R.  R.  Co. 
(holding    that    foreign    corporation    v.  Evans,  6  Heisk.  (Tenn.)  607. 

386 


§  447- §  4G8]  ASSIGNMENT    OF    NAME  §  4G8 

corporate  existence  or  affect  the  right  to  carry  on  business 
under  the  old  name.' 

§  407.  User  of  Name  other  than  Corporate  Name. —  A  corpora- 
tion may  by  user  accjuire  a  trade  or  business  name  differing  from 
its  corporate  name,  and  may  l)y  injuriction  protect  such  business 
name  to  the  same  extent  as  an  indivi(hial  might  do  in  a  similar 
case.^  This  is  true  even  though  the  user  of  such  trade  name  is 
in  contravention  of  a  statute  requiring  the  names  of  all  incorpo- 
rated limited-liability  companies  to  contain  the  word  "  Limited."  ^ 
Consequently  a  corporation  may  adopt  and  use  the  name  of  a 
former  partnership  of  wliich  one  of  its  officers  was  a  member, 
and  the  fact  of  such  adoption  will  be  sufficient  to  render  a  prom- 
issory note  made  in  the  firm  name  binding  upon  the  corpora- 
tion.'' Of  course  the  adoption  and  user  of  a  trade  name  other 
than  the  corporate  name  does  not  alter  the  legal  corporate  name ; 
and  hence  an  action  brought  in  such  adopted  name  should,  if 
the  irregularity  be  properly  pleaded,  abate. ^ 

§  468.  Assignment  of  Right  to  Use  Corporate  Name.  —  A  vol- 
untary assignment  by  a  corporation  of  the  right  to  use  its  corpo- 
rate name  has  been  held  ultra  vires  and  void.^  But  an  assignment 
for  valuable  consideration,  by  the  procuration  and  with  the  assent 
of  the  individual  whose  name  forms  part  of  the  corporate  name 
sought  to  be  transferred,  has  been  held  to  be  effective.^    More- 

*  Richards     v.     Minnesota    Sav.  fatal  variance);    Robinson  v.  First 

Bank,  75  Minn.  196.  205  (headnote  Nat.  Bank  (Tex.),  79  S.  W.  103  (a 

inadequate) ;  77  N.  W.  822  ;  O'Don-  startling  decision  holding  that  if  the 

nell  V.  Johns,  76  Tex.  362.  members  of  a  corporation  carrj'  on 

^  Philadelphia,  etc.    Trust  Co.   v.  business  under  a  name  different  from 

Philadelphia  Trxist  Co.,  123  Fed.  53i;  the    corporate    name,  they  become 

H.    E.    Randall,   L't'd  v.   British    &  liable  as  partners). 

American   Shoe   Co.    (1902),    2    Ch.  ^  H.  E.  Randall,  L't'd  v.  British 

354.  &  American  Shoe  Co.  (1902),  2  Ch. 

Cf.    Charles    S.    Higgins    Co.    v.  354. 

Higgins  Soap  Co.,   144  N.  Y.  462;  *  Conro  v.  Port  Henry  Iron  Co., 

39  N.  E.  490;  3  Am.  St.  Rep.  769;  12  Barb.  (N.  Y.)  27,  55-56. 

27  L.  R.  A.  42;    People  v.  Rose,  219  *  C.  D.  &  M.  Co.  v.  Keisel,  43 

111.  46;   76  N.  E.  42.  Iowa  39. 

But  see  Sykes  v.  People,  132  111.  »  Armington  v.  Palmer,  21  R.  I. 

32;    23  N.  E.  391  (upon  a  prosecu-  109;   42  Atl.  308;    79  Am.  St.  Rep. 

tion  for  false  pretences  proof  that  786;  43  L.  R.  A.  95. 

the    name    of   the    defrauded    com-  '  Lamb  Knit  Goods  Co.  v.  Lamb 

pany   as   stated   in   the   indictment  Glove  d-  Mitten  Co.,  120  Mich.  159; 

was  a  popular,  trade  name  and  not  78  N.  W.  1072. 

the    legal    corporate    name    held    a  But  see  State  ex  rel.  Bradford  v. 

387 


§  468  CORPORATE    NAMES  [ChaP.  VIII 

over,  the  right  to  use  the  corporate  name  may  pass  to  purchasers 
in  reorganization  proceedings/  or  to  an  assignee  for  the  benefit 
of  creditors  and  from  him  to  his  grantee.^  An  assignment  by  a 
corporation  of  the  right  to  use  the  corporate  name  does  not 
entitle  the  purchasers  to  an  injunction  restraining  individual 
shareholders,  whose  own  names  form  part  of  the  corporate 
name  and  who  as  shareholders  have  received  the  benefit  of  the 
consideration  for  the  assignment,  from  establishing  a  rival 
business  under  their  own  names.^ 

Western  Irrigating  Co.,  40  Kans.  96,  Marvin  Co.  v.  Hall's  Safe  Co.,  208 

99  (headnote  inadequate) ;    19  Pac.  U.  S.  554. 

349;    10  Am.  St.  Rep.  166.  '  Lothrop    Pub.    Co.    v.    Lothrop, 

'  Peck  Bros.  &  Co.  v.  Peck  Bros.  etc.  Co.,  191  Mass.  353. 

Co.,  113  Fed.  291;    51  C.  C.  A.  251.  «  Donnell  v.  Herring-Hall-Marvin 

Cf.  Union  MiUs  v.  Harder,  116  N.  Y.  Co.,  208  U.  S.  267. 
App.     Div.    22.     Cf.    Herring-Hall- 


388 


CHAPTER  IX 

CORPORATE   SEALS 

Section 

"When  a  corporation  must  use  a  seal 469-477 

Nature  of  seals  in  general  —  reasons  for  holding  a  corporation 

bound  by  its  seal      469 

Doctrine  that  a  corporation  can  be  bound  only  by  its  seal .    .     470-477 

Reason  for  doctrine 470 

Cessation  of  the  reason  for  the  doctrine 471 

Survival  of  the  doctrine  after  the  reason  had  ceased     .    .    .  472 

Modern  Enghsh  rule 473 

Modern  American  rule 474 

Seal  as  substitute  for  an  oath 475 

Statutory  and  other  provisions  requiring  certain  contracts 

to  be  under  seal 476 

Survivals  of  some  consequences  of  old  rule 477 

What  is  the  corporate  seal 478-482 

Custom  of  corporations  to  have  their  own  seals  for  use  on  all 

occasions 478 

How  corporate  seal  is  adopted  or  altered 479 

Whether  corporation  may  have  several  corporate  seals  at  same 

time 480 

Adoption  of  seal  for  particular  transaction  —  use  of  other  than 

corporate  seal 481 

Seal  used  must  be  adopted  as  seal  of  the  company  and 

not  as  the  seal  of  the  officer  or  agent  affixing  it .    .    .  482 

Authority  to  affix  corporate  seal  —  how  conferred 483 

Whether  deed  of  a  corporation  requires  deUvery 484 

Effect  of  use  of  seal  by  a  corporation 485^86 

Instrument  under  corporate  seal  a  specialty 485 

Whether  sealed  contract  of  a  corporation  requires  a  considera- 
tion       486 

Proof  of  deeds  of  corporations 487—490 

How  seal  proved  to  be  corporate  seal  . 487 

Signature  and  counter-signature  by  officers 488 

Of   the    presumption  that  seal    attached    to    instrument    duly 

signed  on  behalf  of  corporation  is  seal  of  corporation    .    .  489 
Proof  that  seal  was  affixed  by  competent  authority  —  pre- 
sumptions        490 

Statutes  regulating  method  of  execution  of  deeds  of  corporations  .    .  491 

Acknowledgment  of  deeds  of  corporations 492 

389 


§  469  CORPORATE    SEALS  [ChaP.  IX 

§  469- §  477.      WHEN   A   CORPORATION   MUST   USE   A   SEAL. 

§  469.  Nature  of  Seals  in  general  —  Reasons  for  holding  a  Cor- 
poration bound  by  its  Seal.  —  The  law  of  seals  and  sealed  in- 
struments contains  embedded  in  it  many  curious  bits  of  history, 
and  none  more  quaint  and  interesting  than  those  connected  with 
the  subject  of  corporate  seals.  In  former  days,  each  individual 
had  his  own  peculiar  seal  or  signet  which  was  used  for  purposes 
of  identification  much  as  signatures  are  to-day,  and  every  seal 
was  supposed  to  possess  a  peculiar  virtue  and  efficacy,  so  that  in 
the  earliest  times  of  our  legal  history  if  a  man's  own  proper  seal 
were  affixed  to  an  instrument  he  was  bound  thereby  even  though 
the  seal  was  attached  without  his  authority.^  A  corporation 
being  an  intangible,  fictitious  legal  entity,  could  neither  speak 
nor  write,  but  it  might  own  a  seal,  which  should  have  this  pecu- 
liar virtue  and  efficacy.  Since  it  was  not  the  act  of  sealing  but 
the  ownership  of  the  seal  w^hich  in  those  days  bound  the  obligor 
in  a  sealed  instrument,  the  corporation,  although  it  had  no  hands 
with  which  it  could  affix  a  seal,  yet  being  capable  of  owning  a 
seal  might  be  bound  thereby.  Hence  it  was  that  the  common 
seal  was  regarded  as  of  the  very  essence  of  a  corporation  and  as 
constituting  the  very  symbol  of  the  union  between  its  members. 
This  mediaeval  notion  no  doubt  savored  of  scholasticism,  but  it 
was  logical,  and  harmonized  with  the  doctrines  once  prevalent 
as  to  seals  in  general  as  well  as  with  the  conception  of  a  corpora- 
tion as  an  imaginary  legal  entity. 

§  470- §  477.     Of  the  Doctrine  that  a  Corporation  can  be  hound 
only  by  its  Seal. 

§  470.  Reasons  for  Doctrine.  —  A  consequence  of  this  theory 
of  a  corporation,  consistently  carried  out,  was  that  a  body  corpo- 
rate could  act  and  contract  in  no  other  way  than  by  the  use  of  its 
seal.  It  could  not  speak,  for  it  had  no  mouth.  It  could  not  write, 
for  it  had  no  hands.  It  could  not  make  a  contract  resting  for  its 
vahdity  on  a  "meeting  of  minds,"  for  it  had  no  mind.  It  could 
be  bound  only  by  the  talismanic  virtue  of  its  seal. 

§  471.  Cessation  of  Reason  for  Doctrine.  — This  doctrine  was 
not  merely  inconvenient  in  practice,  but  also,  as  the  law  devel- 

»  1  Pollock  &  Maitland's  Hist,  of  Eng.  Law,  490. 
390 


§  469- §  492]  NECESSITY    FOR    SEAL  §  473 

oped,  became  illogical  in  theory.  For  as  time  went  on,  the 
ancient  strictness  of  the  law  of  seals  broke  down;  and  it  came 
to  pass  that  a  seal  was  no  longer  regarded  as  possessing  in  itself 
the  peculiar  efficacy  and  virtue  to  which  we  have  referred.  A 
man  was  no  longer  bound  because  his  own  proper  seal  was 
affixed ;  it  became  necessary  to  show  that  the  seal  was  aflixed 
by  him  or  by  his  authority.  When  this  innovation  Ijecame 
established,  there  was  no  longer  any  reason  for  holding  that  a 
corporation  could  contract  by  the  use  of  its  seal  any  more  than 
in  any  other  way.  For,  if  a  seal  was  not  binding  unless  intention- 
ally affixed,  how  was  a  corporation  to  be  bound  by  its  seal  since 
it  had  no  mind  capable  of  entertaining  an  intent  to  affix  the 
same  ? 

§  472.  Survival  of  Doctrine  after  Reason  had  Ceased.  —  This 
difficulty,  of  course,  never  troubled  the  courts.  They  continued 
to  hold  that  a  corporation  could  be  bound  by  a  contract  under  its 
seal,  and  also,  with  unconscious  inconsistency,  that  it  could  be 
bound  in  no  other  way.  Thus,  this  relic  of  media?valism  survived 
after  its  logical  harmony  with  other  parts  of  the  law  —  its  only 
merit  —  had  passed  away.  Under  those  circumstances,  it  was 
inevitable  that  the  time-honored  rule  itself  that  a  corporation 
could  contract  only  under  its  common  seal,  excessively  incon- 
venient as  it  was,  should  begin  to  break  down. 

§  473.  Modern  English  Rule.  —  Nevertheless,  in  England, 
the  old  mediaeval  rule  has  not  been  completely  abrogated  by 
the  courts.  To  be  sure,  with  respect  to  corporations  formed 
under  the  Companies  Acts,  which  constitute  the  great  bulk  of 
modern  English  corporations  engaged  in  mercantile  or  financial 
enterprises,  the  old  rule  has  been  abolished  by  express  statute. 
That  is  to  say,  the  Companies  Act  of  1867  enacts  in  substance 
that  corporations  governed  thereby  shall  be  bound  by  their 
simple  contracts  to  the  same  extent  as  individuals,  and  that  a 
corporation  need  use  a  seal  only  when  an  individual  would  be 
obliged  to  do  so.'  But  as  to  other  corporations  —  such  as 
municipal  corporations  —  the  old  rule  is  kept  up,-  subject, 
however,  to  certain  exceptions.^    As  the  whole  doctrine  has  been 

»  30  &  31  Vict.  c.  131,  §  37.  v.     Toronto    Milk    Co.,    5    Ont.    L. 

"  See  Law  ford  v.  Billericay  Rural    Rep.   1. 
Dist.  Council  (1903),  1  K.  B.  772.  ^  See   1    Lindley  on   Companies, 

As  to  the  Canadian  law  see  Birney   6th  ed.,  271-273,  and  infra,  §  476. 

391 


§  474  CORPORATE   SEALS  [ChAP.  IX 

fortunately  done  away  with  in  America,  and  also  in  England  as 
to  practically  all  business  corporations,  a  detailed  consideration 
of  these  exceptions  is  unnecessary. 

§  474.  Modem  American  Rule.  —  It  is  unnecessary  to 
narrate  in  detail  the  various  steps  by  which  in  America  the 
courts  gradually  dispensed  with  the  rule  that  corporations  could 
act  only  by  the  use  of  the  corporate  seals.  Suffice  it  to  say  that 
at  the  present  time  in  America  nothing  whatever  is  left  of  the 
old  rule.  In  the  United  States,  the  law  is  well  settled,  by  judicial 
decision  without  the  aid  of  any  statute,  that  a  corporation  may 
enter  into  simple  contracts,  either  oral  or  in  \\Titing,  either 
express  or  implied  in  fact,  or  implied  in  law;  and  that  a  seal  is 
indispensable  in  the  case  of  a  corporation  only  when  by  reason 
of  the  nature  of  the  instrument  it  would  be  requisite  in  the  case 
of  an  individual.*  When  by  our  legal  imagination  we  conjure 
up  a  fictitious  legal  person  called  a  corporation,  the  imagination 
must  be  capable  of  the  additional  strain  of  endowing  it  not 
merely  with  hands  to  write,'  but  with  a  mind  to  intend  and  to 
contract.  Hence,  a  statute  dispensing  with  the  necessity  for 
attaching  a  seal  to  certain  instruments  which  were  required  at 
common  law  to  be  under  seal  applies  to  corporations  as  well  as 
to  individuals.^  The  absence  of  the  corporate  seal  from  any 
instrument  which  is  not  required  by  law  to  be  under  seal  is  not 
even  a  suspicious  circumstance  sufficient  to  give  warning  that  the 
agent  who  executed  the  instrument  had  no  authority  from  the 
corporation  to  do  so.* 

^  Bank  of  the  Metropolis  v.  Gutt-  U.  S.-  v.  Dandridge,   12  Wheat.  64 

schlick,  14  Pet.  19;    Union  Bank  v.  (Marshall,  C.  J.,  dissenting);    Union 

Ridgely,   1  H.  &  G.  (Md.)  324;   St.  Bank  v.  Ridgely,  1   H.  &  G.  (Md.) 

Clair   V.    RuUedge,    115   Wise.    583;  324. 

Griffmg  Bros.  Co.  v.  Winfield  (Fla.),  "  Ismon  v.  Loder,  97  N.  W.  769; 

43    So.    687;     Crowley    v.    Genesee  135  Mich.  345. 

Mining  Co.,  55  Cal.  273;   Banks  v.  But  see  Savannah,  etc.  R.  R.  Co. 
Poitiaux,   3  Rand.    (Va.),    136;     15  v.  Lancaster,  62  Ala.  555,  564  (head- 
Ana.  Dec.  706;   1  Morawetz  on  Priv.  note  inadequate). 
Corps.,  §  338.  As  to  a  statute  dispensing  with 

Ijut  see  St.  Joseph's,  etc.  Soc.  v.  the  necessity  for  the  use  of  a  seal 

St.   Hedvng's  Church,   50  Atl.   535;  except  in  the  case  of  a  corporation, 

3  Penn.  (Del.)  229.  see  Strop  v.  Hughes  (Mo.),   101   S. 

2  Chief  Justice  Marshall's  illogi-  W.   146;    Pidlis  v.  Pullis,  157  Mo. 

cal  and  historically  indefensible  doc-  565 ;   57  S.  W.  1095 ;   Garrett  v.  Bel- 

trine  that  although  a  seal  is  not  re-  mont  Land  Co.  {Tenn.),  29  S.  W.  726; 

quired    a   -writing    is   necessary  has  94  Tenn.  459. 

never  been  accepted.     See  Bank  of  *  Cook  v.  Am.  Tubing,  etc.  Co.  (Ft. 

392 


§  469- §  492]  NECESSITY   FOR   SEAL  §  475 

§  475.  Seal  as  Substitute  for  an  Oath.  —  In  one  or  two  in- 
stances, dependent,  however,  upon  .special  historical  rea.sons,  a 
corporation  must  still  use  a  .seal  where  an  individual  would  not 
be  required  to  do  so.  For  instance,  except  where  the  rule  has 
been  altered  by  statute,  an  answer  of  a  corjx)ration  to  a  bill  in 
equity  must  be  under  the  corporate  seal.'  In  this  case,  how- 
ever, the  seal  is  required  as  a  substitute  for  an  oath  which  was 
necessary  where  the  defendant  was  an  individual.  To  be  sure, 
the  seal  was  a  poor  substitute  for  an  oath,  but  according  to 
the  mediaeval  mind  it  was  the  best  that  could  be  found.-  The 
expedient  of  requiring  an  oath  by  the  president,  or  other  ex- 
ecutive officer  of  the  corporation  familiar  with  its  affairs,  seems 
not  to  have  occurred  to  lawyers  of  former  days,  but  in  a 
similar  case  not  concluded  by  ancient  precedent  would  be  un- 
doubtedly adopted  by  modern  law}'ers  and  judges  in  prefer- 
ence to  the  fictitious  solemnity  of  the  seal.^  On  principle,  the 
argument  might  well  be   accepted  that  modern   statutes  dis- 

I.),  65  Atl.  641;  Shefjieldv.  Johnson  Co.,  27  App.  D.  C.  59,  63  (semble) 

County  Sav.  Bank  (Ga.),  58  S.  E.  386.  Chcquasset  Lumber  Co.,  112  Fed.  56; 

Cf.  Templeton  v.  Hayward,  65  111.  Fayette  Land  Co.  v.  Louisville,  etc. 

178.  R.  R.  Co.,  93  Va.  274 ;  24  S.  E.  1016; 

'  Williams  Co.  v.  U.  S.  Baking  Norwich  Pharmacol  Co.  v.  Abaly 
Co.,  86  Md.  475;  38  Atl.  990;  State  (Wise),  113  N.  W.  962. 
V.  Florida  Central  R.  R.  Co.,  15  Fla.  Cf.  the  modern  practice,  referred 
690,  697;  GUdersleeve  v.  Wolf  to  in  Langdell  on  Equity  Pleading, 
Island  Ry.,  etc.  Co.,  3  Ch.  Chamber  2d  ed.,  pp.  83-84,  of  making  one  or 
Rep.  (Ont.)  358  (holding  also  that  the  more  officers  co-defendants  with,  the 
company's  solicitor  has  no  autliority  corporation  for  the  purpose  of  get- 
to  affix  the  seal).  ting  discovery  from  them.     See  also 

Any  seal  —  for  example,  a  mere  as   to   this   practice   Roanoke  Street 

wafer  —  adopted  for  this  particular  Ry.  Co.  v.  Hicks,  32  S.  E.  295;    96 

purpose  yAW  as  in  other  cases  serve  Va.  510  (holding  that  bill  for  discov- 

as  well  as  the  regular  common  seal ;  ery  cannot  be  maintained  against  a 

Ransom  v.  Stonington  Sav.  Bank,  2  corporation  since  it  cannot  answer 

Beasl.  (N.  J.)  212.  under  oath,  and  that  if  discover}^  is 

^  But  an  answer  of  a  corporation  desired  an  officer  must  be  made  de- 

under  its  seal  does  not  have  the  same  fendant   notwthstanding  the   usual 

effect  as  evidence  as  the  sworn  an-  rule  that  a  mere  witness  cannot  be 

swer   of   an    individual   defendant:  made  defendant  in  order  to  get  dis- 

Maryland,  etc.  h'on  Co.  v.  Wingert,  coverj'  from  him) ;    Xi.Ton  v.  Clear 

8  Gill     (Md.)    170,    178;    Lovett  v.  Creek  Lumber  Co.  (Ala.),  43  So.  805. 

Steam  Saio  Mill  Ass'n.  0  Paige  (N.  So  also,  a  coq:)oration's  bill  for  an 

Y.)  54,  58-59;   Langdell  on  Equity  injunction  is  to  be  verified  ratlier  by 

Pleading,  2d  ed.,  p.  84.  the  affidavit  of  an  officer  than  by  the 

^  E.  g.  Jacobs  v.  Mexican  Sugar  corporate  seal ;  George's  Creek  Co.  v. 

Refining  Co.,  112  N.  Y.  App.  Div.  Detmold,    1    Md.    Ch.   371,   381-382 

657;    Martin  v.  Martin  &  Browne  (affidavit  of  treasurer). 

393 


§476 


CORPORATE   SEALS 


[Chap.  IX 


pensing  with  the  necessity  of  sworn  answers  to  bills  in  equity 
should  by  implication  relieve  corporation  defendants  from  the 
requirement  of  a  seal ;  but  the  courts  have  not  adopted  this 
view.^  Of  course,  pleadings  of  a  corporation  other  than  an 
answer  in  equity,  either  at  law  or  in  equity,  are  not  required  to 
be  under  the  corporate  seal.-  The  only  possible  exception 
would  have  been  pleas  in  abatement  and  the  like  which  in  the 
case  of  an  individual  would  be  required  to  be  sworn  to. 

§  476.  Statutory  and  other  Provisions  requiring  certain  Con- 
tracts of  Corporations  to  be  under  Seal.  —  Even  where  some  partic- 
ular kind  of  contract  is,  by  a  company's  special  act  of  incorpora- 
tion, or  by  the  incorporation  paper,  specifically  required  to  be 
under  seal,  some  American  courts  hold  that  a  contract  of  that 
sort  may  nevertheless  be  binding  although  not  under  seal,  the 
provision  being  construed  as  directory  in  nature.^  Other 
American  authorities,  however,  reach  a  different  conclusion.* 

In  England,  this  precise  question  must  arise,  if  at  all,  under 
somewhat  different  conditions.  In  that  country,  a  statute 
requiring  certain  contracts  of  companies  to  be  under  seal  would 


*  Williams  Co.  v.  U.  S.  Baking 
Co.,  86  Md.  475;  38  Atl.  990  (where 
this  argument  might  have  been,  but 
apparently  was  not  advanced  by  the 
counsel  for  the  losing  side). 

*  Washington  Xat.,  etc.  Ass'n  v. 
Buser  (W.  Va.),  57  So.  E.  40  (bill  in 
equity) ;  George's  Creek  Co.  v.  Det- 
mold,  1  Md.  Ch.  371  (bill  for  injunc- 
tion). 

Cape  Sable  Company's  Case,  3 
Bland  Ch.  (Md.)  606,  610-613,  hold- 
ing that  authority  to  confess  judg- 
ment must  be  under  the  corporate 
seal,  would  not  be  followed  at  the 
present  day.  See  Ford  v.  Hill,  92 
Wise.  188,  198;  66  N.  W.  115;  53 
.\m.  St.  Rep.  902;  Thew  v.  Porce- 
lain Mfg.  Co.,  5  S.  Car.  415,  428. 

*  CahUl  V.  Maryland  Life  Ins. 
Co.,  90  Md.  333,  346-347;  45  Atl. 
180;  47L.  R.  A.  614. 

Of.  Norwich  Yarn  Co.,  22  Beav. 
143  (clause  in  deed  of  settlement  re- 
quiring all  cheques  to  be  signed 
by  three  directors  held  directory) ; 
Dayton  Ins.  Co.  v.  Kelly,  24  Oh.  St. 


345;  15  Am.  Rep.  612;  New  Eng- 
land Fire,  etc.  Ins.  Co.  v.  Robinson, 
25  Ind.  536 ;  Barnes  v.  Ontario  Bank, 
19  N.  Y.  152. 

*  Lindauer  v.  Delaware  Mut. 
Safety  Ins.  Co.,  13  Ark.  461. 

Cf.  Allen  v.  Brown,  6  Kans.  App. 
704;  50  Pac.  505;  Foulke  v.  San 
Diego,  etc.  R.  R.  Co.,  51  Cal.  365 
(statute  pro-\dding  that  no  contract 
of  the  company  shall  be  binding  un- 
less in  writing  held  to  apply  only  to 
wholly  executory  contracts) ;  Pixley 
V.  Western  Pacific  R.  R.  Co.,  33  Cal. 
183  (same  point  as  last  case) ;  Curtis 
v.  Piedmont  Lumber,  etc.  Co.,  109 
N.  Car.  401;  13  S.  E.  944  (similar 
point  to  that  of  last  case) ;  Clowe  v. 
Pine  Product  Co.,  114  N.  Car.  304; 
19  S.  E.  153  (similar  point  to  that 
of  last  two  cases) ;  Roberts  v.  Deming 
Woodworking  Co.,  Ill  N.  Car.  432; 
16  S.  E.  415  (applying  the  same  stat- 
ute involved  in  last  two  cases) ;  Head 
V.  Providence  Ins.  Co.,  2  Cranch  127, 
167-169. 


394 


§  469- §  492]        NECESSITY  FOR  SEAL  §  477 

be  regarded  merely  as  reverting  pro  hoc  vice  to  the  rule  of 
English  common  law  whereby  all  contracts  were  recjuired  to  l>e 
under  seal.  In  any  such  case,  therefore,  an  unsealed  contract 
would  be  void.'  The  tendency  of  the  English  courts  in  other 
cases  is  to  regard  as  merely  directory  regulations  in  a  statute 
or  in  a  company's  memorandum  or  articles  prescribing  a 
certain  form  for  contracts  of  the  company.^  Even  if  the  pro- 
vision be  held  to  be  mandatory,  failure  to  comply  while  fatal  at 
law  might  not  have  the  same  effect  in  all  circumstances  in  equity. 
Thus,  where  a  contract  is  required  to  be  under  seal  either  by 
the  English  common  law  rule,  or  probably  by  a  statute,  never- 
theless if  the  subject-matter  and  circumstances  are  such  that 
specific  performance  might  be  decreed  if  the  parties  were 
individuals,  a  court  of  equity,  if  the  contract  although  not 
under  seal  has  been  partly  performed,  may  decree  specific 
performance.^  The  mere  fact  that  because  of  the  absence  of  a 
seal  the  contract  is  unenforceable  at  law  is  no  ground  for  equi- 
table intervention.*  According  to  the  latest  authority,  the 
absence  of  a  seal  will  not  prevent  a  recovery  against  the  cor- 
poration, even  at  law,  if  the  contract  has  been  fully  performed 
by  the  other  party.^ 

§  477.  Survivals  of  some  Consequences  of  old  Rule.  —  Whilst 
with  such  merely  apparent  exceptions  as  are  noted  in  a  former 
paragraph,  there  is  nothing  left  in  the  United  States  of  the  rule 
that  a  corporation  can  act  and  contract  only  under  its  seal,  yet 
some  of  the  consequences  and  corollaries  of  the  old  doctrine 
still  survive.  For  instance,  corporations  still  are  accustomed  to 
affix  their  seals  to  all  their  more  important  contracts,  although 
individuals  in  making  similar  contracts  would  be  much  less 

'  Crampton  v.  Varna  Ry.  Co.,  7  Laird  v.  Birkenhead  Ry.  Co.,  Johns. 

Ch.  562  (semble).  500;   London  &  Birmingham  Ry.  Co. 

'  a.  Prince  of  Wales' Co.  v.  Hard-  v.  Winter,  Cr.  &  Ph.  57;  Stevens 
ing,  E.,  B.  &  E.  183;  \'orwich  Yarn  Hospital  v.  Dyas,  15  Ir.  Ch.  405; 
Co.,  22  Beav.  143  (provision  requir-  Marshall  v.  Corporation  of  Queens- 
ing  cheques  to  be  signed  by  three  borough,  1  Sim.  &  Stu.  520;  Max- 
directors)  ;  Ridley  v.  Plymouth  Bak-  well  v.  Didwich  College,  7  Sim.  222  n. ; 
ing  Co.,  2  Ex.  711.  1  Lindley  on  Companies,  6th  ed.,  272. 

'  Crook   V.    Seaford,    6   Ch.    551;         *  Crampton  v.   Varna  Ry.  Co.,  7 

Melbourne       Banking       Corp.       v.  Ch.  562. 

Brougham,    4    A.    C.    156,    168-169;         ^  Lawford  \.  Billericay  Rural  Dis- 

Wilsonv.  West  Hartlepool  Ry.  Co.,  2  trict  Council    (1903),    1    K.   B.   772. 

De  G.  &  Sin.  475;  Earl  of  Lindsey  v.  But  see  1  Lindley  on  Companies,  6 

Great  Northern  Ry.  Co.,  10  Hare  664;  ed.,  270. 

395 


§  478  CORPORATE    SEALS  [ChaP.  IX 

likely  so  to  do.  Moreover,  the  law  of  sealed  instruments  executed 
by  corporations  difiPers  in  some  respects,  which  will  be  presently 
considered  in  detail,  from  the  law  of  specialties  executed  by 
individuals. 

§  478- §  482.     WJiat  is  the  Corporate  Seal. 

§  478.  Practice  of  Corporations  to  have  their  own  Seals  for  use 
on  all  Occasions.  —  In  ancient  times,  each  individual  had  his 
own  seal  or  signet,  and  each  corporation  naturally  did  the  like. 
Nowadays,  an  individual  never  thinks  of  having  his  own  seal  to 
aflBx  to  all  legal  documents,  but  whenever  he  has  occasion  to 
execute  a  specialty  adopts  a  seal  for  the  purpose.  Every  well 
organized  corporation,  however,  still  has  its  own  seal  of  some 
peculiar  device  with  which  it  executes  all  instruments  requiring  a 
seal.^ 

§  479.  How  Corporate  Seal  is  adopted  or  altered.  — Some  gen- 
eral incorporation  laws  require  a  description  of  the  corporate 
seal  to  be  inserted  in  the  memorandum  of  association  or  incorpo- 
ration paper  ;^  but  more  generally  the  directors  after  the 
organization  of  the  company  adopt  a  seal  of  a  particular  descrip- 
tion as  the  company's  common  seal.  Possibly,  where  the  seal 
is  adopted  in  and  by  the  incorporation  paper,  no  other  seal 
could  be  adopted  by  the  company.  But  ordinarily  the  com- 
pany has  power  to  alter  its  seal  at  pleasure.  A  seal  may  be 
adopted  by  usage  without  a  formal  resolution  of  adoption.^ 

§  480.  Whether  Corporation  may  have  several  Corporate  Seals 
at  same  Time.  —  In  England,  apparently,  the  corporate  seal 
consists  in  an  impression  of  a  particular  stamp  or  die  which  is 
carefully  kept  at  the  company's  principal  office,  and  without 
this  no  instrument  is  deemed  to  be  the  deed  of  the  company. 
To  enable  a  company  to  keep  in  different  places  several  duplicate 
stamps  or  dies  an  impression  from  any  one  of  which  shall  con- 
stitute the  corporate  seal,  express  statutory  sanction  seems  to 
have  been  thought  necessary."    The  statute  referred  to  ^  author- 

»  As  to  the  distinction  between  a         '  Mickey    v.    Stratton,    5    Sa\\y. 

"common   seal"    or  corporate   seal  475  (headnote  inadequate) ;    McRae 

and  a  single  piece  of  wax  adopted  by  v.  Corbeit,  6  Manitoba  426. 
each  of  several  persons  as  his  seal,         *  Cf .  Wuodhill  v.  Sullivan,  14  C.  P. 

see  Cooch  v.  Goodman,  2  Q.  B.  580.  (Up.  Can.)  285,  272. 

»  Vawter  v.  Franklin  College,  53         ^  Companies    Seals    Act,     1864; 

Ind.  88.  27  Vict.,  c.  19. 

396 


§  469- §  492]  ADDITION    OF    SEAL  §  481 

izes  British  corporutioiis  doing  husiness  in  foreign  countries  to 
keep  abroad  duplicate  stamps  of  their  seals.  The  idea  that  this 
statute  was  necessary  must  have  originated  in  a  doubt  whether 
at  common  law  a  corporation  could  at  any  one  time  have  more 
than  one  stamp  for  its  seal.  But  this  doubt  is  without  foundation 
in  reasons  applicable  to  modern  conditions  of  the  law  or  even  in 
historical  considerations;  and  in  the  United  States  the  practice 
is  constantlv  followed  without  any  statutory  sanction. 

§  4S1.  Adoption  of  Seal  for  particular  Transaction  —  Use  of 
other  than  Corporate  Seal.  —  Since  a  corporation  may  alter  its 
seal  at  pleasure,  it  may  adopt  a  seal  for  a  particular  transaction.' 
Accordingly,  in  juriscHctions  where  a  mere  scroll  or  flourish  of 
the  pen  is  treated  as  a  seal,  a  corporation  may  in  executing  an 
instrument  adopt  as  its  seal  jyro  hac  vice  a  mere  scroll  -  or  a 
printed  fac  simile  of  an  impression  of  its  regular  seal.  Even  if 
the  corporation  has  a  regular  common  seal,  the  power  of  the 
company  itself  or  of  its  directors  to  adopt  a  different  seal  for  a 
particular  purpose  is  not  open  to  question.^  A  fortiori,  the  use 
of  the  letters  "  L.  S. "  in  the  record  of  a  deed  in  a  public  registry 
is  a  sufficient  indication,  if  the  grantor  be  a  corporation,  that  the 
deed  was  under  the  corporate  seal*  Even  where  a  statute  pro- 
vides that  every  company  shall  have  its  name  "engraved"  in 
legible  characters  upon  its  seal,  a  seal  consisting  of  a  piece  of 
adhesive  paper  with  the  corporate  name  printed  thereon  may 

»  Mill  Dam  Foundry  y.  Howey,  21  43  N.  H.  343;    Sarmiento  v.  Boat  & 

Pick.    (Mass.)   417,   42S;     Porter  v.  Oar  Co.,  105  Mich.  300;    63  N.  W. 

Androscoggin,  etc.  R.  R.  Co.,  37  Me.  205;  55  Am.  St.  Rep.  446  (where  the 

349,  objection    that    a    statute    had    de- 

As  to  the  effect  of  a  failure  of  a  prived   corporations   of   this   power 

corporate    seal    to    comply    ^ith    a  was  overruled);    District  of  Colum- 

statutory  form:    City  of  Defiance  v.  bia  v.  Camden  Iron  Works,  181  U.  S. 

Schmidt,  123  Fed.  1 ;  59  C.  C.  A.  159.  453;  21  Sup.  Ct.  680;  G.  V.  B.  Min^ 

2  Jacksonville,    etc.    Ry.    Co.    v.  ing  Co.  v.  First  Sat.  Bank,  95  Fed. 

Hooper,  160  U.  S.  514  (headnote  in-  23;    36  C.  C.  A.  633  (notwithstand- 

adequate) ;    16  Sup.  Ct.  379.  ing    by-laws    reciuiring    the    regular 

'  "Although  it  be  a  Corporation  corporate  seal  to  be  affixed), 

that  doth  make  tlie  deed,  yet  they  Cf.  Stehhins  v.  Merritt,  10  Cush. 

may  seale  with  any  other  seal  be-  (Mass.)    27,    34-35;     South    Baptist 

sides  their  common  seale,  and  the  Soc.  v.  Clapp,  35  Barb.  (N.  Y.)  35, 

deed    never    tlie    worse."      Touch-  49. 

stone  of  Common  Assurances,  57.  But  see  Savings  Bank  v.  Davis, 

Accord:    Bank  of  Middlebury  v.  8  Conn.  191. 

Rutland,  etc.  R.  R.  Co.,  30  Vt.  159;  *  Altschul  v.  Casey,  76  Pac.  1083; 

Tenney  v.  East  Warren  Lumber  Co.,  45  Oreg.  182. 

397 


§  482  CORPORATE    SEALS  [ChAP.  IX 

be  a  good  seal.'  But  when  a  corporation  has  a  regular  stamp 
for  its  corporate  seal,  does  any  officer  or  agent  who  has  authority 
to  affix  that  seal  also  possess  authority  to  adopt  some  other  seal, 
such  as  a  scroll,  as  the  seal  of  the  corporation  for  a  particular 
purpose  ?  Logically,  perhaps  he  does  not,  but  the  courts  at  this 
day  would  be  unlikely  to  hold  an  instrument  void  on  that  ground.^ 
The  circumstance,  however,  that  a  mere  printed  representation 
of  a  seal,  instead  of  an  impression  of  the  regular  corporate  seal  is 
annexed  to  a  paper  may  be  sufficient  evidence,  especially  when 
coupled  with  other  facts  tending  in  the  same  direction,  to  justify 
the  court  in  holding,  even  in  jurisdictions  where  a  scroll  is  a  good 
seal,  that  the  emblem  or  print  was  not  intended  as  a  seal.^ 

§  482.  Seal  mmt  he  adopted  as  Seal  of  Corporation  and  not 
as  Seal  of  Officer  or  Agent  affixing  it.  —  Of  course,  in  order  that 
a  corporation  may  be  bound  by  a  deed  as  a  party  thereto,  the 
seal  must  be  that  of  the  corporation,  and  must  have  been 
adopted  as  such  either  generally  or  for  that  particular  purpose. 
Hence,  if  the  private  seals  of  the  members  are  attached,  the 
instrument  is  not  the  deed  of  the  corporation.*  In  determining 
whether  the  seal  affixed  to  a  paper  is  to  be  deemed  the  seal  of 
the  corporation  or  of  the  agent  by  whom  the  instrument  was 
executed,  the  same  considerations  control  as  in  any  other  case  of 
principal  and  agent,  except  that  the  fact  that  a  corporation  has 
a  regular  seal  which  is  not  used  may  be  some  evidence  that  the 

'  i7oe  V.  Lee,  3  N.  So.  Wales  State  St.  Andrew's  Bay  Land  Co.,  4  Fla. 

Rep.  30.  200. 

=>  Sarmiento  v.  Davis  Boat  &  Oar  But  see  Taylor  v.  Heggie,  83  N. 

Co.,  105  Mich.  300;    63  N.  W.  205;  Car.  244;    Johnston  v.   Crawley,  25 

55  Am.  St.  Rep.  446.  Ga.  316  (headnote  inadequate);    71 

But  see  Savings  Bank  v.  Davis,  8  Am.  Dec.   173. 

Conn.  191,  206.  Cf.  Ismon  v.  Loder,  97  N.  W.  769; 

'  Jackson  v.  Myers,  43  Md.  452;  135  Mich.  345;    Harvey  v.  Board  of 

Mvih  V.  Dolfield,  43  Md.  466.  Trustees,  142  Cal.  391 ;   75  Pac.  1086; 

See  infra,  §  485.  District  of  Columbia  v.  Camden  Iron 

*  Bank  of  Columbia  v.  Patterson,  Works,  181  U.  S.  453;  21  Sup.  Ct.  680. 

7  Cranch  299,  304  (headnote  inade-  In  Wiley  v.  Board  of  Education, 

quate);     Randall    v.    Van    Vechten,  11  Minn.  371,  the  court  held  an  aver- 

19    Johns.    (N.    Y.)    60;     10    Am.  ment   that   the   corporation   by   its 

Dec.     193;     Tippets    v.    Walker,    4  duly  elected  and  qualified  officers  un- 

Mass.     595;     BrirUey    v.    Mann,    2  der  their  hands  and  seals  had  exe- 

Cush.    (Mass.)    337;    48    Am.    Dec.  cuted  an  instrument  to  be  on  de- 

669;    Osborne   v.    Tunis,    25   N.    J.  murrer    a    sufficient    allegation    of 

Law  633;   Taft  v.  Brewster,  9  Johns,  execution  by  the  corporation;    sed 

334;   6  Am.  Dec.  280;    Mitchell  v.  qiuiere  de  hoc. 

398 


§  4G9-§  492]  AUTHORITY   TO    AFl'IX  §  483 

seal  actually  affixed  was  rather  to  be  deemed  that  of  the  agent- 
Moreover,  tiie  mere  fact  that  an  impression  of  the  corporate  seal 
was  made  opposite  the  name  of  each  agent  who  signed  the  paper 
on  the  company's  behalf  does  not  show  that  the  seal  was  inteiifled 
as  the  private  seal  of  the  agents  rather  than  the  common  seal  of 
the    corporation.' 


§  483.  Authority  to  aflBx  Corporate  Seal  —  How  conferred.  — 
Since  a  corporation,  being  an  intangible  legal  entity,  cannot  act 
in  person,  necessarily  the  corporate  seal  must  be  attached  by 
agents.  If  the  rule  that  authority  to  affix  a  seal  must  itself  be 
under  seal  were  strictly  applied  to  corporations,  no  corporation 
could  execute  a  specialty.  Being  an  imaginary  entitv,  it  could 
not  in  proper  person  affix  its  seal  either  to  the  instrument  itself 
or  to  a  power  of  attorney  to  execute  the  instrument.  To  be  sure, 
it  might  be  held  that  the  affixing  of  the  seal  at  a  meeting  of  the 
directors  or  shareholders  should  be  deemed  equivalent  to  execu- 
tion by  the  corporation  in  person,  while  sealing  by  inferior  agents 
should  require  a  sealed  power  of  attorney ;  and  to  this  effect  are 
some  English  authorities.-  But  this  distinction  has  fortunately 
never  been  taken  in  America ;  and  accordingly,  the  law  has  been 
generally  laid  down  that  authority  to  affix  a  corporate  seal  may 
be  conferred  by  parol  ^  or  implied  from  the  practice  of  the 

*  Jackson    ex    dem.    Donally    v.  fact  it  was  made  outside  by  virtue  of 

Walsh,  3  Johns.  (N.  Y.)  226.  a  letter  of  attorney.     It  is  much  to 

Cf.  Johnston  v.  Crawley,  25  Ga.  be  regretted  that  Mr.  Norton  in  his 

316;  71  Am.  Dec.  173;  City  of  Kan-  recent  valuable  treatise  should  have 

SOS  v.  Hannibal,  etc.  R.  R.  Co.,  11  lent  the  weight  of  his  authority  to 

Mo.    180;     Tenney   v.    East   Warren  the  view  that  a  deed  of  a  corporation 

Lumber  Co.,  43  N.  H.  343.  must  be  executed  either  at  a  corpo- 

'  Cf.  Mayor,  etc.  of  Merchants  rate  meeting  or  in  pursuance  of  a 
of  Staple  V.  Bank  of  England,  21  Q.  sealed  power  of  attorney.  Norton 
B.  D.  160,  165-166,  per  Wills,  J.,  on  Deeds,  13.  Even  Mr.  Norton  ad- 
citing  Brooke's  .\br.  Tit.  "Corp."  pi.  mits  that  by  custom  deeds  of  trad- 
72,  and  Y.  B.,  9  Edw.  IV,  p.  39,  which  ing  corporations  may  be  executed 
last  mentioned  autliority  hardly  and  delivered  in  pursuance  of  parol 
bea»-s  out  the  inferences  drawn  from  authority. 

it,  but  relates  rather  to  the  question         ^  Hopkins   v.   Gallatin    Turnpike 

whether  a  deed  of  a  convent  is  good,  Co.,4  Humph.  (Tenn.) 403, 411 ;  Beck- 

which  on  its  face  purports  to  have  with  v.  Windsor  Mfg.  Co.,  14  Conn, 

been  made  in  the  convent,  when  in  594 ;    Hutchins   v.    Byrnes,   9   Gray 

399 


§  484  CORPORATE    SEALS  [ChAP.  IX 

company.^  The  question  in  each  case  is  whether  the  officer  or 
agent  by  whom  the  instrument  was  executed  had  in  fact  authority 
to  affix  the  seal.-  It  is  immaterial  how  that  authority  was  con- 
ferred, whether  expressly  or  impliedly,  orally  or  in  wi-iting.  A 
consequence  of  this  rule  is  that  any  agent  who  has  authority  to 
affix  the  seal  may  fill  up  blanks  in  a  deed  after  it  has  been  sealed.* 
^Moreover,  where  a  person  without  authority  affixes  the  corporate 
seal,  his  act  may  be  ratified  by  parol  or  by  mere  acquiescence  so 
as  to  render  the  instrument  binding  upon  the  corporation  as  its 
deed/  An  act  of  incorporation  providing  that  the  members  of 
the  company  may  "order  and  dispose  of  the  custody  of  their 
common  seal  and  the  use  and  application  thereof"  merely 
empowers  them  to  make  rules  for  the  custody  of  the  seal,  and 
does  not  require  their  concurrence  in  each  special  act  of  sealing, 
or  restrain  them  from  delegating  to  an  agent  authority  to  affix 
the  seal.^  Indeed,  a  statute  specially  pointing  out  a  mode  of  con- 
ferring authority  to  affix  the  corporate  seal  will  if  possible  be 
construed  as  directory  so  as  not  to  exclude  any  method  that 
would  have  been  good  at  common  law.^ 

§484.  Whether  Deed  of  a  Corporation  requires  DeUvery. — 
There  is  an  ancient  legal  tradition  that  a  deed  of  a  corporation 
needs  no  delivery,  but  is  complete  on  the  affixing  of  the  common 
seal.''    This  tradition  has  been  repeated  in  a  number  of  modern 

(Mass.)   367;     Zihlman   v.    Cumber-  Keil,  20  Minn.  531.     See  also  infra, 

land  Glass  Co.,  74  Md.  .303;   22  Atl.  §  491. 

271  (oral  authority  sufficient).  '  The  first  appearance  of  this  tra- 

Cf.   Uvalde  Paving  Co.  v.  City  of  dition   in    our    books,  so  far  as  the 

New  York,  99  N.  Y.  App.  Div.  327;  writer  is  aware,  is  found  in  the  argu- 

91  N.  Y.  Supp.  131.  ment  of  counsel  for  the  defendant  in 

*  Barned's  Banking  Co.,  3  Ch.  Willis  v.  Jermin,  Cro.  Eliz.  167. 
105;  Hutchins  v.  Byrnes,  9  Gray  The  argument  did  not  prevail  with 
(Mass.)  367.  the  court,  and  the  supposed  distinc- 

'  As  to  presumptions  of  author-  tion  between  deeds  of  corporations 

ity  to  affix  corporate  seal,  see  infra,  and  of  natural  persons  was  expressly 

§  490.  disapproved  by  at  least  one  of  the 

*  Barned's  Banking  Co.,  3  Ch.  judges.  The  headnote  to  the  modern 
105.  editions   misrepresents   the  position 

*  Howe  V.  Keeler,  27  Conn.  538;  of  the  court.  See  another  report  of 
St.  James  Parish  v.  Newhuryport,  the  case  in  2  Leon.  97.  The  same 
e<c.  72. /E.  Co.,  141  Mass.  500;  6  N.  E.  contention  was  advanced  by  the 
749.  counsel  for  the  defendant  in  the  Case 

*  HUl  V.  Manchester,  etc.  Water  of  the  Deane  and  Chapter  of  Femes, 
Works  Co.,  5  B.  &  Ad.  866,  874.  Davis  42,  44:  "Et  le  fait  de  un  Cor- 

'  Bason  v.  King's  Mountain  Min-  poration  ne  besoigne  delivery,  come 
ing  Co.,  90  N.  Car.  417;    Morris  v.    le  fait  de  un  natural  person,  mes  le 

400 


§  469-§  492]  NECESSITY    FOR    DELIVERY  §  484 

English  dicta.'  Perhaps,  it  originated  in  the  time  when  the  mere 
use  of  a  person's  seal  even  without  his  consent  and  a  fortiori 
without  delivery  was,  even  in  the  case  of  an  individual,  sufiicient 
to  make  a  completed  deed,  being  kept  alive  by  a  notion  that  a 
corporation,  an  intangible  entity,  was  incapable  of  delivering  a 
paper.  However  this  may  be,  certain  it  is  that  in  modern  times 
the  supposed  doctrine  has  no  basis  in  reason.  For  the  law  has 
long  been  settled  that  the  mere  affixing  of  the  corporate  seal 
without  the  authority  of  the  company  or  its  duly  constituted 
officers  or  agents  does  not  make  a  paper  the  deed  of  the  corpora- 
tion,^ so  that  the  mere  presence  of  the  seal  on  the  document  has 
no  longer  any  talismanic  virtue.  Indeed,  the  authorities  now 
agree  that  the  doctrine  that  no  delivery  is  essential  applies  only 
when  the  intent  is  that  the  instrument  shall  operate  as  a  com- 
pleted deed  from  the  affixing  of  the  seal  without  further  cere- 
mony.^ Thus  qualified,  the  supposed  doctrine  is  not  merely 
illogical  in  its  relation  to  other  parts  of  the  modern  law  of  sealed 
contracts,  but  is  also  without  historic  justification ;  and  accord- 
ingly it  is  submitted  that  the  whole  doctrine  should  be  thrown 
overboard,  and  deeds  of  corporations  placed  on  the  same  footing 
with  respect  to  the  necessity  for  delivery  as  the  deeds  of  in- 

apposition  del  common  Scale  done  tain  Mining  Co.,  90  N.  Car.  417,  421 

perfection  a  ceo  solement."     It  will  (semble). 

be  noticed  that  jvidscinent  was  given  But  see  Mayor,  etc.  of  Merchants 
for  the  plaintiff;  but  the  passage  of  the  Staple  v.  Bank  of  England,  21 
quoted  has  often  been  referred  to  Q.  B.  D.  160,  165-166  (where  Wills, 
^\•ith  approval  as  though  it  were  the  J.,  said  that  a  deed  of  a  corporation 
decision  of  the  court.  requires  delivery  and  that  the  de- 
See  Roll.  Abr.  Tit.  Fait  (I),  p.  23,  livery  must  take  place  at  a  meeting 

I.  50;   4  Cruise  Dig.  tit.  XXXII.  ch.  of  the  corporation  unless  there  be  a 

II,  §  70;  Grant  on  Corporations,  63,  power  of  attorney  to  effect  the 
147-148;    Angell  &  Ames  on  Corps.,    delivery). 

ch.  VII,  §  9;  4  Thomp.son,  Comm.  on  ^  Anonymous,  12  Mod.  423,  Case 

Corps.,  §  5093.     The  supposed  doc-  728,  per  Holt,  C.  J.;    Case   of   the 

trine,  however,  has  never  been  made  Deane  and  Chapter  of  Femes,  Davis 

the  basis  of  an  actual  decision  in  any  43 ;   Mayor,  etc.  of  Merchants  of  the 

reported    case.      Moreover,    in    the  Staple  v.  Bank  of  England,  21  Q.  B. 

time  of  Edward  IV,  it  seems  to  have  D.  160. 

been  assumetl  that  the  deed  of  a  cor-  '  Derby  Canal  v.  Wilmot,  9  East 

poration,  like  the  deed  of  a  natural  360;    Gartside  v.  Silkstone,  etc.  Co., 

person,  requires  delivery.     Y.  B.  9  21  Ch.  D.  762,  768. 

Edw.  IV,  p.  39.  Cf.   Willis  v.  Jermin,  Cro.   Eliz. 

'  Derby  Caiial  v.  Wilmot,  9  East,  167;  s.  c,  2  Leon.  97;  Anonymous, 

360;    Gartside  v.  Silkstone,  etc.  Co.,  1  Ventr.  257;    Good  v.  Ash,  3  Keb. 

21  Ch.  D.  762,  768.  307. 

See  also  Bason  v.  King's  Moun- 
voL.  I.  —  26  401 


§  485  CORPORATE   SEALS  [ChAP.  IX 

di%nduals.  That  this  result  would  be  reached  in  the  United 
States  there  can  be  little  or  no  doubt,^  and  indeed  even  in 
England  it  appears  to  have  been  virtually  attained  in  the  latest 
case  upon  the  subject.^  As  the  time-honored  doctrine  is  sup- 
ported only  by  a  concatenation  of  dicta  originating  in  an  argu- 
ment of  a  losing  counsel,  the  courts  need  hesitate  the  less  in 
putting  the  law  on  a  modern  basis.^ 

§  485- §  486.     Effect  of  Use  of  Seal  by  a  Corporation. 

§  485.  Instrument  under  Corporate  Seal  a  Specialty.  —  The 
effect  of  attaching  a  seal  to  an  instrument  executed  by  a  corpora- 
tion is  precisely  the  same  as  if  the  maker  had  been  an  individual.* 
To  be  sure,  an  idea  is  prevalent  that  the  affixture  of  the  corporate 
seal  is  merely  a  corporation's  way  of  signing  its  name;  but  this 
notion,  it  is  submitted,  is  not  correct.  The  distinction  between 
parol  contracts  and  instruments  under  seal  is  not  obhterated  in 
the  case  of  corporations.  A  contract  under  the  corporate  seal  is 
a  specialty:  the  form  of  action  thereon,  where  forms  of  action 
still  exist,  must  be  debt  or  covenant  and  not  assumpsit ;  ^  and 
the  statute  of  Umitations  is  that  applicable  to  sealed  instead  of 
unsealed  contracts.  It  is  true  that  bonds  and  debentures  under 
the  corporate  seal  are  negotiable  while  the  presence  of  a  seal  is 
fatal  to  the  negotiability  of  an  individual's  note  or  bill.  But  this 
distinction  properly  rests  on  the  custom  of  merchants,  which 

*  Cf.  Holmes  v.  Salamanca  Gold,  *  Clark  v.  Farmers  Mfg.  Co.,  15 

etc.  Co.  (Cal.),  91  Pac.  160  (where  a  Wend.  (N.  Y.)  256. 

deed  executed  by  a  corporation  was  *  Porter  v.  Androscoggin,  etc.  R. 

held  ineffective  for  want  of  delivery  R.  Co.,  37  Me.  349;    Brown  v.  Com>- 

but  without  discussion  of  the  point  mercial  Fire  Ins.  Co.,  21  App.  D.  C. 

now     under    consideration).       See,  325,  335  (semble);    Marine  Ins.  Co. 

however,  dictum  in  North  Carolina  v.  Young,  1  Cranch  332. 

case  cited  supra,  p.  401,  n.  1.  But  see  Levering  v.  Mayor,  etc.  of 

^  Mowatt  V.  Castle  Steel,  etc.  Co.,  Memphis,   7   Humph.    (Tenn.)   553. 

34  Ch.  D.  58,  62.  It  is  submitted  that  this  case  should 

Cf.   Willis  V.  Jermin,  Cro.  Eliz.  be  supported  upon  the  ground  that 

167,  per  Gawdy,  J. ;  s.  c,  2  Leon.  97.  from  the  nature  of   the  paper  —  a 

^  See    Norton    on    Deeds,    9-11,  mere  letter  accepting  a  parol  offer 

where  the  learned  author  carefully  —  the  court  can  see   that  the  so- 

discusses  the  English  authorities  and  called  seal  affixed  thereto  was  really 

reaches  the  conclusion  that  the  sup-  not  intended  as  a  seal, 

posed  distinction  between  deeds  of  Cf.  Brown  v.  Commercial  Fire  Ins. 

corporations  and  deeds  of  Individ-  Co.,  21  App.  D.  C.  325,  335-337. 
uals  is  baseless  and  should  not  be 
applied  by  the  courts. 

402 


§  469-§  492] 


EFFECT  OF  SEAL 


§486 


treats  such  securities  when  issued  by  corporations  as  negotiable.* 
In  spite  of  their  negotiability,  they  are  still  specialties.  It  is  also 
true  that  in  some  cases  the  presence  of  a  printed  representation 
of  a  seal  upon  a  paper  executed  by  a  corporation,  even  in  juris- 
dictions where  a  scroll  is  a  good  seal,  has  l)een  held  not  to  have 
the  effect  of  making  the  instrument  a  specialty.-  But  the.se  cases 
should  be  supported  upon  the  ground  that  the  symbol  or  emblem 
was  never  intended  for  the  seal  of  the  company,  and  do  not 
establish  that  an  instrument  under  the  corporate  seal  can  be 
treated  as  other  than  a  specialty. 

§  4S0.  Whether  Sealed  Contract  of  a  Corporation  requires  a 
Consideration.  —  A  contract  under  seal  of  cour.se  re(juires  no 
consideration  to  support  it,  and  this  rule  applies  to  the  sealed 
contracts  of  corporations  as  well  as  those  of  individuals.^  To 
be  sure,  contracts  without  con.sideration  are  generally  ultra 
vires,  and  the  presence  of  the  seal  does  not  preclude  inquiry  into 
the  question  whether  or  not  the  contract  was  within  the  com- 
pany's powers.*  A  sealed  contract  of  a  corporation  is  neither 
more  nor  less  binding  because  of  the  want  of  consideration :   if 


»  Infra,  §  1734,  §  1735. 

^  Jackson  v.  Myers,  43  Md.  452; 
Muth  V.  Dol field,  43  Md.  466;  Met- 
ropolitan Life  Ins.  Co.  v.  Anderson, 
79  Md.  375,  379;    29  Atl.  606. 

With  perhap.s  doubtful  propriety, 
the  same  conclusion  has  been  reached 
where  the  in.stiiiment  bears  an  im- 
press of  the  regular  corporate  seal 
but  does  not  in  the  body  thereof 
purport  to  be  under  seal.  Ham- 
burger V.  Miller,  48  Md.  317,  323; 
Bank  v.  Railroad  Co.,  5  S.  Car.  156; 
22  Am.  Rep.  12;  Weeks  v.  Ksler,  68 
Hun  (N.  Y.)  518  ;  22  N.  Y.  Supp. 
54  (proceeding  at  least  in  part  upon 
the  ground  that  the  seal  was  not 
proved  to  have  been  affi.xed  by  due 
authority). 

Cf.  Brown  v.  Commercial  Fire  Ins. 
Co.,  21  App.  D.  C.  325,  335-337 
(where  an  impression  of  a  seal  in  the 
upper  corner  of  tlie  instrument  over 
certain  figures  was  hcUl  to  have  been 
intended  to  protect  the  figures  from 
alteration  and  not  as  a  true  seal) ; 
Mackay   v.   St.   Mary's   Church,    15 


R.  I.  121;  23  Atl.  108;  2  Am.  St. 
Rep.  881  (where  a  "paper  seal,"  not 
the  regular  corporate  seal,  was  when 
attached  to  a  promissory  note  held 
"a  piece  of  unnecessary  ornament"). 

^  Royal  Bank  v.  Grand  Junction 
R.  R.  Co.,  100  Ma.ss.  444,  445  (head- 
note  inadequate) ;  97  Am.  Dec.  115; 
Brooks,  Jenkins  &  Co.  v.  Mayor,  etc. 
of  Torquay  (1902),  1  K.  B.  601,  607 
(headnote  inadequate). 

Cf.  Sturtevants  v.  City  of  Alton,  3 
McLean,  393,  395. 

*  Cf.  Mayor,  etc.  of  Xorivich  v. 
Norfolk  Ry.  Co.,  4  E.  &  B.  397,  443- 
444.  As  the  contract  is  under  the 
corporate  seal  and  on  its  face  bind- 
ing upon  the  company,  it  would  seem 
that  the  burden  of  proving  that  the 
contract  was  without  consideration 
and  therefore  ultra  vires  should  rest 
upon  the  corporation.  But  see  1 
Morawetz  on  Priv.  Corps.,  2d  ed., 
§241,  where  tlie  learned  author 
argues  in  support  of  a  contrary  view 
on  this  point. 


403 


§  487  CORPORATE    SEALS  [ChAP.  IX 

ultra  vires,  it  is  according  to  the  strict  doctrines  void,  although 
there  be  a  consideration ;  and  if  it  be  not  ultra  vires,  it  is  vaUd 
though  there  be  no  consideration.  The  lack  of  consideration  is 
merely  one  circumstance  usually  tending  to  make  the  contract 
ultra  vires;  but  it  does  not  necessarily  do  so.  For  instance,  a 
bond  of  a  charitable  corporation  issued  gratuitously  to  a  needy 
person  would  no  doubt  be  enforceable.  So,  there  may  be  many 
cases  in  which  a  promise  under  seal  even  by  a  business  corpora- 
tion is  not  ultra  vires  although  without  such  consideration  as 
would  be  technically  necessary  to  support  an  assumpsit.' 


§  487- §  490.     Proof  of  Execution   of  Deeds   of   Corporations. 

§  487.  How  Seal  proved  to  be  Corporate  Seal.  —  In  order  to 
prove  an  instrument  to  be  the  deed  of  a  corporation,  the  seal 
attached  thereto  must  be  proved  to  be  the  seal  of  the  corporation.^ 
The  most  irrefragable  proof  that  a  seal  attached  to  a  paper  is 
indeed  the  seal  of  the  corporation  would  be  testimony  that  the 
impression  w^as  made  from  the  die  kept  by  the  company  for  use 
as  its  seal  in  pursuance  of  a  formal  resolution  of  directors  or 
shareholders.  Such  proof,  however,  is  by  no  means  necessary. 
Whether  or  not  a  mark,  impression,  or  affixture  can  be  deemed  a 
seal  is  a  question  for  the  court  upon  inspection  of  the  instru- 
ment ;  ^  but  whether  the  seal  is  the  seal  of  the  corporation  is  a 
question  w^hich,  to  be  sure,  may  sometimes  be  determined  in  the 
absence  of  other  evidence  from  the  state  of  the  paper  itself  but 
upon  which  parol  evidence,  such  as  the  testimony  of  a  person 
familiar  with  the  motto  or  device  of  the  regular  seal,  is  clearly 
admissible.^    In  some  cases,  therefore,  whether  or  not  a  seal,  be 

*  Brooks,  Jenkins  &  Co.  V.  Mayor,  Co.,  25  Pa.  St.  303  (semble);    Chew 

etc.  of  Torquay  (1902),  1  K.  B.  601,  v.   Keck,  4  Rawle   (Pa.)    103;    Grif- 

607-608  (headnote  inadequate).  fing  Bros.  Co.  v.  Winfield  (Fla.),  43 

2  Moises  V.  Thornton,  8  T.  R.  303 ;  So.  687. 
Foster  v.  Shaw,  7  S.  &  R.  (Pa.)  156;         But  see  Canandarqua  Academy  v. 

Leazure  v.  Hillegas,  7  S.  &  R.  (Pa.)  McKechnie,  19  Hun  (N.  Y.)  62. 
313,  318;    Jackson  ex  dem.  Martin         *  Jacksonville,    etc.    Ry.    Co.    v. 

v.  Pratt,  10  Johns.  (N.  Y.)  381;   Den  Hooper,  160  U.  S.  514;    16  Sup.  Ct. 

ex  dem.  Tours  v.  Vreelandt,  2  Halst.  379. 

(N.J.)  .381;  Mannv.  Pentz,2Ssindf.  *  Leazure  v.  Hillegas,  7  S.  &  R. 

Ch.  (N.  Y.)  257;    Crossman  v.  HUl-  (Pa.)  313;  Den\.  Vreelandt,  2  B.a\st. 

town  Turnpike  Co.,  3  Grant's  Cas.  (N.  J.)  352;    Doe  King's  College  v. 

(Pa.)  225;    Farmers',  etc.  Turn-pike  Kennedy,  5  Up.  Can.  Q.  B.  577. 

404 


§  469 -§  492]  PROOF  of  execution  §  488 

it  a  formal  seal  or  a  mere  scroll,  is  the  seal  of  the  corporation 
must  be  left  to  the  jury.'  Where  a  deed  purjjortinc^  to  be  sealed 
with  a  corporate  seal  is  oll'ered  in  evidence,  the  jury  cannot  be 
permitted  to  judge  of  the  genuineness  of  the  seal  by  comparison 
with  a  similar  seal  afHxed  to  another  deed  which  had  been 
admitted  in  evidence  witiiout  objection. - 

§  4S8.  Signature  and  Counter-signature  by  Officers.  —  In  order 
to  aid  in  proving  the  seal  to  be  the  seal  of  the  corporation,  it  is 
customary  for  some  ofHcer,  usually  the  president,  to  sign  the 
paper,  and  for  some  other  officer,  usually  the  secretary,  to 
countersign  the  same.  Officers  so  signing  the  deed  do  not 
become  attesting  witnesses,^  but  sign  merely  for  the  purpose  of 
authentication. .  Thus,  where,  in  pursuance  of  the  usual  practice 
of  the  company,  its  seal  is  affixed  to  a  bill  of  sale  in  the  presence 
of  two  directors  who  subscribe  their  signatures  followed  by  the 
word  "  Directors,"  they  are  not  attesting  witnesses  within  the 
meaning  of  a  statute  requiring  the  addresses  of  attesting  wit- 
nesses to  be  given.*  So,  where  the  deed  bears  the  subscription 
"Sealed  by  order  of  the  directors.  J.  K.,  Secretary,"  J.  K.  is  not 
an  attesting  witness,  and  therefore  the  execution  may  be  proved 
without  calling  him  as  a  witness.^  Of  course,  counter-signature 
by  the  secretary,  although  customary,  is  not  essential  to  the 
validity  of  the  deed,   even   if    the    by-laws    of    the    company 

*  Grossman  v.  Hilltotvn  Turn-  as  the  evidence  that  he  is  the  person 
pike  Co.,  3  Grant's  Cas.  (Pa.)  225.        who  has  affixed  the  common  seal  to 

-  Chewv.  Keck,  4  Rawle  (Pa.)  163.  the  same,  stands  also  in  the  charac- 

*  In  addition  to  authorities  cited  ter  of  a  subscribing  witness  to  the 
below,  see  Norton  on  Deeds,  21.  execution  of  the  deed  by  th.e  corpora- 

*  Shears  v.  Jacobs,  L.  R.  1  C.  P.  tion");  Bowers  v.  Hechtman.  45 
513;  Dejfdl  v.  White,  L.  R.  2  C.  P.  Minn.  238,  241-242;  47  N.  W.  792 
144.  (where    the    court,    although    citing 

*  Doe  ex  dem.  Bank  of  England  v.  with  approval  the  dictum  of  Chan- 
Chambers,  4  Ad.  &  El.  410.  cellor  Walworth  quoted  above,  held 

But  see  Coe  v.  Xetv  Jersey  Mid-  that  the  secretary  who  counter- 
mand %.  Co.,  31  N.  J.  Eq.  105,  119-  signed  the  instrument  was  not  a 
120  (where  proof  by  affidavit  of  sec-  mere  attesting  witness  and  therefore 
retary  was  lield  competent  as  proof  was  competent  to  make  a  statutory 
by  an  attesting  witness  although  an-  affidavit  to  the  execution  of  the 
other  person  signed  expressly  as  deed);  Johnson  v.  Bush.  3  Barh.Ch. 
attesting  witness);  Lnvett  v.  Steam  (N.  Y.)  207,  239  (where  Chancellor 
Saw  Mill  As.-i'n,  6  Paige  (N.  Y.)  54,  Walworth  declared  that  the  secre- 
60  (where  Chancellor  Walworth  said:  tary  who  countersigned  the  instru- 
"The  officer  of  the  corporation  en-  ment  was  "merely  an  attesting 
trusted  with  its  common  seal,  and  witness"), 
who  subscribes  his  name  to  the  deed 

405 


§  489  CORPORATE   SEALS  [ChAP.  IX 

require  it/  —  at  any  rate,  not  unless  the  other  party  be 
proved  to  have  notice  of  the  by-laws.  If,  however,  a  statute 
require  deeds  of  corporations  to  be  countersigned  or 
''attested"  by  the  secretary,  it  has  been  held  that  the  record 
of  a  deed  not  so  authenticated  will  not  operate  as  constructive 
notice.^ 

§  4S9.  Of  the  Presumption  that  Seal  attached  to  Instrument 
dxily  signed  on  behalf  of  Corporation  is  Seal  of  Corporation.  —  If 
an  instrument  in  the  body  thereof  contemplates  sealing  by  the 
corporation,  and  is  proved  to  have  been  subscribed  on  behalf  of 
the  corporation  by  its  president  or  other  duly  qualified  officer, 
and  if  a  seal  is  affixed  thereto  purporting  to  be  the  seal  of  the 
corporation,  it  will  be  presumed  genuine  in  the  absence  of 
evidence  to  the  contrary.^  Even  if  under  circumstances  similar 
to  the  above  the  seal  is  shown  to  be  not  the  regular  corporate 
seal  but  a  mere  wafer  or  even  (in  jurisdictions  where  a  scroll 
may  be  used  as  a  seal)  a  scroll  or  printed  emblem,  it  will  never- 
theless be  presumed  to  have  been  adopted  pro  hac  vice  as  the 
seal  of  the  corporation.*  This  presumption,  however,  will  not  be 
indulged,  it  seems,  where  from  the  nature  of  the  instrument  or 
from  other  circumstances  the  court  infers  that  the  document 
was  not  intended  to  be  under  seal :  ^  in  such  cases,  the  printed 
device  or  representation  of  a  seal  will  be  presumed  to  be  rather  a 

»  Smith  V.  Smith,  62  111.  493.  Pick.  (Mass.)  417,  428;  City  of  Kan- 

'  Randall     Co.     v.     Glendenning  sas  v.  Hannibal,  etc.  R.  R.  Co.,  77 

(Okl.),  92  Pac.  158.  Mo.    180;     Stebbins    v.    Merritt,    10 

*  Susquehanna  Bridge,  etc.  Co.  v.  Cush.  (Mass.)  27,  34-35  (headnote 
General  Ins.  Co.,  3  Md.  305;  56  Am.  inadequate);  Tenney  v.  East  War- 
Dec.  740;  Phillips  v.  Cofjee,  17  111.  ren  Lumber  Co.,  43  N.  H.  343;  Ben- 
154;  63  Am.  Dec.  357;  Woodman  bow  v.  Cook,  115  N.  Car.  324;  20  S. 
V.  York,  etc.  R.  R.  Co.,  50  Me.  549;  E.  453;  44  Am.  St.  Rep.  454;  Elli- 
W agg- Anderson  Woolen  Co.  \.  Lesher  son  v.  Branstrator,  54  N.  E.  433; 
<fc  Co.,  78  III.  App.  678;  Chicago,  etc.  153  Ind.  146;  Griffing  Bros.  Co.  v. 
R.  R.  Co.  V.  Levns,  53  Iowa.  lOl;  4  Winfield  (Fla.)  43  So.  687,  689 
N.  W.  842.  (headnote  inadequate). 

Cf.  City  Council  v.  Jane  Moore-  Cf.   Grossman  v.   Hilltown  Turn- 
head,  2    Rich.   Law    (S.  Car.)   430;  pike  Co.,  3  Grant's  Cas.  (Pa.)  225 
Norton  on  Deeds,  21.  Gashmiler  v.  Willis,  33  Cal.   11;  91 

But  see  Moises  v.  Thornton,  8  T.  Am.  Dec.  607. 

R.   303;    Mann  v.   Pentz,  2  Sandf.  *    Jackson  v.  Myers,  43  Md.  452 

Ch.  (N.  Y.)  257.  Muth  v.  Dolfield,  43  Md.  466;    Met- 

*  Jacksonville,  etc.  Ry.  Co.  v.  ropolitan  Life  Ins.  Co.  v.  Anderson 
Hooper,  160  U.  S.  514,  518  (head-  79  Md.  375,  379;  29  Atl.  606.  Cf, 
note  inadequate);  16  Sup.  Ct.  379;  supra,  §  485. 
Mill   Dam  Foundry   v,   Howey,   21 

406 


§  469- §  492] 


PROOF    OF    EXECUTION 


§490 


mere  ornament  or  to  be  used  much  as  stamped  letter-paper  is 
used  by  every  business  firm. 

§  490.  Proof  that  Seal  was  affixed  by  competent  Authority  — 
Presumptions.  —  In  order  that  an  instrument  shall  be  opera- 
tive as  the  deed  of  the  corporation,  not  merely  must  the  seal 
attached  be  proved  to  U'  tlie  seal  of  the  corporation  but  it  must 
also  have  l^een  affixed  by  proper  authority.'  Where  the  seal 
was  affixed  by  the  officer  having  due  custody  thereof,  the  pre- 
sumption is  that  it  was  affixed  by  competent  authority.'-  We 
have  seen  above  that  such  authority  need  not  be  itself  under 
seal.^  Accordingly,  evidence  that  a  certain  agent  was  accustomed 
to  affix  the  seal  is  if  uncontradicted  and  unexplained  sufficient 
evidence  of  authority  to  do  so.  Moreover,  if  the  seal  affixed  is 
shown  to  be  an  impression  from  the  regular  corporate  seal,  the 
presumption  is  that  it  was  affixed  by  competent  authority.*    The 


'  Koehler  v.  Black  River,  etc.  Co., 
2  Black  715.  See  supra,  §  471, 
§  472,  §  483. 

As  to  whether  the  corporation 
can  be  estopped  by  negligence  in  the 
custody  of  the  seal  from  denying 
that  it  was  affixed  by  competent 
authority,  see  Mayor,  etc.  of  Mer- 
chants of  the  Staple  v.  Bank  of  Eng- 
land, 21  Q.  B.  D.  160;  Bank  of  Ire- 
land V.  Trustees  of  Evans'  Charities, 
5  H.  L.  Cas.  389. 

'  Hopkins  v.  Gallatin  Turnpike 
Co.,  4  Humph.  (Tenn.)  403;  Fi- 
delity Ins.  Co.  V.  Shenandoah  Valley 
R.  Co.,  32  W.  Va.  244;  90  S.  E.  180; 
Ellison  V.  Bran^trator,  54  N.  E.  433 ; 
153  Ind.  146;  Bliss  v.  Harris  (Colo.), 
87  Pac.  1076  (secretary  the  lawful 
custodian  of  the  seal);  Watkins  v. 
Glas  (Cal.),  89  Pac.  840,  843;  Evans 
V.  Lee,  11  Nevada  194  (secretary 
custodian  of  seal) ;  Joel  T.  Bailey  & 
Co.  V.  Snyder  Bros.,  61  111.  App.  472 
(semble,  where  instniment  signed 
by  president  and  secretary) ;  Mid- 
lanphy  Sav.  Bank  v.  Schott.  135  111. 
655.  666  (bontls  and  mortgage  .signed 
by  secretary  and  by  president) ; 
Underhill  v.  Santa  Barbara,  etc.  Co., 
93  Cal.  300,  314  (seal  affixed  by 
secretary);   Nelson  v.  Spence  (Ga.), 


58  S.  E.  697  (deed  signed  by 
treasurer). 

Cf.  Jackson  v.  Campbell,  5  Wend. 
(N.  Y.)  572  (where  the  presumption 
was  rebutted);  Graham  v.  Partee 
(Ala.),  35  So.  1016;  139  Ala.  310; 
101  Am.  St.  Rep.  32  (where  the  name 
of  the  corporation  was  not  subscribed 
to  the  deed);  Bliss  v.  Kaweah,  etc. 
Co.,  65  Cal.  502  (where  the  pre- 
sumption was  rebutted);  Smith  v. 
Smith,  117  Mass.  72  (where  the  pre- 
sumption was  rebutted). 

3  Supra,  §  483. 

*  Berks  &  Dauphin  Turnpike 
Road  V.  Myers,  6  S.  &  R.  (Pa.)  12; 
9  Am.  Dec.  402;  Darnall  v.  Dickens, 
4  Yerg.  (Tenn.)  7;  Barned's  Bank- 
ing Co.,  3  Ch.  105,  116;  Mickey  v. 
Stratton,  5  Sawy.  475;  Indianapolis, 
etc.  R.  R.  Co.  V.  Morganstern,  103 
111.  149;  Leggett  v.  Xew  Jersey,  etc. 
Banking  Co.,  1  N.  J.  Eq.  541 ;  23  Am. 
Dec.  728;  Vanish  v.  Pioneer  Fuel 
Co.,  64  Minn.  175;  66  N.  W.  198; 
Gorder  v.  Plattsmouth.  etc.  Co.,  36 
Nebr.  548;  54  N.  W.  830;  Levering 
V.  Mayor,  etc.  of  Memphis,  7  Humph. 
(Tenn.)  553;  Miners'  Ditch  Co.  v. 
ZeUerbach,  §7  Cal.  543;  99  Am.  Dec. 
300;  Underhill  v.  Santa  Barbara,  etc. 
Co.,  93  Cal.  300,  314;  28  Pac.  1049; 


407 


§491 


CORPORATE  SEALS 


[Chap,  IX 


mere  fact  that  the  minutes  of  the  directors  contain  no  entry 
authorizing  the  affixing  of  the  seal  is  insufficient  to  overcome  this 
presumption.^ 


§  491.  Statutes  regulating  Method  of  Execution  of  Deeds  of 
Corporations.  —  Statutory  provisions  as  to  the  mode  of  execu- 
tion of  deeds  by  a  corporation  will  generally  be  construed  as 
directory  merely  and  will  therefore  not  exclude  any  method  of 
execution  that  might  have  been  valid  at  common  law."  Thus, 
a  statute  providing  that  the  president  and  two  other  members 
shall  sign  a  corporation's  deed  of  real  estate  does  not  invalidate 
a  deed  executed  in  any  manner  that  was  good  at  common  law.^ 

Nelson  v.  Spence  (Ga.),  58  S.  E.  697  picious    circumstances).     For   other 

(deed  signed  by  treasurer) ;   Graham  cases    where    the    presumption    was 

V.  Partee  (Ala.),  35  So.   1016;     139  rebutted,   see   Bliss   v.  Kaweah,  etc. 

Ala.    310;     101    Am.    St.    Rep.    32  Co.,  65  Cal.  502;   4  Pac.  507;    Blood 

(where  the  name  of  the  corporation  v.  La  Serena,  etc.  Co.,  113  Cal.  221, 

was   not   subscribed  to  the   deed);  225-226;    41    Pac.    1017;    45    Pac. 

Quackenhoss  v.  Globe,  etc.   Ins.  Co.,  252;      Cullman    Fruit    &     Produce 

111  N.  Y.  71;    69  N.  E.  223  (where  Ass'n,  155  Fed.  372,  376  (headnote 

the  instrument  was  signed  by  the  inadequate);    Gibson  v.  Goldthwaite, 

president     and     secretary);      Kirk-  1    Ala.    281,    294;    42    Am.    Dec. 

Patrick  v.  Eastern  Milling,  etc.  Co.  592. 

(1),  135  Fed.  144;  Degnan  v.  Thor-  As  to  what  constitutes  the  reg- 
oughman,  88  Mo.  App.  62  (semble) ;  ular  corporate  seal  within  the  mean- 
Bullen  V.  Milwaukee  Trading  Co.,  ing  of  this  rule,  see  Blood  v.  La 
85N.  W.  115;  109  Wise.  41;  Collier  Serena,  etc.  Co.,  113  Cal  221,  225;  41 
V.  Doe  ex  dem.  Alexander,  38  So.  Pac.  1017;  45  Pac.  252;  Raub  v. 
244;  142  Ala.  422;  Benedict  v.  Den-  Blairstown  Creamery  Ass'n,  56  N.  J. 
ToTi, 'Walker  Ch.  (Mich.),  336;  Deep-  Law  262;  28  Atl.  384  (holding  that 
water  Council  v.  Renick  (W.  Va.),  the  presumption  does  not  apply 
53S.  E.  552;  Watkins  v.  Glas  (Cal.),  where  a  common  paper  seal  is  at- 
89  Pac.  840;  WoodhUl  v.  Sullivan,  tached  although  the  instrument 
14  C.  P.  (Up.  Can.)  265,  273;  itself,  signed  by  the  president,  pur- 
Springer  v.  Bi^/ord,  55  111.  App.  198;  ported  to  be  under  the  corporate 
McDonald  v.  Chisholm,  131  III.  273;  seal). 

23   N.   E.   596;    Wigmore  on   Evi-         '  McKee  v.   Cunningham   (Cal.), 

dence,  §  2169.  84  Pac.  260,  262   (headnote  inade- 

Bu't  see  Backer  v.   United  States  quate);    Bliss  v.  Harris  (Colo.),  87 

Gas  Fixture  Co.,  84  N.  Y.  Supp.  149  Pac.  1076. 

(where  the  instrument  was  signed  by         ^  Cf.    supra,    §  476,    and    mfra, 

the  company's  treasurer);    Reed  v.  §   1070,  §   1475.     See  also  Bliss  v. 

Fleming,  102  111.  App.  668.  Harris  (Colo.),  87  Pac.  1076. 

Cf.   Koehler  v.   Black  River,   etc.  ^  Bason  v.  King's  Mountain  Min- 

Co.,  2   Black  715   (where  the  pre-  ing  Co.,  90  N.  Car.  417. 
sumption  was  overthrown  by  sus-         But  see  Allen  v.  Brown,  6  Kans. 

408 


§  409- §  492] 


ACK  NOW  LKDGM  ENT 


§492 


Where  a  statute  recjuires  certain  instFuments  to  be  signed  or 
subscribed,  it  is  not  necessary  that  the  corporate  name  be  sub- 
scribed, but  the  signature  of  the  officer  in  his  official  capacity  is 
sufficient.' 

§  492.  Acknowledgment  of  Deeds  of  Corporations.  —  Statutes 
providing  for  the  acknowledgment  of  deeds  usually  contain 
explicit  directions  as  to  the  acknowledgment  of  deeds  of  corpora- 
tions. Such  express  directions  ought,  as  a  matter  of  prudence, 
always  to  be  followed ;  but  probably  they  would  not  vitiate  any 
acknowledgment  that  would  have  been  good  if  no  such  provisions 
had  been  contained  in  the  statute.  At  any  rate,  if  the  statute 
contain  no  express  directions  as  to  the  mode  of  acknowledgment 
of  deeds  by  corporations,  the  directors  or  officers  who  are 
authorized  to  affix  the  seal  are  also  competent  to  acknowledge 
the  deed.^ 


App.  704;  50  Pac.  505;  Isham  v. 
Bennington  Iron  Co.,  19  Vt.  230. 

'  Ismon  V.  Loder  (Mich.),  97  N. 
W.  769. 

'  Gordon  v.  Preston,  1  Watts 
(Pa.)  385  (headnote  inadequate); 
26  Am.  Dec.  75 ;  Hopper  v.  Lovejoy, 
21  Atl.  298;  47  N.  J.  Eq.  573;  12 
L.  R.  A.  588;    Lovett  v.  Steam  Saw 


Mill  Ass'n,  6  Paige  (N.  Y.)  54; 
Bowers  v.  Hechtman,  45  Minn.  238, 
241-242;  47  N.  W.  792;  Kelly  v. 
Calhoun,  95  U.  S.  710;  Merrill  v. 
Montgomery,  25  Mich.  73  (instru- 
ment signed  by  both  president  and 
cashier  may  be  acknowledged  by 
cashier  only). 


409 


CHAPTER  X 

CAPITAL  AND  SHARES  —  CLASSES  OF  SHARES 

Section 
Nominal  or  share  capital  distinguished  from  borrowed  capital    .    .    .     493 

Nomenclature 494-498 

"Capital  stock,"  "stock,"  and  "stockholders,"  "shares"  and 

"shareholder" 494 

Further  consideration  of  English  distinction  between  "shares"   . 

and  "stock"      495 

Meaning  of  "  stock "  in  America 496 

Whether  "capital"  or  "capital  stock"  refers  to  nominal  or  to 

actual  capital 497 

Meaning  of  "corporators" 498 

Nature  of  shares _ .     499-506 

Distinction  between  one  share  and  another  share  of  same  kind  499-501 

Rule  in  England  —  numbering  of  shares 499 

Rule  in  America 500 

Authorities  maintaining  that  shares  are  legally  indis- 
tinguishable from  one  another 501 

A  share  not  an  interest,  legal  or  equitable,  in  company's  prop- 
erty —  whether  real  or  personal  estate 502 

A  share  not  a  sum  of  money  settled  in  trust  but  an  interest  in 

the  company 503 

A  share  as  a  chose  in  action 504 

Whether  shares    are  "goods,   wares,  and   merchandise,"    "per- 
sonal chattels,"  "goods  and  chattels,"  "securities,"  etc.    .     505 

Whether  trover  will  he  for  conversion  of  shares 506 

Nominal  or  share  capital  not  a  liability  of  company 507 

Rights  of  shareholders 508-516 

Primary  or  substantive  rights  —  classification 508 

References  to  full  discussions  of  these  primary  rights   .    .    .      609 

Secondary  or  ancillary  rights  of  shareholders 510-516 

Classification 510 

Right  to  registration  as  shareholder  in  company's  books.    .     511 

Right  to  a  share-certificate 512-516 

Definition  of  certificate 512 

Right  to  a  certificate  in  general 513 

Delay  in  issuing  certificate 514 

Remedies    for    refusal    or  improper    failure    to    issue 

certificate 515 

Loss  of  certificate 516 

Equality  of  shares 517-524 

Origin  and  nature  of  rule  of  equality  between  shares 517 

What  the  law  means  by  equality  between  shares      518-522 

Where  shares  are  of  different  nominal  or  par  values      .    .    .     518 

410 


f 


§  493-§  573]  SYNOPSIS 

Equality  of  shares  (continued)  Section 

Where  a  larger  proportion  paid  in  upon  some  shares  than 

others 519^21 

While    company  a    going    concern  —  calls    and    divi- 

denils,  interest  on  amount  paid  in  advance  of  calls     519 

In  winding-up  or  licjuidation      520-521 

Where  assets  are  more   than  sufficient  to  return 

paid-up  capital 520 

Where   assets  are   insufficient  to   return    paid-up 

capital 521 

Sliares  issued  at  a  premium 522 

Provisions  establishing  different  rules  of  equality 523-524 

Nature  of  such  provisions  —  distinguished  from  provisions 

creating  preferred  shares 523 

Construction  of  provisions      524 

Creation  of  preferential  rights 525-534 

Power  of  shareholders  to  create  preferential  rights  by  mutual 

agreement 525 

Nomenclature  —  "preferred  shares,"  "preference  shares,"  "com- 
mon shares,"  "ordinary  shares" 526 

Power  to  give  preference  to  some  shares  in  respect  of  divi- 
dends       527-530 

In  general      527 

Creation   of    preference    at    organization    of    company   by 

incorporation  paper  or  contemporaneous  by-laws  .    .     528 
Creation  of  preference  after  shares  have  been  issued  on  an 

equality 529 

Issue  of  new  shares  with  preference  over  previously  issued 

shares 530 

Statutes  authorizing  issue  of  preferred  shares 531 

What  words  sufficient  to  authorize  issue  of  preferred  shares 

carrying  sundry  preferences 532 

Injunction  against  unauthorized  issue  of  preferred  shares    .      533 
Effect  of  unwarranted  issue  of  preferred  shares  —  estoppel  — 

acquiescence      534 

Alteration  of  preferential  rights 535-539 

In  general      535 

Preference  created  by  incorporation  paper      536 

Effect  of  proceedings  for  reduction  of  capital 537 

Effect  of  consolidation  with  another  corporation 538 

Waiver  of  preference 539 

Status  of  preferred  shareholders  as  members  and  not  creditors  of  the 

company 540-548 

Preferred  shareholders  entitled  to  the  same  rights  and  subject 
to  same  liabilities  as  other  shareholders  except  as  other- 
wise provided 540 

Preferreil  shareholders  not  entitled  to  rights  of  creditors      ...      541 
What  circumstances  insvifficient  to  confer  on  preferred  share- 
holders the  rights  of  creditors 542 

Express  agreement  that  preferred  shareholders  shall  have  rights 

of  creditors  ultra  vires 543 

Further  explanation  of    the    rule    that    preferred    shareholders 

are  not  creditors 514 

411 


CAPITAL    AND    SHARES  [ChAP.  X 

Status  of  preferred  shareholders,  etc.  (continued)  Sectioa 

Sullivan  v.  Portland,  etc.  R.  R.  Co.,  94  U.  S.  806 545 

Tests  for  distinguishing  shareholders  from  creditors      546 

Statutes  conferring  on  preferred  shareholders  some  of  the  rights 

of  creditors 547 

"  Interest-bearing  stock " 548 

Extent  of  preferential    rights   as   between    preferred    and  deferred 

shareholders 549-571 

How  extent  of  preference  determined 549 

Preference  as  to  dividends      550-563 

What  words  will  confer  a  preference  as  to  dividends     .    .    .     550 

Whether  preference  is  cumulative 551 

Effect  of  cumulative  preference 552-553 

Whether  interest  is  claimable  on  arrearages  of  cumu- 
lative preferred  dividends 552 

Whether  payments  to  preferred  shareholders  in  excess 
of  cumulative  preferential  dividend  chargeable 

against  deficiency  in  subsequent  year 553 

Whether  profits  in  excess  of  preferential  dividend  are  divi- 
sible pro  rata  among   both  preferred  and  common 

shareholders 554 

Whether  preferred  shares  may  participate  in  profits  remain- 
ing after  paying  on  both  classes  of  shares  a  dividend 

equal  to  preferred  dividend 555 

Rights  where  both  classes  of  shares  are  to  participate 
equally  in  profits  remaining  after  paying  on 
both  classes  of  shares  a  dividend  equal  to  the 

preferential  dividend 556 

How  preferential    dividend    payable  —  gold,  cash,  bonds, 

etc 557 

Provisions  for  termination  of  preference      558 

Effect    of   cancellation    or   surrender  of  some  of   the  pre- 
ferred shares 559 

Discretion  of  company  as  to  withholding  preferential  divi- 
dend although  earned 560 

Remedies   of    preferred    shareholders    for    arbitrary    with- 
holding of  preferential  dividends 561 

Remedies  against  payment  of  dividends  to  deferred  share- 
holders in  fraud  of  preferential  rights 562 

When    deferred    shareholders    may  compel    declaration   of 

preferential  dividend 563 

Preference  as  to  repayment  of  capital  in  liquidation     .    .    .    .564-568 

Legality  of  such  a  preference 564 

When  preference  as  to  capital  exists  and  when  not   ....      565 
Attempts    to    confer   indirectly  a  preference  as  to  capital 

upon  shares  not  entitled  thereto 566 

What   funds    regarded    as    capital  and  what  as  profits  in 

winding-up 567 

Whether  preferred  shareholders  are  entitled  in  liquidation 
to  "interest"  from  the  time  of  cessation  of  business 

in  lieu  of  preferential  dividend 568 

Preference  as  to  distribution  of  new  shares  upon  an  increase  of 

capital 569 

412 


§  493-§  573]  NOMENCLATURE  §  494 

Extent  of  preferentiiil  ri<?lits,  etc.  (continued)  Section 

Preference  as  to  voting-rights 570 

Preference  as  to  liability  to  creditors 571 

Consequences  of  distinction  between  preferred  and  deferred  shares 

upon  rules  as  to  parties  in  legal  proceedings 572 

Consequences  of  distinction  upon  powers  of  management  of  majority 

of  corporation 573 

§  403.  Nominal  or  Share  Capital  distingmshed  from  Borrowed 
Capital.  —  We  have  seen  iibove  that  general  laws  tor  the  forma- 
tion of  joint-stock  business  corporations  always,  or  almost  always, 
provide  that  each  company's  incorporation  paper  shall  state  the 
amount  —  that  is,  the  nominal  amount  —  of  the  authorized 
capital,  and  the  number  of  shares  into  which  it  shall  be  divided.' 
Theoretically,  the  full  amount  of  this  capital  at  its  par  value  is 
always  to  be  obtained  by  the  company  from  subscriptions  to  its 
shares  in  money  or  money's  worth;  and  with  the  funds  so 
obtained  the  company  is  to  carry  on  its  business.  In  practice,  as 
every  one  knows,  a  large  part  of  many  a  company's  nominal 
share  capital  represents  no  substantial  assets,  but  mere  "  water," 
the  actual  working  capital  of  the  corporation  being  derived 
from  the  issue  of  bonds.  But  this  practice,  even  if  not  illegal,  is 
nevertheless  not  such  as  the  law  contemplates,  and  is  therefore 
not  reflected  in  its  nomenclature. 


§  494-§  498.     Nomenclature. 

§  494.  "  Capital  Stock,"  "  Stock"  and  "  Stockholder,"  "  Shares  " 
and  **  Shareholder."  —  The  aggregate  of  the  shares  of  capital  is 
called  the  company's  capital  stock;  and  every  share  in  this 
capital  stock  may  itself,  properly  enough,  be  called  stock,  and 
its  holder  a  stockholder.  Accordingly,  this  terminology  is  prev- 
alent in  America,  where  no  distinction  is  drawn  between  shares 
and  stock,-  or  between  a  shareholder  and  a  stockholder.  As  we 
have  just  intimated,  this  usage  is  entirely  proper  on  etymological 
and  historical  grounds.     In  England,  however,  w'ithin  the  last 

*  Supra,  §  109.  stock  ") ;       Lockwood    v.    Town    of 

■  Harvard   College  v.    Amory,     9  Weaton,    61    Conn.    211;    23   Atl.    9 

Pick.  (Mass.)  446,  461-462  ("There  (holding    that    shares    are    ta.xable 

can  be  no  doubt  but  that  shares  in  under  a  statute  le\ying  a  tax  upon 

manufacturing   and   insuring   incor-  all  "stocks  not  issued  by  the  United 

porations  are  and   were   commonly  States"), 
called  and  known  by  the  name  of 

413 


§  495  CAPITAL    AND    SHARES  [ChAP.  X 

fifty  or  sixty  years,  a  popular  practice  has  sprung  up  which 
distinguishes  between  shares  and  stock,  the  former  term, 
"shares,"  beinsr  used  to  denote  the  indivisible  shares  which 
compose  the  capital  of  most  business  corporations  while  "stock" 
is  used  to  designate  a  form  of  security  which  is  infinitely  sub- 
divisible, or  which  is,  at  any  rate,  not  divided  into  definite, 
indivisible  shares.  For  instance,  a  company  whose  capital  is 
composed  of  indivisible  shares  of  the  nominal  amount  of,  say, 
one  pound  and  is  not  transferable  in  fractions  thereof,  may 
"consolidate"  its  shares  into  "stock"  which  may  be  subdivided 
indefinitely  and  transferred  in  amounts  of,  say,  ten  shillings, 
five  shillings,  or  one  shilling,  or  even  less.  Necessarily,  however, 
this  "consolidation  into  stock"  cannot  well  take  place  unless  the 
shares  are  fully  paid  up ;  and  some  English  judges  have,  there- 
fore, said  that  shares  and  stock  "differ  in  this  respect  that  shares 
are  not  necessarily  paid  up."  ' 

§  495.  Further  Consideration  of  English  Distinction  between 
Shares  and  Stock.  —  This  distinction  between  shares  and  stock, 
although  important  to  bear  in  mind  in  reading  the  English 
books  is,  even  in  England,  a  popular  rather  than  a  legal  differ- 
entiation of  terms.  Thus,  where  a  testator  bequeathed  to  his 
wife  "all  such  stocks  in  the  public  funds,  or  shares  in  any 
railway,"  of  which  he  might  die  possessed,  the  House  of  Lords 
held  that  shares  in  a  railway  company  which  before  the  testator's 
death  were  consolidated  into  "stock"  would  nevertheless  pass  by 
the  bequest.^  Lord  Selborne  said:^  "The  share,  while  still 
indivisible  (whether  subject  to  calls  or  paid  up)  and  registered 
upon  one  plan  of  bookkeeping,  is  in  substance  and  in  truth 
nothing  but  a  'share  in  the  capital  stock  of  the  company'  and  it 
is  still  a  'share  in  the  capital  stock  of  the  company'  after  it  has 

1  Morricev.Aylmer.L.R.m.L.  De  G.  &  Sm.  278  ("stock"  in  a 
717,  724,  per  Lord  Hatherley.  statute    held    to    include    shares); 

2  Morrice  v.  Aylmer,  L.  R.  7  H.  L.  Oakes  v.  Oakes,  9  Hare  666  (holding 
717.  that  a  bequest  of  all  the  G.  W.  Ry. 

Cf.  Re  Bodman  (1891),  3  Ch.  135;  shares  of  which  testator  might  be 

New    Zealand    Trust    &    Loan    Co.  possessed  at  the  time  of  his  death 

(1893),   1    Ch.    403    ("stock"    in*  a  is  not  adeemed  by  conversion  into 

statute   held   to  include  shares  not  stock  of  the  shares  owned  by  the 

fully  paid  up) ;    Trinder  v.  Trinder,  testator  at  the  date  of  the  will  but 

1  Eq.  69.5  (bequest  of  "my  shares  in  does   not   pass   other   stock   in    the 

the  G.   W.   Ry.   Co."   held   to  pass  same  company   which    he   acquired 

stock  in  that  company,  the  testatrix  afterwards). 
owning   no   shares);     Re   Angelo,   5         ''  L.  R.  7  H.  L.  729. 

414 


I 


§  493-§  573]  NOMENXLATUKE  §  497 

become  divisible  and  registered  upon  a  different  system  of  book- 
keeping. .  .  .  The  difference  makes  no  real  change  for  any 
purpose  whatever  material  to  the  nature  or  incidents  of  the 
property,  except  that  the  shareholders'  power  of  transfer  is  no 
longer  subject  to  certain  restrictions." 

§  49().  Meaning  of  Stock  in  America.  —  In  the  United  States, 
the  familiar  use  of  the  term  "stockholders"  to  designate  the 
owners  of  shares  in  the  capital  of  a  corporation  not  unnaturally 
leads  to  the  notion  that  the  word  "stock"  ex  vi  termini  indicates 
that  its  holders  are  members  and  not  creditors  of  the  company.' 
Such,  however,  is  not  the  case.  For  instance,  every  one  is 
acquainted  with  "city  stock,"  "United  States  stock,"  and  other 
public  stocks,-  the  holders  of  which  are  creditors  of  the  govern- 
ment or  municipality  that  issues  the  security.  So,  in  England, 
business  corporations  frequently  issue  as  evidence  of  indebted- 
ness a  form  of  security  known  as  "debenture  stock"  —  that  is  to 
say,  certificates  of  indebtedness  transferable  on  the  company's 
books  in  fractional  amounts.^  The  fact  that  the  stockholders  of 
an  ordinary  American  corporation  are  part  owners  of  the 
company's  capital  and  not  creditors  of  the  corporation  should 
not,  therefore,  induce  the  belief  that  the  term  is  especially 
appropriate  for  members  of  the  company  and  inappropriate  for 
its  creditors.  The  holders  of  common  or  of  preferred  stock  are 
not  creditors  but  members  of  the  corporation ;  but  this  is  be- 
cause of  the  real  nature  of  their  position,  and  could  not  safely 
be  inferred  merely  from  their  designation  as  stockholders. 

§  497.  Whether  "  Capital  "  or  "  Capital  Stock  "  refers  to  Nomi- 
nal or  to  Actual  Capital.  —  Whenever  the  "capital"  or  the 
"capital  stock"  of  a  corporation  is  referred  to,  a  question  may 
arise  whether  the  reference  is  to  the  nominal  capital  or  to  the 
actual  capital  of  the  company.*    The  answer  to  this  question 

'  See  State  ex  rel.   Thompson  v.  stocks   and   shares   in    private   cor- 

Cheraw,  etc.  R.  R.  Co.,  16  S.  Car.  524;  porations  "). 
Hamlin  v.  Toledo,  etc.  R.  R.  Co.,  78  '  See  infra,  §  16S7. 

Fed.  664,  670;    24  C.  C.  A.  271 ;   36         *  "The  term  'capital  stock'  has  a 

L.  R.  A.  826  (where  the  court  said  double  meaning  as  applied  to  corpo- 

" Stock  is  capital  ").  rations.     In  one  sense  it  is  the  sum 

Cf.  Sellar  v.  Charles  Bright  &  Co.  mentioned  in  the  articles  of  incorpo- 

(1904),  2  K.  B.  446.  ration  as  the  amount  of  the  capital 

"  Cf.  Lockwood  V.  Town  of  We.^ton,  stock ;   in  other  words  it  is  the  sliare 

61  Conn.  211,  216,  23  Atl.  9  ("The  capital,  or  nominal  capital,  and  does 

word    'stock'   includes   both   public  not    necessarily    represent    a    corre- 

415 


§  498  CAPITAL    AND    SHARES  [ChAP.  X 

must  depend  in  each  instance  on  the  context.  For  instance, 
"capital  stock"  in  a  statute  forbidding  corporations  to  divide, 
withdraw,  or  in  any  way  pay  to  the  stockholders  any  portion  of 
the  "capital  stock,"  has  been  held  to  refer  to  the  actual  capital  or 
assets  of  the  corporation,*  and  not  to  the  nominal  or  share 
capital,  and  therefore  does  not  prohibit  a  stock  dividend.-  The 
amount  of  "actual  capital  paid  in  cash  or  property,"  has 
been  construed  to  refer  to  the  actual  value  of  the  company's 
property  for  the  time  being  and  not  to  the  amount  credited  as 
paid  up  on  the  nominal  capital,  or  to  the  amount  of  the  prop- 
erty or  money  received  in  payment  of  the  shares  at  its  value 
when  so  received.^ 

§  498.  Meaning  of  "  Corporators."  — The  term  "corporators" 
is  properly  used  to  designate  the  persons  who  form  and 
compose  the  corporation  whether  they  be  shareholders  or 
not,  and  hence  should  not  ordinarily  be  construed  to  include 
those  who  afterwards  become  members  of  the  corporation.* 
But  the  context  may  show  that  any  shareholders  or  members 
of  the  corporation  were  intended  to  be  comprised  within  the 
term.^ 

spending  amount  of  actual  capital.    N.Y.433;  27N.  E.  818;  12  L.  R.  A. 
.  .  The  capital  stock  referred  to  in    762  (as  to  the  meaning  of  a  com- 
the  statute,  however,  is  the  actual    pany's  "capital  stock"  for  purposes 
property  of  the  corporation"  :  Ex-    of  taxation). 

celsior  Water,  etc.  Co.  v.  Pierce,  90         ^  Williams  v.  Western  Union  Tel. 
Cal.  131,  140;    27  Pac.  44.     But  cf.    Co.,  93  N.  Y.  162. 
People  V.  Commrs.  of  Taxes,  23  N.  Y.  ^  Person  &  Riegel  Co.   v.   Lipps 

192,  219  (where  a  dissenting  judge,  (Pa.),  67  Atl.  1081. 
whose  opinion  is  more  to  be  relied  *  Chase  v.  Lord,  77  N.  Y.  1. 
upon  than  that  of  the  majority,  as  ^  Gulliver  v.  Roelle,  100  111.  141 
the  decision  was  reversed  on  error  in  (followed  in  Shufeldt  v.  Carver,  8  111. 
2  Black.  620,  635,  declared  that  the  App.  545) ;  Atlantic  Mut.  Life  Ins. 
word  "capital"  is  unambiguous  and  Co.,  2  Fed.  Cas.  168  (policy-holders 
refers  only  to  actual  capital,  but  in  semi-mutual  life  insurance  com- 
that  "stock"  is  ambiguous  and  may  pany  held  to  be  "corporators"  en- 
refer  either  to  nominal  or  actual  titled  to  notice  of  meeting  called  to 
capital).  authorize    bankruptcy    proceedings 

'  Martin  V.  Zellerbach,  38  Cal.  300,  under  U.  S.  Rev.  Stats.,  §  5122,  the 
308-309 ;  99  Am.  Dec.  365 ;  Excelsior  Bankrupt  Act  of  1867) ;  Lady  Bryan 
Water,etc.  Co.  \.  Pierce,  90  Cal  131,  Mining  Co.,  14  Fed.  Cas.  926;  1 
140;    27  Pac.  44.  Sawy.    349;     2    Abb.    (U.    S.)    527 

Cf.Statev.  Morristown  Fire  Ass' n,  (stockholders  held  to  be  "eorpora- 
23  N.  J.  Law  195;  People  ex  rel.  tors"  within  last  mentioned  statute) . 
Union   Trxist   Co.   v.    Coleman,    126 

416 


§  493- §  373]  NATURE   OF    SHARES  §  500 


§  499-§  500.       NATURE    OF    SHARES. 

§  499-§  501.     Duitinciion  between  one  Sluire  and  another  Share 
of  same  Kind. 

§  499.  Rule  in  England  —  Numbering  of  Shares.  —  The  capital 
stock  of  almost  all  American  joint-stock  corporations  '  and  of 
the  vast  majority  of  English  limited  companies  is  divided  into 
shares.  In  England,  the  practice  is  to  give  a  separate  denoting 
number  to  each  share;  and  this  practice  is  in  many  respects 
advantageous  and  worthy  of  imitation  in  the  United  States. 
In  the  first  place,  it  affords  an  additional  check  against  fraudu- 
lent overissues  of  shares.  Moreover,  it  enables  the  title  to 
particular  shares  to  be  traced  through  successive  owners.  Even, 
however,  where  the  practice  of  numbering  the  shares  prevails, 
the  numbers  are  regarded  as  a  mere  convenience,  and  in  no  way 
affect  the  substantive  rights  of  the  holder.-  One  share  is  just  the 
same  as  another  share  of  the  same  kind,  and  a  misstatement  of 
the  denoting  numbers  will  not  relieve  a  transferee  of  shares  from 
liability  thereon.^  Moreover,  the  renumbering  of  shares  does 
not  affect  their  identity.  Hence,  where  a  person  holds  shares 
bearing  certain  numbers,  a  surrender  of  his  share-certificate  to 
the  company,  followed  by  an  issue  of  shares  bearing  the  same 
numbers  to  some  one  else,  does  not  necessarily  amount  to  a 
transfer  of  the  former  shares,  or  release  the  original  holder 
from  liability  as  a  shareholder ;  *  the  new  shares  although 
bearing  the  same  numbers  as  the  old  are  in  law  and  in  fact 
different  shares. 

§  500.  Rule  in  America.  —  Moreover,  where,  as  in  America, 
shares  are  not  distinguished  by  denoting  numbers,  so  that  one 
share  is  to  all  appearances  the  same  as  any  other  share,  yet  the 
individuality,  so  to  speak,  of  the  several  shares  is  in  law  un- 
affected by  this  similarity.  For  instance,  a  pledgee  of  shares  is 
ordinarily  bound  to  keep  the  identical  shares  pledged  to  him. 


'  Cf.  Haices  v.  Anglo-Saxon  Pe-  *  In  addition  to  cases  cited  below, 

froZeum  Co.,  101  Mass.  385  (declaring  see  Adams'  Case,   13  Eq.  474,  483; 

that  where  the  incorporation  paper  National    Ins.    Co.    v.    Egleson,    21 

fixes  the  amount  of  the  capital  stock  Grant  (Can.)  406. 

but  does  not  divide  it  into  shares,  *  Ind's  Case,  7  Ch.  485. 

the  several  subscribers  become  "ten-  *  Ex  parte  Jones,  27  L.  J.  Ch.  666. 
ants  in  common"  of  the  stock). 

VOL.  I.  — 27  417 


§  501  CAPITAL  AND  SHARES  [ChAP.  X 

and  does  not  discharge  his  obhgations  to  the  pledgor  by  holding 
himself  ready  to  surrender  to  the  pledgor  on  payment  of  the 
debt  other  shares  of  the  same  value  in  the  same  company.^  To 
be  sure,  if  the  pledged  shares  were  originally  mingled  indis- 
criminately with  other  shares  standing  in  the  pledgee's  name  or 
if,  by  the  custom  of  brokers  or  otherwise,  the  creditor  is  author- 
ized to  mingle  the  hypothecated  shares  with  other  shares  in  the 
same  company,  the  pledgee  is  not  bound  to  keep  any  particular 
shares  to  answer  the  debtor's  claim  but  does  his  full  duty  if  he 
always  has  in  readiness  a  sufficient  number  of  other  shares  to 
satisfy  a  demand  for  redemption  by  the  hypothecator.^  This, 
however,  is  not  because  the  several  shares  have  no  legal  indi- 
viduality but  because  the  confusion  was  expressly  or  impliedly 
authorized  by  contract;  and  consequently  the  result  would  have 
been  the  same  if  the  company  had  followed  the  English  practice 
of  designating  the  several  shares  by  distinguishing  numbers. 

§  501.  Authorities  maintaining  that  Shares  are  legally 
indistinguishable  from  one  another.  —  A  few  cases,  however, 
cannot  be  thus  explained,  but  must  stand  squarely  upon  the 
proposition  that  the  several  shares  of  the  same  issue  are  in  law 
indistinguishable  from  one  another.  Thus,  where  a  purchaser 
of  shares  was  entitled  to  rescind  the  purchase  on  account  of 
fraudulent  misrepresentations  of  the  vendor,  it  was  held  that  this 
right  of  rescission  could  be  exercised  although  he  had  parted 
with,  and  was  consequently  unable  to  return,  the  particular 
shares  purchased,  inasmuch  as  he  had  tendered  other  shares  in 
the  same  company  of  the  same  value.^    Dicta  in  other  cases  lend 

'  Fay  V.   Gray,    124   Mass.    500;  198,  218;  26  Atl.  874;    28  Atl.  104; 

Allen  V.  Dubois,  117  Mich.  115;  75  21  L.  R.  A.  102;    Price  v.  Gover,  40 

N.  W.  443;    72  Am.  St.  Rep.  557;  Md.  102,  110-114;  Hubbellv.  Drexel, 

Dykers  v.  Allen,  7  Hill  (N.  Y.)  497;  11  Fed.  115;  GUpin  v.  Howell,  5  Pa. 

42  Am.  Dec.  87.  St.   41,   56-58;    45  Am.   Dec.   720; 

Bui  see  Hubbell  V.  Drexel,  II  Fed.  Boylan    v.    Huguet,    8    Nev.    345; 

115.      Cf.  Atkins  v.  Gamble,  42  Cal.  Smith  v.  Becker  (Wise),  109  N.  W. 

86;    10  Am.  Rep.  282  (where  nomi-  131  (holding  that  sale  of  some  shares 

nal  damages  only  were  allowed  for  out   of   the  mingled  mass  not  con- 

the   technical   conversion)  ;    Bell   v.  clusively  presumed  to  be  a  sale  of 

Bank  of  Cal.  (Cal.),  94  Pac.  889.  pledgee's  own  shares  where  sale  of 

*  Nourse  v.  Prime,  4  Johns.  Ch.  the  pledged  shares  was  clearly  in- 

(N.  Y.)  490 ;  8  Am.  Dec.  606  ;  7  Johns,  tended). 

Ch.   69;    11   Am.   Dec.  403;    Norton         Cf.    Worthin-gton    v.    Tormey,    34 

V.  Morgan,   19  N.  Y.  170;    75  Am.  Md.  182. 

Dec.  311;  Skiff  v.  Stoddard,  63  Conn.         ^  Mayo  v.  Knowlton,   134  N.  Y. 

418 


§  493-§  573] 


NATURE    OF    SHARES 


502 


color  to  the  same  proposition  that  the  several  shares  of  the 
capital  stock  of  an  American  company  are  legally  indistinguish- 
able from  one  another.'  Nevertheless,  it  is  submitted  that,  as 
already  intimated,  the  proposition  is  not  supported  by  the  best 
authorities  and  is  contrary  to  sound  principle.  It  may  be  that 
no  special  value  attaches  to  a  [)articular  share-certificate  and  that 
a  bailee  of  shares  does  not  commit  a  conversion  by  surrendering 
the  share-certificate  and  receiving  a  new  certificate  or  certificates 
for  the  same  shares.  Hut  although  the  identity  of  the  certificate 
may  be  immaterial,  the  identity  of  the  shares  is  important.  For 
instance,  the  owner  might  be  satisfied  with  the  title  to  his  own 
shares  and  therefore  be  unwilling  to  accept  other  shares  in  lieu 
thereof.  That  the  title  to  the  other  shares  may  be  in  fact  unim- 
peachable is  no  answer  to  the  argument;  for  a  property  owner 
cannot  be  recjuired  to  accept  instead  of  his  own  property  other 
property  of  the  same  kind  equally  valuable  and  held  by  a  title 
equally  sound.  The  true  doctrine  would  seem  to  be  that  the 
similarity  of  one  share  to  another  will  often  justify  the  in- 
ference that  the  parties  did  not  intend  to  insist  on  a  return 
of  the  particular  shares  but  would  be  satisfied  with  a  return 
of  the  same  number  of  other  shares  of  the  same  issue 
and  value ;  -  but  that  unless  such  inference  is  possible,  the 
several  shares  must  be  treated  as,  in  law,  quite  as  distinct 
from  one  another  as,  say,  one  bag  of  corn  is  from  another  bag 
of  corn. 


§  502.  A  Share  not  an  Interest  legal  or  equitable  in  Company's 
Property  —  Whether  Real  or  Personal  Estate,  etc.  —  A  share  of 
capital  stock  is  property  of  a  peculiar  kind.  It  does  not  con- 
sist in  an  interest  either  legal  or  equitable,  direct  or  indirect, 
in  the  property  of  the  company.^     To  be  sure,  many  lawyers 


250;  31  N.  E.  985;  American  Alkali 
Co.  V.  Salom,  131  Fed.  46,  49-50; 
Go  C.  C.  A.  284. 

Note  that  these  cases  may  be  sup- 
ported, perhaps,  upon  the  ground 
t'lat  the  defrauded  party  should  be 
allowed  to  rescind  the  contract  upon 
restoration  of  substantially,  if  not 
technically,  the  original  status. 


'  See  cases  cited  supra,  p.  41 8.  n.  2. 

Cf.  Atki)is  V.  Gamble,  42  Cal.  86; 
10  Am.  Rep.  282. 

2  Dykers  v.  Allen,  7  Hill  (N.  Y.) 
497;  42  Am.  Dec.  87  (semble,  per 
Walworth,  C,  as  to  construing  a 
loan  of  shares  as  a  mutuum). 

»  Regina  v.  Arnaud,  9  Q.  B.  806; 
Commonwealth  v.  New  York,  etc.  R. 


419 


502 


CAPITAL    AND    SHARES 


[Chap.  X 


and  judges  are  accustomed  to  say  that  the  shareholders  are  in 
equity  the  owners  of  the  corporate  property;  but  every  one 
recognizes  that  such  expressions  are  in  legal  theory  inaccurate. 
For  example,  a  share  of  capital  stock  is  personalty  although 
the  corporation  may  own  real  estate.'  Even  a  statute  expressly 
declaring  that  shares  shall  be  deemed  real  estate  has  been 
construed  to  make  the  shares  realty  only  for  the  purpose  of 
being  inheritable,  leaving  them  for  all  other  purposes  personal 
property  as  at  common  law.^  So,  a  sale  of  shares  cannot  be 
deemed  a  sale  of  an  interest  in  the  goodwill  of  the  company 
within  the  meaning  of  a  statute  which  forbids  any  agreement 
to  refrain  from  exercising  a  lawful  trade  or  business  except  by 
a  seller  of  goodwill;  and  consequently,  under  such  a  statute 
a  shareholder  whose  personality  is  closely  associated  with  the 
goodwill  of  the  company's  business  cannot,  upon  selhng  his 
interest  in  the  corporation,  agree  with  the  purchaser  to  refrain 


Co.,  132  Pa.  St.  591;  19  Atl.  291; 
7  L.  R.  A.  634  (stated  infra,  §  1080). 

'  Russell  V.  Temple,  3  Dane's 
Abridgment  (Mass.)  108;  Bligh  v. 
Brent,  2  Y.  &  C.  Ex.  268;  Bradley  v. 
Holdsworth,  3  M.  &  W.  422;  Elkhorn 
Land,  etc.  Co.  v.  Childers  (Ky.)  100 
S.  W.  222;  Chappell  v.  Chappell 
(Ky.),  99  S.  W.  959,  960  (headnote 
inadequate  —  distinguishing  Price  v. 
Price,  6  Dana  (Ky.)  107,  and  Cope- 
land  V.  Copeland,  7  Bush.  (Ky.)  349, 
in  which  cases  stock  in  railway  com- 
panies was  held  real  estate,  as  gov- 
erned by  peculiar  statutes) ;  Johns 
V.  Johns,  1  Ohio  St.  350 ;  Mattingly  v. 
Roach,  84  Cal.  207;  South-W estern 
R.  R.  Co.  V.  Thomason,  40  Ga.  408; 
Arnold  v.  Ruggles,  1  R.  I.  165;  Mc- 
Keen  v.  County  of  Northampton,  49 
Pa.  St.  519;  88  Am.  Dec.  515  (for 
purposes  of  ta.xation). 

The  same  has  been  held  in  Eng- 
land in  respect  to  shares  in  an  un- 
incorporated joint-stock  company 
formed  upon  the  "cost-book"  prin- 
ciple, Watson  V.  Spratley,  10  Ex.  222 
(as  to  the  nature  of  a  cost-book  com- 
pany or  partnership,  see  1  Lindley 
on  Companies,  6th  ed.,  p.  132);  and 
in  respect  to  shares  in  other  purely 


voluntary  associations,  Watson  v. 
Black,  16  Q.  B.  D.  270  (shareholder 
not  qualified  to  vote  as  equitable 
freeholder  although  land  is  held  by 
trustees  in  trust  for  the  association) ; 
and  in  Connecticut  in  respect  to 
shares  in  an  unincorporated  joint- 
stock  company  such  as  the  Adams 
Express  Company :  Lockwood  v. 
Town  of  Weston,  61  Conn.  211;  23 
Atl.  9. 

See  also  article  by  Prof.  Williston 
in  2  Harv.  L.  Rev.  149,  150-151, 
where  the  learned  author,  reviewing 
the  early  cases,  shows  that  prior  to 
the  nineteenth  century  a  share  of 
capital  stock  was  regarded  as  an 
equitable  interest  in  the  property  of 
the  corporation  and  therefore  as  real 
or  personal  estate  according  to 
the  nature  of  the  property. 

In  Saup  V.  Morgan  &  Co.,  108  111. 
326,  329,  a  tax  levied  on  the  capital 
stock  of  a  corporation  —  not  the 
shares  of  stock  —  was  held  to  be  a 
personal  tax. 

^  Cooper  V.  Dismal  Swamp  Canal 
Co.,  6  N.  Car.  195. 

Cf.  Cape  Sable  Company's  Case, 
3  Bland  Ch.  (Md.)  606. 


420 


§  493- §  573]  NATURE    OF    SHARES  §  504 

from  engaging  in  the  same  business  in  competition  with  the 
corporation.'  On  the  other  hand,  a  shareholder  has  an  in- 
surable interest  in  the  property  of  the  company ; '  for  he  has 
in  fact,  although  not  perhaps  technically  or  in  law,  a  financial 
interest  in  the  property  which  is  sufficient  to  prevent  the  policy 
from  being  a  mere  wager. 

§  503.  A  Share  not  a  Sum  of  Money  settled  in  Trust  but  an 
Interest  in  the  Company.  --  On  the  other  hand,  a  share  cannot 
be  properly  deemed  a  sum  of  money  ^  —  the  amount  paid  in  or 
contributed  by  the  subscriber  —  settled  or  invested  upon  a 
trust.  This  was  decided  in  a  recent  English  case  in  which  the 
true  nature  of  a  share  of  capital  stock  was  very  clearly  stated 
by  the  court.  Said  Farwell,  J. :  "A  share,  according  to  the  plain- 
tiff's argument,  is  a  sum  of  money  which  is  dealt  with  in  a  par- 
ticular manner  by  what  are  called  for  the  purpose  of  argument 
executory  limitations.  To  my  mind  it  is  nothing  of  the  sort.  A 
share  is  the  interest  of  a  shareholder  in  the  company  measured 
by  a  sum  of  money,  for  the  purpose  of  liability  in  the  first  place, 
and  of  interest  in  the  second,  but  also  consisting  of  a  series  of 
mutual  covenants  entered  into  by  all  the  shareholders  inter  se 
in  accordance  with  §  16  of  the  Companies  Act,  1862.  The  con- 
tract contained  in  the  articles  of  association  is  one  of  the  original 
incidents  of  the  share.  A  share  is  not  a  sum  of  money  settled 
in  the  way  suggested,  but  is  an  interest  measured  by  a  sum  of 
money  and  made  up  of  various  rights  contained  in  the  contract, 
including  the  right  to  a  sum  of  money  of  a  more  or  less  amount."  * 

§  504.  A  Share  as  a  Chose  in  Action.  — -  Hence,  it  follows  that 
a  share  in  an  incorporated  company  is  personal  property  of  the 
kind  known  as  choses  in  action.^    For  example,  shares  in  a  cor- 

'  Merchants'    Ad.    Sign    Co.    v.  that  consols  or  public  stocks  will  not 

Sterling,  124  Cal.  429;    57  Pac.  468;  pass  under  a  bequest  of  "money"). 

71  Am.   St.   Rep.  94;    46  L.   R.  A.  *  Borland's  Trustee  v.  Steel  Bros. 
142.  <fc  Co.  (1901),  1  Ch.  279,  288. 

'  Warren  v.  Davenport  Fire  Ins.  The  definition  of  a  share,  given 

Co.,  31  Iowa  464;    7  Am.  Rep.  160.  in  Nanney  v.  Morgan,  37  Ch.  D.  346, 

'  Cf.  Jones  V.   Brinley,   1   East  1  352,  356,  as  tlie  right  to  vote  and  to 

(relating,  doubtless,  to  government  receive  dividends  is  submitted  to  be 

stock);      Nightingal    v.    Devisme,    5  incorrect.      There   are    other    rights 

Burr.  2589  (relating  to  East   India  involved  in  the  ownersliip  of  a  share 

stock) ;   Bridgman  v.  City  of  Keokuk,  besides  those  mentioned.    Moreover, 

72  Iowa  42 ;    33  N.  W.  355  (shares  a  person  may  be  a  shareholder  with- 
not  moneys  or  credits) ;   Gosden  v.  out  tlie  right  to  vote. 

DotterUl,   1   Myl.  &  K.  56  (holding         *  Webb  v.  Baltimore,  etc.  R.  R.  Co., 

421 


§  M3 


CAPITAL   AND    SHARES 


[Chap.  X 


poration  are  "things  in  action"  within  the  meaning  of  the  Eng- 
lish bankrupt  act.'  So,  too,  they  have  been  held  to  be  "choses 
in  action"  within  the  meaning  of  an  attachment  law,  the  com- 
pany being  properly  made  garnishee.^  Moreover,  it  has  been 
held  that  shares  are  choses  in  action  within  the  meaning  of  the 
federal  statute  which  restricts  the  right  of  an  assignee  of  a  chose 
in  action  to  invoke  the  jurisdiction  of  the  federal  courts  on 
tl>e  ground  of  diverse  citizenship  to  cases  in  which  the  same 
diversity  of  citizenship  would  have  existed  if  the  assignor  had 
been  the  plaintiff ;  ^  but  this  decision  must  have  been  but  poorly 
considered,  inasmuch  as  in  hundreds  of  cases  shareholders  who 
derive  title  by  assignment  from  the  original  subscribers  have 
maintained  shareholders'  bills  in  the  federal  courts  on  the 
ground  of  diversity  of  citizenship.^ 

§  505.  Whether  Shares  are  "  Goods,  Wares  or  Merchandise," 
"  Personal  Chattels,"  "  Goods  and  Chattels,"  "  Securities,"  etc.  — 
According  to  the  better  view,  shares  are  not  goods,  ivares,  or  mer- 
chandise, within  the  Seventeenth  Section  of  the  Statute  of  Frauds.* 


77  Md.  92;  26  Atl.  113;  39  Am.  St. 
Rep.  396;  Johnson  v.  Hume,  138 
Ala.  564 ;  36  So.  42 1  (as  to  the  com- 
mon law  rights  of  the  husband  on 
reducing  shares  of  his  wife  to  pos- 
session) ;  Arnold  v.  Ruggles,  1  R.  1. 
165  (as  to  the  marital  rights  of  the 
husband  at  common  law) ;  Slay- 
maker  V.  Bank  of  Gettysburg,  10  Pa. 
St.  373. 

But  see  Ramsey  v.  Gould,  57  Barb. 
(N.  Y.)  398  (holding  that  shares  are 
not  within  a  statute  prohibiting 
attorneys  from  buying  any  bond 
or  other  "thing  in  action"  for  the 
purpose  of  bringing  suit  thereon). 

>  Colonial  Bank  v.  WhUhney,  11 
App.  Cas.  426. 

^  Lipscomb  V.  Condon,  56  W.  Va. 
416;  49S.  E.  392;  107  Am.  St.  Rep. 
938;  67  L.  R.  A.  670.  As  to  the 
soundness  of  this  decision,  quxtre. 

'  Gorman-Wright  Co.  v.  Wright, 
134  Fed.  363;   67  C.  C.  A.  345. 

♦  Cf.  Rule  94  of  the  Supreme 
Court,  restricting  this  right.  See 
infra,  §  1170. 

*  Duncuft  V.  Albrecht,  12  Sim. 
189;    Bowlby  v.  BeU,  3  C.  B.  284; 


Vawter  v.  Griffin,  40  Ind.  593  (sem- 
ble,  under  a  statute  which  omitted 
the  words  "  wares  or  merchandise  ") ; 
Webb  V.  Baltimore,  etc.  R.  R.  Co.,  77 
Md.  92  ;  26  Atl.  113;  39  Am.  St.  Rep. 
396  (distinguishing  Colvin  v.  Wil- 
liams, 3  H.  &  J.  (Md.)  38);  Browne 
on  Stat,  of  Frauds,  5th  ed.,  §  296- 
§  298. 

Contra :  Hightower  v.  Ansley 
(Ga.),  54  S.  E.  939  (overruling  Rogers 
V.  Burr,  105  Ga.  432;  31  S.  E.  438; 
70  Am.  St.  Rep.  50);  Fine  v. 
Hornsby,  2  Mo.  App.  61,  64;  Pray 
V.  Mitchell,  60  Me.  430,  434-435 
(shares  in  an  unincorporated  com- 
pany) ;  Tinsdale  v.  Harris,  20  Pick. 
(Mass.)  9;  Boardman  v.  Cutter,  128 
Mass.  388;  North  v.  Forest,  15  Conn. 
400;  Baltzen  v.  Nicolay,  53  N.  Y. 
467  (where  the  point  although  neces- 
sarily involved  and  decided  was  not 
argued  or  mentioned  in  the  opinion 
of  the  court). 

For  an  analysis  of  the  phraseology 
of  the  statutes  of  frauds  of  the  several 
American  states,  together  with  a 
discussion  of  their  application  to  con- 
tracts for  sale  of  shares,  see  2  Do3 


422 


§  493-§  573] 


NATURE    OF    SHARES 


§  505 


They  are,  however,  personal  chaflcb;  '  for  that  expression  in- 
cludes every  kind  of  personal  property  except  chattels  real.  So, 
they  are  "goods  and  chattels"  witliin  the  meaning  of  the  statute 
of  13  Eliz.,  c.  5,  as  to  conveyances  in  fraud  of  creditors,^  and 
the  price  of  shares  may  be  recovered  under  a  count  for  "goods 
and  chattels"  sold  and  delivered.^  (Jn  the  other  hand  they  are 
not  "goods  and  chattels"  within  the  Factors  Acts.*  Of  course, 
shares  are  included  under  the  designation  "personal  property,"  * 
unless  the  context  shows  that  only  tangible  property  is  meant. 
Although  the  word  ''securities"  properly  and  primarily  desig- 
nates "money  secured  on  property,"*  in  which  sense  it  would 

Rep.  898;  55  L.  R.  A.  155  (holding 
that  shares  are  not  within  a  statute 
re(}uiring  certain  formalities  in  cases 
of  gifts  of  "goods  and  chattels"); 
Rex  V.  Capper,  5  Price  217  (holding 
that  stock  in  the  pubhc  funds  will 
not  pass  under  a  royal  grant  of  bona 
et  caialla  jelonum);  Williamson  v. 
New  Jersey  Southern  R.  R.  Co.,  26 
N.  J.  Eq.  398  (holding  that  shares 
are  not  "goods  and  chattels"  within 
a  statute  requiring  registration,  etc. 
of  chattel  mortgages) ;  Morton  v. 
Cowan,  25  Ont.  529  (shares  not 
within  a  statute  as  to  e.xecution  upon 
interests  in  "goods  and  chattels"). 

*  Jellinik  v.  Huron  Copper  Min- 
ing Co.,  177  U.  S.  1 ;  20  Sup.  Ct.  559; 
Mattingly  v.  Roach,  84  Cal.  207 
(holding  mining  shares  to  be  within 
a  statute  regulating  the  place  of 
delivery  in  sales  of  personal  prop- 
erty); Attorney-General  v.  Monte- 
fiore.  21  Q.  B.  D.  461  (shares  within 
a  statute  levying  a  tax  on  a  "dis- 
position of  property"  to  take  effect 
after  death) ;  Desinge  v.  Beare,  37 
Ch.  D.  481  (beque-st  of  "my  property 
at  R's  bank"  held  to  pass  shares  in 
French  companies  represented  by 
certificates  at  R's  bank  at  which 
locality  the  testator  had  no  tangible 
property). 

"  Cf.  Duncan  v.  Maryland  Sav. 
Inst.,  10  G.  &  J.  (Md.)  299.  308 
(where  in  construing  a  statutory 
power  to  invest  in  "public  stocks  or 
other  securities,"  the  word  "secur- 


Passos  on  Stockbrokers  and  Stock 
E.xchanges,  2d  ed.,  883  et  seq. 

Tlie  Elnglish  rule  applies  to  con- 
tracts for  sale  of  shares  in  an  unin- 
corporated company  formetl  upon 
the  joint-stock  principle  which  there- 
fore are  not  within  the  Seventeenth 
Section  of  the  Statute  of  Frauds: 
Watson  V.  Spratley,  10  Ex.  222. 

So,  scrip  in  a  railway  company  is 
not  "goods,  wares,  and  merchan- 
dise" within  the  English  Stamp 
Acts:  Knightv.  Barber,  16M.  &  W.66. 

On  the  other  hand,  even  in  Eng- 
land, it  has  been  held  that  a  Rule  of 
Court  authorizing  a  sale  of  "goods, 
wares,  and  merchandise"  applies  to 
shares:  Evans  v.  Davies  (1893),  2 
Ch.  216. 

'  Colonial  Bank  v.  Whinney,  11 
App.  Cas.  426,  434  (per  Lord  Black- 
bum). 

^  Pinkerton  v.  Manchester,  etc. 
R.  R.  Co.,  42  N.  H.  424,  451.  Cf. 
Robinson  v.  Jenkins,  24  Q.  B.  D. 
275  (Rule  of  Court  allowing  inter- 
pleader proceedings  where  a  party 
is  under  liability  for  any  "debt, 
money,  goods  or  chattels,"  held  to 
apply  to  shares  on  account  of  the 
generality  of  the  word  "chattels"). 

'  Lawton  v.  Hickman,  9  Q.  B.  563. 

*  Freeman  v.  Appleyard,  32  L.  J. 
Ex.  175  (cited  without  disapproval 
in  Williams  v.  Colonial  Bank,  38  Ch. 
D.  388,  408). 

Cf.  First  Xat.  Bank  v.  Holland,  99 
Va.  495;    39  S.  E.  126;    86  Am.  St. 


423 


506 


CAPITAL    AND    SHARES 


[Chap.  X 


not  include  shares  and  stocks  in  incorporated  companies/  yet 
the  word  has  acquired  the  wider  popular  significance  of  "in- 
vestments"—  a  sense  which  is  broad  enough  to  include  stocks 
and  shares.-  Shares  are  not  comprised  within  the  term  "  money  " 
or  "moneys."  ^  Although  shares  are  choses  in  action,  yet  they 
are  not  "credits."  * 

§  506.  Whether  Trover  will  lie  for  Conversion  of  Shares.  — 
A  share  of  capital  stock  being  a  chose  in  action,  or  intangible 
property,  an  action  of  trover,  properly  so  called,  will  not  lie  for 
its  conversion.^  But  an  action  on  the  case  in  the  nature  of 
trover  may  be  maintained.^  Moreover,  trover  will  lie  for  a  con- 
version of  the  share-certificate  ^  just  as  it  will  lie  for  conversion 
of  a  promissory  note,  bill  of  lading,  or  other  security. 


§  507.     Nominal  or  share  Capital  not  a  Liability  of  Company.  — 
The  share  capital  of  a  corporation  is  in  no  proper  sense  a  lia- 


ities"  was  said  to  mean  "anytWng 
given  or  deposited  to  secure  the 
payment  of  a  debt"). 

'  Thayer  v.  Wathen  (Tex.),  44 
S.  W.  906;  17  Tex.  Civ.  App.  382; 
Bartholomay  Brewing  Co.  v.  Wyatt, 
(1893),  2  Q.  B.  499,  516  ("Shares  in 
a  company  are  not  securities  but 
portions  of  its  capital  ") ;  Mechanics' 
Bank  v.  New  York,  etc.  R.  R.  Co.,  13 
N.  Y.  599,  627  ("Certi6cates  of  stock 
are  not  securities  for  money  in  any 
sense  "');  Ogle  v.  Knipe,  8  Eq.  434 
(bank  stock  and  canal  shares  not 
covered  by  a  bequest  of  "all  my 
money  and  securities  for  money"); 
Graydon's  Exrs.  v.  Graydon,  23  N.  J. 
Eq.  229  (direction  in  will  to  convert 
into  money  all  personal  estate  not 
already  in  money  or  securities  held 
to  require  conversion  of  shares  owned 
by  testator) ;  Bank  of  Commerce  v. 
Hart,  37  Nebr.  197,  203  (headnote 
inadequate);  55  N.  W.  631;  20 
L.  R.  A.  780;  40  Am.  St.  Rep.  479 
(power  in  charter  of  bank  to  "pur- 
chase securities  of  every  kind,"  held 
not  to  authorize  purchase  of  shares 
of  stock  in  other  corporations) ; 
Huddleston  v.  Goiddshury,  10  Beav. 


547  (holding  that  canal  shares  will 
not  pass  under  a  bequest  of  property 
vested  in  "bonds  or  securities"). 

^  Rayner  v.  Rayner  (1904),  1  Ch. 
176. 

^  Collins  v.  Collins,  12  Eq.  455; 
Ogle  v.  Knipe,  8  Eq.  434 ;  and  supra, 
§  503. 

But  see  Knight  v.  Knight,  2  Giff. 
616  (where  MaUns,  V.  C,  held  that 
a  bequest  of  "all  sums  and  sums  of 
money  that  might  be  in  the  house," 
would  pass  shares  represented  by 
certificates  enclosed  in  an  envelope 
and  endorsed  by  the  testator  "to 
be  considered  as  ready  money  " ;  but 
quaere  whether  the  learned  judge  was 
right  in  considering  such  extrinsic 
evidence  of  the  testator's  intent). 

*  Bridgman  v.  City  of  Keokuk,  72 
Iowa42;'33N.  W.  355. 

^  Sewall  V.  Lancaster  Bank,  17 
S.  &  R.  (Pa.)  285. 

'  See  cases  collected  infra,  §  932, 
§  934,  §  937,  §  940,  and  also  §  515. 

Cf.  Ashton  V.  Heydenfelt,  124  Cal. 
14;   56Pac.  624. 

"  Sewall  V.  Lancaster  Bank,  17 
S.  &  R.  (Pa.)  285,  287  (semble); 
Brown  v.  Bokee,  53  Md.  155,  170. 


424 


§  493- §  573]         RiGUTS  of  hiiakeholdeks  §  508 

bility  of  the  company.  To  he  sure,  accoiiiitcint.s  often  inelude 
a  company's  capital  stock  among  its  liabilities;  hut  this  practice 
is  a  mere  convenient  bookkeeping  device,  and  in  no  way  repre- 
sents or  accords  with  a  correct  legal  use  of  the  term.'  Thus, 
a  share  in  a  corporation  cannot  he  treated  as  a  liability  owing 
from  the  company  to  the  shareholder  and  capable  of  being  set 
off  against  a  debt  due  from  the  shareholder  to  the  company,  .so 
as  virtually  to  give  the  company  a  lien  on  the  shares  in  case  the 
holder  becomes  bankrupt.-  So,  the  capital  should  not  be  reck- 
oned as  a  liability  in  determining  whether  the  company  is  solvent 
or  insolvent.^ 


§  508-§  516.     RIGHTS   OF   SHAREHOLDERS. 

§  508.  Primary  or  substantive  Rights  —  Classification.  —  The 
shareholders  in  a  corporation  constituting  the  company  and 
a  share  being  an  interest  in  the  corporation,  the  rights  in- 
cident to  the  ownership  of  shares  are  rights  which  flow  from 
the  ownership  of  an  interest  in,  or  part  of,  the  corporation.  By 
a  broad  classification,  these  rights,  so  far  as  they  are  primary 
or  substantive  in  character,  may  be  reduced  to  four,  namely, 
(1)  the  right  to  participate  in  profits  earned  by  the  company, 
or,  in  other  words,  the  right  to  dividends,  (2)  the  right  to  share 
in  any  assets  which  may  remain  upon  the  dissolution  of  the 
corporation  after  the  creditors  shall  have  been  paid,  (3)  the 
right  to  participate  in  actual  capital  which  is  left  free  by  a  re- 
duction of  nominal  capital  and  (4)  the  right  to  participate  in  the 
management  of  the  company,  or,  in  other  words,  to  vote  at  share- 
holders' meetings.  To  these  may,  perhaps,  be  added  the  pre- 
emptive right  to  subscribe  to  any  increase  of  capital  before  the 
new  shares  are  issued  to  strangers."* 

'  But  see  Posner  v.  Southern  Ex-  of  their  stock  is  not  a  debt,"  —  per 

haust,  etc.  Co.,  109  La.  658,  666;   33  Waite,  C.  J.);   Heller  v.  Xat.  Marine 

So.  641   ("A  corporation  owes  and  Bank,  89  Md.  602,  611;   43  .\tl.  SCO; 

does  not  own  the  stock  ").  73  Am.  St.  Rep.  212;    45  L.  R.  A. 

Cf.  Gansey  v.  Orr,   173  Mo.  532;  438. 
73  S.  W.  477;    Mi7/er  v.  Bradish,  69  =*  Kingstown  Yacht  Club,  21  L.  R. 

Iowa  278;   28  N.  W.  594;   Eyster  v.  Ir.  199. 

Centennial  Board  of  Finance,  94  IT.  S.  '  Shaw  v.  Gilbert,  111  Wise.  165, 

500,  502  ("The  liability  of  a  corpora-  178-179;   86  N.  W.  188. 
tion  to  its  stockholders  on  account  *  Infra,  §  603  et  seq. 

425 


§  509  CAPITAL    AND    SHARES  [ChAP.  X 

§  509.     References  to  full  Discussions  of  these  Primary  Rights. 

—  The  first  of  these  rights,  namely,  the  right  to  dividends,  is 
the  subject  of  special  consideration  below  and  in  other  parts 
of  this  work.^  The  second,  or  the  right  to  participate  in  the 
distribution  of  capital  upon  dissolution  of  the  company,  be- 
longing as  it  does  to  the  topic  of  the  winding-up  and  dissolution 
of  corporations,  is  outside  the  scope  of  this  treatise,  and  is 
therefore  treated  only  incidentally.'-  The  third,  the  right  to 
participate  in  actual  capital  left  free  upon  reduction  of  nominal 
capital,  is  fully  considered  under  the  heading  of  reduction  of 
capital.^  The  fourth,  the  right  to  vote  at  general  meetings  of 
the  company,  receives  detailed  consideration  in  the  chapter  on 
shareholders'  meetings.* 

§  510-§  516.      SECONDARY   OR  ANCILLARY  RIGHTS   OF 
SHAREHOLDERS. 

§  510.  Classification  of  secondary  or  ancillary  Rights.  —  In 
addition  to  these  several  rights,  or  more  properly  as  ancillary 
to  them,  each  shareholder  is  entitled  to  demand  that  the  com- 
pany shall  recognize  his  status  as  a  member.  This  recognition 
is  accorded  in  two  ways,  firstly,  by  enrolling  his  name  in  the 
company's  register  of  members  and,  secondly,  by  issuing  to 
him  a  share-certificate  or  solemn  admission  or  representation 
by  the  company  that  the  person  in  question  is  the  owner  of  a 
certain  specified  number  of  shares.  Another  right  of  a  share- 
holder of  the  same  general  class  is  the  right  to  inspect  books  of 
the  corporation.^ 

§  51 1.     Right  to  Registration  as  Shareholder  in  Company's  Books. 

—  The  enrolment  as  a  shareholder  may  be  necessary  to  perfect 
the  shareholder's  title:  at  all  events  without  enrolment  his 
tenure  is  precarious  and  uncertain.  If  the  company  refuses 
to  register  him  as  shareholder,  he  may  treat  such  refusal  as  a 
conversion  of  his  shares  and  sue  in  tort  for  conversion,*  or  he 

'  Infra,  §  519,  §  550-§  563  and  "  Salt  River  Canal  Co.  v.  Hickey, 

Chapter  XXIII.  36  Pac.  Rep.  171;    4  Ariz.  240. 

'  Infra,  §  .520-§  521 ;  §  564-§  568.  Cf.  Cooley  v.  Curran,  104  N.  Y. 

«  Infra,  §  660-§  668.  Supp.    751    (holding    that    such   an 

*  Infra,  Chapter  XXI.  action  cannot  be  maintained  against 

*  As  to  this  see  infra,  §  1094  the  company's  treasurer);  Nat. 
et  seq.  Bank  of  New  London  v.  Lake  Shore, 

426 


§  493-§  573]  CERTIFICATES  §  ol3 

may  probably  sue  in  assumpsit  for  darnaj]^es  sustained  by  the 
company's  breacli  of  its  le<^al  duty  or  quasi-contractual  oblij^a- 
tion.'  Secondly,  he  may  proceed  by  bill  in  equity,-  or  probably, 
if  his  title  to  the  shares  be  clear,  by  mandamus^  to  compel  the 
company  to  recognize  his  title  and  register  him  as  shareholder. 
An  owner  of  an  undivided  interest  in  a  share  is  entitled  to  have 
his  right  recognized  by  an  entry  on  the  company's  books.* 


§  512-§  516.     Right  to  a  Sfmrc-Certificate. 

§  512.  Definition  of  Certificate.  —  A  share-certificate  is  noth- 
ing more  than  a  solemn  affirmation,  usually  under  the  corporate 
seal,^  and  signature  of  the  appropriate  officer  or  officers,  that 
the  person  named  therein  is  entitled  to  a  specified  number 
of  shares.®  "  A  share-certificate,"  said  Judge  Thompson,  "is  a 
solemn  and  continuing  affirmation  by  the  corporation  that  the 
person  to  whom  it  was  issued  is  entitled  to  all  the  rights  and 
subject  to  all  the  liabilities  of  a  stockholder  in  the  company  in 
respect  of  the  number  of  shares  named,  and  that  the  company 
will  respect  his  rights  and  the  rights  of  every  one  to  whom  he 
may  transfer  such  shares  [by  refusing  to  admit  any  new  trans- 
feree to  the  rights  of  a  shareholder  except  upon  surrendering 
of  the  certificate]."  ^  The  last  clause  destroys  the  accuracy  of 
the  definition ;  for  it  is  certainly  not  an  essential  part  of  a  share- 
certificate  that  the  company  should  represent  that  no  transfer 
will  be  recognized  except  upon  its  surrender:  but  if  the  words 
in  brackets  l)e  omitted,  the  definition  is  correct. 

§  513.  Right  to  a  Certificate,  in  general. — The  issue  of  a 
share-certificate  is  never  necessary  in  order  to  perfect  a  share- 

etc.  Ry.  Co.,  21  Ohio  St.  221  (holding  »  As  to  this  see  Fitzhngh  v.  Bank 

that  tlie  action  cannot  be  maintained  of  ShepherchviUe,  3  T.  B.  Monr.  (Ky.) 

by  a  mere  equitable  owner  of  shares).  126,  128;  16  Am.  Dec.  90.     Cf.  infra, 

'  See  infra,  §  934.  §  921. 

^  See  infra,  ibid.  •  See     Richardson     v.     Delaware 

^  See  infra,  ibid.  Loan  Co.,  9  Houst.  (Del.)  354;    32 

Cf.  People  ex  rel.  Doyle  v.  A'^.  Y.  Atl.   980   (where  the  instrument   in 

Benevolent  Soc,  3  Hun  (N.  Y.)  361;  question  althouji;h  not  called  a  share- 

Delacy  v.  Neuse  Xav.  Co.,  1  Hawks  certificate  would  .seem  to  have  been 

(N.  Car.)  274;   9  Am.  Dec.  636.  sucli  in  legal  effect). 

*  Salt  River  Canal  Co.  v.  Ilickey,  '    '  Keller  v.  Eureka,  etc.  Mfg.  Co., 

36  Pac.  Rep.  171;   4  Ariz.  240.     Cf.  43  Mo.  App.  84,  87-88;    11  L.  R.  \. 

infra,  i^  1007.  472. 

427 


§  C13  CAPITAL    AND    SHARES  [ChAP.  X 

holder's  title.  He  is  as  much  a  shareholder  before  the  issue 
of  the  certificate  as  afterwards.'  Nevertheless,  every  share- 
holder has  a  right  to  demand  a  share-certificate  as  a  muniment 
of  his  title  ■  —  a  right  to  have  in  his  own  possession  some  au- 
thoritative evidence  of  his  title.  Of  course,  a  transferee  of  shares 
who  has  never  presented  his  transfer  for  registration  has  no 
right  to  demand  the  issue  of  a  share-certificate.^  The  share- 
certificate  should  correspond  with  the  register  of  shareholders, 
so  that  the  company  is  not  entitled  to  put  any  qualification  in 
the  certificate  which  it  is  not  entitled  to  put  in  the  registry.*  If 
the  shareholder  has  not  paid  for  his  shares  in  full,  of  course  he 
is  not  entitled  to  a  certificate  representing  him  to  be  a  holder  of 
paid-up  shares ;  ^  but  he  is  entitled  to  a  certificate  stating  that 
he  is  the  holder  of  so  many  shares  and  mentioning  the  exact 
amount  which  has  been  paid  in  on  each.^  Strange  to  say,  this 
latter  proposition  seems  to  have  been  denied  in  several  cases.^ 
It  is  doubtless  true  that  a  shareholder  who  is  in  default  for  non- 
payment of  calls  is  not  entitled  to  any  certificate.*  If  a  person 
is  the  holder  of  a  number  of  shares  upon  which  a  certain  pro- 
portion has  been  paid,  he  has  no  right  to  demand  that  the  whole 
amount  paid  be  applied  to  certain  of  the  shares  so  as  to  make 
them  fully  paid  shares  and  entitle  him  to  a  certificate  stating 
them  to  be  so  paid  up.® 

A  federal  judge  has  recently  announced  that  a  shareholder 
who  owns  twenty-five  shares  has  no  right  to  demand  a  separate 
certificate  for  each  share,  such  a  demand  being  thought  to  be 

'  Supra,  §  171.  etc.    R.    R.    Co.,    44    Ga.    597,    598 

^  Burdett  v.  Standard  Exploration  (semble). 
Ce.,  16  Times  L.  R.  112.  Cf.  Green  v.  Abietine  Medical  Co., 

3  Lacajf  V.  Dutch  Miller,  etc.  Co.,  96  Cal.  .322,  329-330;   31  Pac.  100. 
31  Wash.  .566;    72  Pac.  112.  «  Johnson  v.  Albany,  etc.   R.  R. 

*  W.  Key  &  Son  (1902),  1  Ch.  467.  Co.,  54  N.  Y.  416;    13  Am.  Rep.  607 

*  Babcock  v.  Schuylkill,  etc.  R.  R.  (where  the  remedy  against  the  share- 
Co.,  133  N.  Y.  420;    31  N.  E.  .30.  holder  for  refusal  to  pay  the  portion 

*  Fletcher  v.  McGUl,  110  Ind.  395,  of  his  subscription  remaining  unpaid 
405;  10  N.  E.  651;  11  N.  E.  779  had  been  barred  by  limitations); 
(semble);  1  Morawetz  on  Priv.  Gould  v.  Town  of  Oneonta,  71  N.  Y. 
Corps.,  2d  ed.,  §  472.  298  (holding  that  shareholder  is  not 

'  California,  etc.  Hotel  Co.  v.  Cal-    entitled  to  the  certificate  until  inter- 
lender,  94  Cal.  120;  29  Pac.  859;  28    est  on  overdue  calls  as  well  as  the 
Am.  St.  Rep.  99;    Mobile,  etc.  R.  R.    principal  is  paid). 
Co.    v.    Yandal,    5    Sneed     (Tenn.)  "  Johnson  v.   Albany,  etc.   R.   R. 

294, 296  (semble) ;  Fulgam  v.  Macon,    Co.,  54  N.  Y.  4 16 ;   13  Am.  Rep.  607. 

428 


I 


§  49.3-§  573]  CERTIFICATES  §  515 

unreusonuhle.'  But  for  this  expression  of  judicial  opinion,  one 
would  have  supj)osed  that  a  shareholder  niicrjit,  if  so  minded, 
insist  upon  a  separate,  certificate  for  each  share  or  unit  of  the 
capital  stock. 

§  514.  Delay  in  issuing  Certificate.  —  What  is  a  reasonable 
time  for  the  company  to  delay  issuing  a  share-certificate  must 
depend  largely  upon  circumstances.  Some  allowance  must  he 
made,  especially  in  the  case  of  the  first  i.ssue  of  shares,  for  the 
mere  physical  labor  of  preparing  and  printing  or  engraving 
the  certificates.  But  tiie  mere  fact  that  considerable  time  must 
elapse  before  certificates  can  be  issued  to  some  of  the  subscribers 
does  not  justify  the  company  in  delaying  the  issue  of  certificates 
to  other  subscribers.-  Now,  by  statute,  in  England  a  certificate 
must  be  issued  within  two  months  after  allotment.^ 

§  515.  Remedies  for  Refusal  or  improper  Failure  to  issue  Cer- 
tificate. —  The  right  to  a  share-certificate,  if  denied  by  the 
company,  may  be  enforced  by  mandamus  ^  or  bill  in  equity.^ 
If  the  remedy  in  equity  be  resorted  to  by  a  shareholder  who  has 
paid  for  his  shares  in  property  instead  of  in  cash,  the  bill  need 
not  aver  the  property  so  transferred  to  be  equal  in  value  to  the 
shares  for  which  it  was  to  be  exchanged.®  The  statute  of  limita- 
tions does  not  begin  to  run  against  the  right  of  a  shareholder  to 
compel  the  company  to  issue  a  certificate  to  him  until  a  certificate 
has  been  demanded  by  the  shareholder  and  refused  by  the 
company.''     The  refusal  may  also,  at  least  in  most  cases,  be 

'  Schdl  V.  Alston  Mfy.  Co.,   149  *  Bedford  v.  American  Aluminum 

Fed.  439.  Co.,  51  N.   Y.  App.   Div.   537;    64 

*  Burdett  v.  Standard  Exploration  N.  Y.  Supp.  856;  Davenport  v. 
Co.,  16  Times  L.  R.  112.  Piano   Implement  Co.,  70  111.  App. 

^  Companies    Act,  1907  (7  Edw.  161;   Kinnan  v.  Forty-second  St.,  etc. 

VII,  c.  50),  §  5  (1).  %.  Co.,  HON.  Y.  183;  35  N.E.  498; 

♦  Hair  v.  Burnell,  106  Fed.  280  Wdls  \.  Green  Bay,  etc.  Co..  ^OV^"\sc. 
(where  the  writ  was  against  the  442;  64  N.  W.  69  (directors  held 
officers  of  the  corporation) ;  State  proper  but  not  necessary  parties 
ex    rel.    Thompaon    v.    Cheraw,    etc.  defendant). 

R.  R.  Co.,  16  S.  Car.  524;    State  ex         '  Davenport  v.  Piano  Implement 

rd.    Phillips    v.    Xew    Orleans    Gas  Co.,  70  111.  App.  161. 
Light  Co.,  25  La.  Ann.  413.  ^  Wells    v.    Green   Bay,   etc.    Co., 

But   see   Baker   v.    Marshall,    15  90    Wise.     442;      64     N.     W.     69; 

Minn.    177;     State  ex  rel.    Elliot   v.  Mercer  County  Court  v.  Springfield, 

Guerrero,    12   Nevada   105;     Townes  etc.    Turnpike    Co.,    10   Bush    (Ky.) 

v.   Xicholls,    73    Me.    515;     State   v.  254.     As   to   what   is  sufficient   de- 

Carpenier,  51  Ohio  St.  83;    37  N.  E.  mand,   see   Teeple   v.    Hawkeyc    Co. 

261;    46  Am.  St.  Rep.  556.  (Iowa).  114  N.  W.  306. 

429 


§516 


CAPITAL    AND    SHARES 


[Chap.  X 


treated  as  a  conversion  of  the  shares  for  which  damages  are 
recoverable ;  ^  or  redress  may  be  had  in  action  of  assumpsit 
against  the  company.-  Undue  delay  in  issuing  a  share-certifi- 
cate will  have  the  same  effect  as  a  peremptory  refusal  in  enabling 
the  shareholder  to  sue  for  damages  or  for  relief  by  mandamus  or 
in  equity.^  The  refusal  to  issue  a  certificate,  if  the  shareholder 
elect  to  treat  it  as  a  conversion  of  the  shares,  relieves  him  from 
any  subsequent  liability  as  shareholder  to  the  corporation,  its 
receiver  or  liquidator,'  or  to  its  creditors.  The  shareholder  may 
also  obtain  an  injunction  against  issuing  a  certificate  for  any  of 
his  shares  to  any  person  other  than  himself.^ 

§  516.  Loss  of  Certificate.  —  If  the  certificate  is  lost  or 
destroyed,  the  shareholder  may  require  the  company  to  issue 
to  him  a  duplicate."  As  a  condition  to  this  relief,  it  would  seem 
that  he  should  ordinarily  be  required  to  give  a  sufficient  bond  of 
indemnity  against  any  liability  of  the  company  by  estoppel  upon 
the  former  certificate.^  Where  the  certificate  had  been  lost  and 
unheard  of  for  twelve  years,  the  issue  of  a  duplicate  was  required 


»  Withers  v.  Lafayette  County 
Bank,  67  Mo.  App.  115;  Baltimore 
City  Pass.  Ry.  Co.  v.  Sewell,  35  Md. 
239;   6  Am.  Rep.  402. 

Cf.  Burdett  v.  Standard  Explora- 
tion Co.,  16  Times  L.  R.  112. 

2  Wyman  v.  American  Powder 
Co.,  8  Cush.  (Mass.)  168. 

3  Burdett  v.  Standard  Exploration 
Co.,  16  Times  L.  R.  112. 

*  Potts  V.  Wallace,  32  Fed.  272. 

*  Bedford  v.  American  Aluminum 
Co.,  51  N.  Y.  App.  Div.  537;  54 
N.  Y.  Supp.  856. 

*  Kinnan  v.  Forty-second  St.,  etc. 
Ry.  Co.,  140  N.  Y.  183;  35  N.  E.  498. 

But  see  Keller  v.  Eureka,  etc.  Mfg. 
Co.,  43  Mo.  App.  84;  11  L.  R.  A. 
472  (containing  a  strong  dissenting 
opinion) ;  Dempster  v.  Rosehill  Cem- 
etery Co.,  206  111.  261 ;  68  N.  E.  1070 
(where  the  remedy  was  held  to  be 
barred  by  laches). 

As  to  statutory  remedies  in  case 
of  loss  or  destruction  of  certificates, 
see  Biglin  v.  Friendship  Ass'n,  46 
Hun  (N.  Y.)  223;  Ilendon  v.  North 
Carolina  R.  R.  Co.,  125  N.  Car.  124; 


34  S.  E.  227 ;  Hendon  v.  North  Caro- 
lina R.  R.  Co.,  127  N.  Car.  110;  37 
S.  E.  155  (holding  that  plaintiff  need 
not  tender  a  bond  before  bringing 
suit  if  his  right  to  a  certificate  is 
denied);  Re  Speir,  69  N.  Y.  App. 
Div.  149;  74  N.  Y.  Supp.  555;  Re 
Hayt,  39  N.  Y.  Misc.  356;  79  N.  Y. 
Supp.  845  (remedy  provided  by  a 
state  statute  held  applicable  to 
shares  in  a  national  bank) ;  Re  Coats, 
75  N.  Y.  App.  Div.  469;  78  N.  Y. 
Supp.  425;  Trovers  v.  North  Caro- 
lina R.  R.  Co.,  133  N.  Car.  322;  45 
S.  E.  651  (provision  for  holding  new 
certificate  in  escrow  for  a  period  of 
years  held  to  be  repealed  by  a  stat- 
ute requiring  plaintiff  to  give 
security).  As  to  transfers  by  a  per- 
son who  has  lost  his  certificate,  see 
infra,  §  928. 

'  Galveston  City  Co.  v.  Sibley,  56 
Tex.  269;  State  ex  rel.  McCay  v. 
New  Orleans  Stock  Exchange,  114 
La.  324 ;  38  So.  204. 

Cf.  Kinnan  v.  Forty-second  St., 
etc.  Ry.  Co.,  140  N.  Y.  183;  35  N.  E. 
498. 


430 


§  493-§  573]  EQUALITY    OF    SUAKES  §  517 

in  ]\Iiuiu'.sota  without  insisting  upon  a  bond  of  indemnity." 
InasnuK-h  as  the  hipso  of  time  in  such  a  case  is  the  basis  of  the 
plaintiff's  title  to  rehef,  a  judgment  some  years  previous  between 
the  same  parties  denying  the  same  rehef  has  been  held  to  be  no 
bar.-  In  Louisiana,  a  corj)oration  was  compelled  to  issue  a 
new  certificate  to  take  the  place  of  one  which  had  been  lost  with- 
out a  bond  of  indemnity  being  given  and  without  any  proof,  so 
far  as  the  report  discloses,  of  any  great  lapse  of  time  after  the 
loss;  ^  but  this  decision  was  placed  upon  the  more  than  doubtful 
ground  that  a  purchaser  of  the  certificate  could  have  no  claim 
against  the  company,*  and  has  been  expressly  overruled.^  In  a 
case  where  a  bankrupt  shareholder  had  absconded  with  the 
share-certificate,  a  federal  court  decreed  that  the  company  upon 
being  tendered  a  sufficient  bond  of  indemnity  should  execute 
another  certificate  to  the  assignee  in  bankruptcy.® 


§  517-§  523.    EQUALITY  OF  SHARES. 

§517.  Origin  and  Nature  of  Rule  of  Equality.  —  The  rule 
of  law  is  that  prima  facie  all  the  shareholders  stand  on  an 
equality.  The  courts  have  repeatedly  declared  that  this  prima 
facie  equality  among  the  shareholders  is  not  derived  by  implica- 
tion from  the  construction  of  the  incorporation  paper,  which  in 
the  simple  case  states  merely  that  the  capital  of  the  company 
shall  be  such  and  such  an  amount  divided  into  so  many  shares, 
but  is  a  corollary  of  the  presumption  of  equality  among  partners.' 

'  Guilford  v.  Western  Union  Tel.  So.  174  (where  ten  years  had  elapsed 

Co.,  59  Minn.  332;    61  N.  W.  324;  since  the  loss). 
50  Am.  St.  Rep.  407  (depending  in         *  See  infra,  §  909  et  seq. 
part  upon  a  local  statute).  *  State    ex   rel.    McCay    v.    iVet/j 

Cf.    Guilford    v.    Western    Union  Orleans  Stock  Exchange,  114  La.  32i, 

Tel.  Co.,  43  Minn.  434;  46  N.  W.  70.  327  ;  38  So.  204. 

'  Guilford  v.  Western  Union  Tel.         '  Wilson  v.  Atlantic,  etc.    R.    R. 

Co.,  59  Minn.  332;    61  N.  W.  324;  Co.,  2  Fed.  459. 
50  Am.  St.  Rep.  407.  '  South  Durham  Brewery  Co.,  31 

Cf.    Guilford    v.    Western    Union  Ch.  D.  261;   Guinness  v.  Land  Corp., 

TeZ.  Co.,  43  Minn.  434;  46  N.  W.  70.  22  Ch.  D.  349,  377  (semble) ;    An- 

»  State   ex   rel.    Phillips    v.    New  drews  v.  Gas  Meter  Co.  (1897),  1  Ch. 

Orleans  Gas  Light  Co.,  25  La.  Ann.  361. 
413.  But    see    Hutton    v.    Scarborough 

Cf.  State  ex  rel.  Benedict  v.  South-  Hotel  Co.,  2  Dr.  &  Sm.  521  (over- 

ern  Mineral,  etc.  Co.,  108  La.  24;  32  ruled). 

431 


§  51S  CAPITAL    AND    SHARES  [ChAP.  X 

The  true  meaning  of  this  pronouncement  is  that  the  equality 
among  the  shareholders  is  not  part  of  the  company's  unalterable 
constitution  but  is,  like  the  presumption  of  equality  among 
partners,  a  mere  private  matter  for  the  shareholders  concerned. 
Any  alteration  in  this  prima  facie  equality  involves  the  creation 
of  preferential  rights,  and  will  be  considered  below.  The  sub- 
ject that  now  presses  for  attention  is  the  legal  idea  of  equality 
among  shareholders  —  what  the  law  means  by  equality. 


§  518-§  521.     WHAT    THE   LAW  MEANS   BY  EQUALITY   BE- 
TWEEN SHARES. 

§  5 IS.  Where  Shares  are  of  Different  Nominal  or  Par  Values.  — ■ 
Commonly,  all  the  shares  are  of  the  same  nominal  amount;  but 
sometimes  one  class  or  set  of  the  shares  has  a  different  par  value 
from  another  class  or  set.  Where  this  is  the  case,  the  equality 
which  the  law  strives  to  maintain  between  the  several  shares  is 
an  equality  of  nominal  values  rather  than  a  mere  numerical 
equality.  That  is  to  say,  where  the  capital  consists  partly  of 
one-pound  shares  and  partly  of  five-pound  shares,  each  five- 
pound  share  is  to  be  taken  as  the  equivalent  of  five  one-pound 
shares.* 

§  519-§  524.      WHERE     A    LARGER    PROPORTION    PAID    IN    UPON 
SOME    SHARES    THAN    OTHERS. 

§  519.  While  Company  a  Going  Concern  —  Calls,  Dividends, 
Interest  on  Amounts  paid  in  Advance  of  Calls.  —  A  case  which 
is  both  more  common  and  more  difficult  is  where  all  the 
shares  are  of  the  same  nominal  amount  but  where  a  larger 
proportion  has  been  paid  in  upon  some  of  them  than  upon 
others.  Generally,  of  course,  the  same  amount  is  paid  in  on 
every  share;  and  all  calls  must  be  uniform  upon  all  the  shares. 
But  not  infrequently  some  of  the  shares  are  issued  as  fully  paid 
in  exchange  for  property  or  services,  while  only  a  part  of  the 
nominal  value  of  the  other  shares  is  paid  in.  Wherever  this  is 
the  case,  the  law  contemplates  that  in  all  other  respects  the 
shares  shall  stand  upon  an  equality.    It  is  true,  where  a  greater 

'  Wakefidd  Rolling  Stock  Co.  Whiskey,  etc.  Co.,  16  Times  L.  R. 
(1892),  3  Ch.  165.     See  also  Welsh    246. 

432 


§  493- §  573]  EQUALITY    OF    SHARES  §  520 

proportion  has  been  paid  u[>oii  soiiif  sliares  than  u[K)n  others,  any 
calls  that  may  be  made  must  be  levied  exclusively  u{>on  the  latter 
class  of  shares  until  the  inequality  is  wiped  out.'  But  with  this 
exception,  which  is  apparent  rather  than  real,  shares  of  the  same 
nominal  amount  stand  u|X)n  an  equality  irrespective  of  the  fact 
that  a  larger  amount  has  been  paid  upon  some  of  them  than 
others.  Thus,  all  dividends  must  be  divided  amon<^  the  share- 
holders in  proportion  to  the  nominal  amounts  of  their  shares,  and 
the  directors  have  no  authority  to  pay  a  dividend  in  proportion 
to  the  amounts  respectively  paid  up  on  the  shares.-  To  be  sure, 
where  a  corporation  receives  from  shareholders  money  paid  in 
advance  of  calls,  it  may,  by  an  agreement  contemporaneous  with 
the  payment,  lawfully  treat  the  transaction  as  a  loan,  and  agree 
to  pay  interest  thereon ;  ^  and,  in  that  way,  the  advancing  share- 
holders may  secure  some  of  the  advantages  that  would  accrue  to 
them  if  dividends  were  payable  proportionately  to  the  amounts 
paid  in  on  the  several  shares. 


§  520- §  521.     In  Wiiiding-up  or  Liquidation. 

§  520.  Where  Assets  are  more  than  sufficient  to  return  paid-up 
Capital.  —  Not  merely  are  dividends  payable  only  in  projx)r- 
tion  to  the  nominal  or  par  value  of  the  shares  irrespective  of  the 
fact  that  greater  amounts  may  have  been  paid  in  on  some  of 
them  than  on  others,  but  also,  when  a  corporation  is  being  wound 
up,  any  surplus  that  may  remain  after  satisfying  all  creditors  and 
returning  to  the  shareholders  the  amount  of  capital  respectively 
paid  in  by  them,  must  be  likewise  distributed  among  the  share- 
holders in  proportion  to  the  nominal  amounts  of  their  shares  and 
without  reference  to  the  fact  that  some  of  them  had  paid  in  more 
than  others.* 

'  Great  Western  Tel.  Co.  v.  Burn-  *  See  Lock   v.   Queensland  Land 

ham,  79  Wise.  47;  47N.  W.  373;  24  Co.    (1896),   A.   C.   461,    and    infra, 

Am.  St.  Rep.  698;   Bouku  v.  Kuehn,  §  548  and  §  1340. 

79  Wise.  53.  *  Birch  v.  Cropper,  14  A.  C.  525; 

'  OakbankOilCo.v.CruTn,SA.C.  Morrow  v.   Peterborough   Water  Co., 

65.    Cf.  Gellerman  v.  Atlas  Foundry,  4  Ont.  L.  R.  324.    Cf.  Eclipse  Mining 

etc.  Co.  (Wash.),  87  Pac.  1059.  Co.,  17  Eq.  490. 

But   see   Richardsoii    v.    Vermont,  But  see  Sheppard  v.  Scinde,  etc. 

etc.  R.  R.  Co.,  44  Vt.  613,  621.  Ry.  Co.,  56  L.  J.  Ch.  866;  36  W.  R.  1. 
VOL.  I.  —  2S                                  433 


§  521  CAPITAL    AND    SHARES  [ChAP.  X 

§  521.  Where  Assets  are  insufficient  to  return  paid-up  Capital. 
—  ^Yhe^e,  in  a  winding-up,  the  assets  after  paying  debts  will  not 
suflBce  to  return  all  the  paid-up  capital,  they  must  first  be  applied, 
if  more  has  been  paid  in  on  some  shares  than  on  others,  in  repay- 
ing to  the  holders  of  the  first  class  of  shares  the  difference  between 
the  amounts  paid  up  on  them  and  on  the  other  shares;  and  if 
the  assets  are  not  sufficient  to  make  good  this  difference,  then  a 
call  must  be  made  on  the  other  shareholders  sufficient  to  do  so. 
This  result,  in  the  ordinary  case,  where  some  of  the  shares  are 
fully  paid  and  some  partly  paid,  may  be  reached  by  several 
different  methods  of  accounting. 

(a)  Method  I.  —  In  the  first  place,  the  amount  remaining 
unpaid  on  the  partly-paid  shares  may  be  called  in ;  and  the  sum 
thus  obtained  plus  any  assets  remaining  after  the  payment  of 
debts  and  expenses  should  then  be  divided  pro  rata  among  all 
the  shareholders,^  all  of  whom,  after  the  call,  stand  on  an  equality 
in  respect  to  the  amounts  paid  in.  Of  course  where  this  method 
is  adopted,  there  is  no  need  actually  to  make  and  collect  the  full 
amount  of  the  call ;  but  by  a  short  calculation  the  net  amount  to 
be  paid  or  received  by  the  shareholders  of  the  two  classes 
respectively  may  be  determined,  and  the  necessary  distributions 
or  assessments  may  then  be  made.  This  method  of  accounting 
is  always  available,  and  will  in  the  long  run  prove  the  simplest. 

(6)  Method  II.  —  Secondly,  the  assets  in  hand  (after  paying 
debts  and  costs  of  liquidation)  may  be  used  in  returning  to  the 
holders  of  fully-paid  shares  the  difference  between  the  amounts 
paid  on  their  shares  and  the  amounts  paid  on  the  partly-paid 
shares;  and  the  balance,  if  any,  should  then  be  distributed  pro 
rata  among  all  the  shareholders  in  proportion  to  the  par  value  of 
their  shares.^  When  this  method  is  adopted,  the  shareholders 
who  have  paid  in  the  larger  amounts  cannot  demand  that  interest 

'  Anglesea  Colliery  Co.,  1  Ch.  555.  shares  over  the  amount  paid  on  the 

^  See  Scinde,  etc.  Bank  Corpora-  other  shares  which  had  been  issued 

tion,  6  Ch.  53  n. ;    Wakefield  Rolling  on  special  terms  by  an  increase  of 

Stock  Co.  (1892),  3  Ch.  165;  Driffield  capital,  before  any  distribution  was 

Gas  Light  Co.  (1898),  1  Ch.  451.  made  to   the   holders   of  the   latter 

But  see  Eclipse  Mining  Co.,   17  class  of  shares,  but  that  all  the  as- 

Eq.  490,  where  upon  very  peculiar  sets  in  hand  after  paying  debts  and 

facts  it  was  held  that  the  holders  of  costs  should  be  distributed  pro  rata 

paid-up  shares  were  not  entitled  to  among  all  the  shareholders  without 

be  repaid  the  excess  of  the  amounts  regard  to  the  amounts  paid  up  on 

deemed  to  have  been  paid  on  their  their  shares. 

434 


§  493- §  573]         EQUALITY  OF  SHARES  §  522 

on  the  excess  of  the  amounts  paid  on  their  shares  over  the 
amounts'  paid  on  the  other  shares  be  paid  to  them  before  any 
distribution  is  made  to  the  other  shareholders,'  unless  the 
advance  payments  were  made  under  contracts  stipuhiting  for 
interest  thereon.-  Where  the  surplus  assets  are  not  sufhcient  to 
equalize  the  amounts  paid  up  on  the  two  classes  of  shares  by 
returning  the  excess  payments  to  the  holders  of  the  first  class, 
then  a  sum  sufficient  for  that  purpose  must  be  raised  by  a  call  on 
the  second  class  of  shares ;  ^  but  the  matter  is  more  complicated 
than  where  the  former  method  of  accounting  is  used. 

(c)  Method  III.  —  The  third  method  of  accounting  is  still 
more  complicated.  According  to  that  method,  a  sum  should 
be  raised  by  a  call  on  the  partly-paid  shares  sufficient  to  pay  to 
the  paid-up  shareholders  enough  to  make  the  two  classes  of 
shares,  after  the  call  on  the  first  class  and  the  distribution  of  the 
proceeds  thereof  among  the  holders  of  the  second  class,  stand  on 
an  exact  equality  in  respect  to  the  amounts  paid  in:  after  this 
process  of  equalization  has  been  completed,  any  assets  in  hand, 
remaining  after  payment  of  debts  and  expenses,  should  be 
distributed  pro  rata  among  all  the  shareholders.* 

All  these  three  methods  of  accounting  lead  to  the  same  result ; 
but  as  a  practical  matter  it  is  submitted  that  the  first  is  decidedly 
preferable. 


§  522.  Shares  issued  at  a  Premium.  —  Sometimes  shares  are 
issued  at  a  premium.^  In  such  cases,  of  course,  the  premium  is 
absorbed  in  the  general  funds  of  the  company ;  and  on  dissolu- 
tion the  holders  of  those  shares  cannot  demand  that  the  premium 
should  be  treated  as  capital  paid  in,  and  as  such  be  returned  to 
them.  Any  distribution  of  assets  in  winding-up  must  be  made 
without  regard  to  the  circumstance  that  some  of  the  shares  were 
issued  at  a  premium."  The  amount  of  the  premium  may  be 
treated  by  the  company  as  a  reserve  fund  of  accumulated  profits.^ 

^  Ex  parte  Maude,  6  Ch.  51.  *  Anglo-Continental     Corporation 

»  Exchange  Drapery  Co..  38  Ch.    (1898),  1  Ch.  327. 
D.  171 ;    Wakefield  Rolling  Stock  Co.         *  Cf.  infra,  §  775. 
(1892),  3  Ch.  165.  *  Driffield  Gas  Light  Co.  (189S), 

^  Provisioji    Merchants    Co.,    26    1  Ch.  451. 
L.  T.  862.  '  Hoare  &  Co.  (1904),  2  Ch.  208. 

Cf.  infra,  §  1334. 
435 


§  523  CAPITAL    AND    SHARES  [ChAP.  X 


§  523-§  524.     Provisions  establishing  different  Rides  of  Equality. 

§  523.  Nature  of  such  Provisions  —  Distinguished  from  Pro- 
visions creating  Preferred  Shares.  —  Provisions  in  statutes  or 
in  regulations  of  corporations  altering  these  rules  of  equality 
resemble  provisions  creating  preferential  rights,  and  might 
perhaps  more  logically  be  treated  as  a  branch  of  the  subject  of 
preferred  shares;  but  for  the  sake  of  convenience  they  will  be 
disposed  of  at  once.  Such  provisions  differ  from  provisions 
creating  preferred  shares  in  that,  instead  of  aiming  at  the  creation 
of  a  preference,  their  object  is  the  preservation  of  equality  among 
the  shareholders  by  excluding  the  application  of  rules  of  law 
which,  while  designed  to  maintain  equality,  have  been  thought  to 
destroy  it. 

§  524.  Construction  of  Provisions.  —  In  the  first  place,  the 
principles  stated  above  '  embody  the  legal  conception  of  equality 
and  justice  between  shareholders  who  have  paid  different 
amounts  on  their  shares;  and  as  those  principles  have  been 
settled  upon  by  the  judges  as  those  most  consonant  to  equity,  any 
provisions  involving  departures  from  those  rules  will  be  rather 
strictly  construed.  A  provision  in  a  company's  regulations  that 
profits  shall  be  divided  in  proportion  to  the  amounts  paid  up  on 
the  respective  shares  does  not  affect  the  rule  that  in  a  winding-up 
surplus  assets  after  paying  debts  and  returning  paid-up  capital 
shall  be  divided  in  proportion  to  the  nominal  amounts  of  the 
shares,^  nor  the  rule  that  in  liquidation  before  any  distribution  of 
assets  to  holders  of  partly-paid  shares,  the  amounts  paid  in  on  the 
several  shares  must  be  equalized.^  Indeed,  even  a  provision  that 
any  distribution  to  members  in  winding-up  proceedings  shall  be 
in  proportion  to  the  amounts  paid  up  on  the  shares  held  by  them 
respectively  at  the  commencement  of  the  winding-up  does  not 
do  away  with  the  necessity  for  a  call  on  the  partly-paid  shares  for 
the  purpose  of  equalizing  the  shareholders.*     Such  a  provision 

'  Supra,  §§  518-522.  was  that,  if  the  assets  should  not  be 

*  Birch  V.  Cropper,  14  A.  C.  525.  sufficient  to  return  all  paid-up  capi- 

*  Ex  parte  Maude,  6  Ch.  51.  tal,    the    loss   should    be   borne    by 

*  Ex  parte  Lowenjeld,  70  L.  T.  3;  members  "in  proportion  to  the 
Welsh  Whiskey  Distillery  Co.,  16  capital  paid  in,  or  which  ought  to 
Times  L.  R.  246.  The  same  result  have  been  paid  in  on  the  shares  held 
has  been  reached  where  the  provision  by   them    respectively  at  the  com- 

436 


§  493-§  573]  PREFERRED    SHARES  §  525 

is  taken  to  mean  that  after  all  calls  necessary  for  purposes  of 
equalization  have  been  made,  the  distribution  includinj,'  the 
proceeds  of  the  call  shall  be  pro  rata  according  to  the  amounts 
then  paid  up  on  the  respective  shares.'  Under  provisions  of  tiiis 
kind,  however,  if  the  net  assets  in  the  hands  of  the  liquidator  or 
receiver  are  sufficient  to  return  all  paid-up  capital,  there  is  no 
occasion  for  a  call  for  purposes  of  equalization,  and  any  surplus 
after  the  return  of  capital  must  be  distributed  in  proportion  to 
the  varying  amounts  paid  up  on  the  several  shares."  Sometimes 
where  shares  are  issued  as  fully  paid  in  exchange  for  property  or 
services,  the  special  contract  contains  clauses  negativing  the 
right  of  the  holders  to  have  a  call  made  in  the  winding-up  on  the 
other  shareholders  for  the  purpose  of  equalizing  the  paid-up 
capital.  This  is  the  case  when  the  contract  provides  that  the 
shares  shall  be  treated  as  fully  paid  up  "so  that  no  call  is  to  be 
made  in  respect  of  them" ;  for  the  latter  clause  will  be  construed 
to  mean  to  the  extent  that  no  call  shall  be  made  on  them,  and  not 
as  giving  their  holders  the  other  rights  of  owners  of  paid-up 
shares.^ 

§  525-§  534.       CREATION    OF    PREFERENTIAL   RIGHTS. 

§  525.  Power  of  Shareholders  to  create  Preferential  Rights  by 
mutual  Agreement.  —  The  rule  of  equality  among  the  share- 
holders which  an  attempt  has  been  made  above  to  elucidate 
mav,  as  already  intimated,  be  altered  by  the  persons  affected. 
That  is  to  say,  just  as  partners  may  by  agreement  among  them- 
selves alter  or  regulate  the  rights  and  obligations  which  in  the 
absence  of  agreement  the  law  would  annex  to  their  relationship, 
subject  only  to  the  restriction  that  the  rights  of  third  persons 
must  not  be  prejudiced,  so  shareholders  may  by  mere  mutual 
agreement  moukl  and  control  their  individual  rights  arising  from 
membership  in  the  corporation,  and  may  in  respect  to  such  rights 
confer  upon  some  of  their  number  special  privileges  or  prefer- 
ences. So-called  subscriptions  to  shares  upon  special  terms 
may  often   be  regartled   as  creating   such   preferential   rights, 

mencement     of     the     ^\•inding-up. "    cates   (1S99),    1   Ch.   896.     Cf.   Xew 
Anglo-Continental    Corp.    (1S9S),     1     Transvaal  Co.  (1896),  2  Ch.  750. 
Ch.  327.  ^  llolyjord  Mining  Co.,  Ir.  R.  3 

'  Ex  parte  Lowenfeld.  70  L.  T.  3.    Eq.  208. 

*  Mutoscope  and  Biograph  Syndi- 

437 


§  526  CAPITAL   AND    SHARES  [ChaP.  X 

although  they  have  not  been  generally  treated  in  that  way.'  The 
individual  rights  most  commonly  affected  by  agreements  for 
preferences  in  favor  of  some  shareholders  are  the  rights  of  the 
several  shareholders  to  participate  equally  in  dividends ;  -  but 
other  purely  individual  rights  of  the  shareholders  stand  on  the 
same  footing.  Thus,  the  right  of  uU  the  shareholders  to  share 
equally  in  a  winding-up  in  the  distribution  of  assets  remain- 
ing after  payment  of  the  company's  debts  is  sometimes  altered 
bv  agreements  whereby  certain  of  the  shareholders  become  en- 
titled to  a  preference.^  So,  the  shareholders  may  agree  that 
no  call  shall  be  made  on  certain  of  the  shares  unless  it  be 
necessary  for   payment  of  debts.* 

§526.  Nomenclature.  —  "Preferred  Shares,"  "  Prefereyice 
Shares,"  ''Common  Shares,"  " Ordinary  Shares."  —  When  pref- 
erential rights,  generally  in  respect  to  dividends,  are  given  to  any 
class  of  shares,  those  shares  are  called  in  England  preferred  or 
preference  shares.  In  the  United  States,  they  are  called  pre- 
ferred shares  or  preferred  stock.^  In  England,  the  other  or 
deferred  shares  are  called  ordinary  shares,  while  in  America 
they  are  usually  called  common  shares  or  common  stock.  The 
right  to  a  preference  in  respect  to  dividends  —  that  is  to  say,  the 
right  to  receive  a  dividend  of  a  certain  rate  per  cent  before  any 
dividend  is  paid  on  the  other  shares  —  is  not  merely  the  most 
common  kind  of  preferential  rights,  constituting  the  distinguish- 
ing feature  of  most  preferred  stock,  but  is  also  typical  of  the  other 
preferential  rights  which  may  be  created  in  a  similar  way  and 
which  may  be  reserved  for  subsequent  and  briefer  consideration. 

§  527-  §  530.     Power  to  give  Preference  to  some  Shares  in  respect 

of  Dividends. 

§  527.  In  general.  —  The  right  to  dividends  is  peculiarly 
the  individual,  private  right  of  each  shareholder.  Dividends 
can  be  paid  only  when  profits  are  earned  and  when  therefore 

'  Rutland,  etc.  R.  R.  Co.  V.  Thrall,  of  so-called  "special  stock"  which 

35  Vt.  536;    Waterman  v.  Troy,  etc.  carried   certain   peculiar  rights  and 

R.  R.  Co.,  8  Gray  (Mass.),  433.  which  has  little  resemblance  to  the 

^  Infra,  §  527-§  530.  preferred  shares  so  common  in  Eng- 

^  Infra,  §  .564.  land  and  the   United   States.     Am. 

*  Infra,  §  571.  Tube  Works  v.  Boston  Machine  Co., 

*  The  statutes  of  Massachusetts,  139  Mass.  5;   29  N.  E.  63. 
until  recently,  authorized  the  issue 

438 


§  493-§  573]  I'UEFERRED    SHARES  §  528 

creditors  are  not  jeopardized.  Moreover,  tlie  dividends,  when 
paid,  go  into  the  jMivate  pocket  of  each  shareholder.  If,  there- 
fore, any  shareholder  chooses  to  waive  his  right  to  a  dividend, 
in  whole  or  in  part,  in  favor  of  some  other  shareholder,  neitlier 
the  creditors  nor  the  public  nor  any  other  shareholder  is  in  any 
way  affected  or  has  any  ground  for  complaint.  Moreover,  sub- 
sequent transferees  of  the  shares  who  may  take  with  notice  of 
any  such  waiver  would  take  subject  thereto.  The  waiver  or 
agreement  would,  to  borrow  an  expression  from  the  law  of  real 
property,  "run  with"  the  share  as  against  all  except  bona  fide 
purchasers  for  value.  By  means  of  these  principles,  the  issue  of 
preferred  shares  may  often  be  sustained  without  the  aid  of  any 
express  enabling  statute.' 

§  52S.  Creation  of  Preference  at  Organisation  of  Company  by 
Incorporation  Paper  or  Contemporaneous  By-laws.  —  Thus,  if  the 
incorporation  paper  divide  the  capital  stock  into  preferred  and 
ordinary  or  common  shares,  the  holders  of  the  former  class  of 
shares  being  entitled  to  a  dividend  up  to  a  limited  amount  in 
preference  to  shareholders  of  the  latter  cla^s,  every  signatory  of 
the  instrument  and  every  person  who  may  subsequently  sub- 
scribe for  shares  assents  to  the  arrangement;  and  furthermore 
all  future  transferees  of  shares  are  affected  with  notice  of  the 
contents  of  the  instrument  and,  being  therefore  charged  with 
notice  of  the  preference  given  to  the  one  set  of  shareholders, 
would  take  subject  thereto.  The  legality  and  effectiveness  of 
classifying  the  shares  in  this  way  in  the  incorporation  paper  may, 
accordingly,  be  regarded  as  settled.-  Indeed,  if  a  corporation  at 
its  organization  by  mere  by-law  divides  its  shares  into  preferred 
and  common,  the  rights  of  the  shareholders  will  be  governed  by 
the  terms  of  that  by-law.' 

'  See  Kent  v.  Quicksilver  Mining  preferred  shares  which  was  con- 
Co.,  78  N.  Y.  159,  178-179;  Higgim  tained  in  the  "articles  of  associa- 
V.  Lansingh,  154  III.  301;  40  N.  E.  tion "  recorded  contemporaneously 
362 ;  Wilson  v.  Parvin,  1 19  Fed.  652 ;  with  the  memorandum  of  association 
56  C.  C.  A.  268.  was  effective. 

»  Roberts    v.    Roberts-Wicks    Co.,  Cf.    Kent   v.    Quicksilver   Mining 

184  N.  Y.  257;    77  N.  E.  13;    112  Co.,  78  N.  Y.  159.  178-179. 
Am.  St.  Rep.  607;   Nelson  Coke  Co.  *  Cf.  Kent  v.  Quicksilver  Mining 

V.  Pellatt,  4  Ont.  L.  R.  481 ;  Harrison  Co.,  78  N.  Y.   159,  178-179. 
V.    Mexican    Ry.    Co.,    19    Eq.    358;  See  also  cases  cited  supra  as  to 

South  Durham  Brewery  Co.,  31  Ch.D.  classification    of    shares    in    English 

261;     in   wliich   last   two  ca.ses   the  articles  of  association, 
court  held  that  an  authorization  of 

439 


§  529  CAPITAL    AND    SHARES  [ChAP.  X 

§  529.  Creation  of  Preference  after  Shares  have  been  issued  on 
an  Equality.  —  Even  after  shares  have  been  issued  upon  an 
equal  footing,  the  holders  may  by  unanimous  agreement  re- 
classify them  so  as  to  give  preferential  rights  to  some  of  them.^ 
This  is  often  done  in  pursuance  of  some  scheme  of  reorganization, 
when  all  the  original  shares  are  surrendered  and  new  shares 
issued,  some  of  which  carry  preferential  rights.  ^Yithout, 
however,  such  unanimous  consent,  where  shares  have  been 
issued  with  equal  rights,  no  preference  can  be  given  to  some  over 
the  others,-  —  not  even  by  a  resolution  or  by-law  passed  by  a 
majority  of  the  shareholders.  Thus,  where  shares  as  issued  stood 
upon  an  equality,  a  by-law  which  attempts  to  confer  a  preference 
upon  the  shares  of  any  shareholders  who  may  pay  a  certain 
premium  to  the  company  is  void  as  against  a  dissentient  minority 
of  the  shareholders  unless  they  have  become  barred  by  laches.^ 

§  530.  Issue  of  new  Shares  with  Preference  over  previously 
issued  Shares.  —  The  same  rule  would  seem  to  apply  where  a 
portion  of  the  original  authorized  capital  which  had  not  been 
previously  subscribed  is  proposed  to  be  issued  with  a  preference 
over  the  holders  of  the  previously  allotted  shares ;  ^   and  shares 

'  For    this    purpose,    where    the  where  a  later  decision  between  the 

stock-certificate   has   been  indorsed  same  parties,  Hutton  v.  Scarborough 

to  an  assignee  but  before  the  trans-  Hotel   Co.,   2  Dr.   &  Sm.   521,    was 

fer  is  registered,  the  assent  of  the  overruled.      The    American    courts 

transferor  is  not  sufficient  although  would  probably  agree :    Railroad  v. 

the  company  have  no  notice  of  the  Knoxvillc,  98  Tenn.  1,  21;   37  S.  W. 

transfer:    Campbell  v.  Am.  Zylonite  883. 

Co.,  122  N.  Y.  455;    25  N.  E.  853;  But  see  Hazlehurst  v.  Savannah, 

11  L.  R.  A.  596.  etc.  R.  R.  Co.,  43  Ga.  13;    Ingraham 

2  Campbell  v.  Am.  Zylonite  Co.,  v.  National  Salt  Co.,  130  Fed.  676, 

122  N.  Y.  455;    25  N.  E.  853;    11  679      (headnote     inadequate);      65 

L.  R.  A.  596.     The  power  to  reor-  C.  C.  A.  54;    Wilson  v.  Parvin,  119 

ganize    the  capital  by  dividing  the  Fed.  652 ;  56  C.  C.  A.  268. 
shares  into  classes  is  expressly  con-         The  rule  as  stated   in   the  text 

ferred  by  a  recent  British  statute,  may,  however,  be  evaded  by  issuing 

7  Edw.  "VII,  c.  50  (Companies  Act,  in   payment  for  property  acquired 

1907),  §  39.  by  the  company  ordinary'  shares  to- 

*  Kent  v.  Quicksilver  Mining  Co.,  gether  with  "certificates  of  indebt- 
78  N.  Y.  159,  179-180  (semble).  edness"  sufficient  to  cover  guaran- 

*  Huttonv.  Scarborough  Hotel  Co.,  teed  dividends  thereon  for  a  period 
4  De  G.  J.  &  S.  672  (affirming  s.  c.  of  years:  Ingraham  v.  National  Salt 
2  Dr.  &Sm.  514).  This  decision  was  Co.,  130  Fed.  676;  65  C.  C.  A.  5^. 
approved  and  declared  to  be  "ob-  Cf.  Strickland  v.  Nat.  Salt  Co.  {N.J. ), 
viously  correct"  in  Andrews  v.  Gas  64  Atl.  982  (semble). 

Meter   Co.    (1897),    1   Ch.   301,  368, 

440 


§  493-§  573]  PREFERRED    SFIARES  §  530 

issued  hv  incTcasing  the  authorized  capital  cannot  well  he  dif- 
ferentiated in  this  respect  from  the  previously  unissued  shares  of 
the  original  capital/  In  England,  however,  it  is  now  held,  in 
spite  of  an  early  decision  to  the  contrary,-  that  a  company  may 
by  altering  its  articles  of  association  take  to  itself  the  power  of 
increasing  its  capital  by  the  issue  of  preferred  shares,  and  may 
then  proceed  to  issue  the  shares  of  the  new  capital  with  a  pref- 
erence over  the  shares  of  the  original  capital.^  The  hardship  of 
this  doctrine  in  upsetting  the  supposedly  vested  right  of  the 
original  shareholders  to  rank  equally  with  any  shares  that  might 
subsequently  be  issued  is  perhaps  more  apparent  than  real.  For 
if  the  corporation  should  issue  bonds  or  debentures,  as  unques- 
tionably it  might  lawfully  do,  the  position  of  the  original  share- 
holders would  be  worse  rather  than  better  than  if  the  money  were 
raised  by  an  issue  of  preferred  shares.*  Nevertheless,  as  already 
stated,  the  issue  of  preferred  shares  upon  an  increase  of  capital 
except  by  unanimous  consent  is  in  the  United  States  generally 
held  to  be  unwarranted.  Of  course,  if  the  issue  of  shares  with  a 
preference  over  the  existing  shares  is  authorized  by  the  incor- 
poration paper  or  by  regulations  which  were  adopted  prior  to 
the  issue  of  the  deferred  or  common  shares  and  of  which  the 
subscribers  to  the  common  shares  had  either  actual  or  con- 
structive notice,  the  issue  of  the  preferred  shares  is  quite 
lawful.^  And  even  if  preferred  shares  are  issued  by  a  mere 
majority  vote  of  the  existing  shareholders  when  a  unanimous 
vote  is  requisite,  yet  subsequent  unanimous  acquiescence 
will  be  equivalent  to  prior  authorization,  and  will  validate  the 
issue.® 

'  Ernst    V.    Elmira    Mun.    Imp.         '  Andreivs  v.  Gas  Meter  Co. (1897), 

Co.,  24  N.  Y.  Misc.  Rep.  583;    54  1  Ch.  361.    Cf.  Hinckleij  v.  Schicartzs- 

N.  Y.  Supp.  116.  child,  etc.  Co.,  45  N.  Y.  Misc.  176; 

The  only   possible  distinction  is  91  N.  Y.  Supp.  893. 
that  upon  an  increase  of  capital  the  *  Harrison  v.   Mexican  Ry.   Co., 

original  shareholders  liave  generally  19  Eq.  358,  367-368. 
an  option  of  subscribing  to  the  new  *  Harrison  v.   Mexican   Ry.   Co., 

sliares  in  proportion  to  tlieir  hold-  19  Eq.  358;   South  Durham  Brewery 

ings  of  the  old,  and  are  consequently  Co.,  31  Ch.  D.  261. 
less     injuriously     affected     by     the  *  Kent  v.  Quicksilver  Mining  Co., 

annexing  of    preferential    rights    to  78  N.  Y.   159.     But  see  Ashbury  v. 

the    new    shares    than    if    no    such  Watson,  30  Ch.  D.  376.     Cf.  infra, 

option  had  existed.  §   534. 

''  Hutton  V.  Scarborough  Hotel  Co., 
2  Dr.  &  Sra.  521. 

441 


§  531  CAPITAL    AND    SHARES  [ChAP.  X 

§  531.  Statutes  authorizing  Issue  of  Preferred  Shares.  —  Some- 
times statutes  expressly  authorize  the  issue  of  preferred  shares 
and  define  the  incidents  thereof.  It  is  submitted,  however,  that 
such  statutes  should  not  be  construed  as  impliedly  prohibiting 
the  issue  of  preferred  shares  with  different  incidents  and  rights, 
by  any  method  that  would  be  permissible  without  affirmative 
statutory  authorization.  A  statute  which  in  form  is  enabling 
may  by  implication  limit  the  number  of  preferred  shares  which 
the  corporation  may  issue.  A  statute  authorizing  the  issue  of 
preferred  shares  to  an  amount  equal  to  two  thirds  of  the  capital 
actually  paid  in  means  capital  paid  in  at  the  time  the  issue  is 
authorized  by  resolution  rather  than  the  time  when  the  pre- 
ferred shares  are  actually  issued.' 

§  532.  What  words  Suificient  to  authorize  Issue  of  Preferred 
Shares  ca,TTying  sundry  Preferences.  —  However  this  may  be, 
the  question  may  often  arise  what  language  is  sufficient  to 
authorize  the  issue  of  shares  with  preferential  rights;  and  this 
question  is  essentially  the  same  whether  the  language  to  be 
construed  is  found  in  a  statute,  incorporation  paper,  or  contract. 
It  has  been  held  that  authority  to  issue  new  shares  of  such 
nominal  amount  and  on  such  conditions  as  a  special  resolution 
might  determine  does  not  justify  the  issue  of  preferred  shares;  ^ 
and  the  same  has  been  held  to  be  true  of  authority  to  issue  shares 
"of  such  nominal  value  and  subject  to  such  conditions  as  to  the 
payment  of  calls  and  proportion  of  profits  as  may  be  determined 
by  the  company."  ^  On  the  other  hand,  power  to  issue  new 
shares  "  with  and  subject  to  such  rules,  regulations,  privileges  and 
conditions"  as  the  company  in  general  meeting  may  determine 
will  warrant  the  issue  of  preferred  shares.*  A  clause  empower- 
ing the  company  to  issue  shares  with  such  preferences  as  it  may 
deem  expedient  authorizes  the  issue  of  shares  having  a  pref- 
erence in  respect  to  capital  as  well  as  in  respect  to  dividends ;  ^ 

'  Continental  Varnish,  etc.  Co.  v.  tions  as  the  general  meeting  shall 

Secretary  of  State,   87   N.   W.   901;  direct." 

128  Mich.  621.  ^  Moss  v.  Syers,  32  L.  J.  Ch.  711. 

^  Melhado  v.  Hamilton,  28  L.  T.  *  Harrison  v.   Mexican  Ry.  Co., 

N.  s.  578  (affirmed  in  29  L.  T.  n.  s.  19  Eq.  358. 

364).  ^  Bangor   Slate   Co.,   20    Eq.    59 

Cf.   Hutton  V.  Scarborough  Hotel  (headnote  inadequate).     Cf.  London 

Co.,   2   Dr.    &   Sm.   521,   where  the  &  New  York  Investment  Co.  (1895), 

original    articles  authorized  the  in-  2  Ch.  860.     See  also  infra,  §  564. 
crease  of  capital   "on   such   condi- 

442 


§  493-§  573]  PREFERRED    SHARES  §  533 

and  power  to  issue  preferred  shares  ineludes  power  to  issue 
"guaranteed"  shares,'  for  there  is  no  substantial  (Hiference 
between  the  two.  Indeed,  it  has  been  said  that  where  a  conipaiiy 
is  empowered  to  issue  preferred  shares,  no  conditions  or  restric- 
tions being  attached  to  the  authority,  the  company  may  attach 
such  conditions  as  it  chooses.'  Where  a  statute  authorized  a 
railway  company  to  "increase  their  capital  in  such  manner  as 
they  may  deem  most  advisable,"  the  \'irginia  Court  of  Appeals 
reached  the  somewhat  startling  conclusion  that  the  company  was 
authorized  to  issue  shares  wliich  should  not  merely  carry  a 
preferential  cumulative  dividend,  l)ut  should  also  be  entitled  to 
the  dividend  whether  sufficient  profits  were  earned  or  not.^  And 
a  3*Iassachusetts  statute  authorizing  a  corporation  to  "issue 
preferred  stock  .  .  .  the  said  company  to  give  its  guaranty 
that  each  share  of  stock  shall  receive  semi-annual  dividends  of 
four  dollars  on  each  share,"  was  held  to  authorize  the  issue  of 
stock  the  dividends  upon  which  should  be  paid  whether  or  not 
profits  should  be  earned.*  But  in  general  it  is  submitted  that 
statutes  should  not  be  held  to  authorize  such  anomalous  forms  of 
security  without  very  explicit  language. 

§  533.  Injunction  against  unauthorized  Issue  of  Preferred 
Shares.  —  Ordinarily,  where  without  due  authority  the  com- 
pany is  about  to  issue  preferred  shares,  any  shareholder  may 
secure  an  injunction  against  the  issue.  In  one  case,  however, 
where  such  a  preliminary  injunction  was  asked  for,  Vice-Chan- 
cellor  Knight  Bruce,  without  considering  whether  or  not  the 
proposed  issue  was  ultra  vires,  refused  to  grant  the  application, 
upon  the  ground  that  to  interfere  at  that  stage  in  a  manner  which 
the  court  might  on  final  hearing  determine  to  be  improper  would 
be  more  likely  to  do  harm  than  good,  when  some  of  the  new 
preferred  shares  had  been  already  issued  and  when  the  vast 
majority  of  the  shareholders  favored  the  issue.* 

'  ProiUy  V.  Michigan,  etc.  R.  R.  320,  354.      See    also   infra,    §    542, 

Co.,  1  Hun  (N.  Y.)  (3.35.  661.  §  543. 

^  Hackettv.  Northern  Pac  Ry.  Co.,  *  Williams  v.   Parker,   136  Mass. 

36  N.  Y.  Misc.  583;   73  N.  Y.  Supp.  204.     The  case  proceeds  in  a  large 

1087.  measvire   upon    local   considerations 

^  Gordon's  Exr.t.  v.  Richmond,  etc.  peculiar  to  Massachusetts. 

R.   R.   Co.,   78   Va.    501    (headnote  *  Fielden  v.  Lancashire,  etc.  Ry. 

inadequate).  Co.,  2  De  G.  &  Sm.  531. 

Cf.  Skiddy  v.  Atlantic,  etc.  R.  R.  Cf.  Mackintosh  v.  Flint,  etc.  R.  R. 

Co.,  Re  Stewart's  Petition,  3  Hughes  Co..  32  Fed.  350. 

443 


§  534  CAPITAL   AND    SHARES  [CuAP.  X 

§  534.  Effect  of  unwarranted  issue  of  Preferred  Shares  —  Es- 
toppel —  Acquiescence.  —  Even  if  preferred  shares  are  un- 
warrantably issued,  the  issue  is  not  a  mere  nulHty.  Thus,  the 
vahdity  cf  the  preferred  shares  cannot  be  called  in  question  by 
those  who  received  and  for  several  years  held  them,  collecting 
the  preferred  dividend  thereon.'  Upon  this  principle,  one  who 
actively  promotes  an  issue  of  preferred  stock  and  subscribes  for 
a  large  number  of  shares  thereof  cannot  recover  back  the  amount 
paid  therefor  after  the  company  has  become  insolvent,  upon  the 
ground  that  the  issue  was  illegal  and  that  the  consideration  had 
therefore  failed.-  Moreover,  if  all  the  shareholders  acquiesce  in 
the  illegal  issue  of  preferred  shares,  then  on  the  principles  set 
forth  above  the  improper  issue  is  condoned  and  validated.^  And 
so,  if  the  corporation  resolves  to  issue  preferred  shares  without 
any  preference  as  to  capital  and  the  officers  wrongfully  insert  in 
the  certificates  of  stock  a  clause  conferring  a  preference  in  respect 
to  capital,  this  preference  is  valid  if  the  common  shareholders 
acquiesce  in  the  issue.*  Where,  however,  money  is  advanced  to 
a  company  upon  the  agreement  that  payment  shall  be  made  in 
its  preferred  shares,  the  lender  is  entitled,  upon  the  discovery 
that  the  company  had  no  power  to  create  preferred  shares,  to  a 
return  of  the  money,  notwithstanding  the  fact  that  the  corporation 
may  in  the  meantime  have  acquired  by  act  of  the  legislature 
power  to  issue  the  shares;  ^  in  this  case  the  intended  sul)scriber 
to  the  preferred  shares  had  been  guilty  of  no  laches  sufficient  to 
raise  an  estoppel. 

'  Branch  v.  Jesup,  106  U.  S.  468,  Alstyne,  31  Mich.  76;    18  Am.  Rep. 

481;     1   Sup.  Ct.  495.     Cf.  Long  v.  156. 

Guelph  Lumber  Co.,  SWp.Cun.C.  v.         But  see  Reed  v.  Boston  Machine 

129;     Manufacturers'   Paper   Co.   v.  Co.,  141  Mass.  454;   5  N.  E.  852. 
AUen-Higgins  Co.,  154  Fed.  906.     A  ^  Kent  v.  Quicksilver  Mining  Co., 

different    rule    prevailed    in    Massa-  78N.Y .159;  Taylor  v. South,  etc.  R.  R. 

chusetts   as   to   an   illegal   issue    of  Co.,  13  Fed.  152.     See  supra,  §  530. 
so-called     "special     stock,"     which  *  Toledo,  etc.  R.  R.  Co.  v.  Conti- 

under  certain   conditions    the    stat-  nental  Trust  Co.,  95  Fed.  497,  529, 

utes  of  that  state  authorized  to  be  531;  36  C.  C.  A.  155. 
created:  Am.  Tube  Works  v.  Boston         *  Anthony    v.    Household   Sewing 

Machine  Co.,  1.39  Mass.  5;   29  N.  E.  Machine  Co.,  16  R.  I.  571 ;    18  Atl. 

63.  176;    5  L.  R.  A.  575. 

^  Banigan  v.  Bard,  134  U.  S.  291;  But  cf.  Manufacturers'  Paper  Co. 

10  Sup.  Ct.  565.    Cf.  Lockhart  v.  Van  v.  Allen-Higgins  Co.,  154  Fed.  906. 


444 


§  493-§  573]  ALTERATION    OF    PREFERENCES  §  o3G 

§  535-§  539.     Alteration  of  Preferential  Rights. 

§  535.  In  general.  —  Where  .shares  are  i.s.sued  with  pref- 
erential rights  wliether  the  issue  was  originally  valid  or  has  be- 
come so  by  acquiescence  of  the  deferred  shareholders,  the  right 
to  the  preference  is  a  vested  one  which  is  as  sacred  from  sub- 
sequent alteration  by  the  company  as  is  the  ordinary  right  to 
equality  of  shares  which  are  i.ssued  without  preferen^'e  one  over 
another.'  Thus,  a  preferred  shareholder  may  enjoin  the  company 
from  permitting  the  holders  of  common  shares  upon  payment  of 
a  bonus  to  exchange  them  for  preferred  shares  which  should  rank 
pari  passu  with  the  jireferred  shares  previously  issued,  and  that 
too  although  the  preferential  rights  of  the  earlier  i.ssue  of  pre- 
ferred shares  was  created  by  a  precisely  similar  option  of  ex- 
change of  common  shares  for  preferred,  which  former  exchange 
of  common  shares  for  preferred  had  been  validated  by  long- 
continued  acquiescence  of  all  the  shareholders.^  So,  where  pre- 
ferred shares  are  issued  under  statutory  authority,  a  subsequent 
arrangement  by  which  the  shares  held  by  persons  assenting  to 
the  scheme  are  exchanged  for  shares  ranking  on  a  parity  with 
the  common  or  deferred  shares  does  not  affect  the  non-concurring 
preferred  shareholders.^ 

§  536.  Preference  created  by  Incorporation  Paper.  —  Where 
the  method  of  dividing  profits  between  preferred  and  ordi- 
nary shareholders  is  fixed  by  the  incorporation  paper,  no 
alteration  therein  can  be  made  (unless  in  the  method,  if  any, 
provided  by  law  for  altering  that  instrument) ;  and  this  is  true 
although  the  relative  rights  of  shareholders  are  not  required 
by  law  to  be  determined  by  that  instrument.*  One  judge  has 
expressed  the  opinion  that  not  even  the  unanimous  assent  of 
the  shareholders  would  authorize  an  alteration  in  their  rela- 
tive rights  as  fixed  by  the  incorporation  paper.^     To  be  sure, 

'  A    recent    British    statute    au-         ^  West  Chester,  etc.  R.  R.  Co.  v. 

thorizes  companies  to  alter  or  abro-  Jackson,  77  Pa.  St.  321   (headnote 

gate  preferential  rights  attaching  to  misleatling). 

a  certain  class  of  shares  provided  a  *  Ashbury  v.  Watson,  30  Ch.  D. 

majority  of  the  shareholders  of  that  376.    See  supra,  §  120. 
class  assent.  7  Edw.  VII,  c.  50  (Com-         *  Ashbury  v.  Watson,  30  Ch.  D. 

panics  Act,  1907),  §  39.  376,    384    (semble),    per    Bagallay, 

'  Keni  V.  Quicksilver  Mining  Co.,  L.  J. 
78  N.  Y.  159  (headnote  inadequate), 
affirming  s.  c.  12  Hun  54. 

445 


§  537  CAriTAL    AND    SHARES  [ChAP.  X 

if  the  incorporation  paper  after  providing  for  the  issue  of  pre- 
ferred shares  with  certain  preferential  rights  authorizes  the  com- 
pany to  aher  those  rights,  the  shares  would  be  taken  subject 
to  this  power  of  alteration.'  For  instance,  where  an  incorpora- 
tion paper,  after  providing  for  shares  carrying  a  non-cumulative 
preferential  dividend  of  seven  per  cent  per  annum,  further  pro- 
vides that  any  shares  of  the  present  or  any  increased  capital 
mav  be  isSTied  with  such  rights  and  priorities  as  the  company 
may  from  time  to  time  determine,  the  company  on  increasing 
its  capital  may  issue  shares  ranking  pari  passu  with  the  original 
preferred  shares.-  Where  the  law  provides  a  method  of  alter- 
ing the  incorporation  paper,  the  power  to  alter  the  rights  of 
preferred  or  common  shareholders  inter  sese,  as  fixed  in  that 
instrument,  depends  on  different  considerations,  and  would 
seem  to  exist  to  the  same  extent  as  (and  no  further  than)  the 
power  to  alter  such  rights  when  fixed  by  mere  regulations  or 
by-laws  of  the  company.  Where  a  company's  incorporation 
paper  provides  that  the  preferred  shares  shall  carry  a  preferen- 
tial dividend  at  a  certain  rate  the  corporation  cannot  under  a 
general  power  to  alter  the  instrument  make  an  amendment 
reducing  the  preferential  dividend.^ 

§  537.  EfEect  of  Proceedings  for  Reduction  of  Capital.  —  The 
effect  of  proceedings  for  the  reduction  of  capital  upon  the  pref- 
erential rights  of  preferred  shareholders  is  considered  in  detail 
below.* 

§  538.  EfEect  of  Consolidation  with  another  Corporation.  — 
The  effect  of  a  consolidation  with  another  corporation  upon 
the  rights  of  preferred  shareholders  cannot  be  described  in  gen- 
eral terms  applicable  to  all  cases.  In  some  cases,  the  "con- 
solidation" may  take  the  form  of  a  formal  dissolution  and 
winding-up  of  the  constituent  companies.  In  such  cases  the 
rights  of  preferred  shareholders  in  the  dissolved  corporation 
will  be  governed  by  the  principles  set  forth  below  relating  to 
the  rights  of  preferred  shareholders  in  winding-up  or  liquida- 
tion. In  other  cases,  there  is  a  coalescing  or  merger  of  the  con- 
stituent corporations  without  any  formal  dissolution  of  either 

'  Welsbach  Incandescent  Gas  Light  ^  Pronick  v.  Spirits  Distributing 
Co.  (1904),  I  Ch.  87.  Co.,  58  N.  .1.  Eq.  97;   42  Atl.  586. 

'   Underwood    v.    London    Music         *  Infra,  §  656,  §  672-§  674. 
Hall  (1901),  2  Ch.  309. 

446 


§  493-§  573]         AI.TKKATION    OF    PREFERENCES  §  539 

of  them,  the  new  coinj)any  being  regartled  as  the  successor  of 
both  of  them.  In  such  cases,  the  statute  under  whicli  the  con- 
solidation is  effected  usually  provides  explicitly  that  the  con- 
solidated company  shall  be  lial)le  for  the  obligations  of  the  old 
companies.  It  is,  to  say  the  least,  extremely  doubtful  whether 
such  a  provision  has  any  application  to  the  preferential  rights 
of  preferred  shareholders.  It  is  easy  to  suggest  many  questions 
which  are  very  hard  to  answer.  For  instance,  if  both  of  the 
constituent  corporations  have  issued  preferred  shares,  do  both 
stand  upon  an  ecjuality,  or  does  one  outrank  the  other?  In  a 
New  York  case,  where  the  terms  of  the  consolidation  agreement 
seem  clearly  to  have  contemplated  that  the  rights  of  holders  of 
preferred  stock  in  one  of  the  constituent  companies  should  con- 
tinue unaffected  by  the  consolidation,  the  right  of  such  a  share- 
holder was  enforced  against  profits  earned  by  the  consolidated 
company.'  On  the  other  hand,  in  a  very  recent  case  arising 
under  the  New  Jersey  statute,  the  Vice-Chancellor  of  that  state 
conceded  that  the  right  to  a  continuance  of  the  preferred  cumu- 
lative dividend  might  be  terminated  for  the  future  by  the  con- 
summation of  a  consolidation,  but  held  that  a  consolidation 
agreement  which  provided  for  a  surrender  or  commutation  of 
the  right  to  cumulative  dividends  which  were  overdue  at  the 
time  of  the  consolidation,  and  for  payment  of  which  profits  had 
been  earned  and  accumulated  as  a  reserve  fund,  was  unlawful 
as  against  a  dissenting  preferred  shareholder.-  Certain  it  is 
that  the  mere  issuance  of  preferred  shares  should  not  be  deemed 
a  waiver  of  an  existing  statutory  right  to  consolidate ;  ^  the  only 
question  is  how  the  rights  of  the  preferred  shareholders  are  to 
be  accommodated  to  the  changed  conditions  brought  about  by 
the  consolidation. 

§  539.  Waiver  of  Preference.  —  A  preferred  shareholder  may 
always  waive  the  preferential  rights  attaching  to  his  shares, 
and  as  a  result  of  such  waiver  the  shares  will  be  converted, 
virtually,  into  common  or  ordinary  shares,^  except  that  if  the 
common  shares  have  any  advantages  over  the  preferred  shares 

'  Boardman  v.  Lake  Shore,  etc.  the  court  in  Colgate  v.  U.  S.  Leather 
Ry.  Co.,  84  N.  Y.  157.  Co.  (X.  J.),  67  Atl.  657. 

-  Colgate    v.    U.    S.    Leather    Co.  *  Pendleton  v.  Harris-Emery  Co., 

(X.  J.).  67  .\tl.  657.  124  Iowa  361;    100  N.  W.  117. 

^  This  was  tlistinctly  declared  by 

447 


§  540  CAPITAL    AND    SHARES  [ChAP.  X 

in  respect  to  voting  rights,  or  in  respect  to  being  subject  to  no 
limit  as  to  the  amount  of  dividends  payable,  or  otherwise,  no 
such  "waiver"  by  a  preferred  shareholder  can  have  the  effect  of 
diminishing  those  advantages  without  the  consent  of  the  or- 
dinary shareholders. 

No  attempt  to  coerce  the  preferred  shareholders  into  waiv- 
ing their  riglits  wnll  be  tolerated.  Hence  the  payment  of  in- 
terest upon  dividends  in  arrear  upon  cumulative  preferred 
shares  to  such  preferred  shareholders  as  assent  to  a  change  in 
the  incorporation  paper  whereby  the  preferential  dividend  is 
made  non-cumulative  would  be  unlawful.^ 


§  540-§  548.     Status  of  Preferred  Shareholders  as  Members  and 
not  Creditors  of  the  Company. 

§  540.  Preferred  Shareholders  entitled  to  same  Rights  and  Sub- 
ject to  same  Liabilities  as  other  Shareholders  except  as  otherwise 
provided.  —  The  preferential  rights  which  preferred  shares 
may  carry  may  be  and,  as  will  presently  be  explained  at  length, 
are  exceedingly  diverse;  but  however  various  they  may  be,  and 
whatever  phraseology  may  be  used  in  creating  them,  the  funda- 
mental fact  remains  that  the  holders  are  members  of  the  cor- 
poration.' Consequently,  a  subscription  to  preferred  shares 
cannot  be  treated  as  a  loan  of  money  or  extension  of  credit  to 
the  corporation.^ 

Indeed,  preferred  shareholders  are  shareholders,  and  as  such 
are  entitled  to  all  the  rights,  and  are  subject  to  all  the  liabilities, 
which  attach  to  ordinary  shareholders,  except  in  so  far  as  those 
rights  or  liabilities  may  be  varied,  expressly  or  by  clear  implica- 
tion, by  the  statute,  by-law,  or  convention  under  which  the  pref- 
erence is  created.  Thus,  preferred  shareholders  have  no  greater 
rights  than  ordinary  shareholders  to  enjoin  the  creation  or  fund- 
ing of  debts  by  the  company,*  or  other  matters  of  internal  manage- 

'  Willcox  V.  Trenton  Potteries  Co.,         "  Cf.  People  ex  rel.  S.  Cohn  &  Co. 

64  N.  J.  Eq.  173;   53  Atl.  474  (sem-  v.  Miller,  180  N.  Y.  16;    72  N.  E. 

ble;    the  points  decided  being  that  525. 

the  agreement  in  question  should  not         '  Grover  v.  Cavanaugh  (Ind.),  82 

be  construed  so  as  to  autliorize  such  N.  E.  104. 

payment,  and  that,  if  it  should,  the         *  Thompson  v.  Erie  Ry.  Co.,   11 

whole  agreement  and  scheme  would  Abb.  Pr.,  n.  s.,  188. 
not  on  that  account  be  vitiated). 

448 


§  493-§  573]     STATUS  of  pkeferred  shareholders      §  541 

ment  that  may  affect  them  prejudicially,  or  be  thought  so  to  do. 
Conversely,  preferred  stockholders  are  subject  to  any  statutory 
liaijility  to  creditors  imposed  upon  holders  of  shares.'  Even  a 
statute  providing  that  preferred  shareholders  shall  be  free  from 
any  liability  to  creditors  does  not  exempt  them  from  a  liability 
in  favor  of  creditors  imposed  by  another  statute  u{X)n  share- 
holders who  accept  a  return  of  capital  in  the  shape  of  illegal 
dividends  or  otherwise,-  and  a  furdori  does  not  exempt  them 
from  the  ordinary  liability  of  siiareholders  to  pay  the  par  value 
of  their  shares  to  the  company  or  its  receiver.^  Moreover,  any 
statutes  which  apply  to  shares  in  general  are  prima  facie  applica- 
ble to  preferred  shares.  Consequently,  a  statute  regulating  the 
times  or  periods  for  the  declaration  of  dividends  applies  to 
dividends  on    ])referred   shares.'' 

§  5  il .     Preferred  Shareholders  not  entitled  to  Rights  of  Creditors. 

—  As  preferred  shareholders  are  members  of  the  company,  it 
follows  that  they  are  not  creditors,  and  are  not  entitled,  even  in 
respect  to  their  preferential  dividends,  to  the  rights  of  creditors. 
Hence,  they  cannot  claim  payment  of  their  preferential  divi- 
dend except  out  of  funds  properly  available  for  the  payment 
of  dividends,  —  that  is,  out  of  profits.  Their  claim  is,  there- 
fore, subject  to  the  rights  of  creditors,  secured  and  unsecured, 

—  even  those  whose  debts  were  contracted  after  the  issue  of 
the  preferred  shares  ^  and  with  knowledge  of  the  rights  attach- 
ing thereto.*  jNloreover,  preferred  shareholders  are  not  taxable 
as  holders  of  certificates  of  indebtedness  of  the  company.^ 
Similarly,  preferred  stock  cannot  be  charged  up  as  a  liability  in 
determining  whether  the  indebtedness  of  a  railway  company  is  so 
great  as  to  justify  it  in  refusing  to  run  separate  passenger  trains.'* 

'  Railroad  Co.  v.  Smith,  48  Oh.  a  lien  on  the  company's  property 

St.  219;    31  N.  E.  743.  "next  after  its  indebtedness, "  debts 

*  American  Steel,  etc.  Co.  V.  Eddy,  contracted  subsequently  as  well  as 
89  N.  W.  952;    130  Mich.  266.  prior  to  the  issue  of  the  preferred 

^  Kirkpatrick  v.  American  Alkali  shares  are   referred   to:    Warren    v. 

Co.,  140  Fed.  186.  King,  ubi  supra. 

'  Marquand  v.  Federal  Steel  Co.,  *  Warren  v.  Kiruj,  108  U.  S.  389, 

95  Fed.  725.  400;   2  Sup.  Ct.  789. 

*  St.   John   V.    Erie  Ry.   Co.,   22  "  Miller  v.  Ratterman,  47  Oh.  St. 
Wall.    136;     TT'arren    v.    King,    108  141;  24  N.  E.  496. 

U.  S.  389.  *  People    ex   rel.    Cantrell   v.    St. 

Cf.  Mercantile  Trust  Co.  v.  Balti-    Louis,  etc.  R.  R.  Co.,    176    111.  512; 
more,  etc.   R.   R.  Co.,  82  Fed.  360.    52  N.  E.  292;   35  L.  R.  A.  656. 
Where  the  preferred  shares  are  to  be 
VOL.  I.— 29  449 


§542 


CAPITAL    AND    SHARES 


[Chap.  X 


§  542.  What  Circumstances  insufficient  to  confer  on  Preferred 
Shareholders  Rights  of  Creditors.  —  That  the  preferred  share- 
holders may  have  been  originally  creditors,  having  surrendered 
bonds  of  the  company  in  exchange  for  the  preferred  shares, 
does  not  make  them  any  the  less  members  as  distinguished 
from  creditors  of  the  company.'  Moreover,  the  fact  that  the 
preferred  dividend  may  be  called  "interest"  —  a  term  more  ap- 
propriate to  compensation  for  the  use  of  money  lent  —  is  im- 
material ;  -  and,  also,  the  case  is  not  altered  because  the  statute 
under  which  the  company  is  organized  designates  the  preferred 
shares  as  "stock"  simply,  and  not  capital  stock.^  Nor  is  the 
fact  that  the  preferred  stockholders  do  not  possess  the  right 
of  voting  at  shareholders'  meetings  sufficient  evidence  that  they 
should  be  deemed  creditors  rather  than  members  of  the  corpo- 
ration.* Indeed,  even  if  payment  of  the  preferred  dividend  is 
"guaranteed"  by  the  company,  the  preferred  shareholders  are 
entitled  to  nothing  except  out  of  net  profits:  the  guarantee 
will  be  construed  to  apply  only  to  payment  out  of  any  funds 
legally  available  for  dividends.^     And,  of  course,  a  guarantee 


1  St.  John  V.  Erie  Ry.  Co.,  22 
Wall.  136.  Cf.  Warren  v.  King,  108 
U.  S.  389 ;  2  Sup.  Ct.  789 ;  Field  v. 
Lamson,  etc.  Co.,  162  Mass.  388,  390- 
391 ;  38  N.  E.  1126;  27  L.  R.  A.  1.36. 

But  see  McVity  v.  Albro  Co.,  90 
N.  Y.  .\pp.  Div.  109;  86  N.  Y.  Supp. 
144;  affirmed  short  in  180  N.  Y. 
554;  73  N.  E.  1126  (where  the  cred- 
itor was  allowed  to  avoid  the  con- 
tract by  wliich  he  accepted  the 
guaranteed  shares  and  recover  on 
his  original  claim). 

»  Warren  v.  King,  108  U.  S.  389, 
399;  2  Sup.  Ct.  789;  Branch  v. 
Jesup,  106  U.  S.  468,  475;  1  Sup.  Ct. 
495;  Hamlin  v.  Toledo,  etc.  R.  R.  Co., 
78  Fed.  664,  669;  24  C.  C.  A.  271; 
36  L.  R.  A.  826;  M'Laughlin  v. 
Detroit,  etc.  Ry.  Co.,  8  Mich.  100. 

Cf.  Mercantile  Trust  Co.  v.  Balti- 
more, etc.  R.  R.  Co.,  82  Fed.  360; 
State  ex  rel.  Thompson  v.  Cheraw,  etc. 
R.  R.  Co.,  16  S.  Car.  524;  Ohio  Col- 
lege v.  Rosenthal,  45  Oh.  St.  183;  12 
N.  E.  665;  Waterman  v.  Troy,  etc. 
R.  R.  Co.,  8  Gray  (Mass.)  433. 


3  Chaffee  v.  Rutland  R.  R.  Co.,  55 
Vt.  110,  127  et  seq.;  State  ex  rel. 
Thompson  v.  Cheraw,  etc.  R.  R.  Co., 
16  S.  Car.  524. 

*  Hamlin  v.  Toledo,  etc.  R.  R.  Co., 
78  Fed.  664,  671;  24  C.  C.  A.  271; 
36  L.  R.  A.  826;  Miller  v.  Ratter- 
man,  47  Oh.  St.  141;   24  N.  E.  496. 

°  Stevens  v.  South  Devon  Ry.  Co., 
9  Hare  313,  325;  Lockhart  v.  Van 
Alstyne,  31  Mich.  76;  18  Am.  Rep. 
156;  Taft  v.  Hartford,  etc.  R.  R.  Co., 
8  R.  I.  310;  5  Am.  Rep.  575;  Chaf- 
fee V.  Rutland  R.  R.  Co.,  55  Vt.  110; 
Miller  v.  Ratterman,  47  Oh.  St.  141; 
24  N.  E.  496;  Field  v.  Lamson,  etc. 
Mfg.  Co.,  162  Mass.  388,  392-394; 
38  N.  E.  1126;  27  L.  R.  A.  136; 
Long  v.  Guelph  Lumber  Co.,  31  Up. 
Can.  C.  P.  129. 

See  also  Branch  v.  Jesup,  106 
U.  S.  468  (headnote  inadequate); 
i  Sup.  Ct.  495 ;  Mercantile  Trust  Co. 
V.  Baltimore,  etc.  R.  R.  Co.,  82  Fed. 
360;  Waterman  v.  Troy,  etc.  R.  R. 
Co.,  8  Gray  (Mass.)  433. 

But  see  Williams  v.  Parker,  136 


450 


§  493- §  573]     STATUS  of  preferred  shareholders     §  543 

by  another  corporation  of  the  punctual  payment  of  the  pre- 
ferred dividend  would  not  affect  in  any  way  the  nature  of  the 
preferred  shareholders'  position.'  Even  an  agreement  on  the 
company's  part  to  create  no  mortgage  "except  expressly  subject 
to  the  prior  lien"  of  the  preferred  shareholders  will  not  make 
the  preferred  shareholders  creditors.^  A  so-called  mortgage  or 
deed  of  trust  of  the  company's  property  to  secure  the  payment 
of  preferential  dividends,  even  when  containing  provisions  for 
foreclosure  or  entry  by  the  trustee  in  case  of  default,  will  be 
construed  as  a  mere  agreement  between  shareholders  and  not 
as  evincing  an  intention  that  the  "preferred  stockholders" 
should  be  deemed  to  be  creditors.^ 

§  543.  Express  agreement  that  Preferred  Shareholders  shall 
have  Rights  of  Creditors  Ultra  Vires.  —  In  fact,  even  an  express 
agreement  to  pay  the  preferential  dividend  whether  or  not  profits 
sufficient  for  the  purpose  be  earned  would  be  ultra  vires  as  a 
return  of  capital  to  shareholders,*  and  a  fortiori  a  pledge  or  ap- 
propriation of  a  part  of  the  company's  capital  to  secure  such 


Mass.  204;  McVity  v.  Alhro  Co.,  90 
N.  Y.  App.  Div.  109;  86  N.  Y.  Supp. 
144 ;  affirmed  short  in  180  N.  Y.  554 ; 
73  N.  E.  1126. 

'  Miller  v.  Ratterman.  47  Oh.  St. 
141,  161-162  (headnote  inade(|uate) ; 
24  N.  E.  496.     Cf.  infra,  §  1338. 

^  Hamlin  v.  Toledo,  etc.  R.  R.  Co., 
78  Fed.  664;  24  C.  C.  A.  271;  36 
L.  R.  A.  826;  MUler  v.  Ratterman, 
47  Oh.  St.  141;   24  N.  E.  496. 

3  Miller  V.  Ratterman,  47  Oh.  St. 
141,  159etseq.;  24N.E.496;  Black 
V.  Hobart  Trust  Co.,  53  Atl.  826;  64 
N.  J.  Eq.  415;  affirmed  short  in  56 
Atl.  1131;  65  N.  J.  Eq.  769;  Guar- 
anty Trust  Co.  V.  Galveston  City 
R.  R.  Co.,  107  Fed.  311;  46  C.  C.  A. 
305. 

But  see  Burt  v.  Rattle,  31  Oh.  St. 
116;  Gordon's  Exrs.  v.  Richmond, 
etc.  R.  R.  Co.,  78  Va.  501 ;  Skiddy  v. 
Atlantic,  etc.  R.  R.  Co.,  Re  Stewart's 
Petition,  3  Hughes,  320,  354;  FiYc/i 
V.  Wetherbee,  110  III.  475. 

*  Lockhart  v.  Van  Alstyne,  31 
Mich.  76;  18  Am.  Rep.  156;  Paines- 
ville,  etc.  R.  R.  Co.  v.  King,  17  Oh. 


St.  534;  Ohio  College  v.  Rosenthal, 
45  Oh.  St.  183,  194;  12  N.  E.  665; 
Hamlin  v.  Toledo,  etc.  R.  R.  Co.,  78 
Fed.  664  (headnote  inadequate) ;  24 
C.  C.  A.  271 ;  36  L.  R.  A.  826;  Cratty 
V.  Peoria  Law  Library  Ass'n,  219  111. 
516;   76  N.  E.  707. 

Cf.  Phillips  V.  Eastern  R.  R.  Co., 
138  Mass.  122,  135-138;  McVity  v. 
Albro  Co.,  90  N.  Y.  App.  Div.  109; 
86  N.  Y.  Supp.  144;  affirmed  short 
in  180  N.  Y.  554;  73  N.  E.  1126; 
Guaranty  Trust  Co.  v.  Galveston  City 
R.  R.  Co.,  107  Fed.  311;  46  C.  C.  A. 
305 ;  Smith  v.  Alabama  Fruit  Grow- 
ing, etc.  Ass'n,  123  Ala.  538 ;  26  So. 
232  (where  a  bond  conditioned  for 
payment  of  dividends  by  obligor 
company  on  shares  held  by  obligee 
was  held  void). 

Hut  see  Gordon's  Exrs.  v.  Rich- 
mond, etc.  R.  R.  Co.,  78  Va.  501; 
Skiddy  v.  Atlantic,  etc.  R.  R.  Co.,  Re 
Stetvart's  Petition,  3  Hughes  320, 
354;  Williams  v.  Parker,  136  Mass. 
204  ;  Fontana  v.  Pacific  Can  Co.,  129 
Cal.  51;  61  Pac.  580. 


451 


§  544  CAPITAL    AND    SHARES  [ChAP.  X 

a  di\'idend  is  likewise  illegal.*  A  guarantee  of  dividends  whether 
profits  are  earned  or  not  is  no  less  ultra  vires  because  it  may 
have  been  given  in  part  consideration  for  services  rendered  to 
the  company.-  Likewise,  a  mortgage  of  property  of  the  com- 
pany to  secure  to  a  shareholder  a  return  of  his  capital,  in  pref- 
erence to  creditors,  in  a  winding-up  of  the  company,  is  illegal 
and  void.^  To  be  sure,  in  one  case  where  a  company  had  issued 
scrip,  convertible  into  mortgage  bonds  at  the  option  of  the 
holder,  to  represent  preferential  dividends  for  the  payment  of 
which  no  profits  were  available,  the  Supreme  Court  of  Vermont 
held  that  the  scrip  certificates  were  enforceable  obligations  of 
the  company  although  no  sufficient  profits  for. their  payment 
had  ever  been  earned.*  The  case  proceeds  upon  the  ground 
of  estoppel,  and  lends  no  color  to  the  view  that  dividends  on 
preferred  shares  should  stand  in  respect  to  the  matter  before 
the  court  on  any  different  footing  from  dividends  on  common 
or  ordinary  shares.  Nevertheless,  it  is  submitted  that  a  con- 
trary decision  would  have  been  preferable.  Where  a  corporation 
buys  property  and  in  payment  therefor  agrees  to  issue  paid-up 
shares  and  to  pay  a  certain  sum  in  annual  cash  instalments, 
any  dividends  declared  on  the  shares  in  the  meantime  to  be  ap- 
plied in  reduction  of  the  cash  instalments,  the  fact  that  such 
annual  instalments  equal  dividends  at  a  certain  rate  on  the 
shares  does  not  make  the  agreement  void  as  an  evasion  of  the 
rule  which  prohibits  a  corporation  from  guaranteeing  dividends 
on  its  own  shares.^ 

§  544.  Further  Explanation  of  Rule  that  Preferred  Share- 
holders are  not  Creditors.  —  Of  course,  as  respects  preferential 
dividends  that  are  earned  and  declared,  the  preferred  share- 
holders occupy  the  position  of  creditors;   and  perhaps  in  some 

'  Guinness  v.  Land  Corporation,  Carbide,  etc.  Co.,  64  N.  J.  Eq.  231, 

22  Ch.  D.  .349;    Hamlin  v.   Toledo,  244-245;     53   Ati.    1057;     Black   v. 

etc.  R.  R.  Co.,  78  Fed.  664  (headnote  Hohart  Trust  Co.,  53  Atl.  826;    64 

inadequate);    24    C.  C.  A.  271;    36  N.  J.  Eq.  415;    affirmed  short  in  56 

L.  R.  A.  826.  Atl.  1131;  65  N.  J.  Eq.  769;  Reagan 

^  Elevator   Co.    v.    Memphis,    etc.  v.  First  Nat.  Bank,  157  Ind.  623. 
R.  R.  Co.,  85Tenn.  703;  5  S.  W.  52;         *  Chaffee  v.   Rutland  R.   R.   Co., 

4  Am.  St.  Rep.  798.     Cf.  Smith  v.  55  Vt.  1 10. 

Alabama  Fruit  Growing,  etc.  Ass'n,  *  Strickland  v.  Nat.  Salt  Co.  (N. 

123  Ala.  538;  26  So.  232.  J.)  64  Atl.  982  (semble);    Ingraham 

»  Boneyv.  WUliams,  55  N.  J.  Eq.  v.  Nat.  Salt  Co.,  130  Fed.  676;    65 

691;    38  Atl.    189;    Reed  v.  Helots  C.  C.  A.  54. 

452 


§  493- §  o73]      STATUS    OF    PREFERRED    SHAREHOLDERS       §  545 

cases  the  necessity  for  a  declaration  of  the  preferential  dividend 
when  earned  may  be  dispensed  with  by  the  terms  of  the  agree- 
ment stipulating  for  the  preference.'  Although  preferred  share- 
holders are  to  be  postponed  to  creditors,  of  course  the  principal 
of  all  the  company's  indebtedness  need  not  Ije  paid  off  before 
paying  the  preferred  dividend ;  ^  all  that  is  meant  is  that  the 
preferential  dividends  can  only  be  paid  out  of  funds  that  might 
legally  be  used  for  ordinary  dividends.  The  case  is  not  altered 
in  this  respect  by  the  fact  that  at  the  organization  of  the  com- 
pany its  declared  policy  was  to  contract  no  debts,  the  indebted- 
ness having  been  subsequently  contracted  for  the  common 
benefit  of  both  classes  of  shareholders.^ 

§  545.  Sidlivan  v.  Portland,  etc.  R.  R.  Co.,  94.  U.  S.  806.  — 
A  very  peculiar  case  in  the  United  States  Supreme  Court  would 
seem  to  be  founded  on  the  principle  that  preferred  shareholders 
cannot  by  any  contract  or  agreement  with  the  company  entitle 
themselves  to  the  rank  of  creditors.  A  railway  company  had 
issued  certificates  of  indebtedness  bearing  interest  at  the  rate 
of  ten  per  cent  per  annum,  and  redeemable  at  any  time  at  the 
pleasure  of  the  company.  These  certificates  were  a  first  lien 
on  a  part  of  the  company's  line.  The  corporation  had  also 
issued  preferred  shares  which  were  entitled  to  a  preferential 
dividend  at  the  same  rate,  —  ten  per  cent  per  annum.  The  com- 
pany proposed  to  the  certificate-holders  to  refrain  for  several 
years  from  exercising  its  privilege  of  redeeming  the  certi6cates 
in  consideration  of  the  agreement  by  the  certificate-holders  to 
accept  six  per  cent  yearly  in  lieu  of  ten,  the  money  thus  saved 
to  the  company  to  be  applied  in  paying  dividends  to  those  pre- 
ferred shareholders  who  should  agree  to  accept  new  six  per  cent 
preferred  stock  instead  of  the  original  ten  per  cent  stock.  This 
proposition  having  been  accepted  by  the  certificate-holders  and 
by  some  of  the  preferred  shareholders,  the  company's  entire 
line  of  railway  was  sold  under  a  mortgage  which  as  to  the  por- 
tion covered  by  the  lien  of  the  certificates  was  a  junior  charge. 
Those  preferred  shareholders  who  had  accepted  the  above- 
stated  proposition  filed  a  bill  to  compel  the  purchaser  to  pay 
to  them  as  dividends  the  four  per  cent  annual  interest  released 

'  See  infra,  §  561,  §  562.  »  Belfast,  etc.  R.  R.  Co.  v.  Belfast, 

'  Belfast,  etc.  R.  R.  Co.  v.  Belfast,   31  Me.  445 ;  1  Atl.  362. 
77  Me.  445;    1  Atl.  362. 

453 


§  546  CAPITAL    AXD    SHARES  [ChAP.  X 

by  the  certificate-holders.  But  the  court  held  that  the  plaintiffs 
were  not  creditors  of  the  company,  but  mere  shareholders  or 
members,  and  that  they  were  not  entitled  as  against  creditors 
to  the  security  of  the  certificate-holders,  which  was  prior  to  the 
mortgage  under  which  the  sale  was  made,  and  that  therefore 
the  bill  should  be  dismissed.^  It  is  submitted  that  the  gist  of 
the  case  is  that  the  preferred  shareholders  could  not  be  entitled 
to  the  rights  of  creditors  or  mortgagees,  and  therefore  could  not 
have  priority  over  the  mortgage  under,  which  the  road  was  sold. 
§  546.  Tests  for  distingmshing  Shareholders  from  Creditors.  — 
Although  preferred  shareholders  are  thus  separated  from  credit- 
ors by  a  line  of  demarcation,  yet  it  is  possible  to  imagine  a  form 
of  security  the  holders  of  which  would  lie  very  close  to  the  line 
between  shareholders  and  creditors.  For  instance,  the  holders 
of  income  bonds  are  creditors  of  the  corporation;  but  in  many 
respects  their  rights  are  very  similar  to  those  of  preferred  share- 
holders. One  distinction  is  that  an  income  bondholder  has 
generally  no  vote  or  voice  in  the  corporate  management,  while  the 
holder  of  preferred  shares  has  usually  the  same  voting  rights  as 
a  holder  of  the  same  number  of  ordinary  shares.  But  sometimes 
preferred  shareholders  have  no  vote ;  and  the  difference  between 
such  preferred  shareholders  and  income  bondholders  is  for 
practical  purposes  not  much  more  than  a  difference  in  name. 
Nevertheless,  even  such  preferred  shareholders,  although  shorn 
of  their  voting  rights,  are  yet  members  of  the  company,  while 
the  income  bondholders  occupy  the  theoretically  very  differ- 
ent position  of  outsiders  who  hold  contractual  obligations  of 
the  company.^  According  to  some  authorities,  the  distinction 
between  preferred  shareholders  and  creditors  of  the  corporation 
lies  in  the  fact  that  sooner  or  later  there  must  come  a  time  for 
repaying  creditors  while  preferred  shareholders  may  be  entitled 
to  a  perpetual  income ;  *  but  this  cannot  be  the  right  test,  for 
some  securities,  such  as  the  English  "  perpetual  debenture  stock" 
or  the  income  bonds  of  some  American  companies,  carry  the 
right  to  interest  in  perpetuity,  and  yet  the  holders  thereof  are 
creditors  as  opposed  to  members  of  the  corporation.     At  any 

'  Sullivan  v.  Portland,  etc.  R.  R.         ^  Kent  v.  Quicksilver  Mining  Co., 
Co.,  94  U.  S.  806.  78  N.  Y.  159,  177-178. 

=  Cf.  Re   Bodman  (1891),   3   CYv,. 
135  (containing  a  good  discussion). 

454 


§  493-§  o7o]       STATUS    OF    I'KEFERRED    SHAREHOLDERS        §  547 

rate,  little  goo<l  can  come  from  puzzling  over  anomalous  kinds  of 
securities  the  holders  of  which  lie  close  to  the  line  between  pre- 
ferred shareholders  and  creditors.  Such  legal  monsters  serve 
only  to  obscure  a  distinction  that  in  the  main  is  easy  to  make. 
We  have  little  difficulty  in  distinguishing  a  girl  from  a  fish;  but, 
if  we  should  encounter  a  mermaid,  we  might  have  trouble  in 
determining  in  which  category  the  creature  should  be  placed.  A 
subscriber,  however,  to  "preferred  stock"  has  a  right  to  insist 
that  the  certificate  given  to  him  shall  be  unambiguous,  and  shall 
not  leave  in  doubt  the  question  whether  he  is  to  be  deemed  a 
member  or  a  creditor  of  the  company.' 

§  547.  Statutes  conferring  on  Preferred  Shareholders  some  of 
the  Rights  of  Creditors.  —  Express  legislation  sometimes  confers 
upon  preferred  shareholders  rights  which  usually  belong  only  to 
creditors,  and  which  without  such  statutory  sanction  the  policy  of 
the  law  would  prevent  from  being  conferred  upon  shareholders. 
Such  statutes  frequently  confuse  or  obliterate  the  distinction 
between  shareholders  and  creditors.  For  example,  a  Maryland 
statute  authorizes  the  issue  of  so-called  preferred  stock  the 
holders  of  which  have  priority  over  subsequent  mortgages.'  So 
some  statutes  have  been  held  to  authorize  the  issue  of  "  preferred 
stock"  upon  which  dividends  should  be  payable  whether  or  not 
profits  be  earned.^  The  rights  thus  given  to  "preferred  stock- 
holders" by  statute  may  even  be  such  as  to  induce  the  court  to 
conclude  that,  in  spite  of  the  name,*  they  are  creditors  and  not 
members  of  the  company.  Thus,  where  an  Ohio  statute  author- 
ized the  issue  of  "preferred  stock"  which  was  to  be  redeemed 
by  the  company  at  a  fixed  time,  and  the  dividends  upon  which 
were  guaranteed  by  the  company,  the  payment  of  the  principal 
and  interest  or  "dividends"  being  secured  by  a  bond  and 
mortgage,  and  the  holders  of  the  stock  having  no  right  to  vote 

'  State  ex  rel.  Thompson  v.  Che-  (where  a  statute  authorizing  issue  of 

rait',  etc.  R.  R.  Co.,  16  S.  Car.  524.  preferred  stock  by  an  embarrassed 

-  Heller  v.  Marine  Bank,  89  Md.  railway   company   was   held   to   au- 

G02;    43  Atl.  800;    73  Am.  St.  Rep.  thorize  the  payment  of  the  preferen- 

212;    45   L.   R.   A.   438;    Rogers  v.  tial  dividends  out  of  future  earnings 

Citizens'    Nat.    Bank,    93    Md.    613;  without   first   making  good   a   prior 

49  Atl.  843.      Cf.  Gordon's  Exrs.  v.  loss  or  impairment  of  capital). 
Richmond,  etc.  R.  R.  Co.,  IS  \a.  501.  *  That   the    word    "stock"    does 

^  Williams  v.  Parker,   136  Mass.  not  indicate  per  se  that  the  holders 

204.    Cf.  Cotting  v.  New  York,  etc.  R.  are   members  and   not   creditors  of 

R.  Co.,   54    Conn.   156;   5  Atl.   851  the  company,  see  supra,  §  496. 

455 


§  54S  CAPITAL    AND    SHARES  [ChAP.  X 

and  being  declared  by  the  statute  exempt  from  a  liability  to 
creditors,  which  by  the  state  constitution  attached  to  all  mem- 
bers of  corporations,  the  court  concluded  that  the  so-called  "  pre- 
ferred stockholders"  were  really  not  members  but  creditors  of 
the  company.' 

§  548.  "  Interest-bearing  Stock."  —  A  word  or  two  of  further 
explanation  of  so-called  interest-bearing  stock.  Where  any 
undertaking  is  entered  upon  involving  the  construction  of  ex- 
tensive works,  a  greater  or  less  period  of  time  must  elapse  after 
the  capital  is  contributed  before  it  can  become  productive.  A 
railway  company,  for  example,  cannot  earn  profits  until  several 
years  after  its  organization.  In  such  cases,  in  former  days  —  for 
the  practice  is  much  less  common  now  than  formerly  —  the 
company  would  agree,  as  an  incentive  to  investors,  to  pay 
"interest"  on  the  amount  of  capital  paid  in  on  the  several  shares, 
until  the  line  should  be  completed.  If  such  an  agreement  were 
interpreted  as  a  contract  to  pay  interest  during  the  period  of 
construction,  during  which  in  the  nature  of  things  no  profits 
could  be  earned,  it  might,  on  the  principles  stated  above,  be 
illegal  and  void,-  except  so  far  as  clearly  sanctioned  by  statute.* 
But,  wherever  possible,  the  agreement  should  be  construed  to 
mean  that,  after  the  completion  of  the  road  and  its  establishment 
on  a  profit-earning  basis,  the  company  would  apply  the  profits 
in  paying  to  those  who  had  contributed  to  its  capital  in  the  days 
of  its  infancy  a  sum,  nominally  interest,  but  in  its  real  nature  a 
preferred  dividend,  equal  to  the  amount  of  interest  at  the  stipu- 

>  Burtv.  Rattle,  3\  Ohio  St.  116.  "  Pittsburgh,    etc.    R.    R.    Co.    v. 

Said  the  court  (p.  130):    "A  mort-  County  of  Allegheny,  63  Pa.  St.  126, 

gage  creditor,  although  denominated  136. 

a  'preferred  stockholder'  is  a  mort-  But  see  Milwaukee,  etc.  R.  R.  Co. 

gage  creditor  nevertheless;  his  inter-  v.   Field,    12  Wise.   340;    Miller  v. 

est  is  not  changed  into  a  'dividend'  Pittsburgh,  etc.  R.  R.  Co.,  40  Pa.  St. 

by  caUing  it  a  dividend.     Nothing  237;  80  Am.  Dec.  570;  M'Laughlin 

is   more   common    in   the   construe-  v.  Detroit,  etc.  Ry.  Co.,  8  Mich.  100. 

tion  of  statutes  and  contracts  than  See  also  infra,  §  1340. 

for  the  court  to  correct  such   self-  ^  Pittsburgh,    etc.    R.    R.    Co.    v. 

evident  misnomers  by  supplying  the  County  of  Allegheny,  63  Pa.  St.  126, 

proper  words."  137;    Manice  v.  Hudson  River  R.  R. 

Cf.  Totten  &  Co.  v.  Tison,  54  Ga.  Co.,  3  Duer  (N.  Y.)  426.     Cf.  Com- 

139;   Savannah,  etc.  Bldg.  Co.  v.  Sil-  panies  Act,   1907  (7  Edw.  VII.,  c. 

verberg,  108  Ga.  281;    33  S.  E.  908;  50),  §  9. 
Cook  V.  Equitable  Bldg.,  etc.  Ass'n, 
104  Ga.  814,  828-829;  30  S.  E.  911. 

456 


I 


§  493-§  573]  EXTENT    OF    I'KKFERENCE  §  .j40 

lated  rate  on  the  sums  respectively  paid  in  by  them,  before 
devoting  tlie  earnings  to  dividends  to  other  shareholders  or  to 
any  other  purpose.' 


§  549-§  571.      EXTENT  OF    PREFERENTIAL  RIGHTS   AS    BETWEEN 
PREFERRED    AND    DEFERRED    SHAREHOLDERS. 

§  549.  How  Extent  of  Preference  determined.  —  Preferred 
shares  properly  so  called  carry  preferential  rights  over  the  other 
shares,  but  as  to  all  non-members  of  the  company,  such  as 
creditors,  rank  in  all  respects  as  any  ordinary  shares.  The  pref- 
erence concerns  the  shareholders  inter  sese,  but  in  no  way  affects 
anybody  else.  A  very  great  variety  of  such  preferences  of  one 
class  of  shareholders  over  another  is  possible.  The  extent  and 
character  of  the  preference  is  not  indicated  by  the  designation 
of  the  shares  as  "preferred"  (which  merely  indicates  that  a 
preference  of  some  kind  is  intended),-  but  must  be  determined 
by  construction  of  the  statute,  incorporation  paper,  by-law,^  or 
agreement  by  which  the  preference  is  created.  The  language  of 
the  preferred  shareholder's  share-certificate  is  not  conclusive  as 
to  his  rights;  but  the  antecedent  resolutions  and  proceedings 
are  admissible  evidence  upon  the  question  of  the  nature  and 
extent  of  his  preference.*  So,  too,  where  the  preference  is  given 
in  a  scheme  of  reorganization,  the  court,  in  order  to  determine 
the  extent  of  the  preference,  will  look  not  merely  at  the  formal 
agreement,  but  also  at  the  original  plan  of  reorganization  and  at 
the  certificates  of  stock,  all  the  instruments  being  part  of  one 
transaction ;  ^    but,  unless  for  the  purpose  of  connecting  to- 

'  Wright  v.   Vermont,  etc.  R.  R.  Ry.   Co.,   84   N.   Y.    157,    171-173; 

Corp.,   12  Cush.  (Mass.)  68;  Water-  Scott  v.  B.  &  O.  R.  R.  Co.,  93  Md. 

man  v.  Troy,  etc.  R.  R.  Co.,  8  Gray  475,  498-499;  49  .\tl.  327. 
(Mass.)  433.  Cf.  Bates  v.  Androscoggin,  etc.  R. 

Cf.  Barnard  v.  Vermont,  etc.  R.  R.  R.  Co.,  49  Me.   491 ;   Bailey  v.  Rail- 

Co.,  7  Allen  (Mass.)  512;   Richardson  road  Co.,  17  Wall.  96. 
V.  Verrnont,  etc.  R.  R.  Co.,  44  Vt.  613.  But  see   Smith  v.   Cork,  etc.  Ry. 

But  see  Pittsburgh,  etc.  R.  R.  Co.  Co.,  5  Ir.  Rep.  Eq.  65,  68-69  (where 

V.  County  of  Allegheny,  63  Pa.   St.  the  court  lield  that  a  preferred  .'^hare- 

126.  holder's    right    was    determined    by 

'  Hackett   v.   Northern   Pac.    Ry.  his  certificate  and  refused  to  look  at 

Co.,  140  Fed.  717.  a   prior    resolution  of  the  company 

^  Belfast,  etc.  R.  R.  Co.  v.  Belfast,  not  referred  to  in  the  certificate). 
77  Me.  445;    1  Atl.  362.  *  Bailey  v.  Railroad  Co.,  17  Wall. 

*  Boardman   v.   Lake  Shore,   etc.  96  (headnote  inadequate). 

457 


§  550  CAPITAL    AND    SHARES  [CkAP.  X 

gether  the  various  WTitten  instruments,  parol  evidence  of  the 
understanding  or  intention  of  the  parties  is  not  admissible.^ 
As  already  mentioned,-  the  general  principle,  in  the  light  of 
which  every  provision  for  a  preference  must  be  construed,  is 
that,  except  so  far  as  otherwise  clearly  provided,  the  preferred 
shareholders  stand  on  an  equality  with  the  common  or  deferred 
shareholders.  The  burden  of  proof,  so  to  speak,  is  on  the 
shareholder  who  asserts  a  preference  over  his  fellows. 

§  550- §  563.     Preference  as  to  Dividends. 

§  550.  What  Words  will  confer  Preference  as  to  Dividends.  — 
A  fixed  dividend  that  is  guaranteed  is  a  preferred  dividend 
although  not  expressed  so  to  be.^  INIoreover,  where  shares  are 
denominated  "preferred  stock"  and  are  entitled  "to  the  pay- 
ment of  six  dollars  per  share  semi-annually"  the  holders  are 
entitled  to  a  preference  over  the  other  stockholders  although  it 
is  not  expressly  provided  that  their  six  per  cent  dividend  shall  be 
paid  before  any  dividend  is  paid  on  the  other  shares.* 

§  551.  Whether  Preference  is  Cumulative.  —  The  first  ques- 
tion usually  raised  as  to  the  preferential  dividend  is  whether  the 
preference  is  cumulative  or  not.  That  is  to  say,  when  preferred 
shares  carry  a  preferential  dividend  of  a  certain  rate  per  cent  per 
annum,  are  they  entitled  to  claim  that  if  the  profits  of  one  year 
are  not  sufficient  to  pay  that  dividend  in  full  the  deficiency  must 
be  made  good  out  of  the  profits  of  the  next  or  some  succeeding 
year  before  anything  can  be  paid  to  the  holders  of  the  common 
shares?  If  so,  the  preferred  shares  are  said  to  be  cumulative 
preferred  shares;  if  not,  they  are  said  to  be  non-cumulative. 
Prima  facie,  the  preference  is  cumulative.  Thus,  where  pre- 
ferred shares  are  entitled  to  a  preferential  yearly  dividend  of  so 
much  per  cent,  without  more  being  said,  the  preference  is  cumu- 
lative ;  ^  and  this  is  true  whether  the  preferential  dividend  is 

1  BaUey  V.  Railroad  Co.,  17  Wall.  Co.,   1   De  G.   &  J.   606;    Webb  v. 

96,  105-106.  Earle,  20  Eq.  556;  West  Chester,  etc. 

'  Supra,  §  540.  R.  R.  Co.  v.  Jackson,  77  Pa.  St.  321 

'  Boardman   v.   Lake  Shore,  etc.  (headnote     misleading);     Smith    v. 

Ry.  Co.,  84  N.  Y.  157,  173-174  (head-  Cork,  etc.  Ry.  Co.,  3  Ir.  Rep.  Eq.  356, 

note  inadequate).  affirmed,  5  Ir.  Rep.  Eq.  65;  Fidelity 

*  Bates  V.  Androscoggin,  etc.  R.  R.  Trust  Co.  v.  Lehigh  Valley  R.  R.  Co. 

Co.,  49  Me.  491.  (Pa.),  64  Atl.  829. 

^  Henry    v.  Great   Northern   Ry.         Cf.  Crawford  v.  Northeastern  Ry. 

458 


§  493-§  573]        PREFERExNCE    AS    TO    DIVIDENDS  §  552 

described  as  merely  "preferred"  or  as  "guaranteed."  '  Indeed, 
where  a  dividend  of  so  much  per  cent  per  annum  is  "guar- 
anteed," it  is  a  cumulative  preferential  dividend  although  no 
preference  be  expressly  provided  for.^  On  the  other  hand,  where 
no  annual  preferential  dividend  is  provided  for,  but  where 
the  provision  is  merely  that  the  preferred  shareholders  shall  be 
entitled  to  a  dividend  not  to  exceed  so  much  per  annum,  the  pref- 
erence is  non-cumulative.^  The  mere  fact  that  the  fixed  annual 
preferential  dividend  is  expressed  to  be  payable  on  certain  days 
—  as  on  the  first  days  of  June  and  December  —  will  not  render 
the  preference  non-cumulative,  especially  where  the  dividend  is 
guaranteed ;  *  but  where  the  provision  is  that  the  preferred 
shareholders  shall  be  entitled  to  a  preference  dividend  of  so  much 
per  cent  "out  of  the  prohts  of  each  year,"  an  intention  is  evinced 
to  let  each  year  stand  on  its  own  bottom,  and  accordingly  the 
preference  is  non-cumulative.^  A  provision  that  the  annual 
preferential  dividends  shall  accumulate  during  the  period  of 
three  years  to  the  extent  they  are  not  paid,  entitles  the  preferred 
shareholders  to  an  amount  equal  to  three  annual  preferential 
dividends  before  any  dividends  are  paid  on  the  deferred  shares 
even  though  no  dividends  at  all  were  paid  until  long  after  the 
expiration  of  the  three  years." 

§  552.  Effect  of  cumulative  Preference  —  Whether  Interest 
is  claimable  on  Arrearages  of  cumulative  preferred  Dividends.  — 
Even  where  the  preferential  dividend  is  cumulative,  there  is 
ordinarily  no  right  to  interest  on  the  arrearages,  or  passed  divi- 
dends ; '  but  where  profits  properly  available  for  the  payment 
of  the  preferential  dividends  were  wrongfully  diverted  by  the 
company  to  the  payment  of  dividends  on  the  common  shares, 
the  preferred  shareholders  may  recover  interest  on  their  unpaid 

Co.,  3  Jur.  N.  S.  1093;  Matthews  v.  Co.,  84  N.  Y.  157,  176  (the  preferen- 

Great  Northern  Ry.  Co.,  28  L.  J.  Ch.  tial  dividend  was  "guaranteed"). 
375.  *  Staples     v.     Eastman's     Photo- 

'  Carry  v.  Londonderry,  etc.  Ry.  graphic,  etc.  Co.  (1896),  2  Ch.  303. 
Co.,  29  Beav.  263.  See  also  Belfast,  etc.  R.  R.  Co.  v, 

=  Boardman   v.    Lake  Shore,    etc.  Belfast,  77  Me.  445;    1  Atl.  362. 
Ry.  Co.,  84  N.  Y.  157,  173-174  (head-         «  Gardner  Savings  Bank  v.  Taber- 

note  inadequate).  Prang  Art  Co.,   189  Mass.  363;    75 

3  Elkins  V.Camden,  etc.  R.  R.  Co.,  N.  E.  705. 
36  N.  J.  E(i.  233  (headnote  mislead-         '  Corry  v.  Londonderry,  etc.  Ry. 

ing).  Co.,  29  Beav.  263. 

*  Boardman  v.  Lake  Shore,  etc.  Ry. 

459 


§  553  CAPITAL  AND  SHARES  [ChAP.  X 

di\adends  as  damages  for  the  company's  wrongful  use  of  the 
funds. ^ 

§  553.  Whether  Payments  to  Preferred  Shareholders  in  Excess 
of  Cumidative  Preferred  Dividends  in  one  year  chargeable  against 
Deficiency  in  subsequent  Year.  — -  Where  the  preference  is  cumu- 
lative and  the  preferred  shareholders  are  entitled  to  share  pro 
rata  in  any  excess  of  dividends  after  the  deferred  shareholders 
have  received  a  dividend  at  the  same  rate  as  the  preferential 
dividends,  dividends  paid  to  the  preferred  shareholders  in  excess 
of  the  preferential  dividend  in  one  year  cannot  be  charged  against 
a  deficiency  in  a  subsequent  year,  but  the  amount  of  such 
deficiency  must  accumulate  and  be  paid  out  of  the  earnings  of 
future  years  before  any  further  dividends  are  paid  on  the 
deferred  shares,  just  as  if  the  preferred  shareholders  had  never 
been  paid  in  any  year  prior  to  the  beginning  of  the  deficit  more 
than  their  preferential  dividend.^ 

§  554.  Whether  Profits  in  Excess  of  Preferential  Dividend  are 
divisible  pro  rata  among  both  Preferred  and  Common  Shareholders. 
—  The  contention  has  been  advanced  that  where  a  fixed  pref- 
erential dividend  is  payable  on  preferred  shares,  the  holders  are 
likewise  entitled,  if  the  profits  are  more  than  sufficient  to  pay  that 
dividend,  to  participate  rateably  with  the  common  shares  in  any 
other  dividend  that  may  be  declared.  This  contention,  however, 
is  on  its  face  unreasonable,  and  has  been  overruled  by  the  courts ;  * 
for  the  principle  that  should  furnish  a  guide  in  all  such  questions 
as  to  the  extent  of  preferential  rights  is  that,  equality  between  the 
shares  being  the  legal  conception  of  equity,  provisions  altering 
the  rule  of  equality  must  be  construed  strictly,  so  as  not  unduly 
to  enlarge  the  difference  in  the  rights  attaching  to  the  several 
classes  of  shares. 

§  555.  Whether  Preferred  Shares  may  participate  in  Profits  re- 
maining after  paying  on  both  Classes  of  Shares  a  Dividend  equal  to 
the  Preferred  Dividend.  —  When  the  preferred  shares  are  en- 
titled to  a  preferential  dividend  of  so  much  per  cent  fer  annum, 
without  any  greater  explicitness  being  used,  a  serious  question 

*  Boardman  v.   Lake  Shore,   etc.         "  Scott  v.  B.  &  O.  R.  R.  Co.,  93 
Ry.   Co.,   84   N.   Y.    157,    186-190;    Md.  475;   49  Atl.  327. 
Prouty  V.  Michigan,  etc.  R.  R.  Co.,  1         Cf.   Bailey    v.    Railroad    Co.,    17 
Hun  (N.  Y.)  6.55,  667.  WaU.  96. 

'  Fidelity    Trust    Co.    v.    Lehigh 
Valley  R.  R.  Co.  (Pa.),  64  Atl.  829. 

460 


§  403-§  573]  I'HKIKKI.M  h    AS    T(^    DIVIDENDS  §555 

may  be  raised  whether  they  are  forever  hinited  to  that  (hvideruJ 
or  whether  they  may  not  participate  proportionately  with  the 
common  shares  in  any  surplus  profits  remaining  for  distribution 
after  payin*^  the  common  shares  a  dividend  ef|uivalent  to  the 
preferential  dividend.  In  a  Maryland  case,'  upon  the  reorganiza- 
tion of  the  Baltimore  and  Ohio  Railroad  Company  preferred 
shares  were  issued  which  were  entitled  to  receive  out  of  the  net 
profits  of  each  year  such  yearly  dividend  (non-cumulative)  as 
the  directors  might  declare  up  to  but  not  exceeding  four  per  cent 
before  any  dividends  should  be  set  apart  or  y)aid  on  the  common 
stock.  For  several  years,  the  four  per  cent  dividend  was  regu- 
larly paid  to  the  holders  of  preferred  shares,  but  no  dividend  was 
paid  upon  the  common  stock.  The  company  then  became  more 
prosperous,  and  was  about  to  pay  a  dividend  of  four  per  cent 
upon  both  classes  of  shares,  when  a  preferred  stockholder  applied 
for  an  injunction  against  such  distribution,  praying  a  declaration 
that  any  profits  remaining  after  the  payment  of  the  preferential 
dividend  ought  to  be  distributed  yro  rata  among  both  classes  of 
shares,  or  that  any  surplus  after  paying  four  per  cent  to  common 
as  well  as  preferred  stockholders  should  be  distributed  'pro  rata. 
The  former  contention  sought  to  exaggerate  the  preference  of 
the  preferred  shares  to  a  preposterous  degree,  and  as  stated  above 
certainly  could  not  be  sustained.^  Its  rejection  was  sufficient  to 
justify  a  refusal  of  the  injunction,  since  there  was  no  pretense 
that  the  company  expected  at  that  time  to  pay  more  than  four 
per  cent  to  the  holders  of  common  stock.  The  court,  however, 
proceeded  to  express  the  opinion  that  under  no  circumstances 
could  the  preferred  shareholders  get  more  than  four  per  cent. 
This  opinion,  however,  may  well  be  questioned.  For  if  it  be 
sound,  the  common  shares  have  one  very  important  preference 
over  the  so-called  preferred  shares,  although  the  language  used 
nowhere  exhibited  any  intention  to  prefer  the  common  shares  in 
any  respect  whatsoever.  The  whole  object  was  to  define  the 
limits  of  a  preference  to  be  given  to  the  preferred  shares.  Accortl- 
ingly,  where  the  provision  was  that  the  preferred  shares  "should 
bear  a  dividend  of  six  per  cent  per  annum  and  should  rank  in 
all  respects  in  priority"  to  the  other  shares,  an  English  judge 
expressed  the  opinion  that  the  meaning  was  "to  give  to  the 

'  Scott  V.  B.  &  O.  R.  R.  Co.,  93         '  Supra,  §  55-1. 
Md.  475;   49  Atl.  327. 

461 


§  556  CAPITAL    AND    SHARES  [ChAP.  X 

holders  of  the  preference  shares  a  first  dividend  at  the  rate  of  six 
per  cent  out  of  profits,  then  to  give  the  holders  of  ordinary  shares 
a  dividend  up  to  the  amount  of  6  per  cent  out  of  profits,  and  if 
any  profits  should  remain  after  paying  those  two  dividends  to 
allow  the  ordinary  and  preferential  shareholders  to  divide  them 
equally  or  proportionately."  '  It  is  submitted  that  this  is  the 
better  general  rule,  and  that  the  case  in  the  Maryland  Court  of 
Appeals,  if  it  is  to  be  regarded  as  more  than  a  mere  dictum  upon 
this  question,  should  be  supported  upon  the  special  circumstances 
adverted  to  by  that  court  in  its  opinion. 

§  556.  Rights  where  both  Classes  of  shares  are  to  participate 
equally  in  Profits  remaining  after  paying  on  both  Classes  of  Shares 
Dividends  equal  to  the  preferred  Dividend.  —  At  any  rate,  cases 
sometimes  occur  where,  either  by  express  provision  or  by  judicial 
construction  of  an  ambiguous  provision,  both  classes  of  shares 
are  entitled  to  participate  equally  in  any  profits  that  may  re- 
main for  distribution  after  the  common  shares  have  received 
a  dividend  equal  to  the  preferential  dividend  of  the  preferred 
shares.  Where  this  is  the  case,  if  the  preferred  shares  are  cumu- 
lative, they  cannot  claim  anything  beyond  their  preferential 
dividend  until  the  common  shareholders  have  not  merely  re- 
ceived a  dividend  for  the  current  year  equivalent  to  the  prefer- 
ential dividend  but  also  have  been  compensated  for  all  arrears 
or  passed  dividends,  so  that  taking  into  consideration  the  entire 
period  since  the  issue  of  the  shares,  each  common  shareholder 
shall  have  received  as  much  as  each  preferred  shareholder.^  If 
the  preferred  shares  were  non-cumulative,  it  might  be  plausibly 
argued  that  an  intent  was  evinced  that  each  year  should  stand  on 
its  own  bottom.  But,  nevertheless,  the  sound  doctrine  is  believed 
to  be  that  unless  a  different  intention  is  very  clearly  expressed 
the  common  shareholders  must  be  placed  on  an  equality  with 
the  preferred  as  to  the  whole  period  since  the  issue  of  the  stock, 
whether  the  preferred  shares  be  cumulative  or  not,  before  any 
pro  rata  division  among  both  classes  is  proper.     Whether  the 

'  Alexandra   Palace   Co.,  21  Ch.  Co.,  25  W.  R.  524.    But  see  contra: 

D.  149,  157.    The  terms  of  the  reso-  Gordon's  Exrs.  v.  Richmond,  etc.  R. 

lution  defining  the  rights  of  the  pre-  R.  Co.,  78  Va.  501,  518.     Cf.  Fidelity 

f erred   shares   appear   more   clearly  Trust  Co.  v.  Lehigh  Valley  R.  R.  Co. 

from  the  report  of  the  case  in  46  L.  (Pa.),    64   Atl.    829    (stated    supra, 

T.  730.  §  553). 

*  Allen  V.  Londonderry,  etc.   Ry. 

462 


r 


§  493- §  573]         I'KKFKKEN'CE    AS    TO    DIMDINUS  §559 

preference  be  cuinulative  or  not,  each  ordinary  share  must  re- 
ceive as  much  as  each  preferred  share  has  actually  received 
when  the  whole  period  since  the  issue  of  the  stock  is  taken  into 
account,  before  the  two  classes  of  shares  can  1k'  deemed  to  have 
been  put  upon  an  ec|uality. 

§  557.  How  Preferential  Dividend  payable  —  Gold,  Cash,  Bonds, 
etc.  —  Where  dividends  are  paid  in  l)on(ls  or  other  oijligations 
of  the  company,  as  may  sometimes  lawfully  be  done,  the  rights 
of  the  preferred  shareholders  to  a  preference  are  of  course  the 
same  as  if  the  dividends  were  paid  in  cash.'  In  the  absence  of 
some  peculiar  stipulation,  however,  or  consent,  preferred  share- 
holders have  the  right  to  insist  that  their  preferential  dividend 
be  paid  in  cash  and  not  in  bonds  or  other  securities ;  -  but  tlie 
common  or  deferred  shareholders  cannot,  it  seems,  object  to 
paying  the  preferential  dividend  in  stock  rather  than  in  money.^ 
There  may  be  an  express  stipulation  that  the  preferred  dividend 
shall  be  payable  in  gold,  but  in  the  absence  of  such  a  provision 
payment  may  be  made  in  any  legal  tender.* 

§  558.  Provisions  for  Termination  of  Preference.  —  Where 
preferred  shares  are  entitled  "to  the  payment  of  six  dollars 
per  share  semi-annually  until  the  net  earnings  of  the  road 
shall  be  sufficient  to  pay  an  interest  of  sLx  per  cent  per  annum 
on  all  the  stock  issued,"  it  seems  that  when  once  the  earn- 
ings of  the  road  are  sufficient  for  one  whole  year  to  pay  a 
dividend  of  six  per  centum  on  all  the  stock,  the  preferred  share- 
holders would  thereafter  have  no  rights  superior  to  the  holders 
of  the  other  shares ;  ^  but  the  fact  that  for  six  months  or  any 
other  fraction  of  a  year  the  profits  may  have  been  sufficient  to 
pay  a  dividend  on  all  the  shares  at  the  rate  of  six  per  cent  per 
annum  does  not  put  an  end  to  the  preference.* 

§  559.  Effect  of  Cancellation  or  Surrender  of  some  of  the  Pre- 
ferred Shares.  —  Where  some  of  the  preferred  shares  are  can- 
celled or  exchanged  for  common  shares,  the  holders  of  the  re- 

'  Gordon's    Errs.    v.    Richmond,         ^  Howell  v.  Chicago,  etc.  Ry.  Co., 
etc.  R.  R.  Co.,  78  Va.  501.    Cf.  IloweU    51  Barb.  (N.  Y.)  378. 
V.   Chicago,   etc.    Ry.  Co.,  51   Barb.         *  Baltimore,    etc.    R.    R.    Co.    v. 
(N.  Y.)  378.  State,  36  Md.  519. 

See  also  infra,  §  568.  *  Bates  v.   Androscoggin,  etc.   R. 

2  M'Laughlin  v.  Detroit,  etc.  Ry.    R.  Co.,  49  Me.  491,  503  (semble). 
Co.,  8  Mich.  100.  "  Bates  v.   Androscoggin,  etc.  R. 

R.  Co.,  49  Me.  491. 
463 


§  5G0  CAPITAL   .o;d  shares  [Ciiap.  X 

maining  preferred  shares  are  entitled  to  all  the  subsequent  profits 
until  their  preferential  dividends  are  paid,  and  not  merely  to 
the  proportion  of  such  profits  which  they  would  have  received 
if  the  holders  of  the  cancelled  or  exchanged  shares  had  retained 
their  rights.' 

§  560.  Discretion  of  Company  as  to  withholding  Preferred  Divi- 
dends although  earned.  —  In  general,  the  holders  of  preferred 
shares  cannot  require  payment  of  their  preferential  dividend, 
even  if  the  funds  available  for  that  purpose  have  been  earned, 
unless  the  dividend  has  been  declared  in.  the  ordinary  way  by 
the  directors  of  the  corporation.  That  is  to  say,  the  preference 
given  to  the  preferred  shareholders  is  between  themselves  and 
the  other  shareholders,  and  does  not  deprive  the  company  of 
its  discretion  to  accumulate  profits,  as  a  reserve  fund,  to  make 
good  a  loss  of  fixed  capital,  or  for  other  purposes,  instead  of 
distributing  them  as  dividends.  Hence,  although  profits  suffi- 
cient to  pay  the  preferential  dividend  may  have  been  earned,  the 
directors  may  ordinarily  withhold  declaration  of  the  preferred 
dividend  if  so  to  do  is  honestly  and  reasonably  believed  by  them 
to  be  for  the  best  interest  of  all  concerned  in  the  company,^  and 
this  is  true  although  the  preferred  dividend  is  "guaranteed" 
by  the  company.^  A  provision  that  the  preferential  dividend 
shall  be  dependent  on  the  profits  of  each  particular  year  will 
not  be  construed  as  pledging  the  profits  to  such  payment  so  as 
to  deprive  the  directors  of  their  discretion  to  use  them  in  the 

»  West  Chester,  etc.  R.  R.  Co.  v.  Co.,  7  Allen  (Mass.)  512  (headnote 

Jackson,  77  Pa.  St.  321,  328  (head-  inadequate), 

note  misleading).  But  see  Mackintosh  v.  Flint,  etc. 

-  Bond  V.  Barrow  Hcematite  Steel  R.  R.  Co.,  34  Fed.  582,  598-601 
Co.  (1902),  1  Ch.  353;  New  York,  (where  the  court  held,  among  other 
etc.  R.  R.  Co.  V.  Nickals,  119  U.  S.  things,  that  as  between  preferred 
296;  7  Sup.  Ct.  209  (where  the  di-  and  common  shareholders  the  ex- 
rectors  devoted  net  earnings  to  the  pense  of  permanent  betterments 
building  of  a  double  track,  erection  should  not  be  paid  out  of  earnings, 
of  buildings,  construction  of  docks,  wdth  the  result  of  diminishing  the 
and  other  improvements,  instead  of  preferred  dividends).  CL  Seattle  Trust 
paying  the  preferred  dividend) ;  Mc-  Co.  v.  Pitncr,  18  Wash.  401 ;  51  Pac. 
Lean  v.  Pittsburgh  Plate  Glass  Co.,  1048;  Cratty  v.  Peoria  Law  Library 
159  Pa.  112;  28  Atl.  211.  Ass'n,  219  111.  516;  76  N.  E.  707. 

Cf.  Hazeltine  v.  Belfast,  etc.  R.  R.  ^  Field  v.  Lamson,  etc.  Mfg.  Co., 

Co.,  79  Me.  411;    10  Atl.  328;    1  Am.  162  Mass.  388;    38  N.  E.  1126;    27 

St.  Rep.  330;   Storrow  v.  Texas,  etc.  L.  R.  A.  136. 

Mfg.  Ass'n,  87  Fed.  612;  31  C.  C.  A.  Cf.  Barnard  v.  Vermont,  etc.  R.  R. 

139;   Barnard  v.  Vermont,  etc.  R.  R.  Co.,  7  Allen  (Mass.)  512. 

464 


I 


I 


§  493- §  573]         PREFERENCE    AS    TO    DIVIDENDS  §  5G1 

business  of  the  company.'  Similarly,  a  clause  in  an  incorpora- 
tion paper  which  provides  that  as  between  the  holders  of  the 
different  classes  of  shares,  "the  profits  available  for  dividend 
shall  be  applicable  as  follows:  (1)  to  the  payment  of  a  non- 
cumulative  preferential  dividend"  with  further  provisions  as 
to  the  distribution  of  any  excess,  does  not  override  a  clause  in 
the  contemporaneous  articles  of  association  which  purports  to 
authorize  the  directors  to  accumulate  profits  as  a  reserve  fund, 
so  that  the  directors  may  in  good  faith  accumulate  a  reserve 
before  paying  the  preferential  dividend  in  full.-  So,  too,  a  pro- 
vision that  the  second  preferred  shares  shall  be  entitled  to  their 
preferential  dividend  "only  after  payment"  of  interest  on  the 
bonded  debt  and  of  the  preferential  dividend  on  the  first  pre- 
ferred shares  does  not  preclude  the  company  from  accumulat- 
ing profits  as  a  surplus  or  reserve  fund.^  Indeed,  where  the  com- 
pany has  a  license  to  use  a  patent  in  consideration  of  a  royalty 
amounting  to  a  certain  proportion  of  the  annual  "profits  avail- 
able for  dividend,"  it  was  held  that  the  company  might  deduct 
each  year  a  certain  sum  for  depreciation  in  the  value  of  the 
license  before  determining  the  amount  of  "profits  available  for 
dividend"  within  the  meaning  of  the  contract,  although  the 
company  could  not  have  been  enjoined  from  paying  dividends 
without  making  any  such  deduction  for  depreciation.* 

§  561.  Remedies  of  Preferred  Shareholders  for  arbitrary  With- 
holding of  Preferential  Dividend.  —  But  if  the  company's  re- 
fusal to  declare  the  preferred  dividend  is  arbitrary  and  oppres- 
sive and  contrary  to  the  terms  on  which  the  preferred  shares 
were  issued,  a  court  of  equity  will  overrule  their  determination 
and  compel  the  declaration  of  a  dividend ;  ^    and  this  is  espe- 

'  New    York,   etc.   R.   R.   Co.    v.  1    Ch.    146    {\\'\i\\    wliich    compare 

Nickals,  119  U.  S.  296;    7  Sup.  Ct.  infra,  §  1326). 

209.     But  see  Dent  v.  London  Tram-  *  Boardman   v.   Lake  Shore,    etc. 

ways  Co.,  16  Ch.  D.  344.  Ry.  Co.,  84  N  .Y.  157,  179-180. 

^  Fisher  v.  Black  cfc   White  Pub.  Cf.    Richardson   v.    Vermont,    etc. 

Co.  (1901),  1  Ch.  174.     Cf.  Wemyss  R.  R.  Co.,  44  Vt.  613;    Barnard  v. 

Collieries  Trust  v.  Melville,  8  Fraser  Vermont,    etc.    R.    R.    Co.,    7    Allen 

(Sc.)  143  (to  substantially  the  same  (Mass.)  512;    Cratty  v.  Peoria  Law 

effect).  Library  Ass'n,  219  111.  516;   76  N.  E. 

'  Bond  V.  Barrow  Haematite  Steel  707. 

Co.  (1902),  1  Ch.  353,  363  (iieadnote  As  to  whether  tlie  directors  and 

inadequate).  officers  are  proper  parties  defendant 

*  Bagot   Pneumatic    Tyre   Co.    v.  to  such  a  suit,  see  Chase  v,  Vander- 

Clipper  Pneumatic  Tyre  Co.  (1902).  bill,  62  N.  Y.  307. 
VOL.  I.  — 30                                  465 


§  562  CAPITAL   AND    SHARES  [ChAP.  X 

cially  true  where  the  preferential  dividend  is  non-cumulative, 
so  that,  if  once  passed,  it  is  gone  forever,'  or  where  the  preferred 
shareholders  have  no  vote  in  the  management  of  the  corpora- 
tion and  therefore  no  voice  in  determining  whether  dividends 
should  be  declared.-  The  remedy  of  the  preferred  shareholders 
in  such  cases,  however,  even  when  the  preferential  dividend  is 
"guaranteed"  is  exclusively  in  equity  and  not  at  law.^  In  order 
that  sufficient  profits  to  justify  and  require  the  payment  of  the 
preferred  dividend  should  be  in  hand,  it  is  not  necessary  that 
the  available  earnings  should  be  sufficient  to  pay  the  dividend 
on  the  total  authorized  number  of  preferred  shares  but  only 
on  the  number  actually  issued/  The  wrongful  withholding  of 
preferential  dividends  is  certainly  not  sufficient  cause  for  ap- 
pointing a  receiver  to  manage  the  business  of  the  company,* 

Where  the  certificate  of  the  cumulative  preferred  shares  is 
under  the  corporate  seal,  it  has  been  held  that  the  statute  of 
limitations  will  not  bar  the  claim  of  the  preferred  shareholders 
to  arrears  of  dividends  until  the  lapse  of  the  period  of  limitations 
appHcable  to  actions  on  contracts  under  seal.* 

§  562.  Remedies  against  Payment  to  Deferred  Shareholders  in 
fraud  of  Preferential  Rights.  —  It  is  very  clear  that  a  court  of 
equity  will  enjoin  the  corporation  from  paying  dividends  to  the 
ordinary  or  common  shareholders  in  fraud  of  the  preferential 

'  Belfast,  etc.  R.  R.  Co.  v.  Belfast,  Co.  v.  Jackson,  77  Pa.  St.  321 ;  Bates 

77  Me.  445;   1  Atl.  362;  Hazeltine  v.  v.  Androscoggin,  etc.  R.  R.  Co.,  49 

Belfast,  etc.  R.  R.  Co.,  79  Me.  411;  Me.  491. 
10  Atl.  328;   1  Am.  St.  Rep.  330.  Cf.  M'Laughlin  v.  Detroit,  etc.  Ry. 

Cf.  Nickals  v.  N.  Y.,  etc.  Ry.  Co.,  Co.,  8  Mich.  100;  Richardson  v.  Ver- 
io Fed.  575  (reversed,  119  U.  S.  mont,  etc.  R.  R.  Co.,  44  Vt.  613; 
296).  Cratty  v.  Peoria  Law  Library  Ass'n, 

Qucpre,  whether  the  directors  may  219  111.  516;  76  N.  E.  707  (overrul- 
accumulate  a  reserve  "for  the  ing  an  objection  in  a  suit  in  equity 
purpose  of  equalizing  dividends."  that  complaining  preferred  share- 
Fisher  V.  Black  &  White  Pub.  Co.  holders  had  adequate  remedy  at 
(1901),  1  Ch.  174.  law). 

^  Storrow    v.     Texas,    etc.    Mfg.         *  Mackintosh  v.  Flint,  etc.  R.  R, 

Ass'n,  87  Fed.  612;   31  C.  C.  A.  139.  Co.,  34  Fed.  582,  610. 

'  Field  v.  Lamson,  etc.  Mfg.  Co.,         ^  Texas    Consol.,    etc.     Ass'n    v. 

162  Mass.  388;    38  N.  E.  1126;    27  Storrow,  92  Fed.  5,  10-12;    34  C.  C. 

L.  R.  A.    136;    Boardman  v.  Lake  A.  182. 

Shore,  etc.  Ry.  Co.,  84  N.  Y.  157,  179;         «  Smith  v.  Cork,  etc.  Ry.  Co.,  5  Ir. 

WUliston  v.  Michigan,  etc.  R.  R.  Co.,  Rep.  Eq.  65,  75-76. 
13  Allen  (Mass.)  400.  Cf.  infra,  §  1360. 

But  see  West  Chester,  etc.  R.  R. 

466 


§  493-§  573]        PREFERENCE    AS    TO    DIVIDENDS  §  503 

rights  of  the  preferred  shareholders.'  A  bill  for  this  purpose 
may  be  filed  by  one  of  the  preferred  shareholders  on  behalf  of 
all,  notwithstanding  a  dispute  has  arisen  between  transferors 
and  transferees  of  some  of  the  other  preferred  shares  as  to  their 
relative  rights  to  arrears  of  dividends.'  The  complainant  may 
represent  both  transferors  and  transferees  for  the  purpose  of 
the  suit.  It  is  sufficient  to  make  one  or  more  of  the  common 
or  deferred  shareholders  parties  defendant  as  representatives  of 
all  of  their  class.^  The  effect  of  laches  of  preferred  shareholders 
in  enforcing  their  rights  to  prevent  payments  to  the  common 
or  deferred  shareholders  has  been  discussed  in  several  cases.* 
In  one  case  where  the  holders  of  cumulative  preferred  shares 
had  omitted  to  oppose  the  payment  of  dividends  to  the  ordinary 
shareholders  before  making  good  the  arrearages  of  the  prefer- 
ential dividends,  Lord  Ilatherley  held  that  while  perhaps  this 
acquiescence  barred  the  preferred  shareholders  from  calling 
back  the  dividends  which  had  been  already  paid  to  the  ordinary 
shareholders,  it  did  not  prevent  them  from  enjoining  the  pay- 
ment of  further  dividends  to  the  ordinary  shareholders  before 
making  good  the  arrears  of  the  preferential  dividend.^ 

§  563.  When  Deferred  Shareholders  may  compel  Declaration  of 
Preferential  Dividend.  —  In  general,  the  deferred  or  common 
shareholders  would  have  no  interest  to  compel  the  declaration 
of  the  preferred  dividend ;  but  sometimes  the  preference  is  to 
continue  only  for  a  period  of  years  until  a  certain  number  of 
the  preferential  dividends  have  been  paid,  and  in  such  cases 
the  common  shareholders  would  have  the  same  right  to  compel 
declaration  of  a  dividend  for  payment  of  wdiich  sufficient  profits 
have  been  earned  as  a  preferred  non-cumulative  shareholder 
would  have.  Thus,  when  subscribers  to  common  stock  are  not 
to  be  regarded  as  shareholders  or  entitled  to  any  voice  in  the 

>  Boardmnn  v.   Lake  Shore,   etc.  Hun    (N.  Y.)  655,    G66;    Elkins  v. 

Ry.   Co.,  84  N.   Y.    157;    Smith  v.  Camden,  etc.  R.  R.  Co.,  36  N.  J.  Eq. 

Cork,  etc.  Ry.  Co.,  5  Ir.  Rep.  Eq.  65,  233,  239-240. 
affirming  3  Ir.  Rep.  Eq.  356.  *  Mattheuts  v.  Great  Xorthern  Ry. 

■  Smiih  V.  Cork,  etc.  Ry.  Co.,  5  Co.,  28  I..  J.  Ch.  375,  382-383. 
Ir.  Rep.  Eq.  65,  77-78.  Cf.  Elkins  v.  Camden,  etc.  R.  R. 

3  Smith  V.  Cork,  etc.  Ry.  Co.,  5  Co.,  36  N.  J.  Eq.  233  (headnote  mis- 

Ir.  Rep.  Eq.  65,  78-79.  leading);  Smith  v.  Cork,  etc.  Ry.  Co., 

*  See   Boardman   v.   Lake  Shore,  5    Ir.    Rep.    Efl.    65,    74    (headnote 

etc.  Ry.  Co..  84  N.  Y.  157,  182-184;  inadequate). 
Prouty  V.  Michigan,  etc.  R.  R.  Co.,  1 

467 


§  564  CAPITAL    AND    SHARES  [ChAP.  X 

management  of  the  company  until  five  successive  annual  divi- 
dends shall  have  been  paid  to  the  preferred  shareholders,  the 
court  will  treat  that  as  done  which  ought  to  have  been  done, 
and,  where  amply  sufficient  profits  have  been  earned  for  the 
payment  of  the  five  annual  seven  per  cent  dividends,  although 
such  dividends  were  not  actually  declared  or  paid,  will  compel 
the  company  to  admit  the  subscribers  to  common  stock  to  all 
the  rights  of  ordinary  shareholders,  at  the  same  time  decreeing 
that  an  amount  equal  to  the  preferential  dividends  that  ought 
to  have  been  paid  be  distributed  to  the  preferred  shareholders.' 


§  564-§  568.     Preference  as  to  Repayment  of  Capital  in 
Liquidation. 

§  564.  Legality  of  such  a  Preference.  —  Where  a  corpora- 
tion has  power  to  issue  shares  with  such  preference  as  it  may 
determine,  it  may  issue  shares  which  shall  have  a  preference 
with  respect  to  repayment  of  capital  in  Hquidation  as  well  as 
with  respect  to  dividends.^  Indeed,  the  matter  of  the  relative 
rights  of  shareholders  in  assets  remaining  after  payment  of  all 
creditors  in  liquidation  or  winding-up  is,  like  the  subject  of  the 
distribution  of  profits  available  for  dividends,  a  mere  matter  for 
their  private  concern,  and  hence  by  agreement  among  them- 
selves, without  any  affirmative  authorization,  they  may  provide 
that  preferred  shares  shall  be  entitled  to  a  preference  in  respect 
of  capital.^  It  is  competent  for  the  company  in  issuing  pre- 
ferred shares  to  provide  that  the  holders  of  such  shares  shall 
in  the  event  of  liquidation  not  merely  receive  back  the  nominal 
value  of  the  shares  before  any  capital  is  returned  to  the  other 
shareholders,  but  shall  also  be  entitled  to  a  premium  or  bonus 
in  addition  thereto.* 

§  565.  When  Preference  as  to  Capital  exists  and  when  not.  — 
The  law  is  well  settled  that  a  preference  as  to  dividends  does 
not  carry  by  implication  any  preference  as  to  capital  in  a  dis- 

»  Mackintosh  v.  Flint,  etc.  R.  R.  *  Cf.  South  African  Supply,  etc. 

Co.,  34  Fed.  582.  Co.  (1904),  2  Ch.  268  (where  the  pre- 

2  Supra,  §  531.  ferred  shareholders  were  entitled  to 

3  Toledo,  etc.  R.  R.  Co.  v.  Con-  a  premium  or  bonus  in  the  event  of 
tinental  Trust  Co.,  95  Fed.  497,  531;  winding-up  for  the  purpose  of  recon- 
3G  C.  C.  A.  155.  struction  or  amalgamation). 

468 


§  493-§  573]  PREFERENCE    AS    TO    CAPITAL  §  505 

tribution  of  assets  in  winding-up.'  Priority,  in  respect  to  capital, 
therefore,  if  it  is  to  be  conferred  upon  the  preferred  shares,  must 
generally  be  given  by  appropriate  language.-  Even  overdue 
cumulative  preferential  dividends  are  not  a  charge  upon  capital 
in  proceedings  for  reduction  of  capital  or  for  liquidation  of  the 
company.-'  Where,  however,  the  general  incorporation  law 
of  the  state  provides  that  preferred  shares  in  companies  organ- 
ized thereunder  shall  have  a  preference  in  respect  of  capital, 
the  court  will  presume  that  preferred  shares  issued  by  a  com- 
pany incorporated  by  special  act  were  intended,  in  the  absence 
of  any  circumstances  indicative  of  contrary  intent,  to  have  a 
like  preference ;  *  and  so  where  a  general  incorj)oration  law 
provides  that  upon  dissolution  the  assets  shall  be  distributed 
among  the  common  shareliolders  after  payment  of  creditors 
and  the  preferred  shareholders,  and  also  contains  a  further  pro- 
vision that  any  incorporation  paper  may  create  two  or  more 
kinds  of  shares  with  such  preferences  or  restrictions  as  may  be 
fixed  in  the  incorporation  paper,  shares  which  by  the  incorpo- 
ration paper  are  declared  to  have  a  preference  as  to  dividends 
will  also  have  a  preference  as  to  capital  unless  the  contrary  be 
provided  by  the  incorporation  paper.*  A  provision  that  preferred 
shares  shall  be  a  lien  subject  only  to  an  existing  issue  of  mort- 
gage bonds  gives  the  preferred  shares  a  preference  over  the 
common  in  respect  to  capital  as  well  as  dividends.® 

'  London  India  Rubber  Co.,  5  Eq.  the    assets   in   case    of    dissolution. 

519;   Griffith  V.  Paget,  0  Ch.  D.  oil;  Consumers'     Gas    Trust    v.    Quiriby, 

North  West  Argentine  Ry.  Co.  (1900),  137  Fed.  882;  70  C.  C.  A.  220. 
2  Ch.  882  (where  the  point  was  ap-         ^  As   to  what   language   will   be 

parently   treated    as  too    clear    for  sufficient  to  confer  a  preference  as 

argument);  Odessa  Watenvorks  Co.,  to  capital,  see  in  addition  to  cases 

W.  N.  (1897)  16G;   Jones  v.  Con-cord  cited  below  Bangor  Slate  Co.,  20  Eq. 

(fc  Montreal  R.  R.  Co.,  67  N.  H.  119  59  (stated  supra,  §  532). 
(semble);     38    Atl.    120;     Jones   v.         '  Roberts    v.    Roberts-Wicks    Co., 

Concord  tfc  Montreal  R.  R.  Co.,  67  184N.  Y.257;  77N.E.  13;   112  Am. 

N.  H.  234;   30  Atl.  614;   68  Am.  St.  St.  Rep.  607. 
Rep.  650  (semble).  ■*  McGregor  v.  Home  Ins.  Co.,  33 

Cf.  McGregor  v.  Home  Ins.  Co.,  33  N.  J.  Eq.  181. 
N.  J.  Eq.  181.     By  parity  of  reason-         *  Hellman  v.   Pennsylvania  Elec- 

ing,    an   agreement    that    a    public  trie  Vehicle  Co.  (N.  J.),  67  Atl.  834. 
service  company's  business  shall  be         *  Hamlin  v.  Toledo,  etc.  R.  R.  Co., 

carried  on  with   only  such   charges  78  Fed.  664,  670;    24  C.  C.  A.  271; 

or  tolls  as  may  be  necessary  to  de-  36  L.  R.  A.  826;   Toledo,  etc.  R.  R. 

fray  expenses,  does  not  destroy  the  Co.  v   Continental  Trust  Co.,  95  Fed. 

ultimate  right  of  the  shareholders  in  497,  529-531,  36  C.  C.  A.  155. 

469 


§  oG6  CAPITAL    AND    SHARES  [ChAP.  X 

§  566.  Attempts  to  confer  indirectly  a  Preference  as  to  Capital 
upon  Shares  not  entitled  thereto.  —  Where  preferred  shares  have 
no  preference  as  respects  capital,  they  must  in  a  winding-up, 
which  is  in  theory  a  return  of  capital,  receive  no  more  than  the 
common  shareholders  receive.  This  rule  cannot  be  evaded  by 
any  scheme  of  reconstruction  or  reorganization.  Thus,  where 
preferred  shares  have  no  preference  as  regards  capital,  a  scheme 
of  reconstruction  under  the  English  Companies  Act  which  pro- 
vides that  the  preferred  shareholders  in  the  company  'being 
wound  up  shall  receive  in  exchange  preferred  shares  in  a  new 
corporation  formed  to  take  over  the  assets  and  business  of  the 
old  company,  while  the  ordinary  shareholders  in  the  old  com- 
pany shall  receive  ordinary  shares  in  the  new,  gives  the  pre- 
ferred shareholders  more  than  the  ordinary  shareholders,  and 
is  therefore  vltra  vires. ^  On  the  other  hand,  where  a  statute 
authorized  the  consolidation  of  two  railway  companies  upon 
such  terms  and  conditions  as  might  be  approved  by  a  majority 
of  both  companies,  a  scheme  for  amalgamation  whereby  the 
preferred  shareholders  of  one  of  the  old  corporations,  although 
entitled  to  no  preference  as  respects  capital,  received  for  every 
four  shares  of  their  old  stock  five  shares  in  the  new  company 
while  the  common  stockholders  only  received  for  every  two 
shares  of  their  old  stock  one  share  in  the  new  company,  was 
held  to  be  intra  vires? 

§  567.  What  Funds  regarded  as  Capital  and  what  as  Profits  in 
Liquidation.  —  Where  the  preferred  shares  are  entitled  to  a  pref- 
erence as  to  dividends  but  not  as  to  capital,  it  is  important  to 
inquire,  when  the  corporation  goes  into  liquidation,  what  prop- 
erty or  funds  can  be  regarded  as  capital  divisible  fro  rata  among 
holders  of  both  classes  of  shares  and  what  as  profits  subject  to 
the  preferential  claim  of  the  preferred  shareholders.  To  the 
extent  necessary  to  repay  the  several  shareholders  the  amount 
nominally  paid  upon  their  respective  shares,  it  seems  clear  that 
any  funds  of  the  corporation,  whether  due  to  earnings  or  to  any 
other  source,  must  in  winding-up  or  liquidation  be  regarded  as 
capital  as  between  the  preferred  and  common  or  ordinary  share- 
holders. Indeed,  as  a  general  rule  any  surplus  funds  over  and 
above  the  amount  necessary  to  repay  the  several  shareholders 

*  Simpson  v.  Palace  Theatre,  69  '  Hale  v.  Cheshire  R.  R.  Co.,  161 
L.  T.,  N.  s.,  70.  Mass.  443;  37  N.  E.  307. 

470 


§  403-§  573]  I'KKFEREXCE    AS    TO    CAPITAL  §  5G7 

the  paid-up  capital  nui.st  also,  in  windiiifjj-up  or  lif|ui(latioii,  l)e 
treated  as  cajjital  as  between  the  preferred  and  deterred  share- 
holders. Thus,  tlie  House  of  Lords  has  held  that  where,  in  a 
winding-up,  the  c-oinpany's  business  or  "undertaking"  is  sold, 
the  residue  of  the  purchase  price  remaining  after  paying  ott"  all 
liabilities  and  returning  all  paid-up  capital  is,  as  between  pre- 
ferred and  deferred  shareholders,  to  be  treated  as  capital  and 
not  profits.'  The  company  having  ceased  to  be  a  going  concern, 
the  discretion  of  the  directors,  or  of  the  corporation,  to  treat  an 
appreciation  of  assets  in  excess  of  the  nominal  capital  as  profits 
available  for  dividends  had  terminatech  It  was  once  held  that 
profits  accumulated  as  a  reserve  fund  should,  upon  the  volun- 
tary winding-up  of  the  company,  be  treated  as  still  profits  and 
not  capital.-'  By  the  later  decisions  this  rule  has  been  qualified, 
if  not  overthrown ;  and  it  is  now  held  that  where  the  company 
has  a  discretionarv'  power  of  reserving  profits  before  paying  the 
preferential  dividend  to  preferred  shareholders,  if  the  company 
goes  into  liquidation  before  this  discretion  is  exercised  or  the 
preferred  dividend  declared  out  of  profits  earned  shortlv  before 
the  liquidation,  the  profits  so  earned  should  be  regarded  as 
capital  as  between  the  preferred  and  ordinary  shares,  and  as 
such  distributed  pro  rata  among  both  the  classes  of  share- 
holders.^ The  question  here,  as  in  the  similar  case  where  the 
rights  of  tenants  for  life  and  remaindermen  are  involved,^  is 
whether  accumulated  profits  are,  in  liquidation  or  winding-up, 
regarded  as  capital  unless  they  have  been  declared  as  dividends 

'  Birch  V.  Cropper,  14  App.  Cas.  86;    Odessa  Waterworks  Co.  (1901), 

525.  2  Ch.  190  n. 

Cf.  Frames  v.  Bultfoniein  Mining  But  see  Re  Rogers,  161  N.  Y.  108, 

Co.   (1891),   1  Ch.    140;    Morrow  v.  113;    55  N.  E.  393,  where  the  court 

Peterborough   Water  Co.,  4    Ont.   L.  said,   "After  effecting  a  sale  of  the 

R.  324  (where  the  company's  regu-  company's  plant  it  cea.«ed  to  do  busi- 

lations  provided  tliat  in  h(iuidation  ness     and     went    into    hquidation. 

after     repaying     to     tlie     preferred  After  such  sale  it  could  no  longer 

shareholders  the  capital  contributed  earn  profits  for  distribution,  and  the 

by     them,    the    amount    remaining  directors  were  no  longer  vested  with 

should  be    distributed  among  ordi-  any  discretion  with  reference  to  the 

narj'  shareiiolders,  and  were  enforced  conduct  of  the  busine.ss  or  judgment 

accordingly).  as  to  the  amount  of  profits  to  be 

^  Bridgewater    Xavigation    Co.  retained  and  employed  as  a  working 

(1891),  2  Ch.  317;  Bishop  v.  Smyrna  capital." 
&  Cas.mba  Ry.  (1895),  2  Ch.  265.  *  See  infra,  §  1394. 

«  Crichton's  Oil  Co.  (1902),  2  Ch. 

471 


§  568  CAPITAL    AND    SHARES  [ChAP.  X 

or  are  regarded  as  profits  unless  they  have  been  capitaUzed  by 
proceedings  for  the  increase  of  capital.  Even,  however,  when 
the  company  is  in  liquidation,  it  has  been  held  that  a  fund  due 
to  the  appreciation  of  certain  bonds  held  by  the  company  will, 
as  between  preferred  and  ordinary  shareholders  and  for  the 
benefit  of  the  former,  be  treated  as  profits  where  a  previous 
depreciation  of  the  same  bonds  has  been  debited  to  the  revenue 
account  to  the  prejudice  of  the  preferred  shareholders;'  but 
this  decision  is  not  easy  to  reconcile  with  the  principles  acted 
upon  in  the  later  cases  above  cited. 

It  seems  that  moneys  earned  after  the  commencement  of 
liquidation  proceedings  should  be  treated  as  capital.- 

§  568.  Whether  Preferred  Shareholders  are  entitled  in  Liquida- 
tion to  "  Interest  "  from  the  Time  of  Cessation  of  Business  in  lieu  of 
Preferential  Dividend.  —  As  the  preferential  dividends  are  pay- 
able only  out  of  profits  it  follows  that  if  the  company  ceases  to 
do  business,  with  a  view  to  winding-up,  the  preferential  dividend 
ceases  to  be  payable  even  though  the  preferred  shareholders  be 
entitled  to  a  preference  as  to  capital  as  well  as  dividends.  For 
example,  if  the  company  goes  into  liquidation  any  balance  which 
may  remain  after  satisfying  all  claims  of  creditors  should  be  used 
for  the  purpose  of  returning  capital  to  the  several  shareholders 
according  to  their  respective  rights ;  and  no  part  should  be  de- 
voted to  paying  to  the  preferred  shareholders  "interest"  on 
their  shares  from  the  date  of  the  last  payment  of  the  preferential 
dividend,  to  the  prejudice  of  the  claim  of  the  common  or  deferred 
shareholders  for  the  return  of  the  capital  invested  by  thera.^ 


§  569.  Preference  as  to  Distribution  of  New  Shares  upon  an 
Increase  of  Capital.  —  Upon  the  principle  that  preferred  share- 
liolders  stand  on  equality  with  the  ordinary  shareholders  except 
in  so  far  as  their  preferential  rights  expressly  or  by  necessary 
implication  carry,  a  preference  in  respect  to  dividends  does  not 
confer  a  preference  in  respect  to  the  distribution  of  new  shares 

»  Bishop  V.  Smyrna  &  Cassaba  (where  counsel  conceded  the 
Ry.  Co.,  No.  2  (1895),  2  Ch.  596.  point). 

2  Bishop  v.  Smyrna  &  Cassaba  ^  Wilson  v.  Parvin,  119  Fed.  652; 
Ry.   Co.,  No.   2   (1895),  2  Ch.  596    56  C.  C.  A.  268. 

472 


§  493-§  57.'i]       PREFEREN'CE    AS    TO    VOTINXi    KlfilllS  §  570 

upon  an  increase  of  capital;  and  accordinf^ly  upon  such  an 
increase  both  common  and  preferred  shareholders  have  the 
same  option  of  subscribing  to  the  new  shares  before  any  of  them 
are  offered  for  subscription  to  non-members  of  the  company/ 
In  one  case,  the  payment  of  a  "stock  dividend",  payable  to 
preferred  shareholders  in  preferred  stock  and  to  common 
shareholders  in  common  stock  was  held  to  be,  under  the 
circumstances,  no  violation  of  the  rights  of  the  common 
shareholders.^ 

§  570.  Preference  as  to  Voting  Rights.  —  Inasmuch  as  pre- 
ferred shareholders  are  members  of  the  company,  and,  except 
in  so  far  as  their  rights  may  be  altered  by  the  contract,  statute, 
or  by-law  under  which  the  shares  are  issued,  entitled  in  all 
respects  to  the  same  rights  as  other  shareholders,  it  follows  that 
they  have  the  same  voting  rights  as  other  shareholders.  The 
right  of  shareholders  to  vote  is,  however,  like  the  right  to  divi- 
dends or  to  participate  equally  in  a  division  of  capital  on  liqui- 
dation, regarded  as  a  private  matter  for  each  shareholder  which 
he  may  waive  if  he  choose.  Consequently,  a  provision  that  share- 
holders of  a  certain  class  shall  have  no  right  to  vote  is,  if  assented 
to  by  them,  quite  valid.'  Such  a  provision  might  theoretically 
be  made  as  to  either  the  preferred  or  the  deferred  shares,  but 
is  much  more  common  with  respect  to  the  preferred  shares  so 
as  to  compensate  the  other  shareholders  for  the  preference  of 
the  preferred  shareholders  as  to  dividends.  A  provision  in  an 
incorporation  paper,  whereby  the  preferred  shareholders  shall 
have  no  right  to  vote  is,  therefore,  valid  even  though  a  statute 
provide  that  every  shareholder  shall  be  entitled  to  one  vote  for 
every  share  held  by  him.^  On  the  other  hand,  the  Supreme 
Court  of  Canada  has  recently  held  that  where  the  incorporation 
law  enacts  that  at  an  election  of  directors  each  shareholder  shall 
have  as  many  votes  as  he  holds  shares,  a  provision  in  the  incor- 
poration paper  whereby  the  holders  of  certain  preferred  shares 
should  have  the  right  to  choose  three  of  the  five  directors  is 

'  Jones   V.    Concord   A    Montreal         '  State  ex  rel.  Frank  v.  Swanger 

ft.  i2.  Co.,  67  N.  H.  119:  38  Atl.  120;  (Mo.),    89    S.    W.    872;     190    Mo. 

Jones  V.  Concord  &  Montreal  R.  R.  561. 

Co.,  67  N.  H.  234;   30  Atl.  614;   68         ♦  State  ex  rel.  Frank  v.  Swanger 

Am.  St.  Rep.  650.  (Mo.),    89    S.    W.    872;     190    Mo. 

^  Howell  V.  Chicago,  etc.  Ry.  Co.,  561. 
51  Barb.  (N.  Y.)  378. 

473 


§  571  CAPITAL    AND    SHARES  [ChAP.   X 

invalid.'  It  is  submitted  that  this  construction  of  the  statute  is 
narrow,  and  it  is  encouraging  to  find  that  the  American  court 
has  taken  the  more  hberal  view. 

§  571.  Preference  as  to  Liability  to  Creditors.  —  We  have  seen 
that  in  the  absence  of  stipulation  to  the  contrary,  preferred 
shareholders  are  subject  to  any  statutory  liability  to  creditors 
that  may  attach  to  other  members ;  ^  and  indeed  it  would  not 
be  competent  by  mere  agreement  to  exempt  the  preferred 
shareholders  from  this  liability,  except  as  between  them  and 
the  ordinary  shareholders. 


§  572.  Consequences  of  Distinction  between  Preferred  and  De- 
ferred Shares  upon  Rules  as  to  Parties  in  legal  Proceedings.  —  In 
consequence  of  the  division  of  a  company's  shares  into  preferred 
and  common  or  ordinary,  a  distinction  is  created  between  the 
two  classes  of  shares  which  may  render  it  proper  that  in  certain 
suits  regarding  the  corporate  affairs  representatives  of  both 
classes  should  be  made  parties.  Thus,  where  the  preferred 
shares  are  entitled  to  a  preference  over  the  common  in  respect 
both  to  dividends  and  capital,  and  do  not  enjoy  the  ordinary 
voting  rights,  the  preferred  shareholders  are  proper  to  be  ad- 
mitted as  parties  to  consolidated  suits  for  the  winding-up  of  the 
company  and  the  foreclosure  of  the  mortgage  securing  its  bonds.^ 
Similarly,  as  more  fully  pointed  out  below,  in  cases  of  share- 
holders' bills,  it  is  sometimes  necessary  to  join  as  defendant  a 
representative  of  a  class  of  shareholders  whose  interests  conflict 
with  those  of  the  plaintiff.*  Where  a  representative  of  some  one 
class  of  shareholders  is  desired,  an  individual  should  be  selected 
who  is  not  an  officer  or  director  in  the  company;  since  the  duty 
of  officers  and  directors  is  to  represent  all  classes  of  shareholders 
impartially.^  It  has  been  held  that  the  common  stockholders, 
although  proper,  are  not  necessary  parties  to  a  suit  by  preferred 

*  Colonist  Printing   &   Pub.   Co.,         '  Hamlin  v.  Toledo,  etc.  R.  R.  Co., 

V.  Dunsmuir,  32  Can.  Sup.  Ct.  679.  78  Fed.  664;  24  C.  C.  A.  271;   36  L. 

Cf.   Durkee  v.   People,  155   111.  354;  R.  A.  826. 
40  N.  R.  626;   46  Am.  St.  Rep.  340         *  See  infra,  §  1177. 
(stated  infra,  §  1239).  *  Chase  v.    VanderbiU,  62  N.  Y. 

«  Supra,  §  540.  307. 

474 


§  493- §  573]  PREFERRED    SHARES  §  573 

stockholders  to  compel  declaration  or  payment  of  the  preferen- 
tial dividend.' 

§  573.  Consequences  of  Distinction  upon  Powers  of  Manage- 
ment of  Majority  of  Company.  —  As  the  interests  of  preferred  and 
common  shareholders  often  conflict,  controversies  between  them 
often  arise.  The  rules  of  law  applicable  in  such  cases  are  the 
same  as  apply  to  other  cases  in  which  some  shareholders  have 
individual  interests  in  matters  of  corporate  management  con- 
flicting with  those  of  the  general  body  of  their  fellows.  That  is 
to  say,  any  class  of  shareholders  are  not  deprived  of  their 
control  over  the  corporate  management  merely  because  their  in- 
terests may  not  coincide  with  those  of  the  other  class  of  share- 
holders.- Thus,  a  railway  company  having  power  to  lease  its 
road  may  against  the  objection  of  conniion  shareholders  execute 
a  lease  for  ninety-nine  years  at  a  rental  which  is  less  than  suffi- 
cient to  pay  the  preference  dividend,  and  which  therefore  will 
exclude  the  common  shareholders  from  any  income  throughout 
the  whole  long  period  of  the  lease.^ 

»  Thotnpson  v.  Erie  Ry.  Co.,  45         '  But  cf.  infra,  §  1.397. 
N.  Y.  468;    Prouty  v.  Michigan,  etc.  ^  Middletown  v.  Boston,  etc.  R.  R. 

R.  R.  Co.,  1  Hun  (N.  Y.)  655.  Co.,  53  Conn.  351;    5  Atl.  706. 


475 


CHAPTER  XI 

INCREASE,    REDUCTION,    AND    OTHER    MODIFICATIONS  OF 

CAPITAL 

Section 
Whether  amount  of  nominal  capital  as  fixed  by  the  incorporation 

paper  can  be  altered 574 

"Whether  amount  when  not  fixed  by  incorporation  paper  can  be 

altered      575 

Three  kinds  of  alteration  of  capital 576 

Increase  of  capital 577-619 

Definition  and  kinds  of  increase  of  capital 577 

Effects  of  increase  upon  creditors  and  shareholders 578 

Illegal  increase  of  capital 579-582 

Shares  in  excess  of  amount  of  authorized  capital  void   .    .    .  579 
Liabihty    of    company    for    representing    overissued 

shares  to  be  vaUd 580 

Liability  of  company  on  contract  to  issue  valid  shares   .  581 
Illegal  increase  no    effect  on   old   shareholders  —  not 

ground  for  receiver 582 

Increase  under  statutory  authority 583-619 

What  will  confer  authority  to  increase  capital  —  authority 

to  issue  convertible  bonds 583 

Amount    and    kind    of    increase  —  successive    increases  — 

new  shares  of  different  par  value  from  old     ....  584 

How  increase  may  be  effected 585-592 

Required  formalities 585 

Requisites  of  meeting  at  which  increase  is  voted   .    .    .  586 
Motives  actuating  increase,  how  far  material      ....  587 
Examination  of  proceedings  by  public  official  —  cer- 
tificate of  regularity 588 

Whether  full  amount  of  new  stock  must  be  taken     .    .    .  589 
Provision  confining  increase  to  number  of  new  shares 

taken      590 

Whether  subscriber  to  new  shares  becomes  a  share- 
holder before  payment  in  full 591 

Consequences   of    failure    to    comply    with   statutory 

requirements 592 

Rescission  of  increase 593 

Contracts  to  exercise  statutory  power  of  increase 594 

Contracts  to  refrain  from  exercising  statutory  power    .    .    .  595 

Stock  dividends 596-601 

Legality  of  stock  dividends 596 

Necessity  that    profits    equivalent    in   amount  to  the 

stock  dividend  should  be  in  hand 597 

Consequences  of  an  illegal  stock-dividend 598 

476 


§  574- §  677]  SYNOPSIS 

Increase  of  capital  {continued)  Section 

Necessity    for    distributing    stock    dividends    equally 

among  shareholders 599 

Stock  dividend  distinguished  from  cash  dividend  ac- 
companied  by  an  option  to  subscribe  to  new 

shares 600 

Rescission  of  stock  dividends GOl 

Sale  of  new  shares  in  the  market  followed  by  distribution 

of  premium  among  old  shareholders G02 

Right  of    old    shareholders  to  preference   in  allotment  of 

new  shares 603-619 

In  general      603 

Exceptional  cases 604 

In  whom  the  rigiit  vests 605-609 

In  general      605 

Relative  rights  of  transferor  and  transferee  ....     606 
Relative  rights  of  tenant  for  life  and  remainder- 
man of  old  shares 607 

Relative  rights  of  preferred  and  common  share- 
holders    608 

Rights  of  shareholder  who  has  not  fully  paid  for 

old  shares 609 

Time  for  exercise  of  right 610-611 

Before  increase  of  capital  is  effected 610 

After  expiration  of  time   limited  for  exercise  of 

right 611 

Waiver  of  pre-emptive  right 612 

Assignment  of  the  right 613 

Remedies  against  company  for  failing  to  recognize  the 

pre-emptive  right 614-616 

In  general      614 

Remedy  personal  to  shareholder  whose   right   is 

denied 615 

Company  not  accountable  for  premium  realized 
on  quota  of  shareholder  who  has  waived  or 

othervv'ise  lost  pre-emptive  right 616 

Rights  and  liabilities  of  persons  to  whom  new  shares 
are  issued  in  violation  of  pre-emptive  right  of 

old  shareholders 617 

Rights  of  old  shareholders  upon  issue  of  pre\'iously 
unissued  shares  of  old  capital,  surrendered  and 

forfeited  shares,  etc 618 

Distinction  between  acceptance  of  company's  offer  of 
quota  of  new  shares  and  application  for  sliares  in 
addition  to  quota  at  suggestion  of  company  .    .     619 

Reduction  of  capital 620-G74 

Definition 620-621 

What  reduction  of  capital  means 620 

What  it  does  not  mean 621 

Why    reduction     of    capital    without     affirmative     legislative 

sanction  is  forbidden      622-624 

Reduction  of  actual  capital 622 

Reduction  of  nominal  capital 623 

477 


INCREASE    AND    REDUCTION    OF    CAPITAL      [ChAP.  XI 

Reduction  of  capital  (continued)  Section 

General  principle      624 

Reduction  without  statutory  authority  —  evasion  of  the  prohi- 
bition of  reduction        625-642 

Payment  of  dividends  out  of  capital 625 

Purchase  by  company  of  its  own  shares 626-633 

Whether  purchase  is  lawful 626-627 

On  principle 626 

English  authorities 627 

American  authorities 628 

Purchase    on  credit  or  with  borrowed  money  — 

issue  of  bonds  in  exchange 629 

Purchase   by  a  person    secretly  acting   as   agent 

for  the  company 630 

Effect    of    purchase    where    a    purchase    is   deemed 

illegal 631-632 

In  general      631 

Purchase    by    company    followed    by    reissue    to 

another  person      632 

Effect  of  purchase  where  a  purchase  is  deemed  lawful   .     633 
Acquisition  by  company  of  its  own  shares  otherwise  than 

by  purchase 634-641 

Whether  permissible  —  in  general 634 

Surrender  of  shares      635-637 

In  general      635 

Surrender  of  shares  which  are  liable  to  forfeiture   .     636 
Surrender    of    shares    in   compromise    of    contro- 
versy as  to  vahdity  of  their  issue      ....     637 
Acceptance  of  shares  in  satisfaction  of,  or  as  security 

for,  a  debt  due  the  company      638 

Acquisition   of    shares   by  satisfying  a  judgment   for 

converting  them 639 

Acquisition    of   shares   in    pursuance  of   terms  of  the 
original    issue  —  redeemable     and     convertible 

shares 640 

Acquisition  of  shares  as  trustee  for  third  person .    ...     641 
Release  of  shareholder  from  hability  for  unpaid  subscrip- 
tions to  capital 642 

Reduction  vmder  statutory  authority 643-674 

In  general  —  authority  not  readily  implied 643 

English  and  American  statutes  compared 644 

Effect  of  failure  to  comply  with  statutory  conditions    .    .    .      645 
Statutes    making    certificate  of   public    official   conclusive 

evidence  of  regularity      646 

Whether  statutory   power  extends   to   all   kinds  of  reduc- 
tion of  capital,  i.  e.,  cancellation  of  liability,  return  of 

paid-up  capital,  and  reduction  of  nominal  capital.    .      647 
Return  of  actual  capital   on  footing  that  it  may  be 

called  up  again 648 

Whether  scheme  must    contemplate  a    permanent   reduc- 
tion      649 

Whether    statutory    reduction    may    retroactively    ratify 

illegal  reduction 650 

478 


§  574- §  G77]  SYNOPSIS 

Reduction  of  capital  (continued)  Section 

Reduction  need  not  affect  all  shares  equally G51 

Consent  of  creditors  as  a  statutory  condition  to  reduction    .      G52 
Reduction  of  nominal  capital  so  as  to  correspond  with  the 

actual  capital Go3-G57 

Writing  otT  lost  capital 653-056 

Whetlier  authorized  by  power  of  reduction      .    .    .      653 
Importance  of  determining  whether  a  loss  of  actual 

capital  has  occurred 654 

Rules    for   determining  whether   a   loss  of  actual 

capital  has  occurred 655 

Whether   the    loss    should    fall    on    preferred    or 

common  shareholders 656 

Wiping  out  illegal  over-capitalization 657 

Reduction  in  order  to  return  to  shareholders  assets  which 

the  company  had  no  p)ower  to  hold 658 

Reduction  of  capital  as  substitute  for  winding-up  pro- 
ceedings   659 

Whether  reduction  of  nominal  capital  should  be  accom- 
panied by  corresponding  reduction  of  actual  capital 
and  vice  versa  —  distributing  amount  by  which  capital 

is  reduced  among  the  shareholders 660-668 

Statement  of  the  problem 660 

Of  the  doctrine  that  reduction  must  not  destroy  equili- 
brium of  balance  sheet 661 

Whether  and  to  what  extent  a  reduction  of  nominal 
capital  should  be  accompanied  or  followed  by  a 
distribution  of  paid-up  capital  among  the  share- 
holders         662-668 

Where  such  distribution  should  not  be  made      .    .     662 

Where  the  distribution  should  be  made 663 

Time  of  making  the  distribution 664 

Manner  of  distribution  —  in  kind  or  in  cash  — 
borrowing    to   distribute  —  distribution    of 

bonds      665 

Whether  reduction  of  nominal  capital  for  purpose 
of  writing  off  assets  believed  to  be  valueless 
casts  title  to  those  assets  on  the  shareholders 

individually 666 

Whether  moneys  distributed  upon  reduction  of 
capital  are  income  or  capital  —  rights  of 
preferred  and  common  shareholders,  of  ten- 
ants for  life  and  remaindermen 667 

Certificates  issued  to  shareholders  on  reduction 
of  capital  in  lieu  of  immediate  distribution 

of  cash  or  property 668 

Reduction  as  affecting  voting  rights  of  shareholders    ....     669 
Agreement    to    exercise   power  of  reduction  by  redeeming 

certain  shares 670 

Agreement   not  to  reduce  capital   or  not  to  affect  certain 

shares  by  reduction      671 

Preferred  shares  as  affected  by  reduction  of  capital  .    .     672-<i74 
In  general      672 

479 


§  574  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

Reduction  of  capital  (continued)  Section 

In    case    of  reduction  for    purpose  of  writing  off  lost 

capital 673 

Whether    reduction    of    cumulative    preferred    shares 

affects  overdue  dividends 674 

Modification  of  capital  otherwise  than  by  increase  or  reduction  — 

consolidation  and  subdivision  of  shares 675-677 

Whether  company  has  power  to  consoUdate  or  subdivide  shares   .     675 
Consohdation    or     subdivision     of     shares     under     statutory 

authority 676 

Effect  of  unauthorized  consohdation  or  subdivision 677 


§  574.  Whether  Amount  of  Capital  as  fixed  by  Incorporation 
Paper  can  be  altered.  —  The  amount  of  the  nominal  or  share 
capital  of  a  corporation  is  usually  fixed  by  the  act  of  incorpora- 
tion if  the  company  be  incorporated  by  special  act,  or  by  the 
incorporation  paper  if  the  company  be  orgajiized  under  a  general 
law.  Like  other  provisions  of  a  special  act  of  incorporation  or 
incorporation  paper,  the  provision  fixing  the  amount  of  the  com- 
pany's capital  cannot  be  changed  by  the  corporation  unless  some 
mode  of  alteration  be  provided  by  statute.  Hence,  where  the 
statute  requires  the  amount  of  the  capital  stock  to  be  stated  in 
the  incorporation  paper,  a  clause,  inserted  without  statutory 
authority,  purporting  to  confer  upon  the  company  the  power  to 
increase  or  alter  the  amount  of  the  capital  at  pleasure  is  null  and 
void.' 

§  575.  Whether  Amount  can  be  altered  when  not  fixed  by  Incor- 
poration Paper.  —  In  comparatively  rare  cases,  incorporation 
laws  provide  that  the  amount  of  the  company's  capital  shall  be 
fixed  by  the  corporation  itself  after  its  organization.  In  such 
cases  the  question  arises  whether  the  company,  having  once  fixed 
the  amount  of  its  capital  in  pursuance  of  the  statute,  has  any 
power  to  alter  its  determination  in  that  regard.     According  to 

'  Grangers'  Life  and  Health  Ins.  thorize  a  reduction  unless  the  arti- 

Co.  V.  Kamper,  73  Ala.  325.  cles  or  by-laws  are  first  amended  so 

Cf.  Palmer  v.  Bank  of  Zumbrota,  as  to  provide  therefor). 
72  Minn.  266,  276-277  (headnote  in-         As  to  a  provision  in  an  incorpora- 

adequate);    75  N.  W.  380;    Dexine  tion    paper    for    the    simultaneous 

Patent   Packing   &   Rubber   Co.,   88  issue  and  cancellation  of  part  of  the 

L.  T.  791  (holding  that  where  stat-  authorized  capital,  the  scheme  being 

ute  allows   reduction   in  pursuance  adopted  as  a  matter  of  bookkeeping 

of  a  provision  in  the  articles  or  by-  convenience,    see   State   v.    Consoll- 

laws  a  clause  in  the  memorandum  dated  Gas,  etc.  Co.  (Md.),  65  Atl.  40. 
or  incorporation  paper  cannot  au- 

480 


§  574- §  077]  INCREASE  §  577 

the  better  view,  it  would  seem  that  no  such  power  of  altera- 
tion exists/  although  some  authorities  supjxjrt  the  contrary 
view.'- 

§  570.  Three  Kinds  of  Alteration  of  Capital.  —  A  corporation 
may  desire  to  alter  its  capital  either  (1)  by  way  of  increase  or 
(2)  by  way  of  decrease  or  (3)  by  some  change  in  the  number  or 
par  value  of  the  shares  without  either  increasing  or  diminishing 
the  aggregate  amount  of  the  capital. 


§  577-§  619.     INCREASE  OF  CAPITAL. 

§  577.  Definition  and  Kinds  of  Increase  of  Capital.  —  First, 
then,  of  increase  of  capital.  This  may,  provided  the  laws  per- 
mit, be  accomplished  either  by  issuing  new  shares  or  by  in- 
creasing the  par  value  of  the  old  shares.  The  former  is  much 
the  more  common  way  of  increasing  capital,  and  in  the  follow- 
ing pages  may  be  taken  as  referred  to  whenever  the  phrase 
"increase  of  capital"  is  used  unless  that  phrase  is  qualified 
by  an  explicit  declaration  that  increase  by  adding  to  the  par 
value  of  the  shares  is  meant.^  An  increase  of  nominal  capital 
may  or  may  not  be  accompanied  by  an  increase  of  actual  capi- 
tal. Thus,  when  a  company  in  pursuance  of  statutory  authority 
cancels  its  existing  stock  and  issues  to  each  holder  in  lieu 
thereof  a  larger  nominal  amount  of  new  stock,  although  the 
actual  or  working  capital  is  not  affected,  there  is  clearly  an  in- 
crease of  the  nominal  or  share  capital,  which  is  taxable  as  such.* 
The  acquisition  of  additional  property  by  gift,  devise,  or  in 
any  other  way,  although  it  may  augment  the  actual  or  work- 
ing capital  of  the  company,  does  not  amount  to  any  increase 
in  its  nominal  or  share  capital,  and  is  not  to  be  deemed  an 

'  Cf.  Sutherland  v.  Olcott,  95  N.  Y.  the  minimum  sum  as  the  capital  of 

93.  the    company,    afterwards    without 

*  Somerset,  etc.  R.  R.  Co.  v.  Cush-  objection  issued  new  shares  up  to 

ing,  45  Me.  524;    Peck  v.  Elliott,  79  the  maximum  amount). 
Fed.  10;  24  C.  C.  A.  425;  38  L.  R.  A.         «   ^g  to  an  illegal  attempt  to  in- 

616.  crease  the  capital  by  increasing  the 

Cf.    Gray    v.    Portland    Bank,    3  par  value  of  the  shares,  see  Tschumi 

Mass.  364;    3  Am.  Dec.  156  (where  v.  Hills,  6  Kan.  App.  549;   51  Pac. 

a  company  incorporated  by  a  special  619. 

act    whicii    fixed    a    maximum    and         *  Midland  Railway  Co.   v.   Attor- 

minimum  capital,  having  fixed  upon  ney-General  (1902),  A.  C.  171. 
VOL.  I.— 31                                   481 


§  578  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

increase  of  capital  in  the  legal  sense:  the  prohibition  of  unau- 
thorized increase  of  capital  on  the  part  of  a  corporation  does 
not  prevent  it  from  accepting  as  much  property  as  it  can  law- 
fully acquire,  even  in  excess  of  its  nominal  capital.'  Moreover, 
the  acquisition  by  one  corporation  of  all  the  shares  in  another 
company,  thereby  accomplishing  a  virtual  consolidation,  does 
not  amount  to  an  increase  in  the  capital  of  the  second  or  sub- 
sidiary company  either  in  the  technical  legal  sense  or  within 
the  meaning  of  a  contract  between  such  subsidiary  company 
and  a  third  person  which  entitled  him  to  an  allotment  of  forty- 
eight  per  cent  of  any  increased  capital  of  said  company.^ 

§  578.  Effects  of  Increase  upon  Creditors  and  Shareholders.  — 
An  increase  of  capital  in  either  of  the  two  ways  above  mentioned 
works  a  fundamental  change  in  the  constitution  of  the  company. 
So  far  as  creditors  are  concerned,  the  change  thus  wrought  is 
much  less  serious  than  the  change  effected  by  a  diminution  of 
capital.  A  creditor  is  not  prejudiced  by  an  increment  to  the 
resources  of  the  company  and  to  the  fund  to  which  he  must  look 
for  payment  of  his  claims.  Even  if  the  addition  to  the  nominal 
capital  of  the  company  is  not  accompanied  by  a  corresponding 
increase  in  the  actual  or  working  capital,  nevertheless  the  exist- 
ing creditors  are  no  worse  off  than  they  were  before  the  change. 
The  only  way  in  which  an  increase  of  actual  capital  can  injuri- 
ously affect  creditors  is  by  tempting  the  company  to  use  its  newly 
acquired  resources  in  new  and  speculative  enterprises.  As  re- 
spects shareholders,  however,  the  increase  of  capital  may  be  far 
more  prejudicial.  Thus,  an  increase  in  the  par  value  of  the  shares 
may  enlarge  the  amount  of  the  shareholders'  liability  to  the  com- 
pany or  its  creditors.  If  new  shares  are  issued,  the  proportionate 
interest  of  an  old  shareholder  is  diminished.  For  instance,  if  a 
man  owns  forty-eight  per  cent  of  the  capital  stock,  he  can  gener- 
ally dominate  the  pohcy  of  the  company;  but  if  the  capital  be 
doubled  by  the  issue  of  new  shares,  he  will  own  only  twenty-four 
per  cent  of  the  shares,  and  will  therefore  be  reduced  to  a  com- 
paratively insignificant  factor. 

'  Barry  v.   Merchants'   Exchange         ^  Einstein  v.   Rochester  Gas,   etc. 
Co.,    1   Sandf.  Ch.  280.     See  infra,    Co.,  146  N.  Y.  46;   40  N.  E.  631. 
§  1345. 


482 


§  574- §  G77]  ILLEGAL    IN'CREASE 


§  579- §  5S2.     Illegal  Increase  of  Capital. 

§  579.  Shares  in  Excess  of  authorized  Capital  void.  —  As 
already  stated,  an  increase  of  capital  is  unlawi'ul  unless  .some  en- 
abling statute  exists,  the  provisions  whereof  are  followed.  If  a 
corporation,  being  wholly  witiiout  legal  power  to  increase  its 
capital,  undertakes  to  issue  sliares  in  excess  of  its  authorized  capi- 
tal, such  shares  are  void  and  do  not  confer  upon  the  holders  the 
rights  of  shareholders  '  nor  subject  them  to  the  liabilities  of  share- 
hoklers,-  even  though  the  holders  actively  promoted  and  partici- 
pated in  making  the  illegal  increase;^  and  payments  made  on 
account  of  such  void  sliares  in  the  belief  that  the  issue  was  valid 
may  be  recovered  back.' 

The  law  is  the  same  where  the  company  has  power  to  increase 
its  capital  after  a  certain  time,  and  undertakes  to  increase  it 
before  that  time  arrives.  For  instance,  if  the  company  has  power 
to  increase  its  capital  stock  after  the  original  stock  shall  have 
been  fully  allotted  and  paid  in,  an  increase  which  the  company 
attempts  to  make  before  the  original  capital  has  been  fully  sub- 
scribed or  paid  in  has  been  held  to  be  wholly  void,  so  that  the 
holders  of  sucli  new  stock  are  not  subjected  to  any  liability  as 
stockholders.^  The  rule  is  the  same  where  the  company  having 
power  to  increase  its  capital  to  a  certain  amount  undertakes  to 

'  People  ex  rel.  Jei^kins  v.  Parker  of    the    company,   see   Dwinnell   v. 

Vein  Coal  Co.,  10  How.  Pr.  (N.  Y.)  Minneapolis  Fire,  etc.    Ins.  Co.,  97 

543.    See  also  infra,  §  909.  Minn.  340;    106  N.  W.  312. 

-  Scovill  V.  Thayer,  105  U.  S.  143,         *  Grangers^  Life,  etc.   Ins.  Co.  v. 

149  (explaining  Upton  v.  Trebilcock,  Kamper,  73  Ala.  325  (where  it  was 

91   U.  S.  45;    Chubb  v.    Upton,  95  held  that  the  remedy  was  at  law 

U.    S.   665;     Pullman  v.  Upton,    90  and    not    in    equity);     Anthony    v. 

U.  S.  328);   Page  v.  Austin,  10  Can.  Household,  etc.  Machine  Co.,  16  R.  I. 

Pup.  Ct.   132;    Clark  v.   Turner,  73  571;    18  Atl.   176;    5  L.  R.  A.  575 

(la.    1;     Lathrop    v.    Knccland,    46  (recovery    allowed    notwithstandiijg 

Barb.  (N.  Y.)  432.  passage  of  a  statute  after  the  making 

But  see  Kansas  City  Hotel  Co.  v.  of  the  contract  authorizing  the  issue 

Harris,  51  Mo.  464;   Palmer  v.  Bank  of  the  new  shares). 
cfZumbrota,  72  Minn.  266;  75  N.  W.         Cf.   Western  Nat.  Bank  v.  ^rwi- 

OSO.  .'Strong,  152  U.  S.  346,  353-354;    14 

'  Railroad  v.  Sneed,  99  Tenn.  1;  Sup.   Ct.   572  (iiolding  that  such  a 

41  S.  .W.  364;    47  S.  W.  89.  claim  is  not  a  preferred  claim  against 

But  as  to  the  liability  of  directors  the  receiver  of  the  company), 
f  jr    representing    to   creditors   that         ^  Page  v.   Austin,   10  Can.   Sup. 

they  have  subscribed  to  valid  stock  Ct.  132. 

483 


§  580  INCREASE    AND    REDUCTION    OF    CAPITAL      [ChaP.  XI 

increase  it  to  a  greater  amount :  '  in  such  case  the  new  shares 
will  not  be  held  valid  as  far  as  the  power  of  increasing  the  capital 
extended  and  void  as  to  the  excess,  but  are  void  in  totoj-  the  good 
and  bad  being  indistinguishably  blended.  So,  also,  shares  issued 
in  pursuance  of  an  unconstitutional  statute  are  void  and  subject 
the  holder  to  no  liability  as  shareholder.^  Indeed,  even  the  ex- 
istence of  a  general  law  authorizing  an  increase  of  capital  will 
not  affect  the  case  where  an  increase  is  made  by  a  company  in- 
corporated by  special  act,  even  though  the  company  might  have 
accepted  the  general  law  as  an  amendment  to  its  charter.* 

All  these  cases  should  be  carefully  discriminated  from  cases 
in  which  the  company  has  the  power  to  make  the  increase  of 
capital  but  in  making  it  omits  some  of  the  prescribed  formalities.^ 

§  5S0.  Liability  of  Company  for  Representing  overissued  Shares 
to  be  valid.  —  If  the  holders  of  overissued  shares  have  been 
induced  to  pay  for  the  shares  by  the  company's  representations 
that  the  shares  in  question  are  part  of  its  authorized  capital,  then 
the  holders  may  have  a  right  of  action  against  the  company  for 
damages,  the  company  being  estopped  to  deny  the  truth  of  its 
representations.  As  this  estoppel  usually  arises  in  cases  of  trans- 
fers of  shares,  where  the  transferee  is  ignorant  of  the  facts 
surrounding  the  issue  of  the  shares  and  relies  upon  the  repre- 
sentation contained  in  the  share-certificate  that  the  shares  have 
a  real  and  not  a  merely  fictitious  existence,  the  subject  is  dealt 
with  in  connection  with  transfers  of  shares.® 

§  .581.  Liability  on  Contract  to  issue  valid  Shares.  —  More- 
over, if  the  company  has  contracted  with  a  subscriber  to  issue  to 
him  shares  of  its  capital,  the  issue  of  shares  in  excess  of  its  au- 
thorized capital  amounts  to  a  breach  of  contract,  for  which  it 
would  seem  that  the  subscriber  might  have  an  action  of  assump- 
sit for  his  damages.''  The  only  ground  oh  which  the  contrary 
conclusion  could  be  sustained  would  be  that  the  contract  was 
ultra  vires  and  therefore  void.^     An  answer  to  this  argument 

'  Laredo   Imp.  Co.  v.  Stevenson,         ^  See  infra,  §  592. 
66  Fed.  6.33;    13  C.  C.  A.  661.  «  See  infra,    §   908-§   923,  espe- 

^  Kampman  v.    Tarver,   87  Tex.  cially  §  909. 
491;   29  S.  W.  768.  '  Cf.  supra,  §  230. 

^  Marion    Trust    Co.    v.    Bennett         *  Cf.  Anthony  v.  Household  Seio- 

(Ind.),  82  N.  E.  782.  ing  Machine  Co.,  16  R.  I.  571;    18 

*  Marion    Trust    Co.   v.    Bennett  Atl.  176;   5  L.  R.  A.  575. 
(Ind.),  82  N.  E.  782. 

484 


§  .'74    §  077]  INXREASE    UNDER    STATUTES  .  §  584 

would  be  that  the  company  has  power  to  issue  shares  and  that 
whether  or  not  the  leji^al  Hmit  of  the  capital  has  been  exceeded 
Hes  pecuharly  within  its  own  knowledge,  so  that  the  contract  is 
at  worst  within  the  class  of  contracts  which  are  not  apparently 
vUra  vires  but  are  objectionable  only  by  reason  of  some  secret 
fact  within  the  company's  own  knowledge.' 

§  582.  Illegal  Increase  no  Effect  on  old  Shareholders  Not 
Ground  for  Receiver.  —  The  illegal  issue  of  new  siiures  should 
not  be  allowed  to  aifect  the  rights  of  the  old  shareholders.-  Cer- 
tainly it  is  no  ground  for  the  appointment  of  a  receiver  for  the 
corporation.' 

§  583-§  619.      INCREASE   UNDER  STATUTORY  AUTHORITY. 

§  583.  What  will  confer  Authority  to  Increase  Capital  —  Au- 
thority to  issue  Convertible  Bonds.  —  Statutory  authority  to  ef- 
fect an  increase  of  capital  often  exists.  A  statute  which  au- 
thorizes a  corporation  to  issue  bonds  convertible  at  the  election 
of  the  holders  into  shares  of  capital  stock  impliedly  authorizes 
the  company  to  increase  its  capital,  beyond  the  amount  fixed  and 
limited  by  the  charter,  to  the  amount  necessary  to  effect  such 
conversion/  and  that  too  without  complying  with  formalities 
prescribed  by  another  statute  empowering  the  company  under 
certain  circumstances  to  increase  its  capital.^  But  if  the  issue 
of  the  bonds  in  such  a  case  be  a  mere  scheme  or  device  to  ac- 
complish an  increase  of  capital  stock,  a  court  of  equity  will  enjoin 
the  proceeding  as  a  fraud  on  the  law.** 

§  584.  Amount  and  Band  of  Increase  —  Successive  Increases 
—  New  Shares  of  different  par  Value  from  old.  —  Usually,  general 
incorporation  laws  expressly  provide  some  means  by  which  com- 
panies organized  under  them  may  increase  their  capital.  Often 
the  amount  of  the  increase  is  entirely  within  the  discretion  of  the 
company ;  but  sometimes  statutes  limit  the  amount  to  which  the 
increase  may  go.    A  power  of  increasing  the  capital  is  not  ordi- 

'  As  to  which  see  infra.  §  1061.  Barb.  (N.  Y.)  637,  669-675:  Ramsey 

2  Bijers  V.  Rollins,   13  Colo.  22;  v.  Erie  Ry.  Co.,  38  How.  Pr.  (N.  Y.) 

21  Pac.  894.  193,  216-217. 

«  Virqinia-Carolina  Chemical  Co.         *  Belmont    v.    Erie    Ry.    Co.,    52 

v.  Provident  Sav.,  etc.  Ass.  Soc.  (Ga.),  Barb.  (N.  Y.)  637,  669-675. 
54  S.  E.  929.  "  Belmont    v.    Erie    Ry.    Co.,    52 

*  Belmont   v.    Erie    Ry.    Co.,    52  Barb.  (N.  Y.)  637,  669-675. 

485 


§  oS5  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

narily  exhausted  bv  one  increase,  but  may  be  exercised  repeatedly 
by  successive  increases.^  Where,  however,  the  statute  provides 
that  the  increase  shah  not  exceed  double  the  amount  of  the  au- 
thorized capital,  the  meaning  is  that  the  company  shall  not  either 
at  one  time  or  by  successive  increases  enlarge  its  capital  beyond 
twice  the  amount  originally  fixed.-  A  statute  authorizing  an 
increase  to  an  amount  equal  to  two  thirds  of  the  capital  actually 
paid  in  refers  to  the  amount  paid  in  at  the  time  the  increase  is 
authorized  by  resolution  rather  than  at  the  time  the  new  shares 
are  issued.^  It  has  also  been  held  that  such  a  statute  refers  to 
the  actual  value  of  the  capital  paid  in  and  not  to  the  nominal 
amount  credited  as  paid  up  on  the  shares.'* 

Where  a  statute  authorizes  a  corporation  to  increase  its  capital 
by  the  issue  of  additional  sliares,  it  is  not  necessary  that  the 
new  shares  be  of  the  same  denomination  or  par  value  as  the  old 
shares.^ 

§  585-§  592.     How  Increase  may  he  effected. 

§  585.  Required  Formalities.  —  The  formalities  required  by 
the  several  incorporation  acts  of  the  American  states  and  of 
Great  Britain  in  order  to  effect  an  increase  of  capital  differ  so 
widely  among  themselves  that  any  attempt  to  set  forth  the 
requisites  prescribed  by  the  various  laws  would  be  both  tedious 
and  unprofitable.  If  no  formalities  be  prescribed  by  the  ena- 
bling act,  the  increase  may  be  accomplished  by  mere  resolution 
duly  entered  on  the  company's  minutes  declaring  an  increase 
in  presenti.^  But  if  the  increase  is  to  be  made  by  amending 
the  incorporation  paper  and  no  method  of  making  the  amend- 
ment is  prescribed,  then  the  amendment  must  be  executed 
and  acknowledged  in  the  same  way  as  the  original  incorpora- 
tion paper.' 

'  Massey  Mfg.  Co.,  13  Ont.  App.  (Pa.),  67  Atl.  1081  (where  the  actual 

446.  value  of  the  capital  paid  in  exceeded 

^  Berg  v.  San  Antonio  Street  Ry.  the  nominal  amount  paid  upon  the 

Co.,  17  Tex.  Civ.  App.  291 ;  42  S.  W.  shares). 

647;     43    S.    W.    929;     Scovill    v.         ^  SewelVs  Case,  ^  Ch.  Vi\,  U\. 
Thayer,  105  U.  S.  143  (headnote  in-         «  Sutherland  v.  Olcott,  95  N.  Y. 

adequate).  93,    99.     Cf.   Pay  son   v.   Stoever,   2 

^  Continental  Varnish,  etc.  Co.  v.  Dillon  427. 
Secretary  of  State,   87   N.   W.   901;         ^  Palmer   v.    Bank  of  Zumbrota, 

128  Mich.  621.  72  Minn.  206,  277;    75  N.  W.  380. 

*  Person  &  Riegel    Co.  v.  Lipps 

486 


g  574-§  077]      now  increase  may  be  made  §  580 

Where  the  power  of  inereasnig  tlie  capital  is  conferred  upon 
the  corjK)ration  as  a  whole,  it  can  he  exercised  only  hy  the 
shareholders  and  not  by  the  directors;'  hut  if  the  power  be 
conferred  on  the  directors,  it  may  be  exercised  by  them  with- 
out the  consent  or  authority  of  the  shareholders.- 

Where  an  amendment  to  the  articles  of  association  is  a  statu- 
tory prere(juisite  to  an  increase  of  capital,  the  issue  of  the  new 
capital  cannot  be  authorized  simultaneously  with,  or  prior  to, 
the  consummation  of  the  resolution  amending  the  articles;  ^  but 
it  is  not  necessary  that  the  articles  should  be  first  amended  and 
that  afterwards  another  meeting  of  the  shareholders  should  be 
held  to  authorize  the  additional  capital,  for  the  issue  of  the  new 
capital  may  be  authorized  at  the  same  meeting  that  finally  adopts 
the  alteration  of  the  articles.' 

If  the  filing  of  a  certificate  showing  the  amount  of  capital  paid 
in  be  a  statutory  condition  precedent  to  a  lawful  increase  of 
capital,  a  certificate  stating  that  the  amount  of  the  company's 
capital  is  $12,000  "and  all  but  .  .  .  paid  in,"  is  construed  to 
mean  that  all  has  been  paid  in  and  therefore  complies  with  law.^ 

Where  the  certificate  of  increase  is  incomplete  in  that  some 
of  the  particulars  embodied  in  the  resolution  of  the  company 
authorizing  the  increase  and  required  by  statute  to  be  mentioned 
in  the  certificate  are  omitted,  the  registrar  may  be  required  to 
file  and  record  an  amended  certificate  supplying  these  defects ;  " 
for  the  original  certificate  not  being  in  accordance  with  the 
actual  facts  or  in  compliance  with  the  law^  may  be  disregarded. 

§  586.  Requisites  of  Meeting  at  which  Increase  is  voted.  — 
The  meeting,  whether  of  the  shareholders  or  directors,  at  which 
the  resolution  making  the  increase  is  passed  must  be  a  valid 
meeting,  and  the  requisites  of  a  valid  meeting  are  determined 
by  principles  of  law  which  are  elsewhere  stated.^    If  the  meeting 

1  RaUway    Co.     v.     AUerton,     18  '  Sutherland  v.   Olcott,  95  N.   Y. 

Wall.  233;    Eidman  v.  Boivman,  58  93,  99. 

111.   444;     11   Am.   Rep.  90;    Hum-  ^  Cf.  Patent  Invert  Sugar  Co.,  31 

boldt  Driving  Park  Ass'n  v.  Stevens,  Ch.  D.  16G. 

34  Nebr.  528:     52  N.  W.  568;    33  *  Campbell's  Case,  9  Ch.  1. 

Am.  St.  Rep.  654.  *  Moosbrugger  v.  Walsh,  89  Hun 

Cf.  Bailey  v.  Champlain,  etc.  Co.,  (N.  Y.)  564,  567 ;  35  N.  Y.  Supp.  550. 

77  Wise.  453 ;   46  N.  W.  539  (where  "  State   ex   rel.    Ely,    etc.    Co.    v. 

the  sharcliolders  had  acquiesced  in  Su'a»(7fr,  195  Mo.  539;  93  S.  W.  932. 

the  action  of  the  directors).  '  See  infra,  §  1193  et  seq.,  §  1445 

See  infra,  §  1438.  et  seq. 

487 


§  587  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChaP.  XI 

is  required  to  be  convened  by  notice  of  any  particular  form  or 
for  any  specified  length  of  time,  the  requirement  will  be  con- 
strued in  the  same  way  as  other  requirements  as  to  notice  of 
company  meetings.  That  is  to  say,  the  notice  will  be  deemed 
to  have  been  designed  for  the  benefit  of  the  members,  and  the 
lack  of  it  may  be  waived  by  those  who  are  not  properly  notified.^ 
Where  the  statute  requires  the  resolution  for  an  increase  of 
capital  to  be  passed  at  a  meeting  called  for  the  purpose,  the 
requirement  is  not  satisfied  by  a  notice  stating  that  the  meeting 
is  called  to  act  on  a  report  of  the  board  of  directors,  although 
that  report  recommended  the  increase  and  had  been  generally 
circulated  among  the  shareholders.-  Under  a  statute  which  re- 
quires a  notice  stating  "what  increase  is  proposed  to  be  made 
in  the  capital  stock  or  indebtedness  of  the  corporation,"  one 
notice  of  an  intention  to  increase  both  the  capital  stock  and  the 
bonded  indebtedness  is  sufficient;  ^  and,  if  the  statute  also  pro- 
vide that  the  increase  may  be  either  equal  to  or  less  than  that 
stated  in  the  notice,  a  notice  giving  the  maximum  amount  of 
the  proposed  increase  is  good.* 

§  587.  Motives  actuating  Increase,  how  far  material.  —  The 
motive  of  the  increase  is  no  concern  of  the  registrar  charged  with 
the  duty  of  recording  the  certificate  of  increase.  Hence,  he  may 
not  refuse  to  record  the  certificate  on  the  ground  that  the  increase 
was  made  immediately  after  the  incorporation  of  the  company 
for  the  purpose  of  avoiding  a  tax  which  would  have  been  payable 
if  the  enlarged  capital  had  been  provided  for  in  the  certificate 
of  incorporation.^  On  the  other  hand,  if  the  increase  is  for  a 
fraudulent  purpose,  the  defrauded  party  may  doubtless  enjoin 
its  consummation  or  have  it  set  aside.®     So,  as  will  presently 

»  Nelson  v.  Hubbard,  96  Ala.  238 ;  (where  all  the  shareholders  assented 

11  So.  428;    17  L.  R.  A.  375;    State  without  any  meeting  being  held). 

ex   rd.    Norvcll-Shapleigh   Hardware  *  Palliser  v.  Home  Telephone  Co. 

Co.  V.  Cook,  178  Mo.  189;    77  S.  W.  (Ala.),  44  So.  575. 

559  (overruling  State  ex  rel.  Donnell  *  Palliser  v.  Home  Telephone  Co. 

Mfg.  Co.  V.  McGrath,  86  Mo.  239).  (Ala.),  44    So.    575,  579    (headnote 

See  also  infra,  §  1210.  inadequate). 

2  Jones  V.  Concord,  etc.  R.  R.   Co.,  *  State   ex   rel.    Home   Bldg.,    etc. 

67  N.  H.  119,  140  (headnote  inade-  Ass'n  v.  Rotwitt,  17  Mont.  537;    43 

quate) ;  38  Atl.  120.  Pac.  922  (where  it  was  said  that  the 

Cf.  Jones  V.  Concord,  etc.  R.  R.  objection  could  only  be  made  by  the 

Co.,  67  N.  H.  234;   30  Atl.  614;    68  state  on  qxio  warranto). 

Am.  St.  Rep.  650;    Finley  Shoe  &  *  Donald  v.   American  Smelting, 

Leather  Co.   v.   Kurtz,  34  Mich.  89  etc.  Co.,  62  N.  J.  Eq.  729;    48  Atl. 

488 


§  574- §  077]         HOW    INCREASE    MAY    BE    MADE  §  .jS8 

be  shown,  any  shareholder  may  enjoin  an  increase  which  is 
proposed  to  he  made  without  rccognizinfij  his  prior  right  to  suIj- 
scribe  to  his  proportion  of  the  new  shares.' 

§  588.  Examination  of  Proceedings  by  Public  OflBcial  —  Cer- 
tificate of  Regularity.  —  Statutes  sometimes  prcnide  that  the  j)ro- 
ceedings  looking  to  an  increase  of  capital  shall  be  scrutinized  by 
some  public  ofHcial  who  before  the  increase  can  be  made  must 
certify  that  they  comply  with  law.-  Notably,  a  provision  of  this 
sort  is  found  in  the  National  Banking  Act.  In  construing  this 
provision,  the  federal  courts  have  held  that  the  certificate  of  the 
comptroller  of  the  currency,  to  whom  is  intrusted  the  duty  of 
examining  the  proceedings  under  which  the  increase  is  to  be 
made,  conclusively  establishes  that  the  proceedings  are  legal 
and  regular.^  For  example,  the  certificate  precludes  the  objec- 
tion that  the  requisite  two-thirds  vote  was  not  cast  for  the  reso- 
lution to  increase  the  capital.*  But  notwithstanding  the  comp- 
troller's certificate,  directors  who  falsely  represent  that  profits 
sufficient  for  the  declaration  of  a  stock  dividend  have  been 
earned  and  who  by  these  means  induce  the  comptroller  to  ap- 
prove the  increase  of  capital  involved  in  such  a  dividend,  are 
liable  to  the  company  for  its  damages.^  Moreover,  notwithstand- 
ing the  certificate,  any  person  who  is  alleged  to  have  subscribed 
for  the  new  shares  is  free  to  show  that  he  never  became  a  share- 
holder.® But  a  subscriber  to  the  new  shares  cannot  escape  lia- 
bility because  the  comptroller  issued  the  certificate  after  the 
bank  was  known  to  be  insolvent  and  for  the  mere  purpose  of 
subjecting  to  liability  as  shareholders  persons  who  had  sub- 
scribed to  new  shares  and  had  been  held  out  as  shareholders 
for  several  years,  but  who  had  never  become  actual  shareholders 

771  (increase  for  the  purpose  of  issu-  85  Fed.  934;  29  C.  C.  A.  491;  Tid- 
ing the  new  stock  for  less  than  par  linghast  v.  Bailey,  86  Fed.  46;  Lati- 
enjoined).  7ver  v.  Bard,  76  Fed.  5.36;    Brown  v. 

'  Infra,  §  614.  TUUnghast,  93  Fed.  326;  35  C.  C.  A. 

^  As-  to    similar    provisions    ap-  323. 

plicable  to  reductions  of  capital,  see  Cf.  Scott  v.   Deweese,   181   U.   S. 

infra,  §  646.      Such  a  certificate  of  202;   21  Sup.  Ct.  585. 

increase  of  capital  by  an  officer  of  *  Bailey  v.    TUUnghast,   99   Fed. 

another  state   may   be   received  in  801;   40  C.  C.  A.  93. 

evidence   although   not   certified   in  *  Cockrill  v.  Abeles,  86  Fed.  505; 

accordance  with  the  Act  of  Congress:  30  C.  C.  A.  223. 

Person  A  Riegel  Co.  v.  Lipps  (Pa.),  •  Bailey  v.    Tillitighast.   99   Fed. 

67  Atl.  1081.  801,    809     (headnote    inadequate); 

*  Columbia  Xat.  Bank  v.  Mathews,  40  C.  C.  A,  93. 

489 


§  589  INCRE.\SE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

because  the  certificate  necessary  to  consummate  the  legal  increase 
of  capital  had  been  withheld.^ 

§  oS9.  Whether  full  Amount  of  new  Stock  must  be  taken.  —  An 
increase  of  capital  may  in  ordinary  cases  be  complete  before 
the  whole  number  of  the  new  shares  is  subscribed  for.  More- 
over, calls  may  be  made  upon  a  subscriber  to  shares  issued  by 
way  of  increase  of  capital  even  though  the  entire  amount  of  the 
increase  has  not  been  subscribed  for.-  The  reason  for  holding 
that  a  subscriber  to  shares  in  the  original  capital  of  a  corporation 
is  not  Hable  for  calls  until  the  entire  capital  has  been  subscribed 
is  that  the  company  is  not  authorized  to  commence  business  and 
therefore  can  have  no  need  of  money  before  its  capital  is  wholly 
taken ;  but  this  reason  has  no  application  to  shares  which  are 
issued  by  way  of  increase  of  capital,  for  the  company  is  usually 
engaged  in  the  lawful  prosecution  of  its  business  before  the 
increase  is  projected.  Where,  however,  the  increase  is  made 
before  the  company  has  begun  business  and  when  only  a  very 
few  shares  have  been  issued,  the  increase  being  accompanied  by 
a  change  in  the  par  value  of  the  shares,  a  person  who  shortly 
before  the  increase  subscribes  to  shares  of  the  new  par  value 
cannot  be  called  upon  to  pay  until  the  entire  new  capital  is 
subscribed.^ 

§  590.  Provision  confining  Increase  to  Number  of  Shares  taken. 
—  Although  ordinarily  the  nominal  authorized  capital  may  be 
increased  before  all  the  new  shares  are  taken,  yet  sometimes  sub- 

«  Bailey  v.    Tillhujhast,   99   Fed.  595;    10  Sup.  Ct.  417;  Scott  v.  De- 

801;   40C.  C.  A.  93.  weese,   181  U.  S.  202;    21   Sup.  Ct. 

2  Clarke  v.   Thomas,  34  Ohio  St.  585. 
46;      Greenbrier     Indust.     Exp.     v.         But  see  Read  v.  Memphis  Gayoso 

Ocheltree,  44  W.  Va.  626,  633  (head-  Gas  Co.,  9  Heisk  (Tenn.),  545  (some 

note    inadequate);     30    S.    E.    78;  expressions  thrown  out  by  the  court 

Nutter  V.  Lexington,  etc.  R.  R.  Co.,  obiter    being    difficult    to    reconcile 

6  Gray  (Mass.)  85;    Gettysburg  Nat.  with   the   authorities   cited   by   the 

Ban/c  V.  Brown,  95  Md.  367 ;   52  Atl.  court);     Winters   v.    Armstrong,    37 

975   (semble);    Pope  v.   Merchants'  Fed.    508    (overruled    by    Supreme 

Trust  Co.  (Tenn.),  103  S.  W.  792.  Court  cases,  supra).     In  Hahn's  Ap- 

Cf.  Avegno  v.  Citizens  Bank,  40  peal,  7  Atl.  Rep.  482  (Pa.)  the  sub- 
La.  Ann.  799;  5  So.  537;  Pacific  scription  was  subject  to  an  express 
Nat.  Bank  v.  Eaton,  141  U.  S.  227  condition  that  it  should  not  be  bind- 
(headnote  inadequate);  11  Sup.  Ct.  ing  unless  the  whole  of  the  proposed 
984;  Thayer  v.  Butler,  141  U.  S.  increase  should  be  subscribed. 
234;  11  Sup.  Ct.  987;  Butler  v.  ^  Gettysburg  Nat.  Bank  v.  Brown, 
Eaton,  141  U.  S.  240;  11  Sup.  Ct.  95  Md.  367;  52  Atl.  975. 
985;  Aspinwall  v.  Butler,  133  U.  S. 

490 


§  574-§  G77]       now  i.n'ckease  may  be  made  §  592 

scriptioji  of  the  whole  nuiiiljer  of  new  shares  is  expressly  made 
a  coiuhtioii  j)rece(leiit  lo  the  aceoinj)li.shiiient  of  any  increase; 
and  sonietifne.s  it  is  })rovi(Ied  that  tiie  increase  shall  extend  only 
to  the  iHniiI>er  of  shares  that  may  be  subscribed  for  within  a 
certain  time.  Tor  instance,  where  the  company,  havintr  power 
to  increase  its  cajjital  from  825,000  to  SI  ,0()0,(J0(),  resolves  to 
open  its  books  for  thirty  days  for  subscriptions  for  SGOO,000, 
the  meaning  is  not  that  a  present  increase  of  caj)ital  to  tlie  amount 
of  S()0(),000  be  then  and  there  made  but  rather  that  the  increase 
to  be  made  extend  to  so  much  only  of  the  $600,000  as  may  be 
subscribed  within  the  thirty  days.' 

§  591.  Whether  Subscriber  to  new  Shares  becomes  a  Share- 
holder before  Payment  in  full.  —  The  question  whether  a  sul>- 
scriber  to  shares  whicii  are  part  of  an  increase  of  capital  can 
become  an  actual  shareholder  before  he  has  paid  for  the  shares 
in  full  has  been  considered  elsewhere.-  The  National  Banking 
Act  provides  that  "no  increase  of  capital  shall  be  valid  until  the 
whole  amount  of  such  increase  is  paid  in";  but  this  provision 
does  not  have  the  effect  of  invalidating  shares  of  increased  capital 
that  have  been  fully  paid  for,  merely  because  some  of  the 
other  shares  are  not  paid  for ;  and  therefore  the  holder  of  such 
paid-up  shares  is  subject  to  the  statutory  liability  of  shareholders 
to  creditors.^ 

§  592.  Consequences  of  Failure  to  comply  with  Statutory  Re- 
quirements. —  As  to  cases  where  a  company,  having  statutory 
power  to  increase  its  capital,  attempts  to  do  so  without  observ- 
ing the  statutory  conditions,*  there  is  both  in  p]ngland  and 
America  considerable  conflict  of  authority.  There  seems  to  be 
no  doubt  that  though  the  statutorv  conditions  are  disregjirded  at 
the  time  the  increase  is  made,  yet  a  subsequent  compliance  with 
the  terms  of  the  law  validates  the  issue.^  But  even  where  the 
statutory  re(|uirements  or  conditions  have  never  been  fullv  com- 
])lied  with,  the  decided  weight  of  American  authority  and  sev- 
eral im|)()rtant  English  cases  hold  that  the  non-compliance  is  a 

'  Rend  V.   Memphis  Gayoso  Gas  provisions  should  be  presumed.   Man 

Co.,  9  Heisk.  (Tenn.)  545.  v.  Boykin  (S.  Car.),  60  S.  E.  17. 

-  Supra,  §  174.    Compare  also  in-  *  Setrell's   Case,   3   Ch.    131.     Cf. 

fra,  §  779.  First  Xat.  Bank  v.  Wyoming  Valley 

3  Scott  V.  Latimer,  89  Fed.  843;  Ice  Co.,  136  Fed.  466;   Pacific  Mill 

33  C.  C.  .\.  1.  Co.  V.  Inman,  Paulsen  &  Co.  (Oreg.), 

*  Compliance  with  t!ie  statutory  90  Pac.  1099. 

491 


§  592  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

mere  irregularity  of  which,  after  a  subscriber  to  the  new  shares 
has  acted  and  been  treated  as  shareholder,  both  he  and  the  com- 
pany will  be  estopped  to  take  advantage.'  On  the  other  hand, 
authority  is  not  lacking  for  the  view  that  statutes  authorizing 
corporations  to  increase  their  capital  confer  a  special  power  and 


>  MUler's  Dale  Co.,  31  Ch.  D.  211 ; 
Campbell's  Case,  9  Ch.  1;  Rich- 
mond's Case,  4  K.  &  J.  305 ;  Payson 
V.  Withers,  5  Biss.  269;  Barrows  v. 
Natchang  SUk  Co.,  72  Conn.  658; 
45  All.  951  (certificate  of  increase 
not  filed  for  record  as  required); 
Bailey  v.  Champlain,  etc.  Co.,  77 
Wise.  453;  46  N.  W.  539;  Hoeft  v. 
Kock,  123  Mich.  171;  81  N.  W.  1070; 
81  Am.  St.  Rep.  159  (resolution 
making  increase  not  recorded  as  re- 
quired) ;  Clarke  v.  Thomas,  34  Ohio 
St.  46;  Scovill  v.  Thayer,  105  U.  S. 
143,  149  (explaining  Upton  v.  Tre- 
bilcock,  91  U.  S.  45;  Chubb  v.  Upton, 
95  U.  S.  665;  Pullman  v.  Upton,  96 
U.  S.  328);  Handley  v.  Stutz,  139 
U.  S.  417,  424^26;  11  Sup.  Ct.  530; 
Peck  V.  Elliott,  79  Fed.  10,  18;  24 
C.  C.  A.  425;  38  L.  R.  A.  616  (failure 
to  pay  a  tax  on  increase  as  required) ; 
Olson  V.  State  Bank,  67  Minn.  267; 
69  N.  W.  904;  Veeder  v.  Mudgett, 
95  N.  Y.  295,  309-311;  Columbia 
Nat.  Bank  v.  Mathews,  85  Fed.  934 ; 
29  C.  C.  A.  491 ;  Tillinghast  v.  Bailey 
86  Fed.  46;  Latimer  v.  Bard,  76  Fed. 
536;  Scott  v.  Deweese,  181  U.  S.  202; 
21  Sup.  Ct.  585;  Manufacturers' 
Paper  Co.  v.  Allen-Higgins  Co.,  154 
Fed.  906  (certificate  not  recorded  as 
required  by  statute  as  condition  pre- 
cedent to  validity  of  new  shares); 
Thunder  Hill  Mining  Co.,  4  Brit. 
Columb.  61  (resolution  not  duly 
passed  and  not  recorded  but  sub- 
scribers liable  as  contributories  in 
winding-up,  with  which  decision 
compare  Twigg  v.  Thunder  Hill  Min- 
ing Co.,  3  Brit.  Columb.  101,  wliere  a 
person  who  had  accepted  some  of  the 
same  issue  of  new  shares  was  relieved 
of  them,  while  the  company  re- 
mained  a   going   concern,    on   pro- 


ceedings to  rectify  the  register  of 
shareholders) ;  Pope  v.  Merchants* 
Trust  Co.  (Tenn.),  103  S.  W.  792 
(subscriber  liable  in  liquidation  al- 
though assets  sufficient  to  pay 
creditors  in  full);  Man  v.  Boykin 
(S.  Car.),  60  S.  E.  17. 

Cf.  Kansas  City  Hotel  Co.  v.  Hunt, 
57  Mo.  126  (where  recorded  certifi- 
cate of  increase  did  not  state  all 
data  required  by  law) ;  Western  Nat. 
Bank  v.  Armstrong,  152  U.  S.  346, 
354;  14  Sup.  Ct.  572;  McFarlin  v. 
First  Nat.  Bank,  68  Fed.  868;  16 
C.  C.  A.  46  (where  the  comptroller 
of  the  currency  had  never  certified 
his  approval  of  the  increase  as  re- 
quired by  law) ;  Sayles  v.  Brown, 
40  Fed.  8  (where  the  company  never 
approved  the  increase  by  a  valid 
majority  vote);  First  Nat.  Bank  v. 
Wyoming  Valley  Ice  Co.,  136  Fed. 
466  (as  to  non-payment  of  required 
tax  on  increase  of  capital);  Gowdy 
Gas,  etc.  Co.  v.  Pattison,  64  N.  E. 
485;  29  Ind.  App.  261;  Cunning- 
ham V.  German  Ins.  Bank,  101  Fed. 
977;  41  C.  C.  A.  609  (held,  that  the 
amount  which  the  company  might 
borrow  should  be  determined  with 
reference  to  the  capital  as  irregu- 
larly increased,  no  formal  resolution 
of  the  shareholders,  as  required  by 
law  having  been  recorded,  but  only 
an  amendment  to  the  incorporation 
paper  signed  by  the  president  and 
secretary) ;  Farmers'  L.  &  T.  Co.  v. 
Toledo,  etc.  Ry.  Co.,  67  Fed.  49, 
56-58  (similar  point  to  that  of  pre- 
ceding case);  Poole  v.  West  Point 
Butter,  etc.  Co.,  30  Fed.  513  (as  to 
amount  of  authorized  indebtedness 
determined  with  reference  to  the 
capital). 


492 


§  574-§  677]       HOW  inxrease  may  he  made 


§592 


that  unless  the  terms  of  the  statute  (except  such  as  can  be 
deemed  directory  merely)  are  strictly  pursued,  the  power  fails 
altogether  and  the  case  is  to  be  treated  as  if  no  statute  were  in 
existence,  so  that  the  new  shares  are  wholly  void.'  At  any  rate, 
until  the  statutory  conditions  have  been  performed,  the  inclina- 
tion of  the  courts  will  be  to  hold  that  acts  looking  to  an  increase 
of  capital  were  not  intended  to  operate  as  a  present  issue  of 
additional  shares  but  merely  as  steps  taken  with  a  view  to  effect- 
ing an  increase  of  capital  in  the  future  by  first  complying  with 
the  statutory  formalities  and  then  issuing  new  shares.'-  More- 
over, a  mere  executory  contract  of  subscription  to  shares  con- 
stituting part  of  an  increase  of  capital  will  not  be  specifically 
enforced  in  equity  unless  all  the  requirements  of  law  as  to  the 
manner  of  issuing  the  new  shares  have  been  complied  with ;  ^ 
and  similarly,  if  the  company  is  suing  to  enforce  a  contract  one 
of  the  conditions  of  which  is  that  the  capital  shall  have  been 
increased,  the  company  must  show  that  the  increase  has  been 
duly  made.^ 


*  Bank  of  Hindustan,  etc.  v. 
Alison,  L.  R.  9  C.  P.  222  (relating 
to  the  same  issue  held  to  be  valid  in 
Campbell's  Case,  ubi  supra);  Mc- 
Cord  V.  Ohio,  etc.  R.  R.  Co.,  13  Ind. 
220;  Lincoln  v.  Xew  Orleans  Ex- 
press Co.,  45  La.  Ann.  729;  12  So. 
^37  (where  the  subscriber  recovered 
back  from  the  company  the  sums 
paid  on  the  shares) ;  Schierenberg 
V.  Stephens,  32  Mo.  App.  314  (where 
the  company  being  insolvent,  the 
subscriber  recovered  back  from  the 
receiver  tlie  amounts  paid  in  on  the 
shares) ;  Railroad  v.  Sneed,  99  Tenn. 
1 ;  41  S.  W.  364;  47  S.  W.  89  (where 
the  subscriber  to  the  new  shares 
successfully  defended  an  action  for 
calls);  Winters  v.  Armstrong,  37 
•Fed.  508. 

Cf.  Spring  Co.  v.  Knnwlton,  103 
U.  S.  49,  57  (headnote  inadequate); 
Wood  v.  Union  Gospel  Church  Bldg. 
Ass'n,  63  Wise.  9;  22  N.  W.  756; 
Lathrop  v.  Kneeland,  40  Barb.   (N. 


Y.)  432;  American  Tube  Works  v. 
Boston  Machine  Co.,  139  Mass.  5; 
29  N.  E.  63  (relating  to  an  attempted 
is.sue  of  "special  stock"  under  a 
Massachusetts  statute);  Tschumi  \. 
Hills,  6  Kan.  App.  549;  51  Pac.  619; 
Palmer  v.  Bank  of  Zumbrota,  72 
Minn.  266;  75  N.  W.  380  (where  the 
subscribers  to  the  new  sliares  irregu- 
larly issued  were  allowed  to  stand 
as  creditors  upon  their  claim  to  re- 
cover back  money  paid  upon  the 
new  shares,  in  competition  with 
prior,  but  not  sub.sequent  creditors 
of  the  corporation,  to  whom  indeed ' 
tile  holders  of  new  shares  were  held 
subject  to  a  statutory  liability). 

-  See  Spririg  Co.  v.  Knowlton, 
103  U.  S.  49,  57  (headnote  inade- 
quate); McFarlin  v.  First  A'at. 
Bank,  68  Fed.  868;    16  C.  C.  A.  46. 

^  Smith  v.  Franklin  Park,  etc.  Co., 
168  Mass.  345;   47  N.  E.  409. 

*  Pacific  Mill  Co.  v.  Inman,  Poul- 
sen  &  Co.  (Oreg.),  90  Pac.  1099. 


493 


§  593  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

§  593.  Rescission  of  Increase.  —  A  resolution  increasing  the 
capital,  once  duly  passed  in  pursuance  of  a  statutory  power, 
cannot  subsequently  be  revoked  or  rescinded  even  before  the  new 
shares  are  actually  issued,  except  in  the  mode,  if  any,  provided 
for  reducing;  the  capital.' 

§  594.  Contracts  to  exercise  Statutory  Power  of  Increase.  — 
A  contract  by  a  corporation  to  exercise  its  statutory  power  of 
increasing  its  capital  would  seem,  at  least  under  some  statutes, 
to  be  unenfoi-ceable  and  void.  For  if  such  a  contract  could  be 
enforced,  the  statutory  conditions  and  formalities  would  be 
reduced  to  a  mere  ceremony  which  the  company  could  not 
refuse  to  perform,  and  thus  indirectly  by  making  the  contract 
the  company  would  bind  itself  to  do  that  which  can  be  done 
directlv  only  by  observing  the  statutory  requirements.-  Perhaps 
the  question  depends  on  the  nature  of  the  statutory  conditions. 
For  instance,  if  a  vote  of  two  thirds  of  the  shareholders  is 
required  by  statute  as  a  condition  to  increasing  the  capital, 
obviously  a  contract  to  increase  the  capital  authorized  by  a 
bare  majority  of  the  shareholders  could  not  bind  the  min- 
ority. But  on  the  other  hand,  where  the  only  requirement  is 
that  the  resolution  making  the  increase  be  recorded  in  a 
public  registry,  the  argument  is  very  forcible  that  recording 
is  a  mere  formality  which  is  required  before  the  increase 
can  be  actually  made  but  which  is  not  at  all  necessary  for 
a  mere  contract  to  make  the  increase.  The  objection,  more- 
over, goes  rather  to  the  remedy  of  specific  performance  than 
to  the  validity  of  the  contract;  for  even  a  corporation  which 
has  no  power  at  all  to  increase  its  capital  may  be  required 
to  respond  in  damages  to  a  person  to  whom  it  has  contracted 

1  Sutherland  v.  Olcott,  95  N.  Y.  Machine  Co.,  16  R.  I.  571;  18  Atl. 
93;     Moses   v.    Ocoee   Bank,    1    Lea    176;    5  L.  R.  A.  575. 

(Tenn.)  .398,  408  (semble).  But    see    Reid    v.    Detroit    Ideal 

But  see  Terry  v.  Eagle  Lock  Co.,  Paint  Co.,  94  N.  W.  3  (headnote  in- 

47  Conn.  141.  adequate);    132  Mich.  528  (where  a 

Cf.  Hollingshead  v.  Woodward,  35  subscription  to  shares  to  be  issued 

Hun  (N.  Y.)  410;  Nettles  v.  Marco,  by  increase  of  capital  though  made 

33  S.  Car.  47;    11  S.  E.  595.  before    the    increase    was    accom- 

2  See  Finley  Shoe  &  Leather  Co.  plished  was  held  binding);  Bratten 
V.  Kurtz,  34  Mich.  89;  McNulta  v.  v.  Catawissa  R.  R.  Co.,  211  Pa.  21; 
Corn  Belt  Bank,  164  111.  427;  45  60  Atl.  319  (bonds  convertible  into 
N.  E.  954 ;   56  Am.  St.  Rep.  203.  stock  at  the  option  of  the  holder 

Cf.  Anthony  v.  Household  Sewing    enforced). 

494 


§  574- §  077]  STOCK  dividends  §  596 

to  issue  valid  shares '  or  whose   right    to  valid   shares   it    is 
estopped  from  donying.- 

§  50").  Contracts  to  refrain  from  exercising  Statutory  Power.  — 
A  contract  not  to  exercise  the  statutory  privilege  of  increasing 
the  capital  stands  on  a  different  footing.  The  true  rule  is  sub- 
mitted to  be  that  a  company  cannot  contract  itself  out  of  its 
statutory  power,  but  that  on  the  other  hand  a  contract  that  no 
exercise  of  the  power  shall  affect  the  rights  of  certain  privileged 
shareholders  would  be  competent.''  At  any  rate,  a  provision  in 
the  by-laws  or  internal  regulations  forbidding  an  increase  of 
capital  although  all  the  statutory  conditions  are  complied  with, 
unless  certain  other  conditions  are  performed,  is  quite  nugatory.* 


§  596- §  602.     Stock  Dividends. 

§  596.  Legality  of  Stock  Dividends.  —  So-called  "stock  divi- 
dends" ^  constitute  a  peculiar  form  of  increase  of  capital  that 
is  not  infrequently  met  with  in  America.  A  company,  having 
accumulated  profits  which  would  be  available  for  distribution 
among  the  shareholders  in  the  shape  of  dividends,  determines  to 
retain  the  profits  for  the  expansion  of  its  business  and  to  distrib- 
ute new  shares,  to  a  par  value  equal  to  the  amount  of  the  profits, 
among  the  old  shareholders.  Such  a  scheme  is  obviously  an 
increase  of  capital,  which  the  law  does  not  permit  without  some 
affirmative  statutory  provision.  To  be  sure,  even  without  special 
authority  the  company  might  have  retained  the  undrawn  profits 
for  use  in  its  business  —  in  other  words,  might  have  virtually 

'  Supra,  §  581.  dividend"  was  lield  not  to  be  a  divi- 

-  Supra,  §  580,  and  infra,  §  909.  dend  within  the  meaning  of  a  statute 

^  Cf.  infra,  §  671,  where  the  similar  requiring   the   company  to   pay  in- 

question  as  to  reductions  of  capital  terest    on    amounts    subscribed    by 

is  discussed.  certain  municipal  corporations  until 

See    also    Martin    v.    Remington-  the  first  dividend,  see  Hardin  County 

Martin  Co.,  95  N.  Y.  App.  Div.  18;  v.  Louisville,  etc.  R.  R.  Co.,  92  Ky. 

88    N.    Y.    Supp.    573;     Howell    v.  412;    17  S.  W.  8G0.     Cf.  Louisville, 

Chicago,    etc.    Ry.    Co.,    51     Barb.  etc.  R.  R.  Co.  v.  Hart  County  (Ky.), 

(N.  Y.)  378,  381.  75  S.   W.  288;    25  Ky.   Law  Rep. 

*  Ayre     v.     Skelsey's     Adamant  395. 

Cement    Co.,    20   Times   L.    R.    587  As   to    whetlier   stock    dividends 

(aflirmed  on  another  ground  in  21  are  taxable  as  dividends,  see  Com- 

Times  L.  R.  404).     See  infra,  §  696.  monwealth  v.  Pittsburg,  etc.  Rij.  Co., 

*  For    a    case    where    a    "stock  74  Pa.  St.  83. 

495 


§  o9G  INCREASE    AND    REDUCTION    OF    CAPITAL       [ClIAP.  XI 

capitalized  the  profits;'  but  the  objectionable  feature  is  the 
increase  in  nominal  or  share  capital  —  the  capital  stock,  as  we 
say  in  America.  One  need  not  speculate  icJiy  the  law  should 
freely  permit  an  increase  in  the  actual  capital  but  should  frown 
U{x»n  an  increase  in  the  nominal  capital.  Suffice  it  to  say  that 
the  nominal  capital  is  fixed  and  limited  by  the  incorporation 
paper  in  pursuance  of  statute  while  no  limit  is  usually  put  upon 
the  actual  capital  which  the  company  may  accumulate.  Perhaps 
one  reason  for  the  apparent  anomaly  is  that  by  increasing  the 
nominal  capital  the  company  could  diminish  the  apparent  prof- 
itableness of  its  undertaking  and  thus  perhaps  by  a  certain  kind 
of  misrepresentation  ward  off  demagogic  attacks,  in  state  legis- 
latures and  elsewhere,  upon  the  supposedly  undue  or  uncon- 
scionable prosperity  of  the  corporation.  At  all  events,  if  the 
company's  legal  capital  has  been  fully  issued,  a  stock  dividend 
is  an  increase  of  capital,  and  as  such  is  permissible  only  by  virtue 
of  affirmative  statutory  authority.-  When  a  corporation  has  the 
power  to  increase  its  nominal  capital  and  also  has  an  accumu- 
lated surplus,  the  law  does  not  prohibit  the  distribution  of  new 
shares  to  the  extent  of  the  company's  surplus  among  the  old 
shareholders  a.s  a  dividend,  provided  the  formalities  prescribed 
for  an  increase  of  capital  be  observed.^ 

*  Barry  v.   Merchants'   Exchange  Brundage,  60  N.  Y.  544,  where  the 

Co.,  1  Sandf.  Ch.  (N.  Y.)  280.     See  court  left  open  the  question  as  to  the 

also  infra,  §  1345.  legality    of    tlie     scrip-dividend    in- 

2  Cf.   Bailey  v.   Railroad  Co.,  22  volved  in  Bailey  v.  Railroad  Co.,  ubi 

Wall.  604  (where  a  company  having  supra. 

no  power  to  increase  its  capital  and  As  to  ,  distributing  among  the 
being  restricted  by  statute  to  annual  shareholders  as  a  dividend  shares 
dixddends  of  ten  per  cent,  issued  to  which  after  being  issued  have  been 
its  shareholders,  to  represent  their  acquired  by  the  company  by  pur- 
interest  in  accumulated  earnings,  chase  or  otherwise,  see  Common- 
scrip-certificates  entitling  the  hold-  wealth  v.  Boston  &  Albany  R.  R.  Co., 
ers  to  share  pro  rata  \\'ith  holders  of  142  Mass.  146;  7  N.  E.  716;  Dock 
capital  .stock  in  subsequently  de-  v.  Schlichter,  etc.  Co.,  167  Fa.  St.  370; 
clared  dividends  and  generally  to  31  Atl.  656.  See  infra,  §  1385. 
enjoy  substantially  all  the  rights  of  As  to  using  money  of  the  corpo- 
shareholders  except  that  of  voting,  ration  to  pay  for  shares  to  be  issued 
and  was  held  subject  to  a  tax  on  to  a  third  person  as  trustee  for  the 
scrip-dividends,  the  validity  of  the  existing  shareholders,  see  Jones  v. 
scrip-dividends  being  assumed  and  Morrison,  31  Minn.  140;  16  N.  W. 
no  point  being  made,  that  the  issue  854. 

thereof  amounted  to  an  evasion  of         ^  Williams  v.  Western  Union  Tel. 

the  law  preventing  an  increase  of  Co.,    93    N.    Y.    162;    Re    Barton's 

capital).       See    also     Brundage    v.  Trust,    5    Eq.    238,    244    (headnote 

496 


§  574- §  077]  STOCK  dividends  §  GOO 

§  597.  Necessity  that  Profits  equivalent  to  amount  of  Stock 
Dividend  should  be  in  Hand.  —  In  order  to  sustain  such  a  st(X-k 
dividend,  there  must  l)e  evidence  that  the  company  has  in  hand 
the  refjuisite  amount  of  surplus  profits.'  Thus,  where  the  state 
constitution  forl)ids  the  issue  of  stfx-k  except  for  money  or  prop- 
erty, a  stock  dividend  of  one  hundred  per  cent  on  the  old  shares, 
where  there  is  no  affirmative  proof  that  funds  to  such  an  extent 
in  excess  of  the  original  capital  are  actually  in  hand,  will  Ije 
enjoined. - 

§  598.  Consequences  of  an  Illegal  Stock  Dividend.  —  Even  if  the 
company  is  without  power  to  declare  a  stock  dividend,  a  share- 
holder cannot  recover  the  amount  of  the  dividend  in  money.  He 
must  either  take  the  shares  as  offered  to  him  or  do  without  any 
dividend  at  all.^ 

§  599.  Necessity  for  distributing  Stock  Dividends  equally.  —  Of 
course,  a  stock  dividend,  like  any  other  dividend,  must  he  distrib- 
uted among  the  shareholders  pro  rata.*^  This  rule  corresponds 
with  the  rule  that  where  new  shares  are  offered  for  subscription 
the  old  shareholders  are  entitled  to  a  preference  over  strangers. 

§  000.  Stock  Dividend  distinguished  from  Cash  Dividend  ac- 
companied by  Option  to  subscribe  to  new  Shares.  —  A  stock 
dividend  differs  from  a  cash  dividend  accompanied  by  an  offer  of 
the  proposed  new  shares  to  the  old  shareholders  for  subscription, 
in  that  in  the  case  of  a  stock  dividend  no  shareholder  has  any 
option  to  take  cash  and  decline  the  stock.^  To  be  sure,  he  may 
refuse  to  accept  the  new  shares  which  the  company  offers  to 

inadequate) ;  Howell  v.  Chicago,  etc.  shares  exceeding  in   par  value  the 

Ry.    Co.,    51    Barb.    (N.    Y.)    378,  amount  declared  to  be  available  for 

380;   Cunningham    v.    German    Ins.  dividend  was    held    to    be  unlawful 

Co.,    101    Fed.    977,   981    (headnote  under  a  statute  forbidding  the  use 

inadequate).                                     <  of  money  raised  by  calls  on  shares  for 

But  see  Hoole  v.  Great  Western  payment  of  dividends). 

Rij.  Co.,  3  Ch.  262,  criticised  infra,  -  Fitzpatrick    v.    Dispatch    Pub. 

§1356.  Co.,  83  Ala.  604;   2  So.  727. 

'  Cockrill  v.  Abeles,  86  Fed.  505;  '  Rand  v.  Ilubbell,  115  Mass.  461, 

30  C.  C.  A.  223.  478;    15  Am.  Rep.  121. 

Cf.  Commonwealth  v.  Boston,  etc.  Cf.  Harris  v.  San  Francisco  Sugar 

R.  R.  Co.,  142  Mass.  146;    7  N.  E.  Re}.  Co.,  41  Cal.  393,  408. 

716  (where  the  rule  was  held  to  be  *  Knapp  v.  Publishers,  etc.  Co., 

dispensed,  with  by  a  statute  autlior-  127  Mo.  53;   29  S.  W.  885;   Jones  v. 

izing  the  company  to  dispose  of  the  Terre  Haute,  etc.  R.  R.  Co.,  57  N.  Y. 

shares    as    its    absolute    property) ;  196. 

Hoole  V.  Great  Western  Ry.  Co.,  3  Ch.  *  Lyman  v.  Pratt,  183  Mass.  58; 

262   (where  a  dividend  payable  in  66  N.  E.  423. 
VOL.  I. —32                                 497 


§  COl  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

distribute  to  him ;  but  he  cannot  obtain  cash  in  lieu  of  the  stock.^ 
On  the  other  hand,  where  a  cash  dividend  is  declared,  accom- 
panied by  an  offer  of  new  shares  jyro  rata  with  the  amount  of  the 
dividend  credited  as  paid  thereon,  it  would  seem  that  any  share- 
holder may  elect  to  take  the  cash  and  to  refuse  the  new  shares,^ 
although  indeed  Lord  Watson  seems  to  have  been  of  a  con- 
trary opinion  on  this  point.^  According  to  I^ord  Watson's  view 
a  transaction  of  that  sort  is  in  substance  identical  with  a  stock 
dividend.* 

§  601.  Rescission  of  Stock  dividend.  —  A  stock  dividend  should 
also  be  distinguished  from  a  cash  dividend  in  that  in  the  case  of 
cash  dividend,  the  right  of  the  shareholder  becomes  indefeasible 
immediately  upon  the  declaration  of  the  dividend,  and  the  com- 
pany cannot  subsequently  rescind  its  action.  In  the  case  of  a 
stock  dividend,  on  the  other  hand,  until  the  formalities  required 
by  law  as  conditions  precedent  to  an  increase  of  capital  have 
been  completed,  all  is  in  fieri,  so  that  until  then  the  company 
may  revoke  the  dividend.^  The  reason  of  this  rule  applies,  how- 
ever, only  where  the  stock  dividend  involves  an  increase  of  the 
company's  nominal  capital,  and  therefore  a  dividend  payable  in 
shares  which  had  been  purchased  by  the  company  should  be  in 
this  respect  assimilated  to  a  cash  dividend,  and  is  irrevocable.* 


§  602.  Sale  of  new  Shares  in  Market  followed  by  Distribution 
of  Premium  among  old  Shareholders.  —  A  method  of  increasing 
capital,  which  has  been  sometimes  employed,  and  which  some- 
what resembles  a  "stock  dividend,"  although  it  certainly  cannot 
properly  be  called  by  that  name,  consists  in  selling  the  new  shares 
in  the  market  and  distributing  the  premium  obtained  from  the 
sale  among  the  old  shareholders.  Such  a  distribution  is  not  a 
dividend  within  the  meaning  of  a  law  levying  a  tax  upon  "divi- 

1  Cf.  State  V.  Baltimore,  etc.  R.  R.  '  Bouch  v.  Sproule,  12  A.  C.  385, 
Co.,   6    Gill   (Md.)    363   (where    the    404. 

dividend    was   declared   payable  in         *  See  infra,  §  1380,  §  1386. 
bonds).  *  Terry    v.    Eagle    Lock    Co.,    47 

2  Bouch  V.  Sproule,  12  A.  C.  385,    Conn.   141. 

398  (per  Lord  Herschell).     Cf.  Ma-         *  Dock  v.  Schlichter  Jute  Cordage 
lam  V.  Hitchens  (1894),  3  Ch.  578.       Co.,  167  Pa.  St.  370;   31  Atl.  656. 

498 


§  574-§  677]  RIGHT  of  pke-emition  §  003 

dends"  paid  to  shareholders.'  Moreover,  money  so  distriljuted 
should,  it  seems,  be  re<;arded  as  eapital  rather  than  income  as 
between  a  tenant  for  life  and  remainderman  of  the  old  shares.- 


§  603-§  619.      RIGHT   OF    OLD    SHAREHOLDER.S   TO    PREFERENXE 
I\    ALLOTMENT    OF    NEW    SHARES. 

§  603.  In  general.  —  Usually,  where  the  capital  of  a  cor- 
poration is  increased  by  the  issue  of  additional  shares,  the  old 
shareholders  have  a  right  to  subscribe  to  the  new  shares  in  pro- 
portion to  their  holdings  in  the  existing  capital,  before  the  new 
shares  can  be  allotted  to  outsiders.  A  right  of  this  sort  is  often 
expressly  conferred  by  statute  or  by  the  company's  incorpora- 
tion paper  or  regulations.  Where  that  is  the  case,  the  extent  of 
the  right  will  depend  of  course  on  the  terms  of  the  particular 
statutes  or  regulations  by  which  the  right  is  conferred.  To  give 
the  old  shareholders  such  a  preferential  right  of  subscribing  to 
the  new  shares  is  generally  a  wise  and  just  provision;  for  in  that 
way  the  several  shareholders,  provided  they  possess  sufficient 
pecuniary  resources  to  exercise  the  right,  are  enabled  to  pre- 
serve their  proportionate  interest  in  the  company.  The  American 
cases  and  text-writers  generally  state  that  the  same  absolute  right 
inheres  in  each  of  the  old  shareholders  even  apart  from  any  ex- 
press statute  or  resolution ;  ^  and  this  doctrine  has  recently  been 

»  State  V.Franklin  Bank,  10  Ohio  Co.,  90  N.  W.  1040;    131  Mich.  79; 

St.  91  (headnote  inadequate).  100  Am.  St.  Rep.  582;    Electric  Co. 

^  Leland   v.    Hayden,    102    Mass.  v.  Edison  Electric,  etc.  Co.,  200  Pa. 

542.     See    infra,    §    1334.     But    see  516;     50   Atl.    164;     Wall   v.    Utah 

Wiltbank's  Appeal,  64  Pa.  St.  256,  Copper  Co.  (N.  J.),  62  Atl.  533. 
259;  3  Am.  Rep.  585.  But  see  contra:    Ohio  Ins.  Co.  v. 

^  Real  Estate  Trust  Co.  v.   Bird,  Nunemacher,  15  Ind.  294;    Meredith 

90  Md.  229:   44  Atl.  1048  (semble);  v.  Xew' Jersey  Zinc  cfc  Iron  Co.,  55 

Gray  v.  Portland  Bank,  3  Mass.  364;  N.  J.  Eq.  211,  219-220;  37  Atl.  539; 

3  Am.  Dec.  156;    Jones  v.  Concord,  affirmed  short  in  56  N.  J.  Eq.  454; 

etc.  R.  R.  Co.,  67  N.  H.  119;  38  Atl.  41  Atl.   1116  (where  the  new  stock 

120;  Eidman  v.  Bowman,  58  111.  444  was  issued  in  excliange  for  property), 
(semble);   11   Am.   Rep.  90;    Hum-         Cf.  Re  Wheeler.  2  Abb.  Pr.,  x.  s. 

boldt  Driving  Park  Ass'n  v.  Stevens,  (N.  Y.),  361,  363;  Morris  v.  Stevens, 

34Nebr.  528;  52N.  W.  568;  33  Am.  178  Pa.  St.  563,  578-579;    36  .\tl. 

St.    Rep.    654     (semble);    Jones    v.  151    (wliere    it    was    said    that    the 

Morrison,   31    Minn.    140,    151-153;  sharcliolders  themselves  may  order 

16  N.  W.  854;    State  ex  rel.  Page  v.  tliat  the  new  sliares  be  offered  for 

Smith,   48   Vt.   266,    289    (semble);  public  subscription). 
Hammond    v.    Edison    Illuminating 

499 


§  604  INCREASE    AND    REDUCTION    OF    CAPITAL      [ChAP.  XI 

affirmed,  after  full  consideration,  by  the  Court  of  Appeals  of 
New  York.^  If  this  be  so,  however,  the  shareholders  cannot 
claim  as  of  right  to  subscribe  to  the  new  shares  at  par  if  they  could 
be  sold  in  the  market  at  a  greater  price ;  -  but  can  at  most  claim 
the  right  to  subscribe  for  the  new  shares  at  the  same  price  as 
could  be  got  for  them  in  the  market  from  a  stranger.  It  would 
seem,  however,  that  where  by  statute  or  resolution,  the  old 
shareholders  are  entitled  to  their  proportion  of  the  new  shares, 
their  right  is  prima  facie  a  right  to  subscribe  at  par.^  Certainly, 
it  is  not  illegal  to  permit  the  old  shareholders  to  subscribe  for  the 
new  shares  pro  rata  at  par  even  though  the  shares  could  be  sold 
in  the  market  for  a  larger  sum.*  It  has  been  said  obiter  that  a 
majority  of  the  shareholders  may  "provide  for  a  sale  in  parcels 
or  bulk  at  public  auction,  when  every  stockholder  can  bid  the 
same  as  strangers  ";'"  but  this  dictum,  inasmuch  as  it  would  en- 
able the  wealthy  shareholders  to  "squeeze  out"  their  poorer 
fellows  by  offering  the  new  shares  in  large  blocks  for  which  only 
men  of  great  means  could  bid,  has  been  forcibly  criticised.* 

§  604.  Exceptional  Cases.  —  The  issue  of  bonds  convertible 
into  shares  at  the  option  of  the  holder  without  according  any 
pre-emptive  right  to  the  existing  shareholders  is  certainly  no  less 
objectionable  than  the  issue  of  the  new  shares  in  presenti  to 
strangers  instead  of  to  the  old  shareholders.^  If  the  increase  of 
capital  is  effected  upon  an  amalgamation  with  another  company 
to  whose  shareholders  the  new  shares  are  issued,  it  has  been 

*  Stokes  V.  Continental  Trust  Co.,  ^  Cf.   Gray  v.   Portland  Bank,  3 

186  N.  Y.  285;    78  N.  E.  1090.  Mass.  364;   3  Am.  Dec.   156;   Cun- 

2  Stokes  V.  Continental  Trust  Co.,  ningham's  Appeal,  108  Pa.  St.  546; 

186  N.  Y.  285,  301;   78  N.  E.  1090.  Attorney-General  v.  Boston  &  Maine 

Cf.  Ohio  Ins.  Co.  v.  Nunemacher,  R.  R.,   109  Mass.  99. 

10  Ind.  234,  236;    15  Ind.  294;   Mil-  *  Jones  v.  Concord,  etc.  R.  R.  Co., 

ler  V.  Illinois  Central  R.  R.  Co.,  24  67  N.  H.  234,  239;   30  Atl.  614;   68 

Barb.  (N.  Y.)  312,  329-330;    Mere-  Am.  St.  Rep.  650. 

dith  V.  New  Jersey  Zinc  &  Iron  Co.,  Cf.  State  v.   Bank  of  Charleston, 

55  N.  J.  Eq.  211,  219-220;    37  Atl.  Dud.   (S.  Car.)   187;    39  Am.   Dec. 

539 ;    affirmed  short  in  56  N.  J.  Eq.  135. 

454:    41  Atl.   1116  (where  the  new  ^  Stokes  v.  Continental  Trust  Co., 

shares  were  issued  in  exchange  for  186  N.  Y.  285,  298;    78  N.  E.  1090 

property).  (semble). 

But  see  Gray  v.  Portland  Bank,  3  *  See  N.  Y.  Financial  Chronicle, 

Mass.  364;    3  Am.  Dec.  1.56;    Ham-  Vol.  83  (Dec.  8,  1906),  p.  1380,  1381. 

mond  V.  Edison  Illuminating  Co.,  90  ^  Wall  v.  Utah  Copper  Co.  (N.  J.), 

N.  W.  1040;   131  Mich.  79;   100  Am.  62  Atl.  533. 
St.  Rep.  582. 

500 


§  574-§  077]  RIGHT    OF    PRE-EMPTION  §  GOG 

held  that  the  old  shareholders  of  the  corporation  which  absorbs 
the  other  company  have  no  right  to  demand  any  of  the  new 
shares.'  It  has  been  tiiought  that  the  common  law  pre-emptive 
right  of  the  old  shareholders  does  not  exist  if  the  new  shares  are 
not  to  be  issued  for  cash,  but  are  to  be  paid  for  in  property .- 

§  605-§  609.     In  whom  the  Right  vests. 

§  605.  In  general.  —  The  right  of  the  old  shareholders  to 
a  preference  in  the  distribution  of  the  new  shares,  whether 
created  bv  statute  or  bv  the  terms  of  the  resolution  authorizing: 
the  increase  of  capital,  belongs  to  those  persons  who  are  members 
of  the  company  when  the  increase  is  made.  Hence,  it  may  be 
claimed  by  the  executors  of  a  deceased  shareholder  although 
they  have  never  been  registered  as  shareholders  in  the  place  of 
their  testator.^  An  owner  of  scrip  or  bonds  convertible  at  the 
holder's  option  into  shares  has  no  right  to  participate  in  an  issue 
of  additional  shares  made  before  he  exercises  his  option.^  The 
time  of  the  increase  for  the  purpose  of  determining  who  are 
entitled  to  subscribe  to  new  shares  is  taken  to  be  the  time  when 
the  increase  is  definitively  resolved  upon  by  the  corporation  and 
made  part  of  the  constitution  of  the  company.^ 

§  60().  Relative  Rights  of  Transferor  and  Transferee.  —  An 
assignment  of  the  shares  prior  to  the  increase  would  of  course 
convey  this  right  along  with  other  incidents  of  ownership  to  the 

^  Bonnet  v.  First  Xat.  Bank,  60         *  Miller  v.  Illinois  Central  R.  R. 

S.  W.  325;    24  Tex.  Civ.  App.  613;  Co.,  24  Barb.  (N.  Y.)  312;    Pratt  v. 

Stokes  v.  Continental  Trust  Co.,  186  American  Bell   Tel.   Co.,   141   Mass. 

N.    Y.    285,    299;     78    N.   E.    1090  225;   5  N.  E.  307;   55  Am.  St.  Rep. 

(semble).  465. 

^  Stokes  v.  Continental  Trust  Co.,         ^  Real  Estate  Trust  Co.  v.  Bird, 

186  N.  Y.  285,  298,  299;  78  N.  E.  90  Md.  229,  245   (headnote  inade- 

1090  (semble).     Ci.  Meredith  v.  Xew  quate);    44  Atl.  1048. 
Jersey  Zinc  &   Iron  Co.,  55  N.  J.         CL  Jones  x.Terre  Haute,  etc.  R.  R. 

Eq.    211;     37    Atl.    539;     affirmed  Co.,  57  N.  Y.  196  (as  to  stock  divi- 

short  in  56  N.  J,  Eq.  454;    41- Atl.  dends). 
1 1 16.  .\s  to  wliether  a  holder  of  redeem- 

^  James  v.  Buena  Ventura  Nitrate  able  shares  is  entitled  to  participate 

Co.  (1896),  1  Ch.  456.  in  an  allotment  of  new  shares  issued 

Cf.  Jackson  v.  Turquand.  L.  R.  4  for   tlie    purpose    of    obtaining    tlie 

H.  L.  305;  Leeds  Banking  Co.,  1  Ch.  funds  necessary  to  consummate  the 

231 ;   Bushee  v.  Freeborn,  1 1  R.  I.  149  redemption,  see  Weidenfeld  v.  Xorth- 

(as  to  the  relative  rights  of  specific  ern  Pac.  Ry.  Co.,  129  Fed.  305,  309- 

and    residuary    legatees    to    shares  310;   63  C.  C.  A.  537. 
subscribed  to  by  the  executor). 

501 


§  607  INCREASE    AND    REDUCTION    OF    CAPITAL       [ClIAP.   XI 

transferee ;  but  there  would  seem  to  he  no  objection  to  an  express 
reservation  of  the  right  bv  the  assignor,  aUhough  the  reservation 
would  be  operative  only  in  equity,  ^^'here  the  increase  is  made 
after  a  contract  for  the  sale  of  shares  has  been  entered  into  but 
before  it  has  been  executed,  the  right  of  pre-emption  as  between 
the  vendor  and  the  purchaser  vests  in  the  latter.'  But  the  vendor 
is  under  no  obligation  to  advance  his  own  money  in  order  to  pro- 
cure the  new  shares  for  the  purchaser,  and  by  failing  to  do  so 
and  thus  suffering  the  pre-emptive  I'ight  to  be  lost,  he  incurs  no 
liability  to  the  purchaser,  who  if  he  wished  to  avail  of  the  option 
of  pre-emption  sliould  have  provided  the  vendor,  the  holder  of 
the  legal  title  to  the  old  shares,  with  the  necessary  funds.-  It  has 
been  said  that  an  assignment  of  the  original  shares  after  the 
option  to  subscribe  for  the  rateable  portion  of  the  new  capital 
has,  been  exercised  but  before  the  new  shares  have  been  actually 
issued  will  carry  as  an  incident  the  right  of  the  assignor  to  the 
new  shares  when  issued ;  ^  but  the  questions  suggested  by  this 
dictum,  which  are  merely  questions  of  the  presumed  intention  of 
the  parties,  would  seem  to  depend  in  large  measure  on  the  terms 
of  the  statute  or  by-law  by  which  the  pre-emptive  right  of  the 
old  shareholders  is  conferred  or  regulated. 

§  607.  Relative  Rights  of  Tenant  for  Life  and  Remainderman  of 
old  Shares. — The  privilege  of  subscribing  to  the  new  shares 
is  not  to  be  deemed  income  and  therefore  does  not  enure  ex- 
clusively to  the  benefit  of  a  tenant  for  life  of  the  old  shares,  but 
the  new  shares  when  subscribed  to,  or  the  proceeds  of  sale  of 
the  pre-emptive  right  if  it  be  sold,  constitute  part  of  the  corpus 
of  the  estate.*  In  those  states  which  adopt  the  Pennsylvania 
rule  of  apportioning  extra  dividends  between  life  tenant  and 

1  Currie  v.  White,  45  N.  Y.  822  §  1386);  Atkins  v.  Albree,  12  Allen 

(semble).  (Mass.)  359;  Leland  v.  Hayden,  102 

'Currie    v.     White,    45    N.     Y  Mass.  542;  Re  Kernochan,  104  N.Y. 

822.  618,030;   UN.  E.  149;  Riddle's Ap- 

^  Baltimore  Citxj  Pass.  Ry.  Co.  v.  -peal,  99  Pa.  St.  278;  Moss's  Appeal, 

Hambleton,    77    Md.    341,    350-351  83  Pa.  St.  264;  24  Am.  Rep.   164; 

(semble  —  headnote  inadequate) ;  26  Walker    v.    Walker,  68    N.    H.    407 

Atl.  279.  (headnote  inadequate);  39  Atl.  432; 

*  Sanders  v.   Bromley,  55  L.  T.,  Peirce  v.  Burroughs,  58  N.  H.  302, 

2i.  s.,  145;  Malamv.  Hitchens  (1894),  303  (headnote  inadequate);    Law  v. 

3  Ch.   578   (stated  infra,    §    1380);  A/Ze?/,  67  N.  H.  93  (headnote  inade- 

Davis    V.    Jackson,    152    Mass.    58  quate  —  the  court   saying  that  the 

(headnote  misleading);  25N.  E.  21;  value  of  the    pre-emptive   right    is 

23  Am.  St.  Rep.  801  (stated  infra,  presumptively  capital) ;  29  Atl.  636; 

502 


§   .j74-§  ()77]  RIGHT    OF    PllE-EMPTION  §  009 

reinuindcnnun  uccorcling  to  the  time  when  the  profits  out  of 
which  they  are  declared  are  earned,'  there  would  seem  to  [ye  no 
reason  why  so  much  of  the  value  of  the  pre-emptive  ri^^ht  as  is 
due  to  profits  earned  during  the  pendency  of  the  life  estate 
should  not  be  treated  as  income,  as  indeed  was  done  in  a  recent 
New  Ham j)sliire  case;  -  but  the  cases  are,  to  say  the  least,  rare 
in  wiiich  life  tenants  even  in  states  which  adopt  the  rule  of  ap- 
portioning stock  dividends  have  been  awarded  any  part  of  the 
value  of  the  pre-emj)tivc  right.'' 

§  OOS.     Relative  Rights  of  Preferred  and  Common  Shareholders. 

—  The  right  inter  scse  of  holders  of  preferred  shares  and  of 
holders  of  ordinary  or  common  shares  to  participate  in  an  in- 
crease of  capital  has  been  considered  in  connection  with  the 
subject  of  preferred  shares.* 

§  GOO.     Rights  of  Shareholder  who  has  not  fully  paid  for  old  Shares. 

—  The  fact  that  a  larger  proportion  has  l)ecn  paid  in  on  some 
shares  than  on  others  is  no  reason  for  denying  to  the  holders  of 
the  latter  the  same  right  of  pre-emption  as  the  holders  of  the 
former  have.  So  far  is  this  principle  carried  that  even  a  share- 
holder who  is  in  default  for  non-payment  of  calls  has  been  held 
to  be  entitled  to  participate  in  an  increase  of  capital  pari  passu 
with  shareholders  who  are  not  delinquent.^ 

Hite  V.  Ilite,  93  Ky.  257,  267-268;  Supp.  298;  Hyde  v.  Holmes  (Mass.), 

20  S.  W.  778;  40  Am.  St.  Rep.  189;  84  N.  E.  318. 

19  L.  R.  A.   173;  Thomson's  Estate,  But   see    Wiltbank's   Appeal,   64 

153  Pa.  St.  332;    26  Atl.  652,  653;  Pa.  St.  256;    3  Am.  Rep.  585  (dis- 

Greene   v.   Smith,    17   R.    I.   28;     19  tinguished    in    Pennsylvania    cases 

Atl.     1081     (with    which    compare  cited  supra  and  to  be  compared  with 

Bushee   v.   Freeborn,   11    R.   I.    149,  peculiar    Pennsylvania    rules    on    a 

where    the   new  shares  were  issued  similar  subject,  infra,  §  1387-§  1389). 

to  tlie  old  shareholders  on  payment  As  to  tlie  right  to  subscribe  for 

of  less  tlian  tlie  par  value) ;   Brinley  shares    in    a    subsidiary    company 

v.  Grou,  50  Conn.  66;   47  Am.  Rep.  organized  to  lease  the  property  of 

618;     De    Koven    v.  Alsop,  205   111.  theprincipal corporation, see  U'riV/Zi^'s 

309,  319-320;  68  N.  E.  930;  63  L.  Estate,    24    Pa.    Co.    Ct.    Rep.    376 

R.   A.  587;   Robertson  v.  De  Brula-  (where  the  "adventitious"  right  was 

tour,  80  N.    E.   938,  943  (headnote  held  to  be  income), 

inailequate) ;   188  N.  Y.  301;   Brown  '  See  infra,  §  1387-§  1389. 

v.  Brou'»  (N.  J.),  65  Atl.  739 :  C«r//sv.  ^  Holbrook  v.  Holbrook   (N.   H.), 

Osborn  (Conn.),  65  Atl.  968  (holding  66  Atl.  124. 

also  that  the  new  shares  are  held  by  ^  See  Pennsylvania  and  New  Hamp- 

the  trustee  subject  to  the  same  duties  shire  cases  cited  supra,  p.  502,  n.  4. 

of  conversion,  etc.,  as  the  old);  Love-  *  Supra,  §  569. 

lace  v.   Anson    (1907),   2    Ch.    424;  *  Reese  v.    Bank  of  Montgomery 

Richmond  v.  fiichnwnd,   108  N.  Y.  CownY?/,3lPa.St.78;72Am.Dec.  726. 

503 


§  610  INXREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 


§  610-§  611.     Time  for  Exercise  of  Right. 

§  610.  Before  Increase  of  Capital  is  effected.  —  The  right  can- 
not well  be  exercised  by  anticipation  before  the  increase  is  de- 
termined upon.  A  shareholder  might  promise  to  exercise  the 
right  when  it  accrues,  and  such  a  promise  if  supported  by  a 
consideration  might  operate  as  a  contract  which  would  bind 
him  personally,  and  perhaps  bind  any  transferee  of  the  shares 
with  notice  of  the  promise.' 

§  Oil.  After  Expiration  of  Time  limited  for  Exercise  of  Right.  — 
The  very  nature  of  the  right  of  the  old  shareholders  to  partici- 
pate pro  rata  in  the  distribution  of  new  capital  before  non- 
members  of  the  company  can  subscribe  thereto  presupposes 
that  the  right  must  be  exercised  in  some  reasonable  time,  else 
it  will  be  lost.  Tvloreover,  the  company  would  have  the  right 
to  name  a  particular  date  before  which  the  existing  shareholders 
must  subscribe  or  lose  their  prior  right  to  do  so.  The  only  re- 
striction upon  this  power  of  the  company  is  that  the  date  so 
named  must  allow  the  shareholders  a  fair  opportunity  to  avail 
themselves  of  their  preference  should  they  be  disposed  to  do 
so.-  When  a  reasonable  date  is  named  at  which  the  shareholders' 
option  of  subscribing  to  the  new  issue  will  be  terminated,  time 
is  of  the  essence,  and  no  shareholder  can  subscribe  as  a  matter 
of  right  after  that  date,^  even  though  his  failure  to  subscribe 
in  time  was  due  to  no  fault  of  his.  Thus,  where  the  resolution 
for  the  issue  of  new  capital  was  passed  on  July  25th,  and  the 
shareholders  were  allowed  until  the  10th  of  the  next  month 
for  the  exercise  of  their  option,  a  shareholder  who  was  abroad 
and  who  did  not  learn  of  the  option  until  August  12th  and  who 
thereupon  wrote  immediately  attempting  to  exercise  the  option, 
is  too  late,  and  cannot  require  the  company  to  issue  to  him  his 
proportion  of  the  new  shares."  The  only  exception  to  the  rule 
of  which  the  case  just  stated  is  an  illustration  is  that  if  the  share- 

»  Cf.    Real    Estate    Trust    Co.    v.  held  ineffective  as  to  a  shareholder 

Bird,  90  Md.  229,  246;  44  Atl.  1048.  who  happened  to  be  in  Europe). 

^  Jones   V.    Morrison,    31    Minn.         ^  Hart  v.  St.  Charles  Street  R.  R. 

140,  153;    16  N.  W.  854   (where  the  Co.,  30  La.  Ann.  758. 
company's  attempt  to  limit  the  time         *  Pearson  v.  London  &  Croydon 

within  which    the  old    shareholders  Ry.  Co.,  14  Sim.  541. 
might  subscribe  to  eleven  days  was 

504 


§  574-§  077]  RIGHT    OF    PRE-EMI'TIOX  §  012 

holder's  failure  to  suhscrihe  in  due  time  is  due  to  the  company's 
own  fault  —  for  example,  if  the  letter  notifyint;  him  of  his  right 
to  subscribe  be  misdirected  —  he  will  be  allowed  to  subscribe 
within  a  reasonable  time  after  the  expiration  of  the  prescribed 
period/  The  company  may  recjuire  a  deposit  to  be  paid  at  the 
time  of  subscribing  by  a  shareholder  who  wishes  to  exercise 
his  option  of  subscribing  for  new  shares;  and  if  a  shareholder 
or  his  assignee  fails  to  make  the  payment  within  the  stipulated 
time  the  right  to  subscribe  is  lost.^ 


§  612.  Waiver  of  pre-emptive  Right.  —  The  right  of  the  old 
shareholders  may  be  waived  by  them  before  the  expiration  of 
the  time  for  subscribing  to  the  new  shares,  or,  perhaps,  even 
before  the  increase  of  capital  is  made  or  authorized.^  No  such 
waiver,  however,  will  bind  a  purchaser  of  the  shares  without 
notice  thereof.*  The  only  way  in  which  the  company  can  make 
such  a  waiver  certainly  effective  as  against  a  purchaser  of  the 
shares  is  by  noting  the  same  on  the  share-certificate.  Inasmuch 
as  the  right  vests  in  those  persons  who  are  shareholders  at  the 
time  of  the  increase,  it  seems  to  have  been  thought  that  a  waiver 
of  the  right  before  that  time  would  not  bind  a  person  who,  after 
the  waiver  but  before  the  increase  is  resolved  upon,  acquires 
shares  of  the  original  capital  by  transfer,  even  though  he  have 
notice  of  the  waiver ;  •'  but  there  would  seem  to  be  no  reason 
why  an  absolute  owner  of  shares  should  not  in  equity  be  allowed 
to  waive  the  right  before  it  accrues  nor  why  such  a  waiver  should 
not  bind  a  purchaser  with  notice,  for  it  must  be  remembered 
that  the  privilege  does  not  come  as  a  mere  windfall  or  gift  of 
Providence  to  those  who  are  shareholders  where  the  increase  is 
resolved  but  vests  in  them  in  consequence  of  the  rights  of  owner- 
ship wliich  have  all  along  been  possessed,  p)otentially  at  least, 
by  them  and  their  predecessors  in  title.    The  fact  that  a  share- 


'  James  v.  Buena  Ventura  Nitrate         *  Real  Estate  Trust  Co.  v.  Bird.  90 
Syndicate  (1896),  1  Ch.  456.  Md.  229.  246-248;   44  Atl.  1048. 

2  Sewall  V.  Eastern  R.  R.  Co.,  9         *  Real  E.^tate  Trust  Co.  v.  Bird,  90 
Cush.  (Mass.)  5.  Md.  229,  245-246;    44  Atl.  1048. 

'  Cf.    Hoyt    V.    Shenan/jo    Valley 
Steel  Co.,  207  Pa.  208;   56  Atl.  422. 

505 


§  613  INCREASE    ANT)    REDUCTION    OF    CAPITAL       [ChAP.   XI 

holder  demands  the  right  to  subscribe  to  the  new  shares  at  par, 
whereas  the  extent  of  liis  legal  right  is  to  subscribe  at  such  price 
as  the  majority  of  the  shareholders  may  fix,  does  not  amount  to 
a  waiver  of  his  legal  right,  or  justify  the  company  in  allotting 
the  new  shares  to  third  persons  without  first  offering  to  the  pro- 
testing shareholder  his  proportion  of  the  new  shares  at  the  same 
price  as  the  strangers  are  willing  to  pay.'  Moreover,  an  accept- 
ance of  a  part  of  the  new  stock  to  which  an  old  stockholder  is 
entitled  does  not  amount  to  a  waiver  of  his  right  to  the  rest  of 
his  quota." 

§  613.  Assignment  of  the  Right.  —  The  right  may  be  as- 
signed as  well  as  waived.^  Indeed,  such  rights  are  often  bought 
and  sold  on  the  stock  exchange.  As  there  is  no  certificate  or 
other  tangible  evidence  of  ownership  of  the  right  separable 
from  the  share-certificate,  the  purchaser's  only  security  is  the 
promise  of  the  vendor  or  his  broker.  When  the  shareholder 
has  exercised  his  option  of  subscribing,  he  usually  receives  from 
the  company  a  scrip-certificate  stating  that  he  will  be  entitled 
to  so  many  of  the  new  shares  when  issued;  and  this  certificate 
may  be  sold  on  the  stock  exchange  precisely  like  a  share-certifi- 
cate.* Such  a  sale,  however,  makes  the  purchaser  merely  an 
assismee  of  a  contract  and  not  an  actual  shareholder.  Hence, 
he  cannot  compel  the  company  to  issue  to  him  a  share-certificate 
for  the  shares  subscribed  for  by  his  assignor ;  and  not  until  the 
new  shares  are  actually  issued  does  he  become  a  shareholder, 
entitled  to  vote  and  exercise  the  other  rights  of  a  shareholder.^ 
It  has  been  said  that  an  assignment  of  the  original  shares  after 
the  option  to  subscribe  for  a  rateable  portion  of  the  new  capital 
has  been  exercised  but  before  the  new  shares  have  been  actually 
issued  will  carry  as  an  incident  the  right  of  the  assignor  to  the 
new  shares.* 

'  Stokes  V.  Continental  Trust  Co.,  the  new  stock  —  "himself,   he  was 

186  N.  Y.  285,  299-301;    78  N.  E.  entitled  to  sell  the  right  to  one  who 

1090.  could,  as  is  frequently  done." 

2  Schmidt  v.  Pritchard  (Iowa),  112  *  As  to  transfer  of  the  right  to  the 

N.  W.  801.  new  shares  by  a  sale  of  the  old  shares 

^  Stokes  V.  Continental  Trust  Co.,  see  supra,  §  606. 
186  N.  Y.  285,  297;    78  N.  E.  1090,  =  lUdtimore    City    Passenger    Ry. 

where  the  court   said:    "If  so  situ-  Co.  v.  Ilambleton,  77  Md.  341;    26 

ated  that  he"  —  i.  e.,  the  old  share-  Atl.  279. 
holder  —  "could  not  take  it"  —  i.  e.,         ®  See  supra,  §  606. 

506 


§  o74-§  077] 


RIGHT    OF    PRE-EMPTION 


§014 


§  614-§  616.     Remedies  against  the  Company  for  failing 
to  recognize  pre-emptive  Right. 

§  614.  In  general.  — -  If  the  company  disregards  or  refuses 
to  recognize  the  rights  of  an  old  sliareholder  to  a  preference  in 
the  allotment  of  new  shares,  several  remedies  are  available. 
He  may  by  bill  in  equity  compel  the  company  to  accord  him 
the  privilege  to  which  he  is  entitled,  and  enjoin  it  from  disre- 
garding his  rights.'  If  the  company  has  already  issued  all  the 
shares  to  other  persons  who  are  entitled  to  protection  as  bona 
fide  purchasers,-  so  that  specific  performance  of  the  duty  owed 
to  him  by  the  company  is  impossible,  or  if  he  does  not  choose 
to  ask  for  specific  performance,  he  may  recover  his  damages.^ 
In  order  to  maintain  an  action  for  damages,  he  must  first  offer 
and  demand  to  subscribe  to  the  shares  to  which  he  is  entitled.* 
The  measure  of  damages  in  such  an  action  will  be  the  difference 
between  the  amount  which  he  would  have  had  to  pay  to  the  com- 
pany for  the  shares  to  which  he  was  entitled  to  subscribe  and  the 
value  of  the  shares  at  the  time  the  company  wrongfully  refuses 


'  Dousman  v.  Wisconsin,  etc.  Co., 
40  Wise.  418;  Cunningham's  Ap- 
peal, 108  Pa.  St.  546;  Electric  Co.  v. 
Edison  Electric,  etc.  Co.,  200  Pa.  516, 
521  (headnote  inadequate) ;  50  Atl. 
164;  Schmidt  v.  Pritchard  (Iowa), 
112N.  W.  801. 

Cf.  Sewall  v.  Eastern  R.  R.  Co.,  9 
Cush.  5,  11;  Hammond  v.  Edison 
Mfg.  Co.,  90  N.  W.  1040;  131  Mich. 
79;  100  Am.  St.  Rep.  582  (manda- 
mus granted  against  company). 

But  see  Meredith  v.  Xew  Jersey 
Zinc  cfc  Iro7i  Co.,  55  N.  J.  Eq.  211; 
37  Atl.  539,  affirmed  short  in  56  N. 
J.  Eq.  454;  41  Atl.  1116  (where  the 
remedy  at  law  by  way  of  damages 
•was  thought  adequate). 

-  Cf.  infra,  §  617. 

^  Real  Estate  Trust  Co.  v.  Bird, 
90  Md.  229;  44  Atl.  1048;  Groij  v. 
Portland  Hank,  3  Mass.  364;  3  Am. 
Dec.  156;  Reading  Trust  Co.  v. 
Reading  I.  Works,  137  Pa.  St.  282; 

50 


21  Atl.  169,  170;  Stokes  v.  Conti- 
nental Trust  Co.,  186  N.  Y.  285, 
301;   78  N.  E.  1090. 

Cf.  Crosby  v.  Stratton,  68  Pac. 
130;  17  Colo.  212  (where  the  in- 
jured shareholder  sought  in  vain  to 
recover  damages  from  another  share- 
holder who  was  alleged  to  have  re- 
ceived more  than  liis  just  proportion 
of  the  new  shares). 

*  Wilson  V.  Bank  of  Montgomery 
County,  29  Pa.  St.  537;  Reese  v. 
Bank  of  Montgomery  County,  31  Pa. 
St.  78;  72  Am.  Dec.  726  (where  the 
form  of  action  was  assumpsit) ;  Bon- 
net V.  First  Xat.  Bank,  60  S.  W.  325; 
24  Tex.  Civ.  App.  613. 

Cf.  Hart  V.  St.  Charles  Street  R.  R. 
Co..  30  La.  .\nn.  758  (where  a  tender 
of  the  amount  of  tlie  new  shares  was 
required  by  the  court). 

But  see  Stokes  v.  Continental 
Trust  Co..  186  N.  Y.  285,  299-301; 
78  X.  E.  1090. 


§  615  INCREASE   AND    REDUCTION   OF    CAPITAL      [ChAP.  XI 

to  issue  them  to  him.*  The  statute  of  limitations  begins  to  run 
in  favor  of  the  corporation  from  the  time  of  its  refusal  to  issue 
to  the  complainant  his  proportion  of  the  new  shares.  If  the 
company  exacts  the  payment  of  a  premium  as  a  condition  of 
allowing  a  shareholder  to  subscribe  to  his  proportion  of  the  new 
shares,  it  has  been  held  in  Pennsylvania  that  if  he  pays  the 
premium  even  under  protest,  he  cannot  subsequently  recover 
it  back.- 

§  015.     Remedy  personal  to  Shareholder  whose  Right  is  denied. 

—  In  order  that  a  shareholder  should  have  a  standing  in  court 
to  complain  of  the  distribution  of  new  or  additional  shares,  he 
must  show  some  violation  of  his  own  personal  rights  and  not 
merely  a  \dolation  of  the  rights  of  other  shareholders.  For 
instance,  a  common  shareholder  has  no  ground  of  complaint 
because  the  preferred  shareholders  have  not  been  permitted 
by  the  company  to  participate  in  the  allotment  of  new  shares.^ 

§  G16.     Company  not  accountable  for  Premium  realized  on  Quota 
of  Shareholder  who  has  waived  or  otherwise  lost  pre-emptive  Right. 

—  A  shareholder  who  waives  or  omits  to  exercise  his  right  to 
subscribe  for  his  proportion  of  the  new  shares  cannot  compel 
the  company  to  pay  him  the  amount  of  a  premium,  or  excess 
over  the  par  value,  realized  by  it  on  a  sale  of  the  shares  to  which 
he  would  have  been  entitled,  unless  a  statute  affirmatively  con- 
fers such  a  right.* 


§  617.  Rights  and  Liabilities  of  Persons  to  whom  new  shares  are 
issued  in  Violation  of  Pre-emptive  Right  of  old  Shareholders.  — - 
If  the  right  of  the  old  shareholders  to  a  preference  in  the  dis- 
tribution of  new  shares  be  disregarded  and  the  new  shares  be 
allotted  to  others,  the  allotment  cannot  be  cancelled  after  the 
shares  have  come  into  the  hands  of  bona  fide  holders  for  value.^ 

1  Gray  v.  Portland  Bank,  3  Mass.         ^  Weidenfeld  v.  Northern  Pac.  Ry. 

364;   3  Am.  Dec.  156.  Co.,  129  Fed.  305;   63  C.  C.  A.  537. 

Cf.  Reading  Trust  Co.  v.  Reading         *  Mason    v.     Davol    Mills,     132 

I.  Works,  137  Pa.  St.  282;    21  Atl.  Mass.  76. 
169,  170.  ^  Morris  v.  Stevens,  178  Pa.  St. 

^  De  la  Cuesta  v.    Ins.   Co.,   136  563;    36  Atl.  151. 
Pa.  St.  62;   20  Atl.  505;  9  L.  R.  A.         Cf.  Re  Wheeler,  2  Abb.  Pr.,  n.  s. 

631.  (N.  Y.),  361  (where  shares  issued  in 

508 


§  574- §  G77]  RIGHT  of  pre-emption  §  018 

So  long  as  the  shares  are  in  the  hands  of  persons  who  are  cogni- 
zant of  the  circumstances  under  which  they  were  alhjtted,  the 
issue  may  be  cancelled ; '  and  if  one  of  the  original  allottees  has 
sold  some  of  the  new  shares  to  an  innocent  purchaser,  the  vendor 
may  be  enjoined  from  voting  on  or  selling  a  corresponding 
number  of  his  old  shares  until  the  validity  of  the  allotment  be 
finally  passed  upon.'- 

§  ()1S.  Rights  of  old  Shareholders  upon  Issue  of  previously  un- 
issued Shares  of  old  Capital,  surrendered  and  forfeited  Shares.  — 
Whilst  the  distinction  l)etweeii  an  increase  of  capital  and  the  issue 
of  previously  unissued  shares  of  the  existing  capital  or  shares 
which  have  been  surrendered  or  forfeited  must  not  be  over- 
looked, yet  if  a  corporation  has  begun  business  before  its  capital 
has  been  fully  subscribed  or,  as  the  saying  is,  with  some  of  its 
stock  remaining  in  its  treasury,  it  may  offer  the  shares  so  re- 
maining to  the  existing  shareholders  before  putting  them  up  for 
public  subscription;  and  where  that  is  done,  the  rights  of  the 
shareholders  are  much  the  same  as  if  the  shares  so  offered  had 
constituted  an  increase  of  capital.^  No  obligation,  however, 
rests  upon  the  company  to  offer  to  its  existing  shareholders  in 
preference  to  the  public  at  large  any  shares  of- its  original  author- 
ized capital  which  it  may  have  in  its  disposal  *  —  most  certainly 
not  where  the  company  is  reissuing  shares  which  were  sur- 
rendered by  the  original  allottees.^     But  the  company  has  no 

disregard   of   the   old   shareholders'  illustrative   of  some   points   in   the 

right  of  pre-emption  were  said  to  be  law  as  to  increase  of  capital, 

illegal).  *  State  ex  rel.  Page  v.  Smith,  48 

'  a.  Schmidt  v.Pritchard  (Iowa),  Vt.     266,    289-290;      Hartridge    v. 

112    N.    W.    801    (where   the    sub-  Rockwell,  R.  M.  Charlt.   (Ga.)  260; 

scribers  for  the  new  shares,  not  being  Brown  v.  Florida  Southern  Ry.  Co., 

bona  fide  purchasers,  were  required  19  Fla.  472;    Curry  v.  Scott,  54  Pa. 

to  recognize    the   rights  of  the   old  St.  270. 

sliareliolders) ;     Whitaker   v.    Kilby,  But   see  Jones  v.   Morrison,   31 

106    N.    Y.    Supp.    511    (a    similar  Minn.  140,  146  (semble);    16  N.  W. 

case).  854;    Way  v.  American  Grease  Co., 

But  see  Shellenherger  V.  Patterson,  47  Atl.  Rep.  44,  46;    60  N.  J.  Eq. 

168  Pa.  St.  30;    31  .\tl.  943.  263;   Crosby  v.  Stratton,  68  Pac.  130, 

'  Morris  v.  Stevens,   178  Pa.  St.  132  (.semble);    17  Colo.  212. 

563,  579-580  (headnote  inadequate) ;  Cf.  Mi7/er  v.  Illinois  Central  R.  R. 

36  Atl.  151.  Co.,  24  Barb.  (N.  Y.)  312;    Shellen- 

'  Some  cases  of  this  sort,  for  ex-  berger  v.  Patterson,  168  Pa.  St.  30; 

ample,  Jackson  v.  Turquand,  L.  R.  31  .\tl.  943. 

4  H.  L.  305,  and  Addinell's  Case,  1  "  Crosby  v.  Stratton,  68  Pac.  130: 

Eq.  225,  have  been  cited  above  as  17  Colo.  212. 

509 


§  G19  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP,  XI 

ri^ht  to  accord  the  privilege  to  some  favored  shareholders  whilst 
denving  it  to  others/  And  of  course  the  directors  have  no  right 
to  issue  hitherto  unissued  shares  of  the  original  capital  to  their 
own  friends  for  the  purpose  of  maintaining  themselves  in  control 
of  the  company.-  So,  where  shares  have  been  surrendered  to 
the  company  as  "treasury  stock,"  the  tlirectors  have  no  right 
to  sell  such  shares  to  a  friend  for  the  purpose  of  maintaining 
themselves  in  power,  especially  where  the  price  to  be  obtained 
for  them,  although  under  ordinary  circumstances  a  good  one, 
is  less  than  could  be  realized  by  taking  advantage  of  the 
contest  for  control  of  the  corporation ;  and  if  the  vendee  has 
notice  of  the  object  of  the  directors,  the  court  will  cancel  the 
reissue.^ 

§  619.  Distinction  between  Acceptance  of  Company's  OfEer  of 
Quota  of  new  Shares  and  Application  for  Shares  in  Addition  to  Quota 
at  Suggestion  of  Company.  —  The  exercise  by  shareholders,  within 
the  time  limited  to  them,  of  the  right  to  subscribe  for  the  new 
shares  completes  a  contract  between  the  company  and  the  share- 
holder so  subscribing."  On  the  other  hand,  if  the  company 
writes  to  the  various  shareholders  asking  them  whether  they 
desire  to  take  any  of  the  new  shares  over  and  above  their  pro- 
portion, the  company  is  not  making  an  offer  but  is  merely,  as 
it  were,  advertising  for  offers;  and  therefore  a  reply  by  a 
shareholder  signifying  his  desire  to  subscribe  for  a  certain 
number  of  the  new  shares  in  addition  to  his  proper  propor- 
tion does  not  complete  a  contract,  but  is  a  mere  offer  which 
will  not  ripen  into  a  contract  unless  and  until  it  be  accepted  by 
the  corporation.^ 

>  Reese  v.   Bank  of  Montgomery         '  Elliott  v.  Baker  (Mass.),  80  N. 

County,  31  Pa.  St.  78  (headnote  mis-  E.  450. 
leading) ;    72  Am.  Dec.  726.  *  Jackson  v.   Turquand,  L.  R.   4 

2  Luther    v.    C.    J.    Luther     Co.  H.  L.  305. 
(Wisc.),94N.  W.  69;   118  Wise.  112;  ^  Addinell's    Case,    1    Eq.    225; 

99  Am.  St.  Rep.  977;    Whitaker  v.  Jackson  v.  Turquand,  L.  R.  4  H.  L. 

Kilby,  106  N.  Y.  Supp.  511  (head-  305. 
note  misleading). 


510 


§  574-§  077]  MEANING    OF    REDUCTION  §  021 


§  620-§  674.    REDUCTION  OF  CAPITAL. 

§  020-§  021.     Definition. 

§  620.  What  Reduction  of  Capital  means.  —  Reduction  or 
decrea.se  of  capital  means  either  a  return  to  .sliareholder.s  of  actual 
capital  once  paid  in  or  contributed  by  them  to  the  common  stock/ 
or  a  release  of  sliareholders  from  a  liability  once  incurred  to 
make  such  contribution  if  and  when  called  upon  to  do  so,  or  a 
diminution  in  the  nominal  amount  of  the  capital  by  cancelling 
some  of  the  shares  or  by  reducing  the  nominal  or  par  value  of 
some  or  all  of  the  existing  shares. 

§  021.  What  it  does  not  mean.  —  It  is  scarcely  necessary  to 
say  that  the  mere  fact  that  a  corporation  is  parting  with  .some  (jf 
its  property  does  not  indicate  a  reduction  of  capital  in  the  legal 
sense.  Whenever  such  a  surrender  of  corporate  property  is 
reasonably  necessary  for  the  attainment  of  the  objects  for  which 
the  company  was  formed,  it  cannot  be  said  to  be  a  reduction  of 
capital,  even  though  no  immediate  return  is  secured  to  the  com- 
pany. Thus,  where  an  investment  company  holds  railway  shares, 
it  may,  in  compliance  with  a  scheme  for  reorganizing  the  rail- 
road, surrender  some  of  its  holdings  with  a  view  to  improving 
the  value  of  the  remainder:  to  regard  such  a  surrender  as  a 
reduction  of  capital  would  be  an  entire  misconception.-  Even 
where  losses  are  sustained  in  the  prosecution  of  the  business  so 
that  the  company's  actual  capital  is  impaired,  there  is  never- 
theless no  return  of  actual  capital  to  the  shareholders  and  no 
diminution  in  the  nominal  capital ;  and  consequently  there  is 
no  reduction  of  capital  in  the  legal  sense. ^  Of  course,  a  sale  of 
part  of  the  company's  capital  to  one  of  the  shareholders  at  a 
fair  price  is  not  forbidden  as  a  reduction  or  return  of  capital.* 

'  Cf.    Audenried    v.    East    Coast  called  up  again  by  company  is  re- 

Milling  Co.,  59  Atl.  (N.  J.)  577,  585  duction  of  capital  requiring;  Icgisla- 

(where  it  was  said  that  a  return  of  tive  sanction).     See  also  §  497. 
capital   once   paid   in    was   a   with-         ^  Thompson  v.  Trustees,  etc.  Cor- 

drawal  of  "capital  stock"  within  the  poration    (1895),    2    Ch.    454.      Cf. 

meaning  of  a  statute) ;    Whitwiiam  v.  Beardslee  v.  Shickler  (Pa.),  68  Atl. 

Piernj   (1907),    1   Ch.   289    (holding  44. 

that    payment    of   money  to  share-         *  Cunningham    v.    German    Ins. 

holders  to  go  in  reduction  of  paid-  Bank,  101  Fed.  977;   41  C.  C.  A.  609. 
up  capital  and  to  be  subject  to  be         *  Robinson    v.    Muir    (Cal.),    90 

511 


§  622  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

^Moreover,  a  distribution  of  new  shares  among  the  existing  share- 
holders as  a  stock  dividend  is  not  a  payment  or  return  of  capital 
stock  to  the  stockholders :  it  is  an  increase  rather  than  a  reduc- 
tion of  the  capital  stock.  ^ 


§  622-§  624.     Why  Reduction  of  Capital  without  afflrmative 
Legislative  Sanction  is  forbidden. 

§  622.  Reduction  of  Actual  Capital.  —  As  heretofore  stated, 
a  reduction  of  capital  affects  the  rights  of  shareholders  and 
especially  creditors  more  seriously  than  an  increase.  The  capital 
of  a  corporation  or  limited  company  is  the  fund  provided  by 
law  for  the  carrying  on  of  its  business  and  the  payment  of  its 
debts ;  and  any  attempt,  without  special  legislative  authority  to 
diminish  the  same  is  both  ultra  vires  and  illegal,^  and  should  be 
ruthlessly  stricken  down  by  the  courts.  This  rule  is  founded 
in  the  policy  of  the  law,  and  cannot  be  evaded  by  any  artifice. 
A  decrease  of  capital,  so  far  as  creditors  are  concerned,  is  most 
serious  when  it  takes  the  form  of  a  return  to  shareholders  of 
capital  once  paid  in  ^  or  of  a  release  from  liability  for  uncalled 
capital. 

§  623.  Reduction  of  Nominal  Capital.  —  But  a  reduction  in 
the  nominal  amount  of  capital  may  also  be  very  objectionable, 
and  unless  clearly  authorized  by  statute  should  be  held  to  be 
illegal  even  though  it  may  be  designed  merely  to  make  the 
nominal  capital  correspond  with  the  actual  capital  as  diminished 
bv  losses.''  For  instance,  if  a  corporation  could  reduce  its  nominal 
capital,  it  could  subsequently  treat  any  excess  in  the  value  of 

Pac.  521;    Chase  v.  Mich.  Tel.  Co.,  its  capital,  loses  that  power  upon 

121  Mich.  631;   80  N.  W.  717  (sale  of  becoming  incorporated  with  limited 

company's  entire  property  and  busi-  liability  under  the  Companies  Acts, 

ness  to  a  corporation  which  is  owner  although  the  statute  provided  that 

of  all  except  eight  of  the  shares).  existing   companies  when  incorpor- 

1  Williams  v.  Western  Union  Tel.  ated  under  the  act  should  retain  the 
Co.  93  N.  Y.  162.  powers  conferred  by  their  deeds  of 

2  Haas  Co.,  131  Fed.  232.  settlement). 

Cf.  Droitwich  Patent  Salt  Co.  v.  ^  Cf.   Holmes  v.   Newcastle-upon- 

Curzon,  L.  R.  3  Ex.  35  (holding  that    Tyne  Abattoir  Co.,  45  L.  J.  Ch.,  n.  s., 
an  unlimited  company,  or  partner-    383. 

ship,  which  under  its  deed  of  settle-  *  Dane   v.    Young,    61    Me.    160, 

ment  possessed  the  power  to  reduce    169-170  (headnote  inadequate). 

512 


§  .■)74-§  077]  REDUCTION  §  624 

its  assets  over  the  capital  as  so  reduced  as  representing  surplus 
or  profits  available  for  distribution  among  the  shareholders  as 
dividends.'  So,  too,  the  effect  of  a  reduction  of  the  nominal 
capital,  if  valid,  would  be  to  diminish  'pro  tanto  any  statutory 
liability  of  shareholders  to  creditors  which  may  he  measured 
by  the  nominal  or  par  value  of  the  shares.^ 

§  624.  General  Principle.  —  At  all  events,  the  true  view 
would  seem  to  be  that  the  capital  having  been  fixed  by  the  mem- 
orandum of  association  or  incorporation  paper  is  by  statute 
made  irreducible  except  in  the  mode,  if  any,  expressly  provided 
by  law,  and  that  whether  in  any  particular  case  a  reduction  of 
capital  in  a  certain  way  would  be  hurtful  either  to  creditors  or 
shareholders  is  a  question  with  which  the  courts  need  not  con- 
cern themselves.^  Whether  a  particular  decrease  of  capital  be 
good  or  bad  policy  for  the  corporation,  be  injurious  or  beneficial 
to  the  shareholders,  be  frauglit  with  danger  to  creditors  or  in 
no  way  jeopardizing  their  interests,  —  these  are  not  questions 
for  the  courts ;  for  every  decrease  of  capital  is  forbidden  by  the 
legislature  by  the  very  scheme  of  incorporation,  unless  some 
clear  statutory  sanction  can  be  found. 

In  a  recent  California  case,  a  corporation  was  formed,  under 
a  statute  authorizing  incorporation  for  any  lawful  objects,  for 
the  purpose  of  developing  and  selling  a  tract  of  land,  which  was 
accepted  in  payment  for  shares  of  the  capital  stock,  in  parcels 
or  building  lots.  The  incorporation  paper  provided  that  as 
portions  of  the  tract  should  be  sold,  the  proceeds  of  sale  should 
be  divided  among  the  shareholders.  Undoubtedly,  this  provision 
attempted  to  authorize  a  reduction  of  the  actual  capital.  Never- 
theless, the  court  held  that  the  provision  was  valid,  and  that  any 
shareholder  might  compel  a  distribution  of  the  proceeds  of  sales, 
even  against  the  opposition  of  other  shareholders.*  The  court 
emphasized  the  fact  that  the  rights  of  creditors  were  not  involved 
in  the  proceeding.  Nevertheless,  it  is  submitted  that  a  contrary 
decision  would  have  been  more  consistent  with  the  legal  theory 
of  the  nature  of  a  corporation,^  and  that  the  proper  course  to 

»  See  infra,  §  1314.  *  Baldunn  v.  Miller  &  Lux  (Cal.), 

'  See  Dane  v.  Youn{i,  61  Me.  160,    92  Pac.  1030. 
169-170  (headnote  inadequate).  '  See  supra,  §  53  and  §  122. 

'  Holmes  v.  Newcaf^tle-u-pon-Tyne 
Abattoir  Co.,  45  L.  J.  Ch.,  n.  s.,  3S3. 
VOL.  I.— 33  513 


§  02,3  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

pursue  in  any  such  case  would  be  to  exercise  the  statutory  power, 
if  any  such  be  conferred  upon  the  company,  of  reducing  the 
capital. 

§  625-§  642.      REDUCTION  WITHOUT  STATUTORY  AUTHOR- 
ITY—EVASION OF  PROHIBITION  OF  REDUCTION. 

§  625.  Payment  of  Dividends  out  of  Capital.  —  A  not  uncom- 
mon and  exceedingly  pernicious  method  of  violating  the  rule 
against  reducing  or  returning  capital  is  by  paying  so-called  divi- 
dends out  of  the  company's  capital,  when  no  profits  properly 
available  for  dividends  have  been  earned.  This  practice  amounts 
to  a  thinly  disguised  return  of  capital  to  the  shareholders/  and 
is  carried  out  by  false  balance  sheets  and  other  fraudulent  de- 
vices. The  rules  for  determining  whether  or  not  moneys 
available  for  dividends  are  in  the  company's  hands  are  treated 
in  connection  with  the  subject  of  dividends  in  general.-  So, 
too,  the  liability  of  directors  who  declare  and  pay  a  dividend 
out  of  the  company's  capital  will  be  stated  below.^ 


§  626-§  633.     PURCHASE  by  company  of  its  own  shares. 

§  626-§  630.     Whether  Purchase  is  lawful. 

§  626.  On  Principle.  —  A  more  subtle  method  of  evading 
the  rule  against  unauthorized  reductions  of  capital  lies  in  the 
purchase  by  a  corporation  of  some  of  its  own  shares.  ^Nlost 
unquestionably,  any  such  purchase  reduces  by  the  amount  of  the 
purchase  price  the  fund  available  for  the  payment  of  the  com- 
pany's debts.  As  such,  it  brings  about  a  diminution  of  the  com- 
pany's actual  or  working  capital.  It  also  reduces  the  nominal 
capital  outstanding.  While  the  purchased  shares  may  doubtless 
be  reissued  if  the  purchase  is  valid,  nevertheless  such  reissue 
may  never  be  feasible;  for  the  company  may  never  be  able  to 
find  a  subscriber  for  the  shares.  Hence,  the  purchase  by  a  corpo- 
ration of  its  own  shares  amounts  to  a  reduction  of  both  the 

*  American  Steel,  etc.  Co.  v.  Eddy,    holders  responsible  for  the  claims  of 
89N.  W.  952;    130  Mich.  2G6  (where    creditors   injured   by   a   withdrawal 
shareholders    who    received    illegal    of  capital), 
dividends  were  held  liable  to  credit-         ^  Infra,  §  1313-§  1344. 
ors  under  a  statute   making  share-         ^  Infra,  §  1362. 

514 


§  ";74-§  077]  uxautuokized  heductiux  §  026 

actual  and  the  nominal  capital  of  the  couij)any,  and  as  such  it 
should  be  held  both  ultra  vires  and  illegal  unless  clearly  sanc- 
tioned by  statute.  It  is  no  answer  to  say  that  if  the  company  is 
thoroughly  solvent,  so  that  its  assets  after  the  purchase  are  still 
amply  sudicient  for  payment  of  all  claims  against  it,  the  creditors 
are  not  prejudiced.  For,  while  the  assets  may  still  remain  suf- 
ficient, yet  they  are,  after  the  consummation  of  the  purchase, 
undeniably  less  by  the  amount  of  the  purchase  money  than  they 
were  before;  and  hence  the  fund  which  the  creditors  had  an 
absolute  right  to  have  preserved  intact  for  the  payment  of  their 
claims  has  been  diminished  without  their  consent.  This  is 
obviously  true  where  the.  shares  are  purchased  with  capital 
moneys  of  the  company;  and  the  real  fact  is  but  thinly  disguised 
where  they  are  bought  with  accumulated  profits.  For  the  com- 
pany after  buying  the  shares  might  treat  them  as  extinguished 
and  distribute  any  excess  of  its  assets  over  its  outstanding  nomi- 
nal capital  among  its  shareholders  in  the  shape  of  dividends. 
^Moreover,  even  if  it  were  conceded  that  under  some  circum- 
stances the  purchase  might  not  injure  creditors,  yet  it  most 
seriously  disturbs  the  rights  of  shareholders.  To  enable  the 
corporation  to  purchase,  hold,  and  vote  its  own  shares  would  so 
obviously  enable  the  majority  to  strengthen  their  grip  upon  the 
company  with  money  belonging  in  part  to  the  minority,  that  no 
one  would  contend  that  the  corporation  should  have  the  right 
to  vote  in  respect  of  the  purchased  shares.'  Even  if  the  purchased 
shares  be  treated  as  extinguished,  the  change  in  the  relative 
position  of  the  majority  and  minority  shareholders,  although  less 
in  degree,  is  the  same  in  kind.  For  example,  suppose,  as  may 
well  be  the  case,  the  directors  of  a  corporation  own  between  them 
forty-nine  per  cent  of  the  company's  capital  —  say,  forty-nine 
out  of  a  total  one  hundred  shares.  If,  now,  they  can  with  the 
company's  money  purchase  for  the  corporation  three  more  shares, 
their  forty-nine  shares,  formerly  a  minority  of  the  total  capital, 
are  converted  into  a  majority.  Prior  to  the  purchase,  the  directors 
might  have  been  ousted  from  control  of  the  company  by  a 
combination  of  all  the  other  shareholders;  after  the  purchase, 
any  such  combination  would  be  futile.  Can  it  be  that  those  in 
control  of  a  corporation  can  be  allowed  thus  to  intrench  them- 

'  Sec  infra,  §  1233. 
515 


§  G27  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.    XI 

selves  in  power  with  money  of  the  company  —  money  belonging 
in  part  to  the  minority  shareholders  ?  ^  Even  where  the  purchase 
of  shares  by  the  corporation  does  not  have  the  effect  of  convert- 
ing those  temporarily  in  control  from  a  minority  into  a  majority, 
yet  it  does  necessarily  always  result  in  increasing  the  relative 
strength  of  the  large  holders.  For  all  these  reasons,  it  is  sub- 
mitted that  no  corporation  should  be  held  to  have  implied  power 
to  purchase  its  own  shares. 

§  627.  English  Authorities.  —  The  English  law  is  now  settled 
in  accordance  with  the  principles  set  out  in  the  last  paragraph. 
Soon  after  the  passage  of  the  Companies  Act  of  18G2,  it  was  held 
that  a  company  could  not  purchase  its  own  shares  unless  power 
so  to  do  was  reserved  in  the  memorandum  or  articles  of  associa- 
tion.' Afterwards,  the  lower  courts  fell  into  the  error  of  holding 
that  where  such  a  powder  was  contained  in  the  articles  of  associa- 
tion, the  purchase  might  lawfully  be  made ;  ^  but  the  House  of 
Lords  in  Trevor  v.  Whitworth  *  corrected  this  error  and  over- 
ruled these  cases.  The  broad  principle  laid  down  was  that  the 
purchase  by  a  company  of  its  own  shares  is  impliedly  forbidden 
by  the  Companies  Act,  so  that  even  if  the  memorandum  of  as- 
sociation or  incorporation  paper  contained  a  clause  purporting 
to  authorize  the  company  to  purchase  its  own  shares,  the  clause 
would  be  void.^ 

§  G28.  American  Authorities.  —  In  America,  many  courts  up- 
hold the  same  sound  and  wholesome  doctrine  as  the  English 
cases.^  But  it  must  be  conceded  that  a  somewhat  larger  number 
of  the  American  courts  have  taken  the  view  that  a  corporation 

*  "Can  it  be  contended  that  when  ^  Trevor  v.  Whitworth,  12  A.  C. 
the  policy  of  directors  is  assailed  they  409,  436-437  (semble,  per  Lord 
may  spend  the  capital  of  the  com-    Macnaghten). 

pany  in  keeping  themselves  in  power,  *  Maryland  Trust  Co.  v.  National 

or  in  purchasing  the  retirement  of  Mechanics  Bank,   102  Md.  608;    63 

inquisitive  and  troublesome  critics?"  Atl.    70    (a   very   forcible   opinion); 

Per  Lord  Macnaghten,  in  Trevor  v.  Cartwright   v.   Dickenson,   88   Tenn. 

Whitworth,  12  A.  C.  409,  435.  476;   12  S.  W.  1030;   17  Am.  St.  Rep. 

^  Hope  V.  International  Financial  910;    7  L.  R,.  A.   706;    Crandall  v. 

Society,  4  Ch.  D.  327.  Lincoln,  52  Conn.  73  (but  see  p.  100); 

^  bronfield  Silkstone  Coal  Co.,  17  52    Am.    Rep.    560;    Percy  v.   Mil- 

Ch.   D.   76;     Taylor  v.   PUsen  Joel  Zaudon,  3  La.  568,  580-589  (headnote 

Electric  Light  Co.,  27  Ch.   D.   268;  inadequate);  State  v.  Franklin  Bank, 

Teasdale's  Case,  9  Ch.  54.  10  Oh.  St.  91,  97-98  (semble);  Bed- 

*  Trevor  v.  Whitworth,  12  A.  C.  ford  R.  R.  Co.  v.  Bowser,  48  Pa.  St. 
409  29;     Bank  of  San   Luis  Obispo   v. 

516 


§  374- §  077]  UXAUTIIOHIZED    REDUCTION 


028 


may  without  express  statutory  authority  purchase  its  own  shares, 
provided  the  purchase  is  entered  into  bona  fide  and  does  not 
endanger  the  claims  of  creditors.'  It  should  be  observed  that 
the  American  cases  which  agree  with  the  English  doctrine  are 
often  well-considered  and  fully  reasoned,  whereas  those  which 
uphold  the  contrary  view  generally  lack  any  extended  examina- 
tion of  the  subject ;  and  furthermore  the  English  rule  is  supported 
by  the  weight  of  Mr.   Morawetz's  opinion.-     Even   where  a 


Wickersham,  99  Cal.  655,  661;  34 
Pac.  444;  State  v.  Oberlin  Bldg.,  etc. 
Ass'n,  35  Oh.  St.  258,  263  (headnote 
inadequate);  German  Savings  Bank 
V.  Wuljekuhler,  19  Kan.  60;  Abeles 
V.  Cochran,  22  Kan.  405,  411;  31 
Am.  Rep.  194;  Coppin  v.  Greenlees, 
etc.  Co.,  38  Oh.  St.  275;  43  Am.  Rep. 
425;  St.  Louis  Mfg.  Co.  v.  Hilbert, 
24  Mo.  App.  338;  Barton  v.  Port 
Jackson,  etc.  Plant  Road  Co.,  17 
Barb.  (N.  Y.)  397;  St.  Louis  Raw- 
hide Co.  V.  HUl,  72  Mo.  App.  142 
(semble);  Tait  v.  Pigott,  38  Wash. 
59;  80  Pac.  172;  Burrows  v.  Xi- 
black,  84  P'ed.  111,113-114  (semble) ; 
28  C.  C.  A.  130;  Walters  v.  Porter 
(Ga.),  59  S.  E.  452. 

Cf.  Currier  v.  Lebanon  Slate  Co., 
56  N.  H.  262;  Coleman  v.  Columbia 
Oil  Co.,  51  Pa.  St.  74 ;  United  Society 
V.  Eagle  Bank,  7  Conn.  456;  Clark 
V.  Clark  Co.  (Mich.),  115  N.  W.  416. 

'  Shoemaker  v.  Washburn  Lumber 
Co.,  97  Wise.  585;  73  X.  W.  333; 
Cooper  V.  Frederick,  9  Ala.  738; 
Hartridge  v.  Rockwell,  R.  M.  Charlt. 
(Ga.)  260  (semble);  Western  Imp. 
Co.  V.  Des  Moines  Nat.  Bank,  103 
Iowa  455,  462;  72N.  W.  657;  Glenn 
V.  Hatchett,  91  Ala.  316;  8  So.  656; 
Republic  Life  Ins.  Co.  v.  Swigert,  135 
111.  150;  25  N.  E.  680;  12  L.  R.  A. 
328;  Howe  Grain  &  Mercantile  Co. 
V.  Jones,  21  Tex.  Civ.  App.  198;  51 
S.  W.  24 ;  Iowa  Lumber  Co.  v.  Foster, 
49  Iowa  25;  31  Am.  Rep.  140;  Rol- 
lins V.  Shaver  Wagon  Co.,  80  Iowa 
380;  45  N.  W.  1037;  20  Am.  St. 
Rep.  427 ;  Dock  v.  Schlichter,  etc.  Co., 
167  Pa.  St.  370;  31  Atl.  656;  Bla- 
lock  V.   Kernsville  Mfg.  Co.,  110  N. 


Car.  99;  14  S.  E.  501;  Dupee  v. 
Boston  Water  Power  Co.,  114  Ma.ss. 
37;  New  England  Trust  Co.  v.  Ab- 
bott, 162  Ma.ss.  148;  38  N.  E.  432; 
27  L.  R.  A.  271 ;  Farmers',  etc.  Bank 
V.  Champlain,  18  Vt.  131,  138-139 
(holding  that  the  purchase  makes 
the  vendor  a  competent  witness  at 
common  law  in  a  suit  to  which  the 
company  is  party) ;  Chicago,  etc. 
R.  R.  Co.  V.  Marseilles,  84  111.  145; 
Taylor  v.  Miami  Exporting  Co.,  6 
Ohio  176;  First  Nat.  Bank  v.  Salem 
Capital,  etc.  Co.,  39  Fed.  89;  Leonard 
V.  Draper,  187  Mass.  536;  73  N.  E". 
644 ;  Burnes  v.  Burnes,  137  Fed.  781 ; 
70  C.  C.  A.  357 ;  Porter  v.  Plymouth 
Gold  Mining  Co.,  29  Mont.  347;  74 
Pac.  938;  101  Am.  St.  Rep.  569 
(where  a  statute  expressly  prohib- 
ited the  company  from  reducing 
its  capital  stock) ;  Fremont  Carriage 
Mfg.  Co.  V.  Thomsen,  91  N.  W.  376; 
65  Nebr.  370;  Marvin  v.  Anderson, 
111  Wise.  387,  391;  87  N.  W.  226; 
Vrooman  v.  Vansant  Lumber  Co.,  64 
Atl.  394;  215  Pa.  St.  75;  United 
States  Mineral  Co.  v.  Camden  (Va.), 
56  S.  E.  561. 

Cf.  City  Bank  v.  Bruce,  17  N.  Y. 
507,  511  (headnote  misleading); 
Jones  v.  Morrison,  31  Minn.  140; 
16  N.  W.  854 ;  Barto  v.  A'i.T,  15  Wash. 
563,  568;  46  Pac.  1033;  Yeaton  v. 
Eagle  Oil.  etc.  Co.,  4  Wash.  183;  29 
Pac.  1051  (as  to  presumption  in 
respect  to  foreign  law). 

^  1  Morawetz  on  Priv.  Corps.,  2d 
ed.,  §  112-§  113.  Judge  Thompson 
seems  to  have  been  of  the  .same 
opinion:  2  Thompson's  Comm.  on 
Corps.,  §  2054. 


517 


§  628  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

statute  expressly  forbade  the  company  to  "  divide,  withdraw,  or 
in  anv  wav  pay  to  the  stockholders  or  any  of  them  any  part  of  the 
capital  ...  or  reduce  its  capital  stock  except  as  authorized  by 
law,"  with  a  proviso  allowing  the  company  to  accept  its  own 
shares  in  settlement  of  a  bad  or  doubtful  debt,  a  federal  judge 
held  that  the  company,  if  at  the  time  not  insolvent,  might  with 
the  assent  of  all  its  shareholders  purchase  a  majority  of  its  own 
shares.^  In  some  states,  notably  in  New  Jersey,  the  statutes 
expressly  authorize  corporations  to  purchase  shares  of  their  own 
capital  stock ;  ^  but  even  these  statutes  apply  only  where  the 
purchase  is  for  a  "legitimate  corporate  purpose"  and  do  not 
justify  the  surrender  of  stock  to  the  company  as  "treasury  stock" 
in  pursuance  of  an  illegal  scheme  for  the  issue  of  shares  in  ex- 
change for  property  of  less  value  than  the  nominal  value  of  the 
shares.^  If  the  purchase  is  directly  injurious  to  the  company's 
creditors,  —  for  example,  if  the  company  is  insolvent,  —  all  the 
courts  agree  that  it  may  be  set  aside,*  even  though  the  shareholder 
made  the  contract  of  sale  in  good  faith  without  knowledge  of  the 
facts  concerning  the  company's  financial  condition  which  ren- 
dered the  sale  prejudicial  to  creditors  of  the  company.^     Some 

»  Castle  Braid  Co.,  145  Fed.  224.  Hall  v.  Henderson,  126  Ala.  449;   28 

2  Chapmnn  V.  Iron  Clad  Rheostat  So.  531;  85  Am.  St.  Rep.  53;  61 
Co  62  N.  J.  Law  497;  41  Atl.  L.  R.  A.  621;  Farnesworth  v.  Roh- 
€9o'.  hins,  38  Minn.  369;    31  N.  W.  349; 

Cf.   Hamor  v.   Taylor-Rice   Engi-  S.  P.  Smith  Lumber  Co.,   132  Fed. 

neering  Co.,  84  Fed.  392,  399  (where  618  (proof  on  note  given  in  payment 

the   court   distinguished   between   a  for  stock  disallowed  in  bankruptcy) ; 

purchase   with   money   representing  State  v.  Bank  of  Ogolalla,  65  Nebr. 

capital  and  a  purchase  with  accumu-  20;    90N.  W.  961;    91  N.  W.  497; 

lated  profits).  Obnstead  v.  Vance,  etc.  Co.,  196  111. 

3  Knickerbocker  Importation  Co.  236;  63N.  E.  634;  Hall  v.  Alabama, 
V.  State  Board  of  Assessors  (N.  J.),  65  etc.  Imp.  Co.,  39  So.  285;  143  Ala. 
Atl.  913.  464;   Alabama,  etc.  Imp.  Co.  v.  Hall 

*  Clapp  v.  Peterson,  104  111.  26;  (Ala.),  44  So.  592  (holding  the  trans- 

Heggie   v.    People's    Bldg.    &   Loan  action    bad    as  against    subsequent 

Ass'n,  107  N.  Car.  581,  595-596;    12  creditors  without  notice). 
S.  E.  275;  Adams,etc.Co.v.  Deyette,  Cf.   Payne    v.   Bullard,   23    Mi.ss. 

5  S.  Dak.  418,  424-426;    59  N.  W.  88;  55  Am.  Dec.  74;  United  Society 

214;  49  Am.  St.  Rep.  887;  Colum-  v.  Eaijle  Bank,  7  Conn.  456;   Tait  v. 

hian  Bank's  Estate,  147  Pa.  St.  422;  Pigott,  32  Wash.  344;    73  Pac.  364; 

23    Atl.    625,    626,    628;    Carter    v.  Van  Brocklin  v.  Queen  City  Printing 

Union   Printing   Co.,   54   Ark.    576  Co.,   53    Pac.    822;     19   Wash.    552 

(headnote   misleading) ;     16    S.    W.  (where  claim  of  vendor  for  purchase 

579;    Hamor    v.    Taylor-Rice    Engi-  money  was  postponed  to  claims  of 

neering  Co.,  84  Fed.  392;   Currier  v.  other  creditors  of  the  company). 
Lebanon  Slate  Co.,   56  N.   H.   262;         ^  Commercial  Nat.  Bank  v.  Burch, 

518 


I  574-§  677]  uNAUTnoRizED  reduction  §  031 

autliorities,  while  conceding  tluit  tlie  purchase  is  not  ^dtra  vires, 
maintain  that  any  shareholder  may  object  and  enjoin  the 
purchase.' 

§  ()29.  Purchase  on  Credit  or  with  Borrowed  Money  —  Issue  of 
Bonds  in  Exchange.  —  Wiiere  a  cor[)orati()n  has  power  to  pur- 
chase its  own  shares,  it  may  buy  them  on  credit  -  or  may  borrow 
money  on  mortgage  or  otherwise  —  for  example,  may  issue 
mortgage  bonds  —  to  pay  for  them.^  An  issue  of  bonds  in  ex- 
change for  shares  is  in  effect  a  purchase  of  shares  with  borrowed 
money,  and  bv  parity  of  reasoning  must  be  sustained.* 

§  630.  Purchase  by  Person  Secretly  Acting  as  Agent  for  Com- 
pany. —  Even  where  a  purchase  of  shares  by  or  on  behalf  of  the 
corporation  is  forbidden  by  law,  a  transfer  of  shares  cannot  be 
annulled  because,  unknown  to  the  transferor  at  the  time  of  the 
contract  of  sale,  the  transferee  was  acting  as  trustee  for  the 
company.^ 

§  631-§  632.     Ejject  of  Purchase  where  a  Purchase  is  deemed 

Illegal. 

§  631.  In  general.  —  Where  it  is  held  illegal  for  a  corpora- 
tion to  purchase  its  own  shares,  such  a  purchase  even  if  fully 
consummated  by  transfer  of  the  shares  and  payment  of  the  pur- 
chase price  may  be  repudiated  and  treated  as  void."  Hence, 
the  purchase  money  or  consideration  may  be  recovered  back  by 
the  company  or  its  receiver.^    If  the  purchase  money  was  paid 

141  111.  519;   31  N.  E.  420;   33  Am.         *  See  cases  cited  supra,  n.  3. 
St.  Rep.  331.  *  Johnston  v.   Laflin,   103   U.   S. 

1  Lowe  V.  Pioneer  Threshing  Co.,  800;  Crandall  v.  Lincoln,  .52  Conn. 
70  Fed.  646.  73,    104-105   (but  cf.   pp.    103-104, 

2  Blalock  V.  Kernsville  Mfg.  Co.,  the  ca.se  of  Eldridge),  105-108  (the 
110  N.  Car.  99;  14  S.  E.  501.  Cf.  case  of  Keigwin  &  Reynolds);  52 
Cas^Zefiraid  Co.,  145  Fed.  224  (where  Am.  Rep.  560;  Corn  v.  Skillern 
the    vendor    was  allowed  to    prove  (Ark.),  87  S.  W.  142. 

against    the    company's    estate    in         '^  But  see  Joseph  v.  Raff,  82  N.  Y. 

bankruptcy  for  the  amount  of  the  App.  Div.  47;    81  N.  Y.  Supp.  546, 

purchase  price).  affirmed  short,   176  N.  Y.  611;    68 

3  Berger  v.  U.  S.  Steel  Corp.,  63  N.  E.  1118  (where  the  company  was 
N.  J.  Eq.  809;  53  .\tl.  68;  First  Xat.  said  to  be  estopped  from  questioning 
Bank  v.  Salem  Capital,  etc.  Co.,  39  the  transaction,  because  the  status  in 
Fed.  89;   Hoskins  v.  Seaside  Ice,  etc.  quo  could  not  be  restored). 

Co.  (N.  J.),  59  Atl.  645.  '  Crandall  v.   Lincoln,   52  Conn. 

But  cf.  Coquard  v.  St.  Louis  Cot-  73;  52  Am.  Rep.  560;  Percy  v.  Mil- 
ton, etc.  Co.,  7  S.  W.  Rep.  176  (Mo.),    laudon,  3  La.  568,  580-589  (headnote 

519 


§  631  INCREASE    AXD    REDUCTION    OF    CAPITAL       [ChAP.  XI 

to  an  executor,  it  may  be  recovered  back  from  the  administrator 
dc  bonis  non.^  The  fact  that  the  vendor  did  not  know  who  the 
purchaser  was  in  no  respect  affects  his  habihty  to  return  the 
purchase  money.^  If,  however,  a  shareholder  sells  to  another 
individual  who  unknown  to  him  is  acting  as  agent  or  trustee  for 
the  company,  the  agent  or  trustee  is  liable  to  refund  the  amount 
of  the  purchase  money  to  the  corporation,  but  the  innocent 
vendor  is  not.^  In  all  these  cases,  where  a  recovery  of  the  pur- 
chase money  is  sought,  the  remedy  is,  at  least  according  to  a 
Connecticut  decision,  in  equity  as  well  as  at  law.*  A  fortiori,  if 
the  consideration  remains  unpaid,  it  cannot  be  recovered  from 
the  company.^  If  the  shares  sold  to  the  company  were  not  fully 
paid,  the  vendor  remains  liable  upon  them  as  if  no  sale  had  been 
made,^  and  moreover  will  be  subject  to  any  statutory  liability  in 


inadequate);  St.  Louis  Mfg.  Co.  v. 
Hubert,  24  Mo.  App.  338;  Burrows 
V.  Xihlack,  84  Fed.  Ill;  28  C.  C.  A. 
130  (holding  that  the  action  may  be 
maintained  without  tendering  back 
the  stock). 

Cf.  Bank  of  San  Luis  Obispo  v. 
Wickershayn,  99  Cal.  655;  34  Pac. 
444;  Sanderson  v.  ^tna  Iron,  etc. 
Co.,  34  Oh.  St.  442;  Hall  v.  Hender- 
son, 126  Ala.  449;  28  So.  531;  85 
Am.  St.  Rep.  53;  61  L.  R.  A.  621; 
Tait  V.  Pigott,  32  Wash.  344;  State 
V.  Bank  of  Ogolalla,  65  Nebr.  20;  90 
N.  W.  961 ;   91  N.  W.  497. 

'  Crandall  v.  Lincoln,  52  Conn. 
73,  102-103;  52  Am.  Rep.  560  (the 
case  of  Tracy's  Estate). 

Cf.  Tait  V.  Pigott,  38  Wash.  59; 
80  Pac.  172. 

^  Crandall  v.  Lincoln,  52  Conn.  73, 
103-104;  52  Am.  Rep.  560.  Cf.  Tait 
V.  Pigott,  38  Wash.  59;  80  Pac.  172. 

3  Crandall  v.  Lincoln,  52  Conn. 
73,  104-105  (but  cf.  pp.  103-104,  the 
case  of  Eldridge),  105-108  (the  case 
of  Keigwin  &  Reynolds);  52  Am. 
Rep.  560. 

See  also  supra,  §  630. 

Cf.  Hall  V.  Henderson,  126  Ala. 
449;  28  So.  531;  85  Am.  St.  Rep. 
53;  61  L.  R.  A.  621 ;  Falls  City  Tin- 
ware Co.'s  Trustee  v.  Levine  (Ky.), 
104  S.  W.  716. 


*  Crandall  v.  Lincoln,  52  Conn, 
73,  108-110;   52  Am.  Rep.  560. 

^  Hamor  v.  Taylor-Rice  Engi- 
neering Co.,  84  Fed.  392;  State  v. 
Bank  of  Ogolalla,  65  Nebr.  20;  90 
N.  W.  961;   91  N.  W.  497. 

But  see  Chapman  v.  Iron  Clad 
Rheostat  Co.,  62  N.  J.  Law  497,  499; 
41  Atl.  690  (where  the  court,  after 
deciding  that  the  purchase  was  au- 
thorized by  statute,  declared  that  if 
it  had  not  been  authorized,  the  share- 
holder having  fully  performed  on  his 
part  would  have  been  entitled  to 
enforce  the  idtra  vires  contract 
against  the  company). 

"  Carter  v.  Union  Printing  Co., 
54  Ark.  576  (headnote  misleading); 
16  S.  W.  579;  Mann  v.  Pentz,  2 
Sandf.  Ch.  (N.  Y.)  257;  Vale  of 
Neath  &  South  Wales  Brewery  Co., 
3  De  G.  &  Sm.  96  (where  the  pur- 
chase was  made  by  an  agent  known 
to  be  acting  on  the  company's  be- 
half and  where  the  transfer  remained 
unquestioned  for  years). 

Cf.  Colonial  Investment  &  Agency 
Co.,  19  Vict.  L.  R.  381  (where  the 
argument  was  advanced  in  vain  that 
the  company  itself  had  paid  the 
amount  due  on  the  shares  so  that 
they  should  be  deemed  fully  paid). 


520 


§  574-§  677]  UNAUTHORIZED    REDUCTION  §  032 

favor  of  creditors  —  even  subsequent  creditors.'  If  the  vendor, 
being  i<^nor;int  that  the  company  is  the  real  purchaser,  execute 
a  transfer  in  hhuik,  and  if  the  transfer  is  not  registered,  he  remains 
liable  as  shareholder.-  The  transferor,  even  after  the  lapse  of 
years,  may  compel  the  company  to  recognize  him  as  shareholder 
and  restore  his  name  to  the  register  in  respect  of  the  surrendered 
shares.^  A  shareholder  who  made  no  objection  to  the  purchase 
of  shares  by  the  company  and  who  afterwards  sells  some  of  his 
shares  to  a  third  person  caimot  be  heard  to  allege  that  the  pur- 
chase by  the  company  was  tdtra  vires  and  that  therefore  the 
shares  purchased  enured  to  the  benefit  of  the  then  shareholders 
in  proportion  to  their  holdings,  instead  of  becoming  corporate 
property  distributable  as  dividends  among  those  who  are  share- 
holders when  the  dividend  is  declared ;  for  if  the  purchase  was 
void  the  title  never  passed  from  the  company's  vendor  and  the 
complaining  shareholder  is  out  of  court.^ 

§  632.  Purchase  by  Company  followed  by  Reissue  to  another 
Person.  —  If  shares  are  purchased  by  the  corporation  and 
subsequently  reissued  to  another  person,  the  two  transactions 
when  consummated  may  sometimes  be  deemed  equivalent  to 
a  transfer  from  the  vendor  to  the  second  allottee  and  therefore 
effective;  and  this  is  true  even  though  the  purchase  by  the 
company  was  illegal.^  So,  where  a  corporation  in  defiance  of 
law  lends  money  on  the  security  of  shares  in  its  own  capital  and 
upon  default  in  payment  of  the  debt  sells  the  shares,  the  pledgor 

'  Chrisman-Sawyer   Banking  Co.  issuing  but  that  intention  was  not 

V.   Independence  Wool  Mfg.  Co.,  68  carried  out);   Weidenf eld  v.  Northern 

S.  W.   1026;    168  Mo.  634;    Walters  Pac.    Ry.    Co..    129    Fed.    305;     63 

V.  Porter  (Ga.),  59  S.  E.  452.  C.  C.  A.  537;  Lantry  v.  Wallace.  182 

«  Weedon's   Case,  22  Vict.  L.  R.  U.  S.  536,  551-556;  21  Sup.  Ct.  878; 

235   (distinguishing  Nicol's  Case,  3  First  Xat.  Bank  v.  Peoria  Watch  Co., 

De  G.  &  .1.  387,  where  the  tran.sfer  191  111.  128;  60  N.  E.  8.59  (where  the 

was  nominally  to  a  definite  person  purchase  by  the  company  wa.s  held 

and  not  in  blank).  legal). 

^  Bellerhy  v.  Rowland,  etc.  S.  S.  As  to  whether  the  shares  in  the 

Co.  (1902),  2  Ch.  14.  hands  of  the  second  allottee  shall 

*  Coleman  v.  Columbia  Oil  Co.,  be  deemed  fully  paid  or  not,  see 
51  Pa.  St.  74.  Belknap  v.  Adams,  49  La.  Ann.  1350; 

*  See  supra,  §  868.  22  So.  382;   WaUace  v.  Hood,  89  Fed. 
Cf.  Joseph  V.  Raff.  82  N.  Y.  App.     11.    Cf.  Ailing  v.  Wenzel,  133  111.  264, 

Div.  47;  81  N.  Y.  Supp.  546,  affirmed    275-276;    24  N.  E.  551;    First  Xat. 
short  in  176  N.  Y.  611;    68  N.  E.    Bank  v.  Peoria  Watch  Co.,  191  111. 
1118  (where  the  purcha.se  was  made    128;   60  N.  E.  859. 
with  the  intent  of  immediately  re- 

621 


§  633  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

cannot  recover  the  purchase  money  from  the  company.'  The 
illegal  character  of  a  company's  purchase  of  its  own  shares  does 
not  make  the  purchased  shares  public  property  or  justify  any 
officer  of  the  corporation  in  appropriating  them  to  his  own  use.^ 
Thus,  where  shares  are  purchased  with  funds  of  the  company 
itself,  a  director  without  authority  from  the  corporation  has  no 
right  to  issue  them  to  himself;  and  if  he  do  so,  the  company 
may  enjoin  him  from  transferring  or  voting  in  respect  of  them.' 


§  633.  EfEect  of  Purchase  where  a  Purchase  is  deemed  lawful. 
—  The  effect  of  a  lawful  purchase  or  other  acquisition  by  a 
corporation  of  its  own  shares  is  that  the  shares  so  purchased  or 
acquired  are  suspended  or  temporarily  merged  or  extinguished.* 
Certainly,  the  other  shareholders  do  not  become  individually 
liable  pro  rata  for  the  amount,  if  any,  remaining  unpaid  upon 
the  purchased  shares.^  The  purchased  shares  may,  however, 
be  reissued  in  the  same  manner  as  shares  of  the  originally 
authorized  capital  which  have  never  been  subscribed  for  or 
issued."    The  terms  of  the  contract  of  reissue  may  be  such  that 

ing  that  shares  surrendered  to  or 
purchased  by  the  corporation  are  to 
be  treated  as  outstanding  for  the  pur- 
pose of  ascertaining  the  amount  of 
the  capital  by  wliich  the  company's 
francliise  tax  is  gauged,  until  retired 
and  cancelled  under  formal  proceed- 
ings for  the  reduction  of  capital) ; 
Pabst  V.  Goodrich  (Wise),  113  N.  W. 
398  (holding  that  for  the  purpose  of 
calculating  the  number  of  shares 
necessary  to  satisfy  a  bequest  of 
such  number  of  shares  as  represent 
a  book  value  of  $1,000,000,  shares 
which  have  been  lawfully  purchased 
by  the  company  should  be  treated 
as  still  outstanding). 

As  to  voting  rights  of  such  shares 
see  infra,  §  1233. 

*  Crawford  v.  Roney  (Ga.),  55 
S.  E.  499. 

*  Williams  v.  Savage  Mfg.  Co.,  3 
Md.  Ch.  418,  451-453;  State  Bank  of 
Ohio  v.  Fox,  3  Blatchf.  431;  Hart- 
ridge  v.  Rockwell,  R.  M.  Charlt.  (Ga.) 


'  National  Bank  of  Xenia  v. 
Stewart,  107  U.  S.  676;  2  Sup.  Ct. 
778. 

2  Of.  Walden  Xat.  Bank  v.  Birch, 
14L.  R.  A.  211;  130N.  Y.  221;  29 
N.  E.  127  (holding  that  sureties  of 
national  bank  cashier  in  whose  name 
shares  of  the  bank's  stock  are  regis- 
tered as  security  for  a  loan  made  by 
the  bank  to  the  real  owner,  notwith- 
standing the  Act  of  Congress  which 
prohibits  national  banks  from  lend- 
ing money  on  the  security  of  their 
own  stock,  are  liable  for  the  conver- 
sion of  the  stock  to  his  own  use  by 
the  cashier). 

^  Dacovich  v.  Canizas  (Ala.),  44 
So.  473. 

*  Williams  v.  Savage  Mfg.  Co.,  3 
Md.  Ch.  418,  451^53  (semble). 

Cf.  Western  Imp.  Co.  v.  Des 
Moines  Nat.  Bank,  103  Iowa  455, 
462-463;  72  N.  W.  657;  Knicker- 
bocker Importation  Co.  v.  State  Board 
of  Assessors  (N.  J.),  65  Atl.  913  (hold- 


522 


§  574-§  G77]  UNAUTHORIZED    REDUCTION  §  635 

the  purchasers  will  be  entitled  to  dividends  on  the  shares  in 
question  even  before  the  reissue  is  fully  consummated.'  Never- 
theless, the  purchased  shares  are  not  deemed  property  of  the 
corporation,  and  hence  do  not  pass  by  a  sale  of  all  its  property, 
rif^hts,  and  franchises  except  the  franchise  to  be  a  corjjoration 
and  to  carry  on  business.- 


§  634-§  G41.       ACQUISITK)N    BY    COMPANY    OF    ITS    OWN    SHARES 
OTHERWISE   THAN    BY    PURCHASE. 

§  634.  Whether  Permissible  —  In  general.  —  While,  according 
to  what  has  been  suljmitted  to  Ije  the  better  view,  a  corpora- 
tion has  no  implied  power  to  purchase  its  own  shares,  yet  not 
every  acquisition  by  a  corporation  of  shares  in  its  own  capital  is 
obnoxious  to  the  same  objection.  For  instance,  forfeiture  of 
shares  for  non-payment  of  calls  or  other  breaches  of  duty  on 
the  part  of  the  holders  is  permissible.^  ]\Ioreover,  in  certain 
cases  a  corporation  may  accept  a  surrender  of  shares.  In  what 
cases  this  may  be  done  consistently  with  sound  principle  shall 
be  our  next  inquiry. 


§  635-§  637.     Surrender  of  Shares. 

§  635.  In  general.  —  A  "surrender"  of  shares  founded 
upon  any  valuable  consideration  moving  from  the  company  to 
the  surrenderer  is  really  a  purchase,  and  is  liable  to  the  same 
objections  as  a  purchase  for  a  money  consideration.*  Conse- 
quently, a  so-called  gratuitous  surrender  of  shares  which  are  not 
fully  paid  up  is  really  a  surrender  in  consideration  of  a  release 
from  the  liability  attaching  to  the  shares,  and  therefore  likewise 

260 ;  Commonwealth  v.  Boston  &  Al-         '  Hartley  v.  Pioneer  Iron  Works, 

bany  R.   R.   Co.,   142  Mass.    146;   7  181  N.  Y.  73;   73  N.  E.  576. 
N.  E.  716;   Bank  of  San  Luis  Obispo         -  Tulare   Irrigation  Dist.   v.   Ka- 

V.  Wickersham,  99  Cal.  655;  34  Pac.  weak  Canal,  etc.  Co.,  44  Pac.  Rep. 

444  (where  the  purchase  of  the  sluares  662  (Cal.). 
was  ultra  vires) ;    State  ex  rel.  Page         ^  See  infra,  §  808. 
V.  Smith,  48  Vt.  266;    City  Bank  v.  ■•  Trevor  v.   Whitworth,   12  A.  C. 

Bruce,    17   N.    Y.    507;     Hartley   v.  409.  418,  438  (seinble). 
Pioneer  Iron  Works,  181  N.  Y.  73;         Cf.  Colville's  Case,  48  L.  J.  Ch. 

73  N.  E.  576;    Draper  v.  Blackwell,  633;     Wallscourt's  Case,   7   Manson 

35  So.  110;   13S  Ala.  182.  235;   Addison's  Case,  5  Ch.  294. 

523 


§  G36  INCREASE    AND    REDUCTION    OF    CAPITAL      [ChaP.  XI 

falls  within  the  ban  of  the  law/  A  gratuitous  surrender  of 
paid-up  shares  is  certainly  less  objectionable,  and  might  be 
held  legitimate.'-  So,  a  bequest  to  a  corporation  of  its  own  stock 
has  been  held  valid. ^  It  has  been  held  that  a  surrender  of  paid-up 
ordinary  shares  in  exchange  for  an  equivalent  amount  of  pre- 
ferred shares  is  valid ;  ^  but  this  decision  has  been  disapproved, 
perhaps  on  insufficient  grounds,  by  the  very  judge  by  whom  it 
was  rendered.^  A  surrender  of  shares,  whether  paid  up  or  not, 
coupled  with  a  reissue  of  the  same  to  other  persons  may  be 
supported  as  equivalent  to  a  transfer  from  the  surrenderer  to  the 
person  to  whom  they  are  reissued.*' 

§  636.  Surrender  of  Shares  which  are  liable  to  Forfeiture.  — 
There  is  no  legal  obstacle  to  the  acceptance  of  a  surrender  of 
shares  which  are  liable  to  forfeiture  for  non-payment  of  calls,^ 
provided  the  arrangement  is  not  a  mere  device  to  enable  the 
shareholders  to  retire :  ^  if  bona  fide,  it  merely  relieves  the  com- 
pany from  going  through  the  formalities  attendant  upon  a 
a  forfeiture  of  shares  hi  iuvitum.^ 

§  637.  Surrender  of  Shares  in  Compromise  of  Controversy  as  to 
VaUdity  of  their  Issue.  —  A  corporation  may  accept  a  sur- 
render of  certain  shares,  or  release  part  of  a  subscription,  in 

'  Bellerby  v.  Rowland,  etc.  S.  S.  Wash.    381 ;     Bellerby    v.    Rowland, 

Co.  (1902),  2  Ch.  14.  etc.  S.  S.  Co.  (1902),  2  Ch.  14  (where 

Cf.  Wcdker  v.  Hacking,  57  L.  T.  Cozens-Hardy,  L.  J.,  expressed  the 

763;    Ex  parte  Jones,  27  L.  J.  Ch.  opinion,  obiter,  that  a  gratuitous  sur- 

666;   Cooper  v.  Frederick,  9  Ala.  738  render  of  fully  paid  shares  would  be 

(where    the    transaction    was    held  idtra  vires). 

valid) ;    Bedford  R.  R.  Co.  v.  Bowser,         ^  Rivanna  Nav.  Co.  v.  Dawsons, 

48  Pa.  St.  29;   Glenn  v.  Hatchett,  91  3  Gratt.(Va.)  19. 
Ala.    316;     8    So.    656;     Ailing    v.         ■*  Eichhaum   v.    City   of   Chicago 

Wenzel,  133  111.  264;   24  N.  E.  551;  Grain  Elevators  (1891),  3  Ch.  459. 
Pacific  Fruit  Co.  v.  Coon,  107  Cal.  ^  Bellerby  v.  Rowland,  etc.  S.  S. 

447;   40  Pac.  542;   Payne  v.  Bidlard,  Co.  (1902),  2  Ch.  14,  29. 
23Miss.  88;  55Am.  Dec.  74;  /^flTOc.s-         "See    supra,    §  632    and    infra, 

worth  V.  Robhins,  36  Minn.  369;    31  §  868. 

N.  W.  349;  Chrisman-Sawyer  Bank-         ''  Trevor  v.   Whitworth,   12  A.  C. 

ing  Co.  v.  Independence  Wool  Mfg.  409,  438  (semble). 
Co.,  68  S.  W.    1026;     168  Mo.  634         Ci.  Hall's  Case,  5  Ch.lQl. 
(as  to  "treasury  stock");    Beacons-         *  Beaconsfield  Heights  Estate  Co., 

field  Heights  Estate  Co.,  22  Yict.L.R.  22  Vict.   L.  R.  97  (which  seems  to 

97.  overrule  silently  an  earlier  case  in 

^  Cf.   Wheeler  v.   Mineral  Farm,  the  same  state,  Melbourne  Locomo- 

etc.  Co.,  31  Colo.  110;  71  Pac.  1101;  tive  &  Engineering  Works,  21  Vict» 

Krisch  v.  Interstate  Fisheries  Co.,  81  L.  R.  442). 
Pac.  855  (headnote  inadequate) ;  39         "  Infra,  §  826. 

524 


§  574-§  G77]         ux.vuTiioRizKD  reuuctiox  §  038 

compromise  or  settlement  of  a  bona  fide  dispute  whether  the 
shares  were  validly  issued  so  as  to  bind  the  suixseriber;  and  that 
too  even  though  in  point  of  fact  the  issue  was  legal  and  regular.' 
A  fortiori,  the  surrender  is  good  where  the  issue  was  capable, 
legally,  of  being  upset  -'  but  where  the  surrenderer  claimed  to  be 
relieved  upon  some  ground  other  than  that  which  would  have 
entitled  him  to  repudiate  the  shares.^  If  the  issue  was  in  law 
valid,  such  a  surrender  while  effective  for  the  future  does  not 
relate  back  so  as  to  cancel  the  shares  ab  initio;  and  hence  the 
compromise  or  settlement  of  a  bona  fide  dispute  whether  the 
surrenderer  remains  subject  to  any  liabilities  attaching  to  past 
members  of  the  company.''  The  surrender  is  effective  although 
the  ground  on  which  the  surrenderer  repudiated  the  shares  was 
that  his  subscription  had  been  induced  by  fraud  or  misrepre- 
sentation and  although  the  surrender  is  not  accompanied  or 
followed  by  the  removal  of  his  name  from  the  register  of  mem- 
bers.^ In  order  that  a  surrender  by  way  of  compromise  may  be 
valid,  there  must  be  a  real,  bona  fide  dispute  as  to  whether  the 
shares  were  properly  issued."  ^loreover,  the  surrender  must  be 
actually  intended  as  a  compromise.^ 


§  038.  Acceptance  of  Shares  in  Satisfaction  of,  or  as  Secvirity  for, 
a  Debt  due  the  Company.  —  It  has  been  frequently  declared  that 
a  corporation  may  accept  from  one  of  its  shareholders  a  surrender 
of  his  shares  in  satisfaction  of  a  debt  that  could  be  collected  in 
no  other  way.*     Indeed,  there  seems  to  be  no  reported  case 

'  Bath's  Case,  8  Ch.  D.  334 ;  ^^ew  (subscription  to  shares  induced  by 

Albany  v.  Burke,  11  Wall.  96.  innocent  misrepresentation). 

Cf.  Morgan  v.  Lewis,  46  Oh.  St.  1  *  WrighVs  Case,  7  Ch.  55. 

(headnote   inadequate);     17   N.    E.         *  Bath's  Case,  8  Ch.  J).  33A. 
558;   Gelpclce  v.  Blake,  19  Iowa  263,         *  Fox's  Case,  5  Eq.  118. 
267-269;    Northrop  v.   Bushndl,  38         "  Esparto  Trading  Co.,  12  Ch.  D. 

Conn.    498,    511-512;     Whitaker    v.  191.    CL  Ex  parte  Jones,  27  L.  J.  Ch. 

Grumrnond,  68  Mich.  249;   36  N.  W.  666;   Gill  v.  Balis,  72  Mo.  424. 
62;      Berks    A    Dauphin    Turnpike         ''  Adam's  Case,  \3Y.q.A7  A  {Quaere: 

Road  V.  Myers,  6  Serg.  &  R.   (Pa.)  in  this  case  might  not  an  opposite  con- 

12;  9  Am.  Dec.  402;  State  v.  Oberlin  elusion  well  have  been  reached?). 
Bldg..   etc.   Ass'n,   35   Oh.    St.   258;  *  Crandall  v.   Lincoln,   52  Conn. 

Philadelphia,  etc.  R.  R.  Co.  v.  Hick-  73,  100;   52  Am.  Rep.  560  (semblc); 

man,  28  Pa.  St.  318,  328.  State  v.  Franklin  Bank.  10  Oh.  St. 

'  Finance   tt    Issue  v.   Canadian  91,  97  (semble);    Morgan  v.  Lewis, 

Produce  Corp.  (1905),  1  Ch.  37,  45  46  Oh.    St.    1,   6   (headnote   inade- 

525 


§  639  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

which  directly  supports  the  contrary  of  this  proposition.  More- 
over, a  corporation  may  generally  accept  its  own  shares  as 
collateral  security  for  an  advance  to  a  shareholder.^ 

§  639.  Acquisition  of  Shares  by  satisfying  Judgment  for  Con- 
verting them.  —  A  judgment  in  trover  against  the  corporation 
for  a  conversion  of  any  of  its  shares,  at  any  rate  if  followed 
by  satisfaction,  has  the  effect  of  vesting  the  title  to  the  converted 
shares  in  the  company;  but  that  circumstance  does  not  justify 
the  courts  in  refusing  justice  to  the  owner  of  the  converted 
shares.-  A  compulsory  purchase  is  effected.  If,  liowever,  the 
owner  of  the  converted  shares  instead  of  instituting  promptly 
an  action  for  the  conversion  lies  by  until  the  company  has  be- 
come insolvent,  he  will  not  be  permitted  to  escape  liability  as  a 
shareholder  on  the  ground  that  his  ownership  had  ceased  in 
consequence  of  the  conversion.'' 

§  640.  Acquisition  of  Shares  in  Pursuance  of  Terms  of  Original 
Issue  —  Redeemable  and  Convertible  Shares.  —  The  acquisition 
of  shares  by  a  corporation  in  pursuance  of  terms  of  their  original 
issue  would  certainly  seem  to  be  no  less  objectionable  than  if  the 
shares  had  been  originally  issued  absolutely.'*  Indeed,  such  ac- 
quisition would  be  in  effect  the  performance  of  a  condition  sub- 
sequent attached  to  a  subscription  to  shares  —  a  subject  which 
is  elsewhere  considered.^    Nevertheless,  some  courts  have  held 

quate);    17  N.  E.  558;   German  Sav~  some  other  incorporation  laws.     See 

ings  Bank  v.  Wulfekuhler,  19  Kan.  Bank  v.  Lanier,  11  Wall.  369,  and 

60;  Barto  v.  Xix,  15  Wash.  563,  568-  infra,  §  706  n. 

569;    46  Pac.  1033;    St.  Louis  Raw-  -  Ralston  v.   Bank  of  California, 

hide  Co.  v.  Hill,  72  Mo.  App.  142.  112  Cal.  208;   44  Pac.  476. 

Cf.  Sheffield  Nickel  Co.  v.  Unurin,  ^  Potts  v.  Wallace,  146  U.  S.  689; 

2  Q.  B.  D.  214;    Phosphate  of  Lime  13  Sup.  Ct.  196. 

Co.  V.  Green,  L.  R.  7  C.  P.  43;    Wil-  *  Olmstead  v.  Vance,  etc.  Co.,  196 

liams  V.  Savage  Mfg.  Co.,  3  Md.  Ch.  111.  236;   63  N.  E.  634. 

418,  451-452;    Citij  Bank  v.  Bruce,  Cf.  Davis  v.  Proprietors  of  Meet- 

17N.  Y.  507;   State  Bank  of  Ohio  v.  ing-House,    8    Mete.      (Mass.)    321 

Fox,    3     Blatchf.     431;      Ex    parte  (arising  in  a  state  where  a  corpora- 

Holmes,  5  Cow.  (N.  Y.)  426;    Taylor  tion  is  allov.-ed  to  purchase  its  own 

V.  Miami  Exporting  Co.,  6  Ohio  176;  shares). 

Draper   v.    Blackwell,    35    So.    110;  Pnit    see    contra:    Ophir   Consol. 

138  Ala.  182.  Mines  Co.    v.    Brynteson,    143   Fed. 

>  CL  Williams  \.  Savage  Mfg.  Co.,  829;    74   C.    C.   A.   625   (where    the 

3  Md.  Ch.  418,  451-452;  Ex  parte  company  was  expressly  prohibited 
Holmes,  5  Cow.  (N.  Y.)  426.  Such  by  statute  from  purchasing  its  own 
transactions  are  expressly  prohibited  stock). 

by  the  National  Banking  Act  and         «  Supra,  §  224-§  226. 

526 


§  574— §  077]         UNAUTHORIZED  reduction  §  G41 

that  even  wliere  the  corporation  is  expressly  prohil)ite(l  l)y  statute 
from  purcliasiiig  its  own  shares,  a  provision  for  redemption  of 
the  shares  embodied  in  the  terms  of  the  original  issue  is  vahd 
and  enforceable.'  Indeed,  the  consensus  of  American  authority 
seems  to  be  that  unless  the  provision  for  redemption  is  kept 
secret  shares  may  be  issued  subject  to  a  stipulation  that  they 
may  be  l)ought  back  at  the  option  of  the  holder  -  or  of  the  cor- 
poration.' in  one  aspect,  a  stipulation  for  redemption  at  the 
option  of  the  shareholder  when  contained  in  a  contract  of  sub- 
scription to  shares  is  more  objectionable  than  a  contract  by  a 
corporation  to  piux'hase  shares  which  have  l)een  already  issued ; 
for  the  provision  for  redemption  may,  if  valid,  be  enforced 
against  the  company  even  after  the  company  has  become  insol- 
vent and  to  the  prejudice  of  its  creditors,  whereas  a  contract  of 
purchase  of  shares  is  valid  only  if  the  company  is  solvent  at  the 
time  of  the  purchase.  This  consideration  has  led  the  Supreme 
Court  of  Michigan  to  hold  that  the  provision  for  redemption  can- 
not be  availed  of  after  the  corporation  has  become  insolvent.'* 
But  it  would  seem  that  this  view  is  hardly  logical,  and  that  a 
better  view  is  that  the  stipulation  is  wholly  void.  Shares  con- 
vertible into  bonds  are  an  example  of  shares  issued  upon  a  con- 
dition subsequent  or  coupled  with  an  agi'eement  on  the  part  of 
the  company  to  buy  them  back  under  certain  contingencies.  It 
would  seem  clear  on  principle  that  such  convertible  shares  cannot 
be  issued  without  affirmative  statutory  authority. 

§  041.  Acquisition  by  Company  as  Trustee  for  Third  Person.  — 
Whether  a  corporation  formed  for  the  purpose  of  acting  as 
trustee  may  acquire  and  hold  shares  in  itself  as  trustee  for  third 
persons  is  a  rather  peculiar  question.  That  it  may  do  so  has 
been  held  in  lowa,^  but  as  the  courts  of  that  state  uphold  the 
power  of  a  corporation  to  purchase  its  own  shares,  this  case 
cannot  be  deemed    very   persuasive    authority   in  jurisdictions 

*  See  supra,  p.  526.  n.  4.  65  Nebr.  370;    United  States  Mineral 

=  Broione  v.  St.  Paid  Plow  Works,  Co.  v.  Camden  (Va.),  56  S.  E.  561. 

62  Minn.  90;   64  N.  W.  66;    Vent  v.  '  Hackett   v.    Northern   Pac.    Ry. 

Duluth  Coffee,  etc.  Co.,  64  Minn.  307;  Co.,  36  N.  Y.  Misc.  583;    73  N.  Y. 

67  N.  W.  70;    Wiscon.'iin  Lumber  Co.  Supp.  1087. 

V.  Greene,  127  Iowa  350;    101  N.  W.         *  Mclnt'jre  v.  E.   Bement's  Son^ 

742;     109   Am.    St.    Rep.   387;     69  (Mich.),  109  N.  W.  45. 

L.  R.  A.  968 ;    Fremont  Carriage  Co.  '"  State  ex  rel.  Higby  v.  Higby  Co. 

V.  Thomsen  (Nebr.),  91  N.  W.  376;  (Iowa),  100  N.  W.  382. 


§   G42  INCREASE    AXD    REDUCTION    OF    CAPITAL       [ChAP.   XI 

where  that  power  is  denied.  Nevertheless  it  should  be  observed 
that  the  acquisition  of  shares  as  a  mere  trustee  is  free  from 
many  if  not  all  of  the  objections  urged  above  to  the  power  of 
a  corporation  to  use  its  funds  in  purchasing  its  own  shares. 


§  642.  Release  of  Shareholder  from  Liability  for  unpaid  Sub- 
scriptions to  Capital.  —  A  release  of  a  shareholder  from  liability 
differs  from  a  surrender  of  the  shares  in  that  the  shares  still 
remain  outstanding  so  that  the  holder  continues  to  be  entitled 
to  all  the  rights  of  a  shareholder,  and  so  that  the  nominal  capital 
is  not  affected.'  If  the  release  is  made  upon  a  valuable  considera- 
tion moving  from  the  shareholder  to  the  company,  and  if  the 
consideration  is  honestly  deemed  by  the  corporation  equivalent 
in  value  to  a  discharge  of  the  shareholder's  liability  by  payment, 
the  transaction  operates  in  law  as  an  effective  discharge  of  the 
liability,  unless  some  statute  requires  payment  in  cash.  If,  how- 
ever, the  release  is  without  sufficient  consideration  ^  or  is  a  mere 
device  to  relieve  the  shareholder  from  his  legal  burdens,  the 
transaction  substantially  amounts  to  an  issue  of  the  shares  at 
a  discount,  and  is  open  to  the  same  legal  objections,  the  nature 
and  effect  of  which  will  be  considered  in  another  place,^  and 
indeed,  is  in  some  respects  even  more  objectionable,  since  it 
may  operate  as  a  voluntary  release  or  conveyance  of  a  valuable 
asset  and  hence  may  be  fraudulent  as  against  creditors  under 
the  statute  13  Elizabeth.*  If  a  bona  fide  dispute  exists  as 
to  whether  a  person  is  liable  as  shareholder,  a  compromise 
whereby  the  shareholder  pays  a  part  of  what  is  legally  due  and 
is  released  from  liability  for  the  balance  is  effective.^ 

*  A  surrender  of  partly  paid  acknowledged  to  be  due  is  on  ac- 
shares  followed  by  a  reissue  of  cepted  principles  of  law  no  legal  con- 
paid-up  shares  to  a  nominal  amount  sideration.  World's  Fair  Excursion 
equal  to  that  paid  in  on  the  sur-  Co.  v.  Gasch,  162  111.  402;  44  N.  E. 
rendered  shares  is  in  effect  a  pur-  724 ;  Northrop  v.  Bushnell,  38  Conn, 
chase  of  shares.  Cf.  Vrooman  v.  498. 
Vansant  Lumber  Co.  (Pa.),  64  Atl.  ^  Infra,  §  776  et  seq. 
394;  215  Pa.  St.  75  (where  the  Cf.  Osgood  v.  King,  42  Iowa 
transaction  was  upheld).  478. 

2  Sawyer  v.  Hoag,  17  Wall.  610,  ^  Cf.  Bouton  v.  Dement,  123  111. 

620  (semble).  142;    14  N.  E.  62. 

Cf.  Rider  v.  Morrison,  54  Md.  429.  ^  New  Haven  Trust  Co.  v.  Nelson, 

Payment  of  a  less  sum  than  is  73  Conn.  477;  47  Atl.  753;  Whitaker 

528 


§  o74-§  077]      REDUCTION    UNDER    ENABLING    STATUTES      §  644 


§  643-§  674.     REDUCTION    UNDER   STATUTORY 
AUTHORITY. 

§  643.  In  general  —  Authority  not  readily  implied.  —  By  stat- 
ute in  Enjijland  and  very  i^eneriilly  in  tlie  United  States,  tiie  re- 
duction of  capital  is,  in  some  cases  and  under  more  or  less 
stringent  safeguards,'  expressly  authorized.  No  such  power, 
however,  will  he  ordinarily  implied.  For  instance,  the  power 
cannot  be  implied  from  an  express  power  to  increa.se  the  capital 
ad  libitum,-  nor  is  it  conferred  by  a  general  power  to  make 
changes  in  the  incorporation  paper.^  Where  a  company  which 
is  incorporated  by  special  act  has  a  certain  autiiorized  capital, 
a  subsequent  amendatory  act  reducing  the  amount  has  been 
construed  as  an  enabling  'act  merely,  so  as  not  to  put  a  legal 
impediment  in  the  way  of  issuing  the  full  amount  of  capital 
previously  authorized.* 

§  644.  English  and  American  Statutes  compared.  —  The  Com- 
panies Act  of  1SG2,  although  it  authorized  increase  of  capital 
made  no  provision  for  reduction  of  capital.  This  omission  was 
supplied  by  the  Companies  Act  of  1867,  which  provided  that  any 
company  limited  by  shares  might  if  authorized  so  to  do  by  its 
regulations  as  originally  framed  or  as  altered  by  special  resolu- 

V.    Grummond,    68   Mich.    249;     36  tion  were  held  liable  to  make  good 

N.  W.  62.  amount  abstracted  from  the  corn- 
See  also  Bvipra,  §  637,  and  partic-  pany's  assets). 

ularly  cases  cited,  p.  525,  n.  1.      Cf.  A  shareholder  may  enjoin  a  re- 

Fuches  V.  Hamilton,  etc.  Pub.  Co.,  10  duction  of  capital  wliich  is  made  for 

Ont.    497    (where    a    so-called    con-  an  illegal  purpose  even  though  all 

promise  was  held  to  be  beyond  the  the  forms  of  law  be  complied  with. 

powers  of  the  directors).  Theis  v.  Durr,  125  Wise.  651;    104 

'  Cf.  American  Steel,  etc.  Co.  v.  N.  W.  985;    110  Am.  St.  Rep.  880; 

Eddy,  89  N.  W.  952;    130  Mich.  266  1  L.  R.  A.,  n.  s.,  571. 

(where  the  statute  made  the  share-         -  Sutherland  v.  Olcott,  95  N.  Y. 

holders  liable  to  creditors  who  might  93;  Peck  v.  Elliott,  79  Fed.  10,  15-16 

be    injured    by    the    reduction    of  (headnote  inadequate);   24  C.  C.  A. 

capital,  to  the  extent  of  the  sums  425;   38  L.  R.  A.  616;   Seignouret  v. 

refunded  to  them  respectively).  Home  Ins.  Co.,  24  Fed.  332. 

As  to  cases  where  creditors  are         ^  Seignouret  v.  Home  Ins.  Co.,  24 

prejudiced  by  a  reduction  under  the  Fed.  332  (headnote  inadequate). 

forms  of  law,  see  State  v.   Bank  of         Cf.  Smith  v.  Goldworthy,  4  Q.  B. 

Ogolalla,   65   Nebr.   20;    90  N.   W.  430,465-466. 

961;    91   N.  W.  497;    Alexander  v.         *  Agricultural   Branch  R.   R.   Co. 

Relfe,    74    Mo.    495    (where    share-  v.  Winchester,  13  Allen  (Mass.)  29. 

holders  participating  in  the  rcduc- 
VOL.  I.  — 34  529 


§  645  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

tion  so  far  alter  its  memorandum  of  association  "as  to  reduce  its 
capital."  ^  This  general  power  having  been  limited  by  a  narrow 
judicial  construction,-  the  Companies  Act  of  1877  was  promptly 
passed,  providing  that  the  general  power  conferred  by  the  Act 
of  1867  should  "include  a  power  to  cancel  any  lost  capital,  or 
any  capital  unrepresented  by  available  assets,  or  to  pay  off  any 
capital  which  may  be  in  excess  of  the  wants  of  the  company." 
This  act  is  not  to  be  construed  as  limiting  the  general  power 
conferred  by  the  act  of  1867  to  these  enumerated  cases.^  Under 
these  statutes,  where  the  proposed  reduction  involves  a  return 
of  paid-up  capital,  or  a  release  from  liability  to  calls,  the  credit- 
ors must  be  paid  or  secured,  or  must  assent;  and  in  all  cases  the 
reduction  must  be  confirmed  by  order  of  court.  The  court, 
however,  will  not  refuse  its  approv^|l  to  a  scheme  of  reduction 
which  is  neither  unjust  nor  oppressive,*  so  that  the  English  cases 
are  applicable  as  authorities  even  in  states  where  no  such  judicial 
sanction  is  required. 

The  American  statutes  differ  widely  among  themselves,  and 
from  the  British  law.  The  general  purposes,  however,  are  every- 
where the  same;  namely,  to  enable  a  company  whose  actual 
capital  is  greater  than  its  needs  to  distribute  the  surplus  among 
its  members,  and  to  enable  a  concern  whose  nominal  capital  for 
any  reason  is  not  represented  by  available  assets  to  write  off  the 
excess  of  its  nominal  over  its  actual  capital,  precautions  more  or 
less  adequate  always  being  prescribed  to  secure  the  rights  of 
creditors.  The  conceivable  means  by  which  these  results  may 
be  attained  are  various.  For  instance,  paid-up  capital  may  be 
distributed  pro  rata  among  the  shareholders  and  the  nominal 
value  of  their  shares  correspondingly  reduced ;  or  if  the  capital 
has  not  been  wholly  paid  in,  the  members  may  be  released  from 
liability  for  uncalled  capital.  Or,  again,  the  par  value  of  the 
shares  may  be  reduced  commensurately  with  a  loss  of  capital 
sustained  by  the  corporation ;  or  some  shares  may  be  cancelled. 

§  645.  Effect  of  Failiire  to  comply  with  statutory  Conditions.  — 
The  statutory  re(iuirements  in  respect  to  a  reduction  of  capital 
should  be  strictly  pursued,  as  any  irregularity  or  failure  to  com- 

1  Companies  Act,  1867,  §  9.  (1895),  1    Ch.    691,  698;    Hyderbad 

2  See  infra,  §  647.  Co.,  75  L.  T.  23  (semble). 

3  Poole  V.  National  Bank  of  Cf.  Poole  v.  National  Bank  of 
China  (1907),  A.  C.  229.  China  (1907),  A.  C.  229. 

*  In   re   Floating   Dock,   etc.    Co. 

530 


§  574    §  (177]       REDITTIOX    UNDER    EN'ABLIXf;    STATUTES      §  047 

ply  with  the  statutory  formalities  may  render  the  reduction  void.* 
Witliout  doubt,  where  a  company  has  power  to  reduce  its  capital 
by  resolution  recorded  in  the  same  manner  as  the  original  incor- 
poration j)aper,  the  act  of  a  bookkeeper  in  undertaking  to  write 
off  a  loss  of  capital,  not  sanctioned  by  any  resolution  of  the  share- 
holders or  directors  still  less  by  any  recorded  resolution,  does  not 
in  law  effect  any  reduction  of  capital.-  A  mere  irregularity  will 
not  ipso  facto  annul  the  company's  corporate  existence  '  altliougli 
it  might  perhaps  furnish  a  ground  for  quo  warranto  proceeding-> 
against  the  corporation.' 

§  G4().  Statutes  making  Certificate  of  Public  Official  conclusive 
Evidence  of  Regularity.  —  Statutes  are  sometimes  encountered 
which  provide  that  some  public  official  shall  scrutinize  any  pro- 
ceedings for  the  reduction  of  capital  and  that  his  determination 
in  favor  of  their  regularity  shall  be  final. ^  In  construing  a  pro- 
vision of  this  sort  contained  in  the  Companies  Act  of  1S67,  the 
English  Court  of  Appeal  held  that  the  officer's  certificate  of 
approval  of  the  reduction  precluded  an  attack  upon  the  valid- 
ity of  the  reduction  proceedings  based  upon  the  fact  that  an 
interval  of  fourteen  days  as  required  by  law  had  not  elapsed 
between  the  meetings  at  which  the  resolution  making  the  re- 
duction was  passed  and  the  meeting  at  which  it  was  confirmed, 
or  upon  the  fact  that  the  "special  resolution"  amending  the 
articles  so  as  to  authorize  the  reduction  —  a  necessary  prelimi- 
nary under  the  British  statute  to  a  reduction  of  capital  —  was 
invalid  for  a  similar  reason ; "  and  a  very  recent  case  goes  even 
further  and  holds  that  the  registrar's  certificate  was  conclusive 
although  no  resolution  of  any  kind  amending  the  articles  had 
been  passed.^ 

§  647.  Whether  statutory  Power  extends  to  all  Kinds  of  Reduc- 
tion—  i.  e.,  Cancellation  of  LiabiUty,  Return  of  paid-up  Capital,  and 
Reduction   of    Nominal   Capital.  —  On  principle,   it   would   seem 

'  But  see  Shoemaker  v.  Washburn         ^  Brown   v.    Wyandotte,    etc.    Ry. 

Lumber  Co.,  97  Wise.  585,  594;    73  Co.,  68  Ark.  134;   56  S.  W.  862. 
N.  W.  333.  ■•  See  supra,  §  157. 

^  Cunningham    v.    German    Ins.         *  As    to    similar    provisions    re- 

B'ank,  101  Fed.  977,  981;  41  C.  C.  A.  specting  an  increase  of  capital,  see 

609  (holding  that  the  amount  which  supra,  §  588. 

the  company  is  authorized  to  borrow         "  Ladies'  Dress  Ass'n  v.  Pulbrook 

must  be  determined  without  refer-  (1900),  2  Q.  B.  377. 
ence  to  the  writing  off  of  the  lost         "  Re  Walker  it  Smith,  88  L.  T. 

capital).  792. 

531 


§  648  INCRE.^E    AND    REDUCTION    OF    CAPITAL      [ChAP.  XI 

clear  that  a  power  to  reduce  capital  conferred  in  general  terms  by 
a  statute  authorizes  any  form  of  reduction  of  capital  —  that  is, 
either  a  cancellation  or  diminution  of  liability  for  unpaid  capital 
or  a  return  of  paid-up  capital  or  a  reduction  of  nominal  capital. 
That  is  to  say,  the  statutory  power  extends  to  all  three  of  these 
forms  of  reduction,  although  in  some  cases  as  will  be  explained 
in  detail  below  ^  a  reduction  of  nominal  capital  cannot  be  ac- 
complished without  an  accompanying  reduction  of  actual  capital 
either  by  cancellation  of  liability  or  by  return  of  paid-up  capital, 
and  vice  versa.  To  be  sure,  under  the  British  Companies  Act  of 
18G7,  it  was  reluctantly  held  by  Sir  George  Jessel  that  the  power 
to  reduce  capital,  although  conferred  in  general  terms,  did  not 
extend  to  a  reduction  of  nominal  capital  unaccompanied  by  a 
cancellation  of  liabiUty  for  unpaid  capital  or  to  any  reduction  of 
paid-up  capital,  and  hence  that  the  statute  did  not  authorize  a 
company  whose  capital  had  been  impaired  by  losses  to  reduce 
the  nominal  value  of  paid-up  shares; '  but  the  law  as  thus  an- 
nounced w^as  speedily  altered  by  Parliament,^  and  the  soundness 
of  the  decision  which  occasioned  the  passage  of  the  act  of  the 
legislature  has  been  so  often  questioned  by  English  judges  *  and 
text-writers  ^  that  the  authority  of  the  case  is,  to  say  the  least, 
seriously  impaired.  It  is  submitted  that  unless  the  wording  of 
a  statute  authorizing  a  reduction  of  capital  clearly  demands  so 
restricted  a  construction  as  that  of  Sir  George  Jessel,  the  more 
liberal  rule  now  expressly  enacted  into  law  in  Great  Britain 
should  be  adopted.  Indeed,  a  New  York  statute  authorizing 
reduction  of  capital  has  been  thought  to  apply  only  in  cases 
where  a  reduction  of  the  nominal,  so  as  to  correspond  with  the 
actual,  capital  is  sought,  so  that  a  return  of  paid-up  capital 
would  not  be  permissible.^ 

§  648.  Return  of  Actual  Capital  on  Footing  that  it  may  be 
called  up  again.  —  It  has  been  held  in  England  that  the  statutory 
power  of  reduction  of  capital  permits  actual  capital  to  be  returned 

'  Infra,  §  660-§  668.  British   &   American,   etc.   Corp.   v. 

'  Ebbw  Vale  Steel,  etc.  Co.,  4  Ch.  Couper  (1894),  A.  C.  399,  412. 

D.    827;     Kirkstall   Brewery   Co.,   5  Cf.    Poole   v.    National    Bank   of 

Ch.  D.  535.  China  (1907),  A.  C.  229. 

'  Companies  Act,  1877,  40  &  41  *  1      Palmer's     Company     Prec- 

Vict.,  c.  26.  edents,  9th  ed.,   1095-1096. 

*  Bannatyne    v.    Direct    Spani.^h  ^  Strong  v.  Brooklyn  Cross-Town 

Telegraph  Co.,  34  Ch.  D.  287,  302;  R.  R.  Co.,  93  N.  Y.  426. 

532 


§  574-§  077]      REDUCTION    UNDER    ENABLING    STATUTILS      §  051 

to  the  shareholders  upon  the  footing  that  it  may  Ik;  called  up 
again  by  the  company  at  pleasure.'  This  is  rather  a  peculiar 
method  of  reduction,  but  no  reason  is  perceived  why,  if  the  ques- 
tion should  ever  arise  in  America,  the  same  conclusion  should 
not  be  reached. 

§  049.  Whether  Scheme  must  contemplate  Permanent  Reduc- 
tion. —  In  order  to  fall  within  a  statutory  {Kjwer  of  reductitjii  of 
capital,  a  proposed  scheme  must  contemplate,  as  an  English 
judge  has  held,  a  genuine  reduction.  Hence  the  judge  refused 
to  confirm  a  scheme  whereby  certain  shares  in  the  nature  of 
founder's  shares  were  to  be  cancelled  and  ordinary  shares  to 
a  much  greater  nominal  amount  were  to  be  issued  in  exchange. 
The  judge  concluded  that  the  scheme  contemplated  no  real 
reduction  but  rather  an  increase  of  capital,  and  that  too  without 
the  payment  of  its  par  value;  and  therefore  he  refused  his 
sanction  to  the  scheme;-  but  on  the  other  hand  upon  very 
similar  facts,  except  that  the  ordinary  shares  to  be  issued  in 
exchange  were  to  be  paid  for  in  full  in  cash,  another  English 
judge  in  a  later  case  sanctioned  the  scheme.^  This  decision 
seems  less  technical  and  therefore  preferable.* 

§  050.  Whether  statutory  Reduction  may  retroactively  ratify 
illegal  Reduction.  —  It  seems  that  the  statutory  reduction  pro- 
ceedings cannot  be  used  to  ratify  a  previous  illegal  return  of 
capital.  For  example,  where  a  corporation  paid  profits,  which 
were  in  hand  availal)le  for  dividends,  to  the  several  shareholders 
with  the  understanding  that  the  amount  so  paid  should  be  taken 
in  reduction  of  the  paid-up  capital  and  should  be  liable  to  be 
called  up  again  at  the  pleasure  of  the  company,  an  English  court 
held  that  the  transaction  could  not  be  validated  by  a  retroactive 
resolution  for  reduction  of  capital  subsequently  passed  under 
the  Companies  Act  of  ISSO,  but  that  the  amounts  so  paid  to  the 
several  shareholders  must  be  treated  as  ordinary  dividends  and 
therefore  must  go  to  a  tenant  for  life  as  income.^ 

§  051.  Reduction  need  not  afiect  all  Shares  equally.  —  "While 
no  scheme  of  reduction  that  by  reason  of  inequality  is  unjust  or 

'  Fvre-Street   Warehouse   Co.,   59         '  Anglo-French    Exploration    Co. 

L.  T.,  N.  s.,  214.  (1902),  2  Ch.  845. 

Cf.   Whitwham   v.   Picrcy  (1907),         ■•  Cf.   Poole  v.  National   Bank  of 

1  Ch.  289.  China  (1907),  A.  C.  229. 

2  Development  Co.  of  Central  and         *  Whitwham  v.  Piercy  (1907),   1 

West  Africa  (1902),  1  Ch.  547.  Ch.  289. 

533 


§  652  INCRE.A^E    AND    REDUCTION    OF    CAPITAL      [ChaP.  XI 

oppressive  will  be  sanctioned  by  the  courts/  yet  no  rule  of  law 
requires  that  all  the  shares,  or  even  all  the  shares  of  the  same 
class,  shall  be  rateably  reduced.-  Hence,  a  corporation  may 
reduce  its  capital,  the  statutory  formalities  being  followed,  by 
purchasing  the  shares  of  certain  of  its  members ;  ^  but,  in  con- 
struing a  New  Jersey  statute,  it  was  thought  that  the  offer  of 
purchase  must  be  extended  to  every  shareholder  of  the  same 
class.^  Similarly,  shares  which  have  been  surrendered  to  the 
company  voluntarily  ^  or  in  compromise  of  a  controversy  as  to 
the  validity  of  their  allotment  **  may  be  written  off  and  cancelled 
by  pursuing  the  statutory  mode  for  reducing  capital. 

§  052.  Assent  of  Creditors  as  statutory  Condition  to  Reduction. 
—  Where  the  assent  of  creditors  is  a  condition  precedent  to  the 
reduction,  there  must  be  an  affirmative  assent ;  the  mere  failure 
to  appear  and  object  after  due  notice  is  not  enough.^  Although 
a  lessor's  inchoate  right  against  a  company  for  subsequently 
accruing  rent  is  not  a  present  claim,  yet  where  the  confirmation 
of  the  reduction  by  the  court  is  requisite,  the  judicial  sanction 
will  be  refused  unless  a  sufficient  sum  is  impounded  to  meet  the 
claim  of  a  non-assenting  lessor  for  future  rent.^ 

»  Per  Lord  Herschell  in  British  &  U.  S.  Steel  Corp.,  63  N.  J.  Eq.  809; 

Am.   Trustee,    etc.    Corp.    v.    Couper  53   Atl.   68;    Donaldson,   Coburn   & 

(1894),    A.   C.    399,   406;    Theis    v.  Knox,  5  N.  So.  Wales  State  Rep.  725. 

Durr    'l25   Wise.    651;    104   N.  W.  Cf.  Shoemaker  v.  Washburn  Lum- 

985;  'no  Am.  St.  Rep.  880;   1  L.  R.  ber  Co.,  97  Wise.  585;   73  N.  W.  333; 

A.,  N.  s.,  571.  Alexander  v.  Relfe,  74  Mo.  495. 

'2  Re  Gatling  Gun  Co.,  43  Ch.  D.  Contra:   Currier  v.  Lebanon  Slate 

628    (overruling    Re     Union    Plate  Co.,  56  N.  H.  262. 

Glass  Co.,  42  Ch.  D.  513);   British  &  *  Berger  v.  U.  S.  Steel  Corp.,  63 

Am.    Trustee,   etc.   Corp.   v.   Couper  N.  J.  Eq.  809;   53  Atl.  68. 

(1894),  A.  C.  399.  Cf.  Theis  v.  Durr,  125  Wise.  651; 

Contra:   Currier  v.  Lebanon  Slate  104  N.  W.  985;    110  Am.  St.  Rep. 

Co.,  56  N.  H.  262;  Niagara  Shoe  Co.  880;    1  L.  R.  A.,  n.  s.,  571. 

V.  Tobey,  71  111.  App.  250.  '  Re    Denver    Hotel    Co.    (1893), 

Cf.  Gade  v.  Forest  Glen  Brick  Co.,  1  Ch.  495. 

165111.367;  46N.E. 286 (holding that  «  ReGatlingGunCo.,A?,C\i.Ti.&2S. 

the  objection  can  be  made,  if  at  all,  ^  Re   Patent    Ventilating   Co.,    12 

only  by  a  shareholder  and  not  by  a  Ch.  D.  254,  disregarding  Re  Credit 

creditor);  Theis  v.  Durr,  125  Wise.  Fonder  of  England,   L.   R.    11    Eq. 

651,  658;    104  N.  W.  985;    110  Am.  356.    The  latter  case  also  bears  upon 

St.  Rep.  880;   1  L.  R.  A.,  n.  s.,  571.  the  case  where  under  such  circum- 

3  British     &    Am.     Trustee,    etc.  stances  .some  of  the  creditors  are  un- 

Corp.  V.  Couper  (1894),  A.  C.  399  known,  for  example,  holders  of  bonds 

(overruling  dicta  in  Re  Denver  Hotel  or  debentures  payable  to  bearer. 

Co.   (1893),    1   Ch.   495);    Re   York  *  Re  Telegraph  Construction  Co.» 

Glass  Co.,  60  L.  T.  744;    Berger  v.  L.  R.  10  Eq.  384. 

534 


§  574-§  677]       REDUCTION    UNDER    ENABLING    STATUTES      §  654 

§   653-§   657.      REDUCTION   OF   NOMINAL   CAPITAL  SO   AS  TO 
CORRESPOND    WITU   TOE    ACTUAL   CAPITAL. 

§  653-§  050.     IVrituuj  oJJ  lost  Capital. 

§  653.  Whether  authorized  by  general  Power  of  Reduction.  — 
We  have  seen  above  that  acoording  to  the  weight  of  authority, 
a  general  power  to  reckice  capital  may  Ije  exercised  by  reducing 
the  nominal  capital  in  order  to  make  it  correspond  with  the  actual 
capital  as  diminished  by  losses;  and  a  number  of  points  in  con- 
nection with  such  a  reduction  of  capital  have  come  before  the 
courts  for  decision.' 

§  654.  Importance  of  determining  whether  a  Loss  of  Actual  Capi- 
tal has  occurred.  — The  English  Companies  Act  of  1877  expressly 
authorizes  a  company  under  certain  conditions  "to  cancel  any 
lost  capital  or  any  capital  unrepresented  by  available  assets"; 
and  the  English  courts  have  been  not  infrequently  concerned 
with  the  question  whether  a  loss  of  capital  within  the  meaning 
of  this  statute  has  been  proved.  A  very  recent  case  in  the  House 
of  Lords  goes  far  towards  establishing  that  under  the  British 
statutes  it  is  not  necessary  to  prove  that  the  capital  proposed  to 
be  cancelled  is  lost  or  not  represented  by  available  assets.^  Not- 
withstanding this  case,  the  earlier  English  decisions  upon  the 
question  whether  a  loss  of  capital  sufHcient  to  justify  a  reduction 
of  capital  are  still  important  in  the  United  States  not  merely  as 
bearing  on  cjuestions  arising  under  any  American  statutes  which 
may  confine  the  right  of  reduction  to  cases  where  capital  has 
been  lost,  but  also  on  the  question,  which  is  everywhere  material, 
whether  a  reduction  of  nominal  capital  must  be  accompanied 
or  followed  by  a  distribution  of  assets  representing  the  reduced 
capital  among  the  shareholders;  for  as  will  presently  be  shown, 
if  the  reduction  is  merely  for  the  purpose  of  wiping  out  a  loss  of 
capital,  no  such  distribution  is  necessary  or  proper. 

'  In  addition  to  the  cases  cited  decision  and  was  laid  down  by  only 

below,  §  654-§  656,  see  infra,  §  662.  one  of  the  lords,  Lord  Macnaghten. 

^  Poole  V.  Xational  Bank  of  China  Lord  Loreburn,  the  Lord  Chancellor. 

(1907),  A.  C.  229.     Note  that  not-  made  a  short  speech  which  did  not 

withstanding    the    lieadnote    in    the  advert  to  this   proposition,  and   the 

Law  Reports,  the  proposition    that  other  two  lords  wlio  sat  in  the  case 

a  loss  of  capital  was  not  essential  to  contented  themselves   with   concur- 

be  proved  was  not  necessary-  to  the  ring  in  the  result. 

535 


§  655  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

§  655.  Rules  for  determining  whether  a  Loss  of  Actual  Capital 
has  occurred.  —  The  expenditure  of  money  by  the  company  for 
any  of  its  legitimate  purposes,  for  example,  for  preliminary  ex- 
penses such  as  the  establishment  of  agencies,  was  held  not  to  be 
such  a  loss  of  capital  as  under  the  British  statute  would  authorize 
a  reduction  of  the  nominal  capital/  Moreover,  it  has  been  held 
that  in  ascertaining  the  assets  of  the  company  for  the  purpose 
of  determining  whether  a  loss  of  capital  has  occurred  sufficient 
to  justify  a  reduction,  the  amount  of  a  fund  collected  from  reserve 
profits  and  of  the  value  of  goodwill  must  be  taken  into  account.^ 
But  on  the  other  hand,  where  profits  are  accumulated  as  a 
reserve  fund  by  a  trading  company  and  used  in  its  business  with- 
out distinction  from  its  capital  moneys,  the  company  upon  sub- 
sequently sustaining  losses  in  the  business  is  not  bound  to  charge 
the  whole  of  such  losses  against  the  reserve  fund  but  may  treat 
a  fair  proportion  of  the  losses  as  losses  of  capital  justifying  a 
reduction  of  the  nominal  capital.^ 

§  CoG.  Whether  the  Loss  should  fall  on  Preferred  or  Common 
Shareholders.  —  Where  a  reduction  of  the  corporation's  nominal 
capital  is  for  the  purpose  of  writing  oflf  a  loss  of  actual  capital 
sustained  by  the  company  the  reduction  should  be  thrown  upon 
that  class  or  those  classes  of  the  shareholders  by  whom  such  a 
loss,  according  to  the  constitution  of  the  company,  should  be 
borne.*  Thus,  where  preferred  shareholders  are  entitled  to 
priority  both  in  respect  to  dividends  and  capital,  a  loss  of  capital 
should  be  borne  by  the  common  shareholders  to  the  relief  of  the 
preferred,  and  consequently  upon  any  resulting  reduction  of 
nominal  capital  the  loss  should  first  be  met  by  the  common 
shares,  even  to  the  extent  of  their  utter  extinction.^  But  where 
preferred  shares  have  no  priority  in  respect  to  capital,  it  would 
seem  that  the  whole  loss  should  not  be  thrown  upon  the  common 
stock."    On  the  other  hand,  where  preferred  shareholders  were 

'  Re    Abstainers,    etc.     Insurance  Credit  Assurance,  etc.  Corp.  (1902), 

Co.  (1891),  2  Ch.  124.  2  Ch.  601. 

2  Barrow  Haematite  Steel  Co.  ^  Floating  Dock,  etc.  Co.  (1895), 
(1900),  2  Ch.  846  (affirmed  on  an-  1  Ch.  691;  London  &  N.  Y.  Invest- 
other  ground  in  (1901)  2  Ch.  746).  ment  Co.  (1895),  2  Ch.  860;  Poole  v. 

3  Hoare  &  Co.  (1904),  2  Ch.  208.      National    Bank    of    China     (1907), 
*  Floating  Dock,  etc.  Co.   (1895),    A.  C.  229  (headnote  inadequate). 

1  Ch.  691;   London  A  .V.  Y.  Invest-         «  Cf.  Quebrada  Ry.  Co.,  40  Ch.  D. 

ment  Co.  (1895),  2  Ch.  860.  363  (explained  in  Re  Denver  Hotel 

Cf.  Hyderbad  Corp.,  75  L.  T.  23;    Co.  (1893),  1  Ch.  495,  502);    Union 

536 


§  574-§  677]       REDUCTION    UNDER    ENABLING    STATUTES      §  057 

entitled  to  a  dividend  of  five  per  cent  before  any  dividend  should 
be  paid  to  deferred  shareholders  and  were  also  entitled  to  share 
fro  rata  with  the  deferred  shareholders  in  any  dividends  in  ex- 
cess of  five  per  cent  and  in  any  distribution  of  capital  on  a  wind- 
ing-up, a  scheme  was  sanctioned  for  the  cancellation  of  enough 
of  the  deferred  shares  (the  holders  consenting)  to  correspond 
with  a  loss  of  capital,  with  the  proviso  that  the  remaining  de- 
ferred shares  should  thereafter  rank  in  all  respects  pari  passu 
with  the  preferred  shares.'  When  the  preferred  shares  have  no 
voting  rights,  although  they  are  entitled  to  a  preference  both  as 
to  capital  and  dividends,  it  has  been  thought  not  unfair  that  the 
preferred  shares  should  bear  part  of  the  loss  rather  than  that 
the  deferred  shares  should  be  wholly  extinguished.-  Moreover, 
the  fact  that  the  company's  regulations  provide  that,  in  the  event 
of  a  deficiency  of  assets  in  winding-up,  the  assets  shall  be  dis- 
tributed among  the  several  shareholders  in  pi-oportion  to  the 
amounts  paid  up  on  their  respective  shares,  does  not  require  that 
the  same  principle  should  be  applied,  in  case  of  a  reduction  of 
capital  in  consequence  of  losses,  between  shares  of  the  same  class 
upon  which  different  amounts  had  been  paid  up.^ 


§  657.  Wiping  out  illegal  Over-capitalization.  —  An  illegal 
over-capitalization,  it  has  been  held,  cannot  be  wiped  out  by 
means  of  the  machinery  provided  for  reducing  capital.  For 
instance,  if  shares  are  improperly  issued  at  a  discount,  or  if  a 
statute  requiring  payment  therefor  in  cash  has  not  been  com- 
plied with,  the  holders  are  liable  to  pay  to  the  company  the  full 
par  value  of  their  shares,  and  this  obligation  cannot  be  escaped 
by  an  attempt  to  cancel  that  proportion  of  the  shares  represented 
by  no  actual  capital.^     If,  however,  the  shares  had  passed  to 

Plate  Glass  Co.,  42  Ch.  T).  5\3;   Ban-  Roberts-Wicks  Co.,   18-i  N.  Y.  257; 

natyne  v.  Direct  Spanish  Tel.  Co.,  34  77  N.  E.  13. 

Ch.  D.  287;    Re  Barrow  Haematite  »  Hyderbad  Co.,  75  L.  T.  23. 

Steel    Co.,  39    Ch.   D.  582;    Barrow  •  Cf.  Allsop  <S:  Sons,  51  W.  R.  644 

Haematite  Steel   Co.    (1900),   2   Ch.  (hcadnote  inadequate). 

846,   855-856   (affirmed   on   another  ^  Credit     Assurance,     etc.     Corp. 

ground  in  (1901)  2  Ch.  746,  and  com-  (1902),  2  Ch.  601. 

mented  upon  by  Lord  Macnajihten  *  Re  Xew  Chile  Gold  Mining  Co., 

in  Poole  v.  National  Bank  of  China  38  Ch.  D.  475. 

(1907),  A.  C.  229,  238);  Roberts  v.  Cf.    Re   Omnium    Investment   Co. 

537 


§  65S  INCRE-VSE    AND    REDUCTION    OF    CAPITAL       [ClIAP.   XI 

purchasers  for  value  without  notice  of  the  circumstances  at- 
tending the  issue,  or  if  for  any  other  reason  the  amount  actually 
due  on  the  shares  cannot  be  recovered  from,  the  holder,  this 
reasoning  would  not  apply;  and  in  that  case,  presumably,  the 
"water"  in  the  shares  could  be  "squeezed  out"  under  the  guise 
of  a  reduction  of  capital  under  the  statutory  procedure. 


§  658.  Reduction  in  order  to  return  to  Shareholders  assets  which 
Corporation  had  no  Power  to  hold.  —  Where  a  company  has  taken 
in  payment  for  its  shares  assets  which  the  courts  afterwards 
decide  to  be  illegal  for  it  to  hold,  a  statutory  form  for  the  re- 
duction of  capital  may  be  used  to  reduce  the  capital  in  an 
amount  equal  to  the  value  of  those  assets,  which  may  there- 
upon be  distributed  pro  rata  among  all  the  shareholders  with- 
out making  any  attempt  to  return  to  each  shareholder  the 
particular  assets  which  he  had  contributed  in  payment  for  his 
shares.^ 

§  659.  Reduction  of  Capital  as  Substitute  for  Winding-up  Pro- 
ceedings. —  The  procedure  for  reducing  capital  cannot  be  used 
as  a  substitute  for  winding-up  proceedings:  thus,  where  the 
company  had  for  five  years  done  no  business,  a  scheme  for  re- 
turning to  the  shareholders  all  of  its  property  with  the  exception 
of  one  lot  of  ground  which  could  not  then  be  advantageously 
sold  will  not  be  approved  as  a  reduction  of  capital.^ 

§  660-§  668.  WHETHER  REDUCTION  OF  NOMINAL  CAPITAL 
SHOULD  BE  ACCOMPANIED  BY  CORRESPONDING  REDUCTION 
OF  ACTUAL  CAPITAL  AND  VICE  VERSA  —  DISTRIBUTING 
AMOUNT  BY  WHICH  THE  CAPITAL  IS  REDUCED  AMONG  THE 
SHAREHOLDERS. 

§  660.  Statement  of  the  Problem.  —  It  has  been  stated  above 
that,  at  least  according  to  the  better  view,  a  reduction  of  capital 
when  authorized  by  statute  may  consist  either  in  a  reduction 

(1895),  2  Ch.  127;  Theis  v.  Durr,  66  N.  J.  Eq.  274.  Cf.  Lovelace  v. 
125  Wise.  651;  104  N.  W.  985;  110  Anson  (1907),  2  Ch.  424  (relating  to 
Am.  St.  Rep.  880 ;  1 L.  R.  A.,  n.  8.,  571 .  the  consequences  of  this  transaction). 
'  Continental  Securities  Co.  v.  ^  Re  Wallasey  Brick  &  Land  Co., 
Northern  Securities  Co.,  57  Atl.  876;    63  L.  J.  Ch.  415. 

538 


§  574-§  077]       REDUCTION  UNDER  ENABLING  STATUTES         §  GGl 

of  actual  capital,  whether  in  the  form  of  paid-up  capital  or  of 
liability  for  unpaid  capital,  or  in  a  reduction  of  nominal  capital. 
It  remains  to  consider  when  a  reduction  of  nominal  capital 
should  be  accompanied  by  a  reduction  of  the  actual  capital 
and  when  it  should  not  be,  and  vice  versa.  The  problem  gen- 
erally comes  up  for  decision  when  a  question  is  made  whether  a 
reduction  of  nominal  capital  should  Ix*  accom[)anied  or  followed 
by  a  distribution  of  actual  capital  among  the  shareiiolders. 

§  6(5 1.  Of  the  Doctrine  that  Reduction  must  not  destroy  Equi- 
librium of  Balance  sheet.  —  It  would  seem  that  in  every  case  the 
eil'ect  of  tlie  reduction  of  capital  should  be  such  "as  not  to  affect 
the  equilibrium  of  the  balance  sheet  to  the  prejudice  of  the 
creditor."  In  other  words,  if  the  nominal  capital  be  regarded 
as  a  liability  of  the  company,  and  if  the  assets  be  placed  on  the 
opposite  or  credit  side  of  the  balance  sheet,  every  scheme  of 
reduction  should  result  in  striking  oft'  an  equal  amount  from 
both  sides  of  the  balance  sheet.  For  instance,  "where  capital 
is  wTitten  off  as  lost  or  unrepresented  by  available  assets,  the 
equilibrium  of  the  balance  sheet  is  maintained  by  striking  out 
on  the  one  side  a  certain  amount  from  the  paid-up  capital,  and 
on  the  other  side  a  certain  amount  from  the  value  of  the  assets. 
Where  capital  is  returned  as  in  excess  of  the  wants  of  the  com- 
pany, an  amount  is  in  the  same  manner  taken  oft"  from  both 
sides  of  the  balance  sheet.  The  balance  item  on  the  debit  or 
credit  side  of  the  balance  sheet,  as  the  case  may  be,  is  in  either 
case  unaffected."  ^  Hence,  the  court  concluded  that  a  scheme 
of  reduction  which  involved  a  diminution  of  nominal  capital, 
thereby  striking  oft"  a  certain  amount  from  the  debit  side  of  the 
balance  sheet,  should  not  be  sanctioned  by  the  court  unless  an 
equivalent  amount  were  to  be  struck  off  from  the  credit  side 
either  by  a  return  of  paid-up  capital  or  by  a  cancellation  of  lia- 
bility for  unpaid  capital."  So,  also,  a  scheme  of  reduction  which 
involves  no  return  of  paid-up  capital  and  no  release  of  liability 
for  unpaid  capital  will  not  meet  with  judicial  approval  unless 
a  loss  of  capital  be  proved.^ 

'  Anglo-French    Exploration    Co.         '  Anglo-French    Exploration   Co. 

(1902),  2  Ch.  845,  853,   per  Buck-  (1902),  2  Ch.  845. 
ley  J.     See,  however,  adverse  criti-         ^  Barrow     Haematite     Steel     Co. 

cism    of    this   case    by    Lord    Mac-  (1901),   2  Ch.   746.     See,  however, 

naghten  in  Poole  v.  S'ational  Bank  supra,  §  654. 
of  China  (1907),  A.  C.  229,  238-239. 

539 


§  662  INCREASE    AND    REDUCTION    OF    CAPITAL       [ClL\P.  XI 


§  662-§  668.  Whether  and  to  what  Extent  Reduction  of  Nominal 
Capital  sJiould  be  accompanied  or  followed  by  Distribidion 
of  Paid-up  Capital  among  Shareholders. 

§  662.  When  such  Distribution  should  not  be  made.  —  There  is 
no  rule  that  upon  a  reduction  of  capital  an  amount  equal  to 
the  difference  between  the  nominal  capital  before  and  after  re- 
duction must  be  distributed  among  the  shareholders,  but  the 
amount,  if  any,  so  distributable  depends  upon  extraneous  con- 
siderations which  are  not  necessarily  apparent  on  the  face  of 
the  proceedings  by  which  the  reduction  is  accomplished.^  For 
example,  if  the  reduction  takes  the  form  of  a  mere  reduction 
of  nominal  capital  in  order  to  enable  the  company  to  write  off 
a  loss  or  impairment,  without  any  corresponding  reduction  of 
actual  capital,  there  will  of  course  be  no  occasion  for  a  distri- 
bution of  capital  among  the  shareholders ;  and  indeed  any  such 
distribution  would  be  unlawful,-  for  the  law  does  not  permit  a 
return  of  actual  capital  to  the  shareholders  in  consequence  of 
a  reduction  of  nominal  capital  unless  the  company  would  after 
such  return  continue  to  have  assets  at  least  equal  in  value  to 
the  nominal  capital  as  reduced.^  In  such  a  case  of  reduction 
of  nominal  capital  for  the  purpose  of  WTiting  off  a  loss  or  im- 
pairment of  capital,  the  reduction  affects  the  nominal  capital 
only,  and  there  is  no  corresponding  reduction  of  either  form  of 
actual  capital.  As  was  said  by  Sir  George  Jessel,  the  actual 
capital  has  already  suffered  a  corresponding  reduction  "by  a  very 
unpleasant  process."  ^  So,  also,  if  the  reduction  were  accom- 
plished by  a  cancellation  of  a  liability  attaching  to  partly  paid 
shares,  without  any  reduction  of  paid-up  capital,  no  distribution 
of  moneys  representing  paid-up  capital  need  or  could  legally 
ensue ;  for  the  reduction  of  actual  capital  corresponding  to  the 
reduction  of  nominal  capital  takes  place  automatically,  consisting 
merely  in  a  relief  from  liability.    So  when  a  reduction  is  effected 

»  Strong  v.  Brooklyn  Cross-Tovm  30  N.  E.  893;    Jerome  v.  Cogswell, 

R.  R.  Co.,  93  N.  Y.  426.  204  U.  S.  1,  7  (semble). 

*  Cf.    Strong   v.    Brooklyn   Cross-         ^  Kassler   v.    Kyle,    65    Pac.    34; 

Town   R.    R.    Co.,    93    N.    Y.    426;  28  Colo.  248. 

McCann   v.    First  Nat.    Bank,    112         *  Ebbw  Vale  Steel,  etc.  Co.,  4  Ch. 

Ind.  354;    14  N.  E.  251;    McCann  D.  827,  832. 
V.  First  Nat.   Bank,   131    Ind.   95; 

540 


§  574- §  077]       REDUCTION    UNDER    ENABLING    STATUTES      §  663 

by  purchasing  and  extincruishing  some  of  the  outstanding  shares, 
the  reduction  need  not  he  accompanied  or  followed  hy  any  distri- 
bution or  payment  of  capital  moneys  to  the  other  shareholders ; 
for  in  such  a  case,  although  there  is  a  reduction  of  nominal 
capital  and  a  corresponding  reduction  of  actual  capital,  yet  by 
reason  of  the  method  of  reduction,  the  entire  amount  by  which 
the  actual  capital  is  diminished  is  payable  to  the  holders  of  the 
purchased  shares  and  is  not  distriinitahle  jrro  rata  among  all 
the  shareholders. 

§  6G3.  When  the  Distribution  should  be  made.  —  On  the  other 
hand  a  reduction  of  capital  must  sometimes  be  accompanied 
or  followed  by  a  distribution  of  capital  moneys  among  the  share- 
holders pro  rata}  Thus,  where  a  reduction  of  nominal  paid-up 
capital  is  effected  by  cancelling  a  certain  proportion  of  each 
shareholder's  shares  on  the  ground  that  the  company's  actual 
capital  is  in  excess  of  its  needs,  the  company  must  distribute 
assets,  or  their  value,  to  the  extent  of  the  reduction  among  the 
shareholders  yro  rata:  there  is  no  power  in  the  company  to  re- 
tain as  a  so-called  surplus  any  portion  of  the  actual  capital 
which  represents  the  nominal  capital  extinguished  by  the  re- 
duction.^ But  in  order  to  justify  such  distribution,  there  must 
be  proof  that  the  original  capital  had  not  been  in  any  degree 
impaired ;  for  if  the  reduction  was  intended,  in  part  to  wipe  out 
an  over-capitalization  or  to  reduce  the  nominal  so  as  to  corre- 
spond with  the  actual  capital,  and  in  part  to  diminish  the  actual 
as  well  as  the  nominal  capital,  a  division  of  actual  capital 
among  the  shareholders  would  be  lawful  only  in  so  far  as 
the  wiping  out  of  the  over-capitalization  leaves  surplus  capital 
in  the  company's  hands  in  excess  of  the  nominal  capital  as 
reduced.^ 

»  As  to  the   application   of  the  400    (affirmed     short,     78     N.    Y. 

Statute    of    Limitations    to    such  a  600). 

claim  for  a   return   of   capital,   see         Cf.  Cogswell  v.  Second  Nat.  Bank, 

Artisans'     Land    ifc     Mortgage    Co.  78  Conn.  75;  60  Atl.  1059,  affirmed  su6 

(1904),  1  Ch.  796.  norn.  Jerome  v.  Cogswell,  204  U.  S.  1. 

As  to  interest  on  a  claim  for  re-  '  Strong  v.   Brooklyn  Cross-Town 

turn  of  capital  set  free  by  reduc-  R.  R.  Co.,  93  N.  Y.  426;   McCann  v. 

tion    proceedings,    see    Mustard    v.  First  Nat.  Bank,  112  Ind.  354;    14 

Union  Nat.  Bank,  86  Me.  177  (hold-  N.  E.  251;    McCann  v.  First  Nat. 

ing  that  interest  does  not  run  until  Bank,  131  Ind.  95:   30  N.  E.  893. 
demand).  Cf.  Roberts  v.  Roberts-Wicks  Co., 

'  Seeleu  v.  New   York  Nat.   Ex-  102  N.  Y.  App.  Div.  118,  reversed, 

change     Bank,     8     Daly     (N.    Y.),  184  N.  Y.  257. 

541 


§  6G4  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

§  664.  Time  of  making  Distribution.  —  It  would  seem  clear 
that  in  cases  where,  upon  a  reduction  of  capital,  paid-up  capital 
is  to  be  returned  to  the  shareholders,  the  distribution  may  prop- 
erly follow  rather  than  precede  the  final  confirmation  of  the 
reduction.' 

§  665.  Manner  of  Distribution  —  In  Kind  or  in  Cash  —  Dis- 
tribution of  Bonds.  —  Where  in  consequence  of  a  reduction  of 
capital,  capital  is  to  be  returned  to  and  distributed  among  the 
shareholders,  the  company  may  distribute  in  kind  the  assets 
which  after  the  reduction  is  consummated  becomes  super- 
fluous;- but  such  distribution  in  kind  is  not  necessary,  for  in 
lieu  thereof  the  company  may,  and  generally  does,  sell  the  sur- 
plus assets  and  convert  them  into  cash  for  convenience  of  dis- 
tribution. If  this  course  is  for  any  reason  not  deemed  advisable, 
the  company  may,  it  would  seem  clear,  borrow  on  mortgage 
bonds  or  otherwise  the  requisite  amount  of  cash  for  distribution, 
thus  in  effect  converting  capital  stock  into  bonds  or  obligations 
of  the  company  to  the  extent  of  the  reduction  of  capital,^  although 
in  a  Missouri  case  this  procedure  was  held  illegal  for  reasons 
that  are  not  perhaps  altogether  convincing.^  Moreover,  it  has 
been  held  that  a  scheme  of  reduction  involving  the  return  of 
paid-up  capital  to  the  shareholders  may  provide  that  the  com- 
pany shall  issue  its  debentures  in  part  payment  to  such  share- 
holders as  elect  to  receive  the  same  in  lieu  of  cash,  such  a  con- 
version of  shareholders  into  creditors  not  rendering  illegal  a 
scheme  otherwise  unobjectionable.^ 

*  Lees  Brook  Spinning  Co.  (1906),  in    the    principal    company    as    an 

2  Ch.  394,  disapproving  Calgary  &  authorized  investment  are  not  nec- 

Edmonton  Land  Co.   (1906),    1   Ch.  essarily    authorized    to    retain    the 

141.  distributed  shares  as  an  investment. 

'  Continental    Securities    Co.     v.  Lovelace   v.     Anson    (1907),    2    Ch. 

Northern  Securities  Co.,  57  Atl.  876;  424. 

66    N.    J.    Eq.    274;     Harriman   v.  »  Berger  v.   U.  S.  Steel  Corp.,  63 

Northern  Securities  Co.,   197  U.   S.  N.  J.  Eq.  809;   53  Atl.  68. 

244,  299;   25  Sup.  Ct.  493.  "  Coquard  v.  St.  Louis  Cotton,  etc. 

That  in  such  cases  there  is  no  Co.,  7  S.  W.  Rep.  176  (Mo.), 

implied  warranty  of  title  on  the  part  Cf.  Strong     v.     Brooklyn     Cross- 

of  the  company,  see  Olsen  v.  Home-  Town  R.  R.  Co.,  93  N.  Y.  426. 

stead  Land   Co.,   87   Tex.   368;     28  ^  Re     Nixon's     Navigation     Co. 

S.  W.  944.  (1897),  1  Ch.  872;  Re  Lamson  Store 

If    the    assets    so    distributed   in  Service  Co.  (1897),  1  Ch.  875  n. 

kind  consist  of  shares  in  other  cor-  Cf.   Berger  v.    U.  S.  Steel   Corp., 

porations,  trustees  who  hold  shares  63  N.  J.  Eq.  809;   53  Atl.  68. 

542 


§  574-§  G77]     ijKDUf'TioN  under  enabling  statutes    §  607 

§  660.  Whether  Reduction  of  Noiniiial  Capital  for  purpose 
of  uyritiiig-ojj  Assets  believed  to  be  worthless  casts  Title  to  those 
Assets  on  Shareholders  individually.  —  If  capital  is  reduced  in 
an  amount  equal  to  the  loss  supposed  to  have  been  sustained 
by  the  deterioration  of  an  asset  which  is  believed  to  have  become 
quite  worthless,  the  supposetlly  valueless  asset  does  not,  merely 
in  consequence  of  the  reduction,  devolve  upon  the  shareholders 
individually,  and  if  the  asset  in  question  afterwards  becomes 
valuable  and  is  sold  by  the  company,  a  shareholder  cannot 
force  a  distribution  of  the  amount  so  realized  among  the  several 
members  of  the  company.'  If,  however,  capital  is  reduced  for 
the  purpose  of  writing  off  assets  of  doubtful  value,  which  are  set 
aside  as  a  special  fund,  such  action  is  deemed  equivalent  to  the 
declaration  of  a  dividend  equalling  in  the  aggregate  the  value 
of  those  assets,  so  that  upon  the  winding-up  of  the  company 
the  amount  realized  from  the  assets  so  reserved  and  set  apart 
is  distributable  among  those  persons  who  were  shareholders 
at  the  time  the  reduction  was  effected  and  the  assets  so  set  apart, 
and  not  among  those  who  were  shareholders  when  the  company 
came  to  be  wound  up.- 

§  607.  Whether  Moneys  distributed  on  Reduction  of  Capital  are 
Income  or  Capital.  —  Rights  of  Preferred  and  Common  Share- 
holders, of  Tenants  for  Life  and  Remxiindermen.  —  The  amount 
liberated  by  a  reduction  of  nominal  capital  for  distribution 
among  the  shareholders  is  capital  in  every  sense  of  the  word. 
Hence,  where  the  company  has  issued  cumulative  preferred 
shares  which  are  entitled  to  no  preference  as  to  capital,  the 
amount  distributed  among  the  several  shareholders  in  conse- 
quence of  a  reduction  of  nominal  capital  is  not  to  be  regarded 
as  profits  available  for  payment  of  cumulative  preferred  divi- 
dends which  were  overdue  at  the  time  of  the  reduction  but 
should  be  distributed  pro  rata  among  both  common  and  pre- 
ferred shareholders.^    So,  an  amount  so  distributed  is  to  be  re- 

'  McCann   v.    First   Nat.    Bank,  of  a  stock  dividend  must  be  treated 

112  Ind.  354  ;   14  N.  E.  251 ;  McCann  as  capital  and  not  income  as  between 

V.  First  Nat.  Bank,  131  Ind.  95;   30  life  tenant  and  remainderman). 
N.  E.  893.  ^  Jerome  v.   Coginvell,  204   U.   S. 

Cf.  Parker  v.  Mason,  8  R.  I.  427  1  (affirming;  Cogstvell  v.  Second  Nat. 

(holding  that  the  amount  of  the  in-  Bank,  78  Conn.  75;    60  Atl.  1059). 
creased    value    of    the    supposedly         *  Roberts    v.    Roberts-Wicks    Co., 

worthless    asset    when    distributed  184  N.  Y.  257;   77  N.  E.  13. 
among  the  shareholders  in  the  form 

513 


§  668  INXREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

garded  as  capital  and  not  income  as  between  tenant  for  life  and 
remainderman.' 

§  668.  Certificates  issued  to  Shareholders  on  Reduction  of  Capital 
in  lieu  of  immediate  Distribution  of  Cash  or  Property.  — Where  the 
capital  of  a  company  is  reduced  by  cancelling  certain  shares  and 
repa\'ing  to  the  holders  the  value  thereof,  certificates  issued  to 
the  holders  of  the  cancelled  shares  stating  that  they  are  entitled 
to  so  much  cash  from  the  company  are  regarded,  it  seems,  as 
quasi  negotiable.  Hence,  an  assignee  of  such  a  certificate  will 
be  preferred  to  the  company  claiming  under  a  pledge  to  it  made 
by  the  original  holder  after  the  assignment  but  before  notice 
thereof  had  been  communicated  to  the  company.^ 


§  669.  Reduction  as  affecting  Voting  Rights  of  Shareholders. 
—  It  is  no  objection  to  a  proposed  reduction  of  capital  that  the 
voting  rights  of  the  shareholders  w^ill  be  affected  thereby.^  For 
instance,  where  in  consequence  of  a  loss  of  capital  it  was  pro- 
posed to  reduce  the  par  value  of  the  ordinary  shares  and  to  cut 
down  proportionately  their  voting  rights,  leaving  untouched  the 
number,  par  value,  and  voting  rights  of  the  preferred  share- 
holders, the  scheme  of  reduction  was  after  objection  sustained.* 
Indeed,  if  the  par  value  of  some  only  of  the  shares  is  reduced,  or, 
presumably,  if  for  any  other  reason  the  reduction  of  capital 
renders  equitable  a  change  in  the  voting  rights  attaching  to 
some  of  the  shares,  the  reduction  will  not  be  legal  unless  such 
change  is  made.^ 

§  670.  Agreement  to  exercise  Power  of  Reduction  by  Redeeming 
certain  Shares.  —  It  is  competent  for  a  corporation  to  contract 
with  the  holders  of  certain  shares  to  exercise  its  statutory  power 
of  reducing  its  capital  by  redeeming  such  shares  at  par  out  of 
accumulated  profits ;  and  where  such  a  contract  is  incorporated 
in  the  incorporation  paper,  or  original  constitution  of  the  com- 
pany, the  reduction  of  capital  involved  does  not  include  a  return 
of  paid-up  capital  within  the  meaning  of  a  statute  requiring  the 

»  Infra,  §  1393.  "  James  Colmer,  L't'd  (1897),   1 

«  CaUanan  v.  Edwards,  32  N.  Y.    Ch.  524. 
483.  '  Pinkney  &  Sons  S.S.  Co.  {1892), 

«  Alhop  &  Sons,  51  W.  R.  644.       3  Ch.  125. 

544 


§  574-§  G77]       REDUCTION    UNDER    ENABLING    STATUTES      §  072 

assent  of  creditors  to  any  reduction  of  capital  involving  such  a 
return.' 

§  671.  Agreement  not  to  reduce  Capital  or  not  to  affect  certain 
Shares  by  the  Reduction.  —  It  seems  to  be  conceded  that  just  as 
a  corporati(jn  or  its  shareholders  may  agree  to  prefer  certain 
shares  in  the  payment  of  dividends,  so  a  contract  that  any  reduc- 
tion of  capital  shall  not  affect  certain  shares  is  competent.^ 
Such  an  agreement  should  be  distinguished  from  an  attempt  by 
a  corporation  to  contract  itself  wholly  out  of  its  statutory  power 
of  reducing  its  capital,  which  would  probably  \ye  nugatory.^ 

§  672- §  674.     Preferred   Shares   as    affected    by    Reduction    of 

Capital. 

§  672.  In  general.  —  The  mere  issue  of  preferred  shares  car- 
rying a  right  to  a  preferential  dividend  at  a  fixed  rate  does  not 
amount  to  a  contract  by  the  company  not  to  reduce  the  nominal 
value  of  such  shares  and  thus  indirectly  diminish  their  dividends. ' 
Thus,  where  preferred  shares  are  expressed  to  carry  a  prefer- 
ential dividend  of,  say,  ten  per  cent,  the  meaning  is  ten  per 
cent  on  the  par  value  of  the  shares  as  originally  issued  or  as 
subsequently  legally  reduced ;  and  the  subscriber  takes  subject 
to  the  statutory  power  of  reduction.^  So,  where  the  preferred 
shareholders  are  entitled  to  "a  fixed  dividend  of  eight  per  cent 
on  the  amount  paid  up  in  respect  of  their  shares"  if  a  loss  of 
capital  is  sustained,  the  par  value  of  the  shares  may  be  reduced 
and  with  it  the  amount  of  the  preferential  dividend,  since  the 
language  quoted  is  construed  to  mean  that  the  fixed  dividend 
shall  be  eight  per  cent  on  the  par  value  for  the  time  being  of 
the  shares  and  shall  not  exceed  the  same  percentage  on  the 
amount  which  has  been  paid  in  on  the  shares.®  That  the  pre- 
ferred shareholders  have  no  voting  rights  does  not  restrict  the 
company's  right  to  reduce  their  shares.^     Moreover,  a  scheme 

'  Re  Dicido  Pier  Co.  (1891),  2  Ch.  Haematite    Steel    Co.,    39    Ch.     D. 

354.     As  to  redeemable  shares,  see  582. 
also  supra,  J  225.  *  Bannatyne    v.    Direct    Spanish 

'  Hyderbad  Co.,  75  L.  T.  23,  26.  Tel.  Co.,  34  Ch.  D.  287. 

*  Barrow  Haematite  Steel  Co.,  39  ^  Re  Barrow  Haematite  Steel  Co., 
Ch.  D.  582.  596.  39  Ch.  D.  582,  600-602. 

*  Bannatyne  v.  Direct  Spanish  '  Re  Barrow  Haematite  Steel  Co., 
Td.  Co.,  34  Ch.  D.  287;   Re  Barrow  39  Ch.  D.  582,  603. 

VOL.  I. — 3>  545 


§  673  INCREASE    ANT)    REDUCTION    OF    CAPITAL       [ChAP.  XI 

by  which  some  of  the  deferred  shares,  with  the  consent  of  the 
holders,  should  be  cancelled  and  the  remainder  of  them  should 
thenceforward  rank  pari  passu  with  the  preferred  shareholders, 
has  been  upheld.'  A  fortiori,  where  the  incorporation  paper, 
after  fixing  the  relative  rights  of  preferred  and  ordinary  shares, 
expressly  provides  that  the  company  may  alter  the  rights  as  so 
fixed,  a  scheme  of  reduction  of  capital  which  very  seriously 
affects  the  rights  of  the  preferred  shareholders  may  nevertheless 
receive  judicial  approval,  especially  where  a  majority  of  the 
preferred  shareholders  assent.^ 

§  673.  In  case  of  Reduction  for  purpose  of  writing-oS  Lost 
Capital,  —  The  question  whether  a  reduction  of  nominal  capital 
for  the  purpose  of  writing-off  a  loss  of  actual  capital  should  throw 
the  loss  upon  the  preferred  shares  or  upon  the  common  or  ordi- 
nary shares  has  been  considered  above.^ 

§  674.  Whether  Reduction  afiects  overdue  cumulative  preferential 
Dividends.  —  Where  cumulative  preferred  shares  are  reduced  in 
par  value  with  the  holder's  consent,  it  was  held  by  the  Appellate 
Division  of  the  New  York  Supreme  Court  that  the  full  amount 
of  preferential  dividends  which  were  overdue  at  the  time  of  the 
reduction  could  not  be  claimed  by  preferred  shareholders  before 
dividends  are  paid  upon  the  common  or  ordinary  shares  out  of 
subsequent  earnings,  but  that  the  most  that  could  be  claimed 
was  the  preferred  dividends  calculated  with  reference  to  the  par 
value  of  the  shares  as  reduced."  This  result  was  reached  by 
assimilating  the  case  to  a  purchase  by  the  company  of  a  certain 
proportion  of  the  shares ;  but  it  is  submitted  that  the  reduction 
is  very  different  from  such  a  purchase,  and  consequently  the 
Court' of  Appeals,  reversing  the  decision  of  the  Appellate  Divi- 
sion, held  that  the  reduction  ought  not  to  be  construed  as  affect- 
ing the  preferred  shareholder's  vested  right  to  the  cumulative 
preferential  dividends  which  were  overdue  at  the  time  of  the 
reduction.'  Such  should  certainly  be  the  construction  if  the 
reduction  were  effected  without  the  shareholder's  assent;  and 
it  is  submitted  that  even  an  express  assent  should  be  taken  most 
strongly  in  favor  of  the  shareholder,  and  should  not  be  held 

'  Ilyderbad  Co.,  75  L.  T.  23.  "  Roberts    v.    Roberts-Wicks    Co., 

»  Wehhach  Incandescent  Gas  Light    102  N.  Y.  App.  Div.  118. 
Co   (1904)    1  Ch.  87.  "  Roberts    v.    Roberts-Wicks    Co., 

»  Supra'  §  656.  184  N.  Y.  257;   77  N.  E.  13. 

546 


§  574-§  077]       OTHER    MODIFICATIONS    OF    CAPITAL  §  075 

equivalent  to  a  waiver  of  existing  vested  rights  unless  clearly 
intended  to  have  that  effect.  Indeed,  according  to  the  opinion 
of  the  New  York  Court  of  Appeals  it  would  seem  that  no  exer- 
cise of  the  statutory  power  of  reduction  could  legally  without  the 
consent  of  the  preferred  shareholders  alfect  their  vested  right  to 
the  overdue  preferential  dividends  even  if  clearly  intended  ac- 
cording to  its  terms  to  have  that  effect.' 


§  675- §  677.     Modification  of  Capital  otherwise  than  by  Increase 
or  Reduction  —  Consolidation  and  Subdivisiofi  of  Shares. 

§  ()75.  Whether  Corporation  may  Consolidate  or  Subdivide  its 
Shares.  —  Inasmuch  as  the  number  and  par  value  of  the  shares 
into  which  the  capital  of  a  corporation  is  divided  is  almost  always 
stated  in  the  incorporation  paper,  or  in  the  company's  special 
act,  the  consolidation  or  subdivision  of  the  shares  by  the  com- 
pany will  be  illegal  unless  legislative  authority  for  the  change 
can  be  shown.-  Even  an  express  power  reserved  in  the  incor- 
poration paper  to  reduce  or  subdivide  the  shares  would  be 
ineffective  in  the  absence  of  legislative  sanction  therefor.^  A 
subdivision  of  shares  has  more  serious  consequences  than  a 
consolidation  of  shares;  for,  if  the  company  might  subdivide 
the  shares  indefinitely,  they  might  be  reduced  to  so  small  an 
amount  and  scattered  among  so  many  holders  that  no  one 
shareholder  would  owe  a  sufficiently  large  sum  to  justify  the 
expense  of  collection,  and  thereby  creditors  of  the  company 
might  be  prejudiced.''  Where,  however,  the  special  act  of  incor- 
poration does  not  fix  the  number  of  the  shares  into  which  the 
capital  should  be  divided,  the  company,  it  seems,  may  alter 
the  number  at  pleasure,  although  no  such  alteration  can 
affect  the  members'  substantive  rights,  —  such  as  their  voting 
rights.* 

'  See,  however,  Oban  &  Avltmore-         *  Financial    Corporation,    2    Ch. 
Glenlivet  Distilleries,  5  Fraser  (Sc),    714,  733,  per  Lord  Cairns. 
1140.  *  Ambergate,     etc.     Ry.     Co.     v. 

*  Financial  Corporation,  2  Ch.  Mitchell,  4  Ex.  540.  Cf.  Somerset, 
714;  Tschumiv.  Hills,  G  Kans.  App.  etc.  R.  R.  Co.  v.  Cushing,  45  Me. 
549;   51  Pac.  619.  524. 

'  Financial    Corporation,    2    Ch. 
714. 

547 


§  676  INCREASE    AND    REDUCTION    OF    CAPITAL       [ChAP.  XI 

§  676.  Consolidation  or  Subdivision  of  Shares  under  Statutory 
Authority.  —  Sometimes  general  incorporation  laws  authorize  a 
consolidation  or  subdivision  of  shares.  Sometimes  this  is  effected 
upon  an  increase  or  reduction  of  capital,  the  old  shares  being 
virtually  surrendered  and  new  shares  to  the  amount  of  the  capital 
as  increased  or  reduced  being  issued.^  An  alteration  in  the  par 
value  of  shares,  even  when  accomplished  under  sanction  of  law, 
will  not  have  a  retroactive  effect  so  as  to  change  the  meaning  of 
contracts  or  offers  previously  made  with  or  to  the  company.  For 
example,  when  a  person  applied  for  shares  in  a  corporation,  the 
shares  being  then  of  the  nominal  value  of  £20,  a  subsequent 
change  in  the  par  value  of  the  shares  from  £20  to  £40  could 
not  enable  the  company  by  accepting  the  offer  to  require  the 
applicant  to  take  £40  shares;  but  on  the  contrary  the  com- 
pany's acceptance  completed  a  contract  for  the  issue  of  £20 
shares." 

§  677.  Effect  of  unauthorized  Consolidation  or  Subdivision.  — • 
An  unauthorized  or  illegal  attempt  at  subdivision  or  consolida- 
tion of  shares  is  wholly  nugatory;'  the  shares  remain  of  the 
original  amount.  For  example,  where  a  company  attempted  to 
divide  its  shares  of  £100  each  into  shares  of  the  nominal  value 
of  £20  each,  giving  certificates  for  five  £20  shares  in  exchange 
for  each  £100  share,  the  shares  remained  of  the  nominal  value 
of  £100  each;  a  transfer  of  five  £20  shares  operated  as  a 
transfer  of  the  £100  share  for  which  they  had  been  given  in 
exchange,  so  long  as  the  origin  of  the  new  shares  could  be 
traced ;  and  the  transferee  although  entered  on  the  register  as 
a  holder  of  five  £20  shares  and  although  ignorant  of  the  fact 
that  the  shares  had  been  originally  of  the  denomination  of 
£100  is  nevertheless  liable  as  the  holder  of  a  £100  share.^  In 
such  a  case,  a  proceeding  for  the  forfeiture  of  the  shares  for 
non-payment  of  calls,  treating  them  as  £20  shares,  would  be 
irregular  and  liable  to  be  set  aside  if  the  objection  be  season- 
ably made;  but  if  the  shareholder  raises  no  such  point,  but  on 
the  contrary  asks  for  a  remission  of  the  forfeiture  as  a  matter 
of  grace,  he  thereby  waives  the  point,  and  the  company  or  its 
liquidator  cannot  hold  him  for  subsequent  calls  as  if  the  for- 

'  See  Gettyfsburg  Nat.  Bank  v.  ^  Financial    Corporation,    2    Ch. 

Bro«;n,  95  Md.  367 ;   52  Atl.  975.  714.     C(.  Cammack  v.  Levy  {La..),  45 

'  Gristard's  Case,  8  Eq.  438.  So.  925. 

548 


§  574- §  077]       OTHER    MODIFICATIONS    OF    CAPITAL  §  077 

feiture  were  void.*  In  a  Kansas  case,  where  the  directors  with- 
out legal  authority  undertook  to  increase  the  par  value  of  the 
shares,  it  was  held  that  a  person  who  had  accepted  a  certifi- 
cate for  shares  of  the  increased  value  incurred  no  liabiHty  as 
shareholder.^ 

»  Financial   Corporation   (King's        *  Tschumi  v.  HUis,  6  Kana.  App. 
Case),  2  Ch.  714.  649;  51  Pac.  619. 


549 


CHAPTER   XII 

BY-LAWS  AND   INTERNAL   REGULATIONS 

Section 
The  need  of  internal  regulations  adapted  to  each  company's  pecuUar 

conditions 678 

By-laws  as  internal  regulations      679 

Objections  to  by-laws  as  regulations  for  modern  companies     ....     680 

Remedies  attempted  by  legislatures  in  America 681 

Remedy  in  England  —  Articles  of  Association 682 

Comparison  between  English  Articles  and  American  by-laws  ....     683 

"Regulations"  —  meaning  of  term 684 

Nature  of  by-laws 685-687 

Scant  consideration  of  subject  by  judges  and  text- writers   .    .    .     685 

Municipal  ordinances  as  examples  of  by-laws 686 

Distinctions  between  by-laws  and  mere  resolutions 687 

Method  of  adopting  by-laws 688-690 

In  general  —  by-laws  resting  in  parol  —  custom  as  by-law .    .    .      688 

By-laws  adopted  before  incorporation      689 

By-laws  adopted  in  foreign  states 690 

In  whom  the  power  of  enacting  by-laws  resides 691-692 

Whether  the  power  resides  in  shareholders  or  directors    ....     691 

Dual  power  in  both  shareholders  and  directors 692 

What  by-laws  or  regulations  are  vaUd 693-715 

General  rules 693-695 

By-laws  void  in  part 693 

Void  by-laws  incorporated  into  contracts 694 

Estoppel  to  deny  validity  of  by-laws 695 

By-laws  and  regulations  must  be  legal 696-698 

Must  not  conflict  with  any  statute 696 

Must  not  conflict  with  general  principles  of  corporation  law     697 

Must  not  conflict  with  common  law      698 

By-laws   and    regulations  must  accord  with  the  charter  or  in- 
corporation paper 699-701 

In  general      699 

Must  relate  to  prosecution  of  company's  objects  or  busi- 
ness      700 

Whether  express  power  to  enact  by-laws  for  one  purpose 
excludes  imphed  power  to  enact  by-laws  for  other 

purposes 701 

Of  the  rule  that  by-laws  must  be  reasonable 702-715 

In  general,  as  applied  to  by-laws  and  English  articles  .    .    .     702 

By-laws  presumptively  reasonable 703 

Legal  standard  of  reasonableness      704 

By-laws  in  restraint  of  trade  or  alienation 705-711 

In  general      705 

By-laws  restricting  transferabiUty  of  shares    .    .    .     706-711 

In  general      706 

550 


§  678-§  73S]                        SYNOPSIS                                    §  G78 

What  by-laws  or  regulations  are  valid  (continued)  Section 

Effect  of  af^reement  of  shareholder  to  abide  by  a 

by-law  restrictiiiK  right  of  alienation    .    .    .  707 
Effect   of   accepting   share-certificate   referring   to 

the  by-law 708 

Observations  on  unfortunate  condition  of  /Ameri- 
can law  in  respect  to  these  matters  ....  709 
Rule   again.st    perpetuities    not  apj^hcable  to   by- 
laws restricting  tran.sfers  of  shares    ....  710 
By-laws  merely  regulating  transfers  valid    ....  711 
By-laws   attempting   to    restrict    right    to    resort    to    the 

courts 721 

By-laws  attempting  to  bind  minority  to  fraudulent  or  ultra 

vires  acts  of  majority 713 

Retroactive  by-laws 714 

By-laws  must  be  general  and  uniform 715 

Sanction  of  by-laws  —  fines,  forfeitures,  and  other  penalties   .    .     716-719 

In  general       716 

Void  and  unenforceable  penalties      717 

Penalties  attempted  to  be  impo.sed  for  doing  what  the  member 

has  a  legal  right  to  do 718 

Remedies  for  enforcement  of  fines  —  defences 719 

Amendment  and  repeal  of  by-laws       720-727 

In  general       720 

Amendment  or  repeal  affecting  the  company's  constitution  721 
Amendments    affecting  vested    or   contractual  rights  acquired 

under  by-law 722 

General  power  to  alter  by-laws  cannot  be  surrendered  by  con- 
tract or  by  provision  in  the  regulations  themselves    .    .    .  723 
Contracts  with  companies  to  be  construed  if  possible  so  as  not 

to  interfere  \vith  power  of  altering  the  by-laws 724 

Whether  provision  in  by-laws  may  authorize  amendments  with- 
out complying  with  statutory  requisites 725 

Repeals  by  implication 726 

Repeals  by  desuetude      727 

Disregard  of  by-laws  without  formal  repeal 728 

Reformation  of  mistakes  in  by-laws 729 

Waiver  of  by-laws  intended  for  company's  benefit 730 

Construction  of  by-laws 731 

Constructive  notice  of  by-laws 732-735 

Strangers  to  the  company 732 

Shareholders      733 

Directors  and  officers 734 

Persons  wlio  are  in  act  of  becoming  or  who  afterwards  become 

members  or  officers      735 

Who  are  subject  to  by-laws 736 

Who  may  take  advantage  of  by-laws 737 

Pleading  ami  proof  of  by-laws 738 

§  678.  The  Need  of  Internal  Regulations  adapted  to  each  Com- 
pany's peculiar  Conditions.  —  Re£julations  of  some  sort  for  the 
government  and  management  of  corporations,  in  addition  to  tlie 

551 


§  679  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

rules  laid  down  by  the  incorporation  statute  or  companies  act, 
are  almost  a  necessity.  The  incorporation  paper,  containing  as 
it  generally  does  the  mere  skeleton  of  the  company's  constitution, 
cannot  adequately  supply  this  want ;  and  besides,  being  altera- 
ble with  difficulty  or  not  at  all,  it  cannot  be  adjusted  to  meet  the 
changing  needs  of  the  company's  business.  In  the  case  of  com- 
panies incorporated  by  special  act,  the  desirability  of  some 
method  of  establishing  for  themselves  rules  and  internal  regu- 
lations was  by  no  means  so  great  as  in  the  case  of  companies 
organized  under  general  laws.  For  a  special  act  of  incorpora- 
tion could,  and  often  did,  provide  many  details  for  the  manage- 
ment of  the  company  that  were  supposed  to  be  especially  adapted 
to  its  own  peculiar  needs.  But  a  general  incorporation  law, 
providing  as  it  does  for  an  indefinite  multitude  of  corporations 
whose  individual  circumstances  and  wants  cannot  be  foreseen,  is 
necessarily  incapable  of  furnishing  a  satisfactory  code  of  regula- 
tions for  each  one  of  them.  Then,  too,  unless  the  freedom  of  the 
right  to  incorporate  is  to  be  delusive,  each  company  should  have 
liberty  to  frame  its  own  regulations.  As  an  experienced  English 
author  has  said:  "Companies  and  their  members  cannot  be 
expected  to  put  up  with  a  uniform  set  of  regulations,  any  more 
than  testators  with  a  common  form  of  will,  or  partners  in  firms 
with  a  common  form  of  partnership  deed.  A  company  with 
hundreds  or  thousands  of  members  obviously  may  require  very 
different  regulations  to  those  required  by  one  with  only  a  dozen 
or  a  few  dozen  members."  ' 

§  679.  By-laws  as  Internal  Regulations.  —  The  only  means 
by  which  in  the  United  States  under  the  present  laws  a  corpora- 
tion can  establish  rules  for  its  management  subordinate  to  its 
incorporation  paper  is  through  the  instrumentality  of  by-laws.^ 
This  system  of  corporate  government  by  by-laws  originated  with 
the  old  common  law  corporations  erected  by  royal  charter ;  and 

'  Palmer's  Introductory  Note  to  Lodge  v.  Kutscher,  179  111.  340;    53 

Revised   Table    A    (Supplement    to  N.  E.  620;    70  Am.  St.  Rep.   115; 

Palmer's  Company  Precedents,  9th  Domes  v.  Supreme  Lodge,  75  Miss. 

ed.),  p.  5.  466;   23  So.  191;   Supreme  Lodge  v. 

^  The    so-called    "constitutions"  Knight,  117  Ind.  489;  20  N.  E.  479; 

of  some  American  corporations,  par-  3  L.  R.  A.  409 ;   Stein  v.  Marks,  44 

ticularly  benevolent  and  social  or-  N.  Y.  Misc.  140,  145;  89  N.  Y.  Supp. 

ganizations,  are  in  legal  contempla-  921. 
tion  nothing  but  by-laws.    Supreme 

552 


§  678-§  738]     BY-LAWS  and  internal  regulations       §  GSl 

although  the  system  in  its  original  form  is  now  obsolete  in 
England  so  far  as  ordinary  business  corporations  are  concerned, 
having  been  superseded  by  a  newer  if  not  a  better,  yet  it  has 
survived  in  America.  The  power  to  enact  by-laws  was  incident 
to  every  corporation  at  common  law;  and  the  same  power  may 
be  implied  in  the  case  of  our  American  statutory  coryxjrations.' 

§  080.  Objections  to  By-laws  as  Regulations  for  Modern  Com- 
panies. —  One  might  easily  demonstrate  the  extremely  un- 
satisfactory nature  of  by-laws,  such  as  might  be  enacted  by  a 
corporation  at  common  law,  as  a  subordinate  constitution,  or 
code  of  permanent  regulations,  for  a  modern  business  company. 
Indeed,  objections  to  corporate  government  through  by-laws 
may  be  found  in  every  direction  as  the  subject  is  investigated. 
As  by-laws  may  be  either  in  WTiting  or  parol,  either  recorded  in 
the  minutes  or  not  so  recorded,  as  they  may  either  originate  in 
express  vote  of  the  company  or  be  implied  from  a  custom,  their 
very  existence  is  often  uncertain.  Even  a  lawyer  will  often  be  in 
doubt  whether  a  particular  regulation  i^  in  force  as  part  of  the 
by-laws  or  not.  All  the  circumstances  combine  to  beget  in 
the  shareholders  utter  disrespect  and  disregard  for  their  by- 
laws. Very  often  no  by-laws  are  adopted,  and  generally  those 
that  are  adopted  are  not  observed. 

§  681.  Remedies  attempted  by  Legislatures  in  America.  — 
Attempt^  to  remedy  this  unfortunate  condition  have  been  made 
in  some  of  the  United  States.  Thus,  by-laws  are  sometimes 
required  to  be  in  wTiting  or  to  be  adopted  by  a  two-thirds  vote. 
Sometimes  they  have  been  required  to  be  under  the  corporate 
seal.-  These  expedients  are  but  palliative,  however;  for  no 
adequate  relief  can  be  had  unless  the  by-laws  are,  like  the  incor- 
poration paper,  required  to  be  recorded  in  a  public  registry,  so 
as  not  merely  to  invest  them  with  some  formality  and  title  to 
respect,  but  also  to  charge  the  shareholders  and  all  who  deal  with 
the  company  with  constructive  notice  of  them.  So  far  as  the 
writer  is  aware,  this  course  has  not  become  general  anywhere  in 
the  United  States.^ 

*  Martin  v.  Xashville  Bldg.  Ass'n,  '  Compare,  however,  Fee  v.  Nat. 

2  Coldw.  (Tenn.)  418  (sernble).  Masonic   Accident  Ass'n,   110   Iowa 

'  Dunston  v.   Imperial  Gas  Light  271;     81    N.    W.    483;     Allman   v. 

Co.,  3  B.  &  Add.  125;   McDonnell  v.  Havana,  etc.  R.  R.  Co.,  88  III.  521, 

Ontario,  etc.  R.  R.  Co.,  11  Up.  Can.  23   (as  to   Illinois  Railway  Law  of 

Q.  B.  267.  1872);    Rose  Hill,  etc.  Road  Co.  v. 

553 


§  6S2  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

§  682.  Remedy  in  England  — ■  Articles  of  Association.  —  In 
England,  on  the  other  hand,  although  the  power  of  enacting 
by-hiws  was  and  is  incident  to  every  corporation  created  by 
royal  charter,  yet  the  Companies  Acts  beginning  with  the  act  of 
1856,  substitute,  as  to  companies  incorporated  under  them,  a 
different  system.  As  we  have  already  stated,  each  English  com- 
pany, in  addition  to  its  memorandum  of  association  or  incorpora- 
tion paper,  has  its  articles  of  association,  which  comprise  the 
matters  of  internal  regulation  proper  to  be  relegated  to  mere 
by-laws.^  These  articles  must  be  executed  by  the  subscribers  to 
the  memorandum  and  recorded  contemporaneously  with  that 
document  in  the  registry  of  joint-stock  companies.  If  no  articles 
are  adopted,  the  code  of  internal  regulations  contained  in 
"  Table  A"  ^  is  to  apply  in  lieu  thereof.  The  company's  articles, 
or  "Table  A"  if  no  articles  are  adopted,  are  subject  to  alteration 
by  a  special  resolution  —  that  is  to  say,  a  resolution  which  is 
passed  by  a  three-fourths  vote  at  a  general  meeting  convened  for 
the  purpose,  and  whick  is  confirmed  at  another  general  meeting 
held  after  an  interval  of  not  less  than  a  fortnight  nor  more  than 
a  month.^  Any  such  special  resolution  must,  like  the  original 
articles,  be  recorded  in  the  registry.* 

§  683.  Comparison  between  English  Articles  and  American  By- 
laws. —  These  articles  of  association  of  an  English  company 
take  the  place  of  by-laws,  and  are  in  substance  and  effect  re- 
corded by-laws;  ^  but  they  are  never  in  England  called  by  that 
name.  The  differences  between  them  and  the  by-laws  customary 
in  the  United  States  are  due  almost  entirely  to  the  greater 
formality  attending  their  adoption  and  the  fact  that,  as  they 
are  recorded,  all  who  deal  with  the  corporation  must  at  their 
peril  take  notice  of  them.®    Thus,  a  consequence  of  the  formal 

People  ex  rd.  Lawless,  115  111.  133;  Manon  Insurance  Co.  (1902),  A.  C. 

3  N.  E.  725.  232. 

'  Supra,  §  11.  As   to   the   function   of   English 

'  See  supra,  §  12.  articles,  see  further  supra,  §  11. 

*  Companies  Act,  1862,  §  50-  ^  Mahony  v.  East  Holyford  Min- 
§  51.  ing  Co.,  L.  R.  7  H.  L.  869,  893,  where 

*  Ibid,  §  53.  Lord  Hatherley  said:   "It  is  a  point 
^  See  Brovm  v.  Republican  Silver    of  very  great  importance  that  those 

Mines,  55  Fed.  7  (where  the  articles  who  are  concerned  in  joint-stock 
of  association  of  an  English  company  companies  and  those  who  deal  with 
were  consistently  denominated  by-  them  should  be  aware  of  what  is 
laws  by  the  court);    Ho   Tung  v.    essential  to  the  due  performance  of 

554 


§  678- §  738]  NATURE    OF    BY-LAWS  §  686 

nature  of  English  articles  of  association  and  of  the  fact  that 
they  are  made  matter  of  record  and  accessible  to  the  public  is 
that  they  may  rea.s()nal)ly  enough  deal  with  matters  tiuit  could 
not  be  left  to  the  informal,  unrecorded  American  by-laws  with- 
out injustice.'  Subject  to  these  qualifications,  it  is  appre- 
hended that  English  articles  and  American  by-laws  should  Ije 
affected  by  the  same  considerations. 

§  084.  Regulations  —  Meaning  of  Term.  —  A  term  which  is 
often  used  to  denote  tlie  articles  of  asscx-iation  of  an  English 
company  and  may  with  equal  propriety  be  applied  to  the  by-laws 
of  an  American  corj^oration  is  "regulations."  Accordingly,  it 
will  be  u.sed  in  this  work  to  denote  both  the  one  and  the  other. 
Indeed,  the  word  properly  designates  any  rules  for  the  company's 
constitution  and  management  which  are  binding  upon  its  mem- 
bers. Accordingly,  it  might  fairly  be  taken  to  include  the 
incorporation  paper ;  but  in  a  recent  case  the  word  "  regulations  " 
in  a  British  statute  was  construed  to  refer  exclusively  to  the 
articles  of  association  and  not  to  the  memorandum  or  incorpora- 
tion paper.-  In  its  usual  sense,  the  word  regulations  is  ordinarily 
to  be  taken  to  mean  conventional  regulations  as  distinguished 
from  regulations  prescribed  by  statute ;  and  yet  even  the  latter 
are  sometimes  designated  by  the  term. 

§  685-§  687.     Nature  of  Bij-laivs. 

§  685.  Scant  consideration  of  subject  by  Judges  and  Text- 
writers.  —  Any  one  who  bears  in  mind  the  important  part  in 
the  corporate  economy  that  is  played,  in  theory  at  least,  by  the 
by-laws,  will  be  no  little  surprised  to  see  how  scant  has  been  the 
consideration  of  their  real  nature  either  by  courts  or  text-wTiters. 

§  686.  Municipal  Ordinances  as  Examples  of  By-laws.  —  Per- 
haps the  most  instructive  and  typical  instances  of  by-laws  can  be 

their  duties,  both  as  customers  or  pany,  and  those  who  so  deal  with 

dealers  with  tlie  company  and   as  them  must  be  affected  with  notice  of 

persons  forming  the  company,  and  all  that  is  contained  in  those  two 

deaUng  with  the  outside  world  re-  documents." 

spectively.    .    .    .    Every  joint-stock         '  See  McKain  and  Canadian  Bir- 

company  has  its  memorandum  and  beck,  etc.  Co.,  7  Ont.  L.  R.  241,  246- 

articles  of  association.    .    .    .    Those  247. 

articles  of  association  .  .  .  are  open         '  Dexine  Patent  Packing  ct  Rub- 
to  all  who  are  minded  to  have  any  ber  Co.,88  L.  T.  791. 
deahngs  whatsoever  with  the  com- 

555 


§  087  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

found  in  the  by-hnvs  of  municipal  corporations  —  that  is  to  say, 
in  municipal  ordinances.  Such  municipal  by-laws  are,  as  their 
name  implies,  laws.  When  valid  and  authorized  by  the  charter, 
thev  have  all  the  force  of  law.  In  the  case  of  modern  business 
corporations,  although  the  power  of  making  by-laws  is  much 
more  limited  and  although  the  means  for  their  enforcement  are 
much  less  perfect,  yet  their  real  nature  as  laws  is  the  same.  To 
be  sure,  ordinances  of  municipal  corporations  are  local  laws  and 
bind  all  persons  within  the  territorial  limits  of  the  municipality, 
whereas  by-laws  of  ordinary  business  corporations  bind  only 
members  and  officers ;  but  this  distinction  goes  to  the  extent  of 
the  jurisdiction  of  the  corporation  rather  than  to  the  real  nature 
of  the  by-laws.  The  kinship  of  the  by-laws  of  ordinary  indus- 
trial corporations  to  the  ordinances  or  bv-laws  of  a  municipal- 
ity is  demonstrated  by  the  case  of  the  incorporated  guilds  of 
merchants  and  craftsmen  which  became  common  in  England 
in  the  sixteenth  century  and  which  are  in  some  respects  the  ante- 
tvpes  of  the  American  corporations  of  to-day.  These  societies 
would  legislate  for  their  members  in  much  the  same  way  as  a 
common  council  of  an  incorporated  town  legislates  for  its  inhab- 
itants. They  would  prohibit  unworkmanlike  practices,  and 
enact  rules  of  sundry  sorts  for  the  conduct  of  the  trade. 

§  687.  Distinction  between  By-laws  and  mere  Resolutions.  —  In 
essence,  however,  by-laws  are  mere  resolutions  of  the  corpora- 
tion. They  are  distinguished  from  other  resolutions  "in  that  a 
resolution  applies  to  a  single  act  of  the  corporation,  while  a 
bv-law  is  a  permanent  and  continuing  rule,  which  is  to  be  applied 
on  all  future  occasions."  ^ 

§  688-§  690.     Method  of  adopting  By-laws. 

§  688.  In  general  —  By-laws  resting  in  Parol  —  Custom  as  By- 
law. —  Inasmuch  as  by-laws  are  nothing  but  resolutions  of  the 
corporation,  the  method  of  adopting  them  may  be  characterized 

1  1  Cook  on  Corporations,  4th  ed.,  Barb.  (N.  Y.)  .508,  5.39-540;  Domes 

§  4  a;    Steger  v.  Davis,  8  Tex.  Civ.  v.  Supreme  Lodge,  75  Miss.  466,  480- 

App.  2.3;  27  S.  W.  1068.  481;    23  So.  191;   Sorrentino  v.  Cil- 

Cf.  North  Milwaukee  Town  Site  letti,  75  N.  Y.  App.  Div.  507;    78 

Co.  V.  Bishop,  103  Wise.  492,  493;  N.  Y.  Supp.  .322;    Walker  v.  John- 

79  N.  W.  785;    45   L.  R.  A.    174;  son,  17  App.  (D.  C.)  144,  163. 
Drake  v.  Hudson  River  R.  R.  Co.,  7 

556 


§  678-§  738]  METHOD  of  adcji'Tiox  §  68S 

by  very  great  informality.  Indeed,  it  seems  clear  that  like  other 
resolutions  by-laws  need  not  Ik*  written  or  reduecd  to  writing, 
but  may  rest  in  parol  merely.'  So,  a  custom  or  usage  of  the 
company  may  have  the  force  of  a  by-law.-  .1  fortiori,  a  WTitten 
t)y-law  or  co<]e  of  by-laws  which  Inis  been  acted  upon  by  the  com- 
pany for  years  will  be  the  law  of  the  company  in  spite  of  any  de- 
fect in  its  original  adoption  ; ''  and  indeed  the  same  rule  applies 
to  Encrlish  articles  of  association  which,  without  signature  by 
the  incorporators  or  formal  adoption  by  special  resolution,  have 
been  acted  on  and  recognized  bv  the  companv  for  raanv  vears  and 
have  even  been  aminded  from  time  to  time  by  special  resolution 
formally  adopted.'  Still  more  clearly,  a  by-law  which  was  de- 
clared to  be  adopted  and  which  has  been  acted  upon  by  the 
company  for  eleven  years  will  be  presumed  to  have  received  the 
two-thirds  vote  which,  by  the  company's  incorporation  paper, 
was  necessary  for  its  adoption.^  So,  a  book  of  by-laws  which  is 
circulated  among  the  members  of  a  corporation  as  its  regulations 
is  admissible  in  evidence  as  the  by-laws  of  the  company  without 
any  proof  of  formal  adoption.^  Moreover,  where  the  power  of 
enacting  by-laws  resides  in  the  directors,  it  has  been  held  that  a 

'  Masonic,  etc.  Aas'n  v.  Severson,  R.  I.  308;    11  Am.  Rep.  253;    Union 

71  Conn.  719;    43  Atl.  192  (amend-  Bank  v.  Ridgely,   1   H.  &  G.  (Md.) 

ment  of  by-law  by  parol  unrecorded  324,  410-414;    Frank  v.  Morrison, 

resolution);    Knights,  etc.  of  Amer-  58  Md.  423,  438—139;    Graebner  v. 

tea  V.  Weber,  101  111.  App.  488.  Post,  119  Wise.  392;   96  N.  W.  783; 

="  Miller  v.  Eschbach,  43  Md.   1;  100  Am.  St.  Rep.  890;    Star  Loan 

Mutual  Fire  Ins.  Co.  v.  Farquhar,  86  Ass'n  v.  Moore  (Del.),  55  Atl.  946; 

Md.  668;    39  Atl.  527;    Stafford  v.  4  Penn.  308. 

Produce  Exchange  Banking  Co.,    16         Cf.  Myar  v.  Poe  (Ark.),  95  S.  W. 

Oh.  Circ.  Ct.  50;    Wain's  Assignees  1005   (provision  in  articles  of  asso- 

V.   Bank  of  N.  America,  8  S.  &  R.  ciation  held  to  be  a  by-law  within 

(Pa.)  73;    11  Am.  Dec.  575;    Walker  the  meaning  of  a  statute). 
V.  Johnson,  17  App.  (D.  C.)  144,  161.  *  Ho  Tung  v.  Manon    Insurance 

But  see  District  Grand  Lodge  v.  Co.  (1902),  A.  C.  232.    Cf.  Muirhead 

Cohn,  20  111.  App.  335,  344-345.  v.  Forth,  etc.  Mutual  Ins.  Co.  (1894), 

As  to  custom  having  the  effect  of  A.  C.  72. 
a  by-law  or  regulation  in  the  case  of         '  Marsh    v.    Mathias,     19    Utah 

an    English    company    incorporated  350  (headnote  inadequate) ;   56  Pac. 

under  the  Companies  Acts,  see  Ma-  1074.      For  further  illustrations  of 

ritw's  Case,  2  Ch.  596.  this  principle,  see  Ilagerman  v.  Ohio 

As  to  proof  of  custom,  see  Fire-  Bldg.,   etc.   Ass'n,  25  Oh.   St.    186; 

stone  V.   First  Slavish,  etc.   Church,  Morrison  v.  Dorsey,  48  Md.  461. 
215  Pa.  8;  63  Atl.  1038.  ^Knights,    etc.    of    America     v. 

»  State   V.    Curtis,    9    Nev.    325;  Weber,  101  111.  App.  488. 
Lockwood  V.  Mechanics  Nat.  Ba7ik,  9 

557 


§  689  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

mere  contract  entered  into  by  the  directors  may  have  the  force 
of  a  by-law.^ 

§  GS9.  By-laws  adopted  before  Incorporation.  —  Of  course, 
by-laws  cannot  be  adopted  prior  to  the  incorporation  of  the  com- 
pany ;  and  any  by-laws  so  adopted  are  invaUd.'  A  special  act 
incorporating  a  voluntary  association  which  provides  that  the 
by-laws  of  the  association  shall  be  the  by-laws  of  the  corporation 
until  repealed  or  altered,  does  not,  it  has  been  held,  impart 
validity  to  any  provisions  in  the  by-laws  which  according  to 
general  principles  of  law  would  be  invalid,  but  merely  dispenses 
with  the  necessity  of  formal  adoption  by  the  corporation.^* 

§  090.  By-laws  adopted  in  Foreign  States.  —  It  is  generally 
held  that  by-laws  adopted  in  a  state  other  than  that  by  which 
the  company  is  incorporated  are  not  binding.''  This  conclu- 
sion is  a  necessary  result  of  the  commonly  accepted  doctrine 
in  respect  to  the  validity  of  corporate  action  taken  in  a  foreign 
state,  and  is  therefore  fully  treated  in  connection  with  the  sub- 
jects of  meetings  of  shareholders  and  directors. 

§  691-§  692.     7/1  whom  Power  of  enacting  Bij-laws  resides. 

§  691.  Whether  the  Power  resides  in  the  Shareholders  or  in  the 
Directors.  —  Generally,  the  power  of  enacting  by-laws  resides 
in  the  shareholders  at  large  and  not  in  the  directorate ;  ^  and 
this  rule  is  not  affected  by  a  provision  that  "the  stock,  property, 
affairs  and  business"  shall  be  under  the  care  of  and  managed 
by  the  board  of  directors.^    When  the  power  of  enactment  rests 

'  Hazlehurst    v.    Savannah,    etc.  Co.,  56  Mo.  App.  145;    United  Fire 

R.  R.  Co.,  43  Ga.  13,  53.  Ass'n  v.  Benseman,  4  Wkly.  Notes 

'  2  Ver'coutere  v.  Golden  State  Land  Cas.  (Pa.)   1 ;   Carroll  v.  Mullanphy 

Co.,  116  Cal.  410;  48  Pac.  375;  Bos-  Sav.  Bank,  8  Mo.  App.  249. 
ton'  Acid  Mfg.   Co.   v.   Moring,    15         But    see    Heinzelman   v.    Druids 

Gray  (Mass.)  211,  214  (semble).  Relief  Ass'n,  38  Minn.  138;  36  N.  W. 

*  Albers  v.  Merchants'  Exchange,  100. 

39  Mo.  App.  983,  592,  596-597  (head-  The  adoption  of  a  code  of  by-laws 

note  inadequate).  by  unanimous  vote  of  alUhe  share- 

*  Mitchell  V.  Vermont  Copper  holders  is  not,  however,  invalid  be- 
Mining  Co.,  40  N.  Y.  Sup.  Ct.  406.  cause  they  are  also  directors,  and  the 
See  infra,  §1212,  §  1462.  meeting  at  which  the  action  is  taken 

*  Morton    Gravel    Road    Co.     v.  is    called    a    meeting    of    directors. 
Wysong,  51  Ind.  4;    North  Milwau-  State  Savings  Ass'n  v.  Nixon-Jones 
kee   Town  Site  Co.   v.   Bishop,    103  Printing  Co.,  25  Mo.  App.  642. 
Wise.  492-   79  N.  W.  785;   45  L.  R.  *  North  Milwaukee  Town  Site  Co. 
A.  174;    Watson  v.  Woody  Printing  v.  Bishop,  103  Wise.  492  (headnote 

558 


§  67S-§  738]       POWER  OF  shakeholdeh.s,  ltc.  §  G92 

with  the  shareholders,  the  by-laws  have  the  effect  of  hinding 
the  directors  '  and  all  inferior  agents,  so  that  no  action  taken 
in  contravention  of  them  can  bind  the  company  at  least  as  against 
any  person  having  notice  of  the  by-laws.  Under  some  incor- 
poration laws  the  power  of  enactment  is  expressly  reposed  in 
the  directors ;  -  and  where  this  is  the  case,  there  is  an  end  of 
what  little  authority  might  otherwise  attach  to  the  by-laws. 
For  the  same  authority  that  enacts  may  also  repeal  or  alter  ^ 
or  disregard  *  the  by-laws ;  and  hence  the  by-laws  do  not  re- 
strain the  company's  own  governing  body,  which  it  should  be 
the  chief  object  of  regulations  to  control.  By-laws  enacted  by 
the  directors  govern  inferior  agents  and  the  individual  share- 
holders; but  as  to  the  directors  themselves  they  amount  to 
nothing  more  than  a  declaration  of  a  present  intent  to  pursue 
a  given  course.  By  a  strange  anomaly,  where  the  power  of 
enacting  by-laws  is  lodged  with  the  directors,  a  by-law  duly 
adopted  by  the  directors  will  prevail  over  a  subsequent  incon- 
sistent resolution  adopted  by  the  shareholders  in  general  meet- 
ing assembled. "*  Where  the  power  of  enacting  by-law^s  resides 
in  the  shareholders,  perhaps,  as  will  hereafter  be  shown,  they 
may  delegate  it  to  the  directors ;  but  a  provision  in  the  by-laws 
themselves  that  they  may  be  amended  by  the  directors  does 
not  enable  the  directors  to  abrogate  another  by-law  imposing 
limitations  on  their  powers.® 

§  692.  Dual  Power  in  both  Shareholders  and  Directors.  — 
Indeed,  a  power  of  enacting  by-laws  may  be  vested  without  in- 
compatibility both  in  the  shareholders  and  in  the  directors.^ 
That  is  to  say,  even  where  the  power  of  enacting  by-laws  is 
lodged  with  the  shareholders,  the  directors  may  always  —  in 

inadequate);    79  N.  W.  785;    45  L.         «  See  infra,  §  720. 
R.  A.  174.  *  See  infra,  §  728. 

'   United  Fire  Ass'n  v.  Benseman,         *  Granger  v.  Grubb,  7  Phila.  (Pa.) 

4  Wkly.  Notes  Cas.  (Pa.)  1 ;  Samuel  350     (headnote     inadequate).       Cf. 

V.    Holladay,    1    Woolw.    400,    408  Manufacturers'  Exhibition  Bldg.  Co. 

(semble);    Fowler  v.  Great  Southern  v.  Landay,  76  N.  E.   146;    219  111. 

Tel,  etc.  Co.,  104  La.  751 ;  29  So.  271.  168.     Ikit  see  infra.  §  692. 

'  Hughes  V.   Wisconsin,  etc.   Ins.         *  Stevens  v.   Dainson,    18  Gratt. 

Co.,  98  Wise.  292;    73  N.  W.  1015;  (Va.)  819;   98  Am.  Dec.  692. 
People  V.  Sterling  Mfg.  Co.,  82  111.         '  Cf.  Lovell  v.  Westuwod,  2  Dow 

457  (where  the  by-laws  were  adopted  &  CI.  21. 
by  a  shareholders'  meeting  in  which 
all  the  directors  participated). 

559 


§  G92  BY-LAWS    .^T)    INTERNAL    REGULATIONS       [ChAP.  XII 

subordination  of  course  to  the  shareholders  —  make  rules  for 
their  own  orderly  action  and  for  the  government  of  the  com- 
pany's agents.  By  whatever  name  these  rules  may  be  called, 
they  are  in  their  nature  by-laws.  Thus,  in  every  corporation, 
there  would  seem  to  be  in  reality  a  dual  power  of  adopting  by- 
laws —  a  subordinate  power  in  the  directors,'  and  a  controlling 
power  in  the  shareholders.-  Consequently,  on  principle,  an  ex- 
press authority  given  to  directors  to  enact  by-laws  should  not 
be  held  to  oust  the  shareholders  of  their  common  law  power 
of  adopting  controlling  regulations  or  by-laws  for  the  corpora- 
tion.^ So,  a  delegation  of  the  power  to  enact  by-laws  by  the 
shareholders  to  a  select  body  of  the  members  would  seem  to 
be  unobjectionable ;  *  for  the  members  at  large  may  at  any  time 
revoke  the  authority  and  abrogate  any  regulations  adopted  by 
the  delegates.  In  any  corporation,  however,  in  which  the  power 
to  enact  by-laws  is  not  conferred  upon  the  directors,  no  rules 
or  regulations  that  the  directors  may  adopt  will  be  deemed  by- 
laws vdthin  the  meaning  of  statutes  requiring  certain  things  to 
be  done  in  accordance  with  the  by-laws.  Thus,  where  a  statute 
provides  that  such  notice  of  calls  shall  be  given  as  the  by-laws 
shall  prescribe,  a  call  is  not  enforceable  of  which  notice  was  given 
in  accordance  with  a  regulation  adopted  by  the  directors,  no 
rule  on  the  subject  having  been  prescribed  by  the  shareholders.^ 

•  Cf.  Pfister  V.  Germig,  122   Ind.  =  Cf.    Stephenson    v.     Yokes,    27 

567,  570-571  (headnote  inadequate) ;  Ont.  691.    But  see  Granger  v.  Grubb, 

23  N.  E.  1041;   Heinzelman  v.  Dru-  7  Phila.  (Pa.)  350  (headnote  inad- 

ids  Ret.   Ass'n,  38  Minn.    138;    36  equate). 

N.   W.    100;     Albers   v.    Merchants'  ^  Cf.  Lovell  v.  Westwood,  2  Dow 

Exchange,  39  Mo.  App.  583.  &  CI.  21;    Stephenson  v.   Yokes,  27 

But  see  Watson  v.  Woody  Print-  Ont.  (Can.)  691. 
•ing  Co.,  .56  Mo.  App.  145;  Carroll  v.  But  see  Manufacturers'  Exhibi- 
Mullanphy  Sav.  Bank,  8  Mo.  App.  tion  Bldg.  Co.  v.  Landay,  76  N.  E. 
249;  in  which  cases  regulations  146;  219  111.  168;  Dunsmuir  v.  Col- 
adopted  by  directors  were  held  to  onist  Printing  &  Pub.  Co.,  9  Brit, 
be  utterly  void.  Columb.  290,  293  (semble). 

See  also   Thayer  v.   Herrick,   23  *  Cf.  Stevens  v.  Davison,  18  Gratt. 

Fed.   Cas.   899,  where  a  regulation  (Va.)  819;   98  Am.  Dec.  692  (where 

adopted  by  directors  prohibiting  the  by-laws  adopted  by  the  shareholders 

officers  from  selling  certain  property  purported  to  authorize  the  directors 

of    the    company    was    pronounced  to  amend  them). 

void  because  the  power  of  enacting  See  also  Albers  v.  Merchants'  Ex- 

by-laws  was  vested  in  the  sharehold-  change,  39  Mo.  App.    583 ;    Griffing 

ers.    And  compare  Supreme  Lodge  v.  Iron  Co.,  63  N.  J.  Law  168,  171;  41 

Kutscher,  179  111.  340;  53  N.  E.  620;  Atl.  931. 

70  Am.  St.  Rep.  115.  ^  North  Milwaukee  Town  Site  Co, 

560 


§  67S-§  738]  WHAT    BY-LAWS    ARE    VALID  §  G94 

So,  where  a  statute  gives  a  turnpike  company  the  power  to  adopt 
by-laws  fixing  rates  of  t(jlls,  a  schedule  of  rates  [jnnnulgated 
by  the  directors  is  not  binding  on  those  who  travel  over  the 
company's  road.'  IMoreover,  where  a  statute  provides  that  by- 
laws adopted  by  the  directors  shall,  unless  (•(jiifirnied  bv  a 
general  meeting  of  the  company,  continue  in  force  only  until 
the  next  annual  meeting  of  the  shareholders,  a  by-law  adopted 
by  the  directors  fixing  a  quorum  for  shareholders'  meetings 
ceases  to  be  effective  after  the  next  annual  meeting  unless  it 
be  confirmed  by  affirmative  action  of  the  shareholders.^ 


§  693-§  715.    WHAT     BY-LAWS     OR     REGULATIONS 
ARE  VALID. 

§  693- §  695.     General  Rules. 

§  693.  By-laws  void  in  Part.  —  A  by-law  which  consists  of 
two  or  more  distinct  parts  is  not  necessarily  void  in  toto  because 
one  part  of  it  is  invalid.^  If,  however,  the  bad  portion  is  not 
separable  from  the  rest,  the  whole  is  void.* 

§  694.  Void  By-laws  incorporated  into  Contracts.  —  A  bv-law 
that  is  not  valid  because  of  some  defect  in  its  adoption,  or  for 
illegality  or  unreasonableness,  may  nevertheless  be  incorporated 
into  a  contract  with  the  company  and  so,  as  to  that  particular 
transaction,  have  the  same  effect  as  if  it  were  valid. ^  Thus, 
where  a  code  of  by-laws  which  was  adopted  prior  to  the  incor- 
poration of  the  company  and  was  therefore  invalid  contains 
a  provision  that  subscriptions  to  shares  of  the  capital  stock 
should  be  payable  in  monthly  instalments,  a  subscriber  who 
signs  the  by-laws  thereby  agrees  to  pay  according  to  the  pro- 
vision therein  contained."    A  reference  in  a  contract  to  the  by- 

V.  Bishop,  103  Wise.  492;   79  N.  W.         *  State  v.  Curtis,  9  Nev.  325;  Rex 

785;  45  L.  R.  A.  174.  v.  Company  of  Fishermen,  8  T.  R. 

'  Morton  Gravel  Road  Co.  v.  Wy-  352,  356  (semble). 
song,  51  Ind.  4.  *  Muirhead  v.  Forth,  etc.  Mutual 

2  Darrin    v.    Hoff,    99    Md.    491,  Ins.  Ass'n  (1894),  A.  C.  72. 
499-500;  58  Atl.  196.  Cf.  Skelly  v.  Private  Coachmen's, 

'  Amesbury    v.     Bowditch    Mut.  etc.  Sac,  13  Daly  (N.  Y.)  2. 
Fire  Ins.  Co.,  6  Gray  (Mass.)  596;         '  Vercoutere  v.  Golden  State  Land 

Rex  V.  Company  of  Fishermen,  8  T.  Co..  116  Cal.  410;   48  Pac.  375. 
R.  352,  356  (semble).  Cf.    Pfister   v.   Gerwig,    122    Ind. 

VOL.  I.— 36  561 


§  695  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

laws  or  regulations  of  the  company  may  be  construed  to  apply 
to  the  regulations  as  amended  by  an  amendment  which  was 
never  legally  adopted.^ 

§  095.  Estoppel  to  deny  VaUdity  of  By-laws.  —  Certain  per- 
sons or  classes  of  persons  may  be  estopped  from  questioning 
the  validity  of  by-laws  that  would  be  open  to  attack  by  anybody 
who  is  free  to  assert  the  truth."  For  example,  a  shareholder 
who  participates  in  passing  a  by-law  confiding  to  the  share- 
holders the  power  of  levying  calls  instead  of  to  the  directors  as 
provided  by  statute  is  estopped  from  disputing  the  validity  of 
a  call  levied  by  a  shareholders'  meeting  in  pursuance  of  the  by- 
law.' So,  the  validity  of  a  by-law  providing  for  the  forfeiture 
of  shares  of  delinquent  shareholders  cannot  be  questioned  by 
one  who  although  not  shown  to  have  been  present  when  the 
by-law  was  adopted  yet  in  company  with  the  other  shareholders 
acquiesced  therein  and  accepted  a  share-certificate  on  which 
the  by-law  was  printed."  On  the  other  hand,  a  shareholder  who 
votes  in  favor  of  a  by-law  prohibiting  the  transfer  of  shares 
except  under  certain  onerous  conditions  does  not  preclude  him- 
self or  his  transferee  from  treating  the  regulation  as  invalid  if 
he  be  minded  to  transfer  his  shares.^  Moreover,  a  shareholder 
is  not  estopped  from  setting  up  the  invalidity  of  a  certain  by- 
law merely  because  he  raised  no  objection  to  it  until  an  attempt 
was  made  to  enforce  it  against  him.^  The  principle  of  the  maxim, 
allegans  contraria  nori  est  audiendus,  may  sometimes  be  invoked 
to  prevent  a  party  from  disputing  the  validity  of  a  by-law  upon 
which  he  must  rely  in  order  to  establish  his  title.^ 

567-    23  N.  E.   1041;    Fee  v.  Nat.  U.  S.  Savings,  etc.  Co.  v.  Shain,8'!:^. 

Masonic  Accident   Ass'n,   110  Iowa  Dak.  136;  77  N.  W.  1006;   Blue  Mt. 

271  ■   81  N.  W.  483.  Forrest  Ass'n  v.  Borrowe,  71  N.  H. 

^'  Muirhead  v.  Forth,  etc.  Mutual  69;    51  Atl.  670. 
Ins.  Ass'n  (1894),  A.  C.  72  (a  case         ^  Willamette    Freighting    Co.    v. 

relating  to  the  articles  of  association  Stannus,  4  Oreg.  261. 
of  a  British  company).  *  Lesseps  v.  Architects'  Co.,  4  La. 

2  Cf.  Morrison  v.  Dorsey,  48  Md.  Ann.  316. 
461;   Bergman  v.  St.  Paul,  etc.  Bldg.         "  Re   Klaus,   67  Wise.    401;     29 

Ass'n,  29  Minn.  275,  280-281;     13  N.  W.  582. 

N.  W.  120;   Falcone  V.  Societa  Sarti,         ^  Kolff    v.    St.    Paul    Fuel    Ex- 

61  N.  Y.  Supp.  873;    People  ex  rel.  change,    48   Minn.   215;     50   N.    W. 

Wallace  v.  Stirling  Mfg.  Co.,  82  111.  1036. 

457-  Reynolds  v.  Georgia  State  Bldg.,  ''  Rex  v.  College  of  Physicians,  5 

etc.  Ass'n,  102  Ga.  126;  29  S.  E.  187;  Burr.  2740,  2760-2761. 

562 


§  678-§  738]  WHAT    BY-LAWS    ARE    VALID  §  69G 


§  696-§  698.     By-laws  and  Regulations  must  he  legal. 

§  690.  Must  not  conflict  with  any  Statute.  —  The  first  condi- 
tion to  the  vahcHty  of  internal  rcf^uhitioiis  of  a  corporation  eitlier 
in  England  (m-  America  is  that  tiiey  l>e  legal,  and  do  not  C(^nflict 
with  the  provisions  of  the  statute  under  which  the  company 
is  organized,  or  with  any  other  statute  that  may  be  applicable. ' 
Thus,  a  provision  in  tlie  regulations  that  a  shareholder  shall 
not,  except  under  certain  conditions,  exercise  the  right  given 
him  by  statute  of  applying  for  a  winding-up  is  invalid.-  So,  too, 
a  by-law  providing  that  at  annual  meetings  of  the  company  any 
business  may  be  transacted  whether  specified  in  the  notice  of 
the  meeting  or  not  cannot  apply  to  a  vote  to  increase  the  capital 
of  the  company  where  a  vote  of  that  sort  is  required  by  statute 
to  be  taken  at  a  meeting  called  for  the  purpose.^  Still  more 
clearly,  a  by-law  purporting  to  absolve  shareholders  from  their 
statutory  liability  to  creditors  is  void.*  A  by-law  attempting 
to  authorize  the  company  to  enter  into  contracts  which  are  be- 
yond its  powers  as  defined  in  its  act  of  incorporation  is  of  course 
void.^  Moreover,  by-laws  must  l)e  in  harmony  with  the  general 
statutes  of  the  state.  Hence,  a  by-law  which  pro\ides  for  usuri- 
ous interest  upon  advances  to  stockholders  is  void.^  A  by-law 
providing  for  a  rate  of  interest  whicli  at  the  time  was  legal  is 
abrogated  by  a  subsequent  statute  making  so  high  a  rate  of  in- 
terest usurious.^  Moreover,  a  provision  in  the  regulations  of 
a  company  that  the  interest  of  a  bankrupt  shareholder  should 
not  pass  to  his  assignee  in  bankruptcy  would  contravene  the 
bankrupt  act;  but  on  the  other  hand  a  provision  that  the  as- 
signee in  bankruptcy  must  sell  the  shares  is  not  obnoxious  to 

'  Great    Falh,    etc.    Im.    Co.    v.  ■•  Wells  v.    Black,    117  Cal.    157; 

Harvey,  45  N.  H.  292.     Note,  how-  48  Pac.  1090;   59  Am.  St.  Rep.  162; 

ever,  that  a  by-law  waiving  a  privi-  37  L.  R.  A.  619. 

lege  conferred  upon  the  corporation         *  Andrews  v.  Union  Mutual  Fire 

by  statute  is  valid.    Dupuy  v.  East-  Ins.  Co.,  37  Me.  256.    As  to  by-laws 

ern  Bldg.,  etc.  Ass'n,  93  Va.  460;   25  for  ultra  vires  purposes,  see  further 

S.  E.  537;  35  L.  R.  A.  215.  infra.  §  699-§  701. 

=  Peverii  Gold   Mines    (1898),    1  «  Herbert   v.    Kenton,   etc.    Ass'n, 

Ch.  122.  74    Ky.    296;     Martin    v.    Xashville 

^  Jones   V.    Concord   &   Montreal  /?/(/<;.  .4ss'h,  2  Coldw.  (Tenn.)  418. 
R.   R.  Co.,  67  N.   H.    119,   140-141  '   Mechanics,   etc.    Ass'n   v.    Dor- 

(headnote  inadequate) ;  38  Atl.  120.  sey,  15  S.  Car.  462. 

563 


§  697  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

that  objection.'  In  determining  whether  or  not  a  by-law  is  in 
conflict  with  a  statute  regard  must  be  had  to  the  purpose  of  the 
statute ;  for  in  some  cases  the  legislature  may  have  intended  the 
statutory  rule  to  apply  only  where  the  company's  regulations 
are  silent  on  the  subject.- 

§  697.  Must  not  conflict  with  general  Principles  of  Corporation 
Law.  —  In  like  manner,  regulations  that  are  contrary  to  the 
spirit  of  the  incorporation  statute  or  to  the  general  principles 
of  corporation  or  company  law  —  such  as  provisions  purporting 
to  authorize  the  issue  of  shares  at  a  discount,^  or  the  payment 
of  dividends  out  of  capital/  or  the  purchase  by  the  company  of 
its  own  shares/  or  other  return  of  capital  to  the  shareholders  ^  — 
are  void.  Indeed,  such  by-laws  are  in  conflict  with  the  implied, 
if  not  expressed,  provisions  of  the  incorporation  act. 

§  698.  Must  not  conflict  with  Common  law.  —  So,  also,  by- 
laws that  are  contrary  to  any  rules  of  the  common,  law,  that  have 
not  been  abrogated  by  statutes,  are  illegal  and  void.  Of  course, 
this  proposition  does  not  mean  that  any  by-law  is  void  which 
lays  down  a  rule  different  from  that  which  would  prevail  if  the 
regulations  were  silent  on  the  subject;  for  if  that  were  the  case 
corporate  regulations  would  never  be  legal  except  when  super- 
fluous.'   The  doctrine  is  rather  that  any  by-law  or  other  regula- 

»  Borland's  Trustee  v.  Steel  Broth-  ^  Welton  v.  Saffory  (1897),  A.  C. 

ers  &  Co.  (1901),  1  Ch.  279.  299.    Cf.    Union   Savings    Bank    v. 

2  The  circumstances  under  which  Letter,  145  Cal.  696;    79  Pac.  441. 

a  by-law  is  deemed  to  conflict  with  *  Guinness  v.  Land  Corporation, 

the  general  law  have  been  weU  stated  22  Ch.  D.  349. 

by  Channell,  J.:  "A  by-law  is  not  *  Trevor  v.  Whitworth,   12  A.  C. 

repugnant  to  the  general  law  merely  409. 

because  it  creates  a  new  offence,  and  ^  Vercoutere  v.  Golden  State  Land 

says  that  something  shall  be  unlaw-  Co.,  116  Cal.  410;   48  Pac.  375. 

ful  which  the  law  does  not  say  is  un-  ^  Said  Lord  Campbell  in  Edmonds 

lawful.     It  is  repugnant  if  it  makes  v.  Com-pany  of  Watermen  &  Lighter- 

unlawful  that  which  the  general  law  men,  24  L.  J.  Magistrate  Cases  124, 

says  is  lawful.     It  is  repugnant  if  it  128:    "A  by-law  cannot  be  said  to 

expressly  or  by  necessary  implica-  be  inconsistent  with  the  laws  of  this 

tion  professes  to  alter  the  general  kingdom  merely  because  it  forbids 

law  of  the  land.    .    .    .    Again,  a  by-  the  doing  of  something  which  might 

law  is  repugnant  if  it  adds  something  lawfully  have  been  done  before,  or 

inconsistent  with  the  provisions  of  a  requires  something  to  be  done  which 

statute  creating  the  same  offence;  there  was  no  previous  obligation  to 

but  if  it  adds  something  not  incon-  do;    otherwise  a  nominal   power  of 

sistent,  that  is  not  sufficient  to  make  making   by-laws   would   be   utterly 

the  by-law  bad  as  repugnant."    Gen-  nugatorj'." 
tel  V.  Raps  (1902),  1  K.  B.  160,  166. 

564 


§  67S-§  73S]  WHAT    HV-LA\VS    ARE    VALID  §  G99 

tion  is  void  when  the  common  law  has  not  merely  a  diH'ereiit 
rule  but  also  a  difl'erent  policy.'  That  is  to  say,  in  order  to  strike 
down  a  by-law  or  regulation  as  illegal,  the  law  must  not  merely 
establish  a  different  rule  but  must,  either  expressly  or  by  im- 
plication from  its  general  policy,  provide  that  that  diilerent  rule 
shall  apply  not  only  when  the  regulations  are  silent  on  the  sub- 
ject, but  even  in  spite  of  l)y-laws  or  regulations  to  the  contrary. 
Thus,  although  the  common  law  does  not  permit  shareholders 
to  vote  by  proxy,  yet  a  by-law  authorizing  voting  by  proxy  is, 
according  to  the  better  view,  quite  valid.-  So,  although  the  com- 
mon law  gives  each  member  only  one  vote  no  matter  how  many 
shares  he  may  hold,  yet  a  by-law  allowing  one  vote  for  every 
share  owned  i)y  the  voter  is  valid.'  On  the  other  hand,  a  by- 
law of  a  mutual  benefit  or  insurance  society  attempting  to  ex- 
clude the  application  of  the  principle  of  equitable  estoppel  so 
as  to  prevent  an  estoppel  to  insist  upon  a  forfeiture  is  void.* 

§  699-§  701.     By-Iou's  and  Regulations  must  accord  with  the 
Charter  or  I ncorporatioti  Paper. 

§  699.  In  general.  —  The  next  requirement  is  that  the  by-laws 
or  reffulations  shall  be  not  merely  consonant  with  law,  but  also 
in  the  case  of  companies  incorporated  under  a  general  law  in 
accordance  with  the  company's  incorporation  paper,'  or  in  the 
case  of  corporations  created  by  royal  charter,  with  the  charter.^ 
Thus,  a  regulation  purporting  to  authorize  an  extension  of  the 
company's  business  beyond  the  objects  expressed  or  implied  in 
the  incorporation  paper  is  inefficacious.^  Of  course,  a  by-law 
which  conflicts  with  an  illegal  and  void  provision  of  the  incor- 
poration paper  is  not  by  reason  of  that  conflict  rendered  invalid.* 

'  Pulford  V.  Fire  Dept.,  31  Mich.  Free  Grammar  School,  14  L.  J.  Q.  B. 

458,    466;     Goddard    v.    Merchants'  67;    Rex  v.   Bumstead,  2  B.   &  Ad. 

Exchange,  9  Mo.  App.  290  (affirmed  699. 
on  opinion  below  in  78  Mo.  609).  '   Ashbury  Ry.,  etc.  Co.  v.  Riche, 

See  also  supra,  p.  564,  n.  1.  L.  R.  7  H.  L.  653,  671   (headnote 

=  Infra,  §  1252.  inadequate). 

^  Infra,  §  1216.  Cf.    Andrews   v.    Union   Mutual 

*  Morgan  v.    Independent  Order,  Fire  Ins.  Co.,  37  Me.  256. 

etc.  of  Jacob  (Miss.),  44  So.  791.  »  Booz's  Appeal,  109  Pa.  St.  592; 

«  Bergman  v.  St.  Paul,  etc.  Bldg.    1  Atl.  36. 
Ass'n,  29  Minn.  275;    13  N.  W.  120. 

•  Regina  ex  rel.  May  v.  Darlington 

565 


§  700  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

§  700.  Must  relate  to  Prosecution  of  Company's  Objects  or  Busi- 
ness. —  Every  by-law  of  a  corporation  must  have  for  its  object 
the  furtherance  of  the  company's  business  or  undertaking.  An 
industrial  or  business  corporation  has  no  right  to  legislate  for 
the  spiritual  health  or  moral  welfare  of  the  community  at  large, 
or  even  of  its  own  members.^  On  this  groimd,  a  by-law  of  a 
canal  company  prohibiting  navigation  on  its  waterway  on  Sunday 
has  been  held  void.-  Although  no  one  will  call  in  question  the 
principle  of  this  decision,  yet  the  application  to  that  particular 
case  may  well  be  deemed  doubtful.  Certainly,  a  mere  private 
industrial  company  may  by  its  regulations  prohibit  the  trans- 
action of  its  business  on  Sunday,  not  indeed  on  religious  or 
moral  grounds,  but  merely  for  the  well-being  of  the  corporation.^ 
If,  therefore,  the  canal  case  is  to  be  supported,  it  must  be  upon 
the  ground  that  a  canal  is  a  public  highway,  so  that  the  right  of 
a  company  to  regulate  navigation  thereon  will  be  jealously  re- 
stricted v.-ithin  the  narrowest  limits.  Of  course,  a  corporation 
which  is  formed  for  the  purpose  of  promoting  commercial  integ- 
rity among  the  members,  such  as  the  mediaeval  guilds,  or  for  the 
purpose  of  encouraging  morality  or  religion  among  its  members, 
may  enact  any  by-laws  reasonably  adapted  to  the  attainment  of 
those  ends.*  In  every  case,  the  question  is  whether  the  by-law 
is  germane  to  the  purpose  for  which  the  company  is  formed. 
To  attempt  to  collate  all  the  cases  would,  therefore,  be  both 
profitless  and  impertinent. 

§  701.  Whether  express  Power  to  enact  By-laws  for  one  Purpose 
excludes  implied  Power  to  enact  By-laws  for  other  Purposes.  — 
There  is  an  oft-cited  dictum  of  Lord  Macclesfield  in  an  early 
case  that  a  provision  in  a  company's  charter  conferring  power  to 

'  Kolff  V.  St.  Paid  Fuel  Exchange,         *  Warren  v.  Louisville  Leaf,  etc. 

48  Minn.  21,5  (headnote  inadequate) ;  Co.,  55  S.  W.  Rep.  912  (Ky.) ;  People 

50  N.  W.  1036.  V.  Chicago  Board  of  Trade,  45  111.  1 12 ; 

^  Colder  Nav.  Co.  v.  Pilling,   14  People  ex  rel.  Thacher  v.  N.  Y.  Com- 

M.  &  W.  76.     A  by-law  of  a  chari-  mercial  Ass'n,  18  Abb.  Pr.   (N.  Y.) 

table  society  requiring  mennbers  to  271 ;    Dickenson  v.  Chamber  of  Conv- 

receive  the  sacrament  according  to  merce,  29  Wise.  45 ;  9  Am.  Rep.  544 ; 

the    rites    of   the    Roman    Catholic  Wood  v.  Chamber  of  Commerce,  119 

Church    is    void.      People    ex    rel.  Wise.    367;    96   N.   W.  835   (where 

Schmitt  V.   Saint  Franciscus  Benev-  the  offence  was  committed  outside 

olent  Society,  24  How.  Pr.   (N.  Y.)  the    territorial    jurisdiction    of    the 

216  (headnote  inadequate).  corporation). 

'  Granger  v.  Grubb,  7  Phila.  (Pa.) 
350. 

5G6 


§  G78-§  738]  WHAT    BY-LAWS    ARE    VALID  §   702 

enact  In-laws  for  one  purpose  impliedly  prohibits  by-laws  for 
any  other  purpose.'  But  in  that  case,  the  power  conferred  was 
to  make  by-laws  for  the  management  of  the  conij^any's  business, 
and  the  by-law  that  was  held  invalid  related  to  an  ultra  vires 
and  illegal  enterprise.  The  case,  therefore,  decides  merely  that 
power  to  enact  by-laws  for  intra  vires  purposes  forbids  by  im- 
plication by-laws  for  ultra  vires  purposes  —  a  proposition  that 
needs  no  argument  in  its  support.  Probably,  the  chancellor 
intended  to  lay  down  no  other  or  further  proj)osition  of  law. 
It  is  submitted  that  a  power  to  enact  by-laws  for  one  intra  vires 
purpose  does  not  prohibit  by-laws  for  other  intra  vires  objects.^ 
Indeed,  as  we  have  already  shown,  the  power  to  enact  by-laws 
is  little  more  than  the  power  to  prescribe  a  regular  order  or 
course  of  action,  in.stead  of  leaving  each  particular  ca.se  to  be 
dealt  with  separately ;  and  hence  the  power  cannot  well  be 
severed  from  the  power  of  the  corporation  to  act  in  respect  to 
any  subject-matter.  At  all  events,  it  is  submitted  that  the  maxim 
expressio  unius  cxclusio  altcrius  should  be  very  cautiously  applied 
where  the  effect  is  to  abridge  the  company's  power  of  making 
by-laws  or  rules  for  its  orderly  government.  The  legislature 
should  be  required  to  use  express  language  if  it  desires  to  accom- 
plish that  object. 


§  702-§  715.     OF     THE    RULE    THAT    BY-LAWS    MUST    BE 
REASONABLE. 

§  702.  In  general  —  As  applied  to  By-laws  and  English  Articles. 
—  From  the  earliest  times,  it  has  been  laid  down  and  held  that 
by-laws  to  be  valid  must  be  reasonable.  In  America  this  doc- 
trine is  constantly  enforced  by  the  courts  with  possibly  too  great 
rigor.  No  instance  has  been  found  in  which  articles  of  associ- 
ation of  an  iMiglish  company  that  were  consistent  with  law  and 
with  the  terms  of  the  mernorandum  have  been  held  invahd  dis- 
tinctly on  the  mere  ground  of  unreasonableness.    Yet  it  is  not 

'  Child  V.   Hudson's   Bay  Co.,  2  where  other  reasons  were  assigned 

P.  Wms.  207,  209.    Accord:    Ireland  for  the  invalidity  of  the  same  by- 

V.  Globe  Milling  Co.,  19  R.  I.   180;  law);    State  v.  Ferguson,  33  N.   H. 

32  Atl.  921:    61  Am.  St.  Rep.  7.56;  424,430-431  (municipal  ordinances). 
29  L.  R.  A.  429  (with  wliich  compare  -  People's    Home    Sav.    Bank    v. 

Ireland  v.  Globe  MUling  Co.,  21  R.  I.  Sadler  (Cal.),  81  Pac.  1029. 
9;  41  Atl.  258;  79  Am.  St.  Rep.  769; 

567 


§  702  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

to  be  doubted  that  in  a  clear  case  an  English  court  would  apply 
the  doctrine  to  articles  of  association/  Of  course,  as  already 
more  than  once  stated,  the  greater  formality  of  English  articles 
of  association  protects  from  the  imputation  of  unreasonableness 
manv  provisions  that  in  mere  unrecorded  by-laws  would  be  open 
to  that  objection.  jNIoreover,  inasmuch  as  the  original  articles 
of  a  British  company  are  prepared  and  recorded  contempora- 
neouslv  with  the  memorandum  of  association,  every  subscriber 
to  shares  has  knowledge,  or  the  opportunity  of  knowledge,  of 
their  terms,  and  consequently  cannot  with  much  grace  complain 
that  although  legal  they  are  unreasonable  and  so  void.  Then, 
too,  the  British  courts,  with  a  disposition  to  adhere  closely  to  the 
phraseology  of  the  particular  statute  in  question  without  regard- 
ing the  act  as  a  mere  part  of  the  historical  development  of  cor- 
poration law,  may  be  unduly  influenced  by  the  fact  that  their 
statute  confers  in  unlimited  terms  the  power  of  enacting  articles 
of  association. 

In  a  recent  case,  Lindley,  M.  R.,  said,  "Wide,  however,  as 
the  language  of  s.  50  is"  —  the  section  of  the  Companies  Act 
which  confers  the  power  of  altering  the  articles  of  association  — 
"the  power  conferred  by  it  must,  like  all  other  powers,  be  exer- 
cised subject  to  those  general  principles  of  law  and  equity  which 
are  applicable  to  all  powers  conferred  on  majorities,  and  enabling 
them  to  bind  minorities.  It  must  be  exercised,  not  only  in  the 
manner  required  by  law,  but  also  bona  fide  for  the  benefit  of  the 
company  as  a  whole,  and  it  must  not  be  exceeded.  These  con- 
ditions are  always  implied  and  are  seldom,  if  ever,  expressed. 
But  if  they  are  complied  with,  I  can  discover  no  ground  for 
judicially  putting  any  other  restrictions  on  the  power  conferred 
by  the  section  than  are  contained  in  it."  ^ 

However,  an  article  declaring  that  if  any  member  of  the  com- 
pany should  commence  or  threaten  any  legal  proceedings  against 
the  company  his  shares  should  be  liable  to  forfeiture  has  been 
held  invalid.^  And  an  article  that  is  adopted  for  a  fraudulent 
purpose  is  void.*    So,  it  has  been  thought  that  an  article  varying 

»  Cf.   Mineral   Water   Bottle,   etc.         ^  Allen   v.    Gold   Reefs   of    West 
Soc.  V.  Booth,  36  Ch.  D.  465  (where    Africa  (1900),  1  Ch.  656,  671. 
a  provision  in  articles  of  association         ^  Hope     International    Financial 
in  unreasonable    restraint  of   trade    Soc,  4  Ch.  D.  327. 
was  held  void).  ■*  Clarke  &  Helden's  Case,  37  L.  T 

222. 
568 


§  67S-§  738]  WHAT    15Y-LA\VS    AliE    VAl.ll)  §  705 

tlie  liability  of  the  several  shareholders  on  their  respective  shares 
without  their  consent,  increasing  that  of  some  and  diminishing 
that  of  others,  would  be  void.' 

§  703.  By-laws  presumptively  reasonable.  —  It  is  unneces.sary 
to  consider  what  by-laws  are  reasonable,  but  rather  to  intjuire 
what  are  unreasonable.  Any  by-law  that  is  not  in  conflict  with 
ahy  statute  or  with  the  company's  charter  or  incor{)oration 
paper,  is* presumptively  valid;  and  the  burden  of  showing  its 
unrea.sonableness  rests  upon  the  party  who  challenges  its 
validity.- 

§  704.  Legal  Standard  of  Reasonableness.  —  Before  consid- 
ering in  detail  certain  groups  or  classes  of  unreasonable  and 
consecjuently  invalid  by-laws  the  legal  rule  or  standard  of  reason- 
ableness should  be  clearly  understood.  "In  order  to  avoid  a 
by-law  upon  the  ground  of  its  being  unreasonable  because  of 
some  inconvenience  that  may  result  from  it,  it  should  appear  to 
be  a  probable  inconvenience;  for  one  can  hardly  predicate,  of 
any  law,  that  some  possible  inconvenience  may  not  result  from 
it."  ^  Moreover,  "the  long  continuance  of  a  by-law,  tJiough  it 
would  not  legalize  it  if  it  were  in  itself  illegal,  is  fair  evidence 
to  show  that  there  is  no  intrinsic  inconvenience  in  it."  *  The 
question  whether  or  not  a  by-law  is  unreasonable  is,  in  actions 
at  law,  for  the  court  and  not  the  jury.^ 

§  70o-§  711.       BY-LAWS  IN  RESTRAINT  OF  TRADE  OR  ALIENATION. 

§  705.  In  general.  —  One  of  the  most  ancient  grounds  for 
declaring  a  by-law  to  be  unreasonable  and  void  is  that  it  operates 
in  unreasonable  restraint  of  trade  or  alienation.^  The  rule  in 
reference  to  by-laws  restraining  trade  or  alienation  is  the  same 

'  Teasdale's  Case,  9  Ch.  54,  59  350, 351  (headnote  inadequate);  Hi- 
(semble).  hernia    Fire,    etc.    Co.    v.    Common- 

*  Granger  v.  Grubb,  7  Phila.  (Pa.)  '  wealth  ex  rel..  Harrison,  93  Pa.  St. 
350,  354  (headnote  inadequate);  264;  Master  &  Company  of  Frame- 
Hihernia  Fire,  etc.  Co.  v.  Common-  workers  y.  Green,  1  Ld.  Raym'd  113, 
wealth  ex  rel.  Harrison,  93  Pa.   St.     114  (headnote  inadequate). 

264.  Cf.  State  v.  Overton,  24  N.  J.  Law 

^  Rex  V.  Ashwell,  \2  East  22,  28-  435,   440-442;     61    Am.    Dec.    671; 

29  (per  Lord  EUenborough,  C.  J.).  Morris,  etc.  R.  R.  Co.  v.  Ayres,  29 

*  Rex  V.  Ashwell,  12  East  22,  29  N.  J.  Law  393;  Compton  v.  Van 
(per  Lord  Ellenborough,  C.  J.),  32-  Volkenbnrgh,  34  N.  J.  Law  134. 

33  (per  Bayley,  J.).  "  Cf.    Ipswich   Taylors'   Case,   11 

'  Granger  v.  Grubb,  7  Phila.  (Pa.)    Coke  53. 

569 


§  706  BY-LAWS    AND    INTERNAL    REGULATIONS       [ClIAP.   XII 

as  the  rule  in  respect  to  contracts  having  a  similar  effect.  That 
is  to  sav,  a  bv-law  is  not  void  merely  because  its  enforcement 
will  result  in  restraint  of  trade;  in  addition  to  this,  the  restraint 
of  trade  must  be  unreasonable.  For  this  reason,  Lord  Kenyon 
thought  that  a  by-law  of  a  company  of  fishermen  forbidding  any 
member  from  carrying  on  trade  on  his  own  account  in  competi- 
tion with  the  company  would  be  valid.  ^  But  any  by-law  tHe 
effect  of  which  is  restraint  of  trade  is  prima  facie  void,  and 
therefore  cannot  be  enforced  unless  the  party  relying  upon  it 
establishes  affirmatively  the  reasonableness  of  the  restraint.  For 
this  reason,  a  by-law  of  a  guild  of  gunmakers  of  London  pro- 
hibiting its  members  from  selling  guns  to  non-members  within 
the  city,  or  from  stamping  their  marks  on  wares  manufactured 
by  non-members,  was  declared  void.'^  For  the  same  reason,  a 
by-law  of  a  guild  of  coopers  forbidding  any  member  to  have 
more  than  one  apprentice  is  invalid.^  So  a  regulation  of  an  asso- 
ciation of  manufacturers  providing  that  no  member  should 
employ  a  servant  who  had  left  the  service  of  another  member 
is  void.* 


§  706-§  7n,     By-laws  restricting  Transfer  ability  of  Shares. 

§  706.  In  general.  —  In  these  latter  days,  although  the  at- 
tempts of  corporations  to  restrain  trade  are  certainly  not  less 
frequent  than  in  former  times,  yet  the  object  is  sought  to  be 
accomplished  in  different  ways  from  those  which  the  cases 
above  cited  show  to  have  been  employed  in  former  times.  The 
same  principles  of  law,  however,  apply.  The  most  frequent 
application  of  these  principles  to  the  by-laws  of  modern  incor- 
porated companies  is  in  cases  of  attempts  to  restrict  the  free 
transferability  of  the  shares.     Many  by-laws  having  such  an 

1  Rex  V.  Company  .of  Fishermen,  Press,  136  N.  Y.  333;   32  N.  E.  981;  • 

8  T.   R.  352.     Quwre  whether  this  32  Am.  St.  Rep.  741   (upholding  a 

dictum  is  law  with  respect  to  modem  bj'-law  of  a  news-gathering  associa- 

incorporated  joint-stock  companies,  tion   forbidding   members   to   print 

-  Master,    etc.    of   Gunmakers   v.  news    collected    by    rival    organiza- 

Fell,  Willes  384.  tions. 

Cf.    People  ex  rel.   Mcllhany   v.         ^  Rex  v.  Wardens  of  Coopers'  Co., 

Chicago   Live   Stock    Exchange,    170  7  T.  R.  543. 

111.  556;   48  N.  E.  1062;   62  Am.  St.         "  Mineral  Water  Bottle,  etc.  Soc. 

Rep.  404;   39  L.  R.  A.  373.  v.  Booth,  36  Ch.  D.  465. 

But   cf.    Matthews   v.    Associated 

570 


§  G78-§  738] 


WHAT    BY-LAWS    ARE    VALID 


roo 


object  have  been  relentlessly  stricken  down.  Thus,  a  by-law 
restricting  the  right  of  shareholders  to  alienate  their  shares,  by 
providing  that  any  one  desiring  to  sell  shall  first  notify  the  com- 
pany of  the  price  he  can  obtain,  at  which  ])rice  the  other  share- 
liolders  or  the  company  shall  have  the  option  of  purchasing, 
has  been  held  void.'  A  fortiori,  it  has  been  held  that  a  by-law 
forbidding  a  transfer  of  shares  without  the  consent  of  all  the 
shareholders  or  of  the  directors  is  void ;  -  and  the  same  is  true  of 
a  by-law  limiting  the  number  of  shares  which  any  one  person 
may  hold.""  The  same  has  been  held  of  a  by-law  purporting  to 
give  the  company  a  lien  on  its  shares  for  all  debts  of  the 
holders,  and  to  forbid  any  transfer  until  such  indebtedness  is 
paid;*  although,  according  to  the  weight  of  autliority,  such  a 


'  Victor  G.  Bloede  Co.  v.  Bloede, 
84  Md.  129;  34  Atl.  1127;  57  Am. 
St.  Rep.  373;  33  L.  R.  A.  107;  Ire- 
land V.  Globe  MUlimj  Co.,  21  R.  I. 
9;  41  Atl.  2.58;  79  Am.  St.  Rep.  769; 
Trust  &■  Savings  Co.  v.  Home  Lumber 
Co.,  118  Mo.  447;  24  S.  W.  129. 

But  cf.  Pfister  v.  Gerwig,  122  Ind. 
567;  23  N.  E.  1041;  Blue  Mt.  For- 
rest Ass'n  V.  Borrowe,  71  N.  H.  69; 

51  Atl.  670;  Barrett  v.  King,  03 
N.  E.  934;    181  Mass.  476. 

2  In  re  Klaus,  67  Wise.  401 ;  29 
N.  W.  582 ;  MUler  v.  Farmers'  Mill- 
ing, etc.  Co.  (Nebr.),  110  N.  W.  995. 
Farmers',  etc.  Bank  v.  Wasson,  48 
Iowa  336;  30  Am.  Rep.  398;  Im- 
perial Starch  Co.,  10  Ont.  L.  R.  22. 

Cf.  Herring  v.  Ruskin,  etc.  Ass'n, 

52  S.  W.  Rep.  327  (Term.) ;  McNulta 
V.  Corn  Belt  Bank  164  111.  427,  447; 
45  N.  E.  954 ;  56  Am.  St.  Rep.  203 ; 
Sargent  v.  Franklin  Ins.  Co.,  8  Pick. 
(Mass.)  90;    19  Am.  Dec.  306. 

'  Miller  v.  Farmers'  Milling,  etc. 
Co.  (Nebr.),  110  N.  W.  995;  O'Brien 
V.  Cummings,  13  Mo.  App.  197.  Cf. 
Richardson  v.  Devine  (Mass.),  79 
N.  E.  771. 

*  Driscoll  V.  TFc.s<  Bradley,  etc.  Co., 
59  N.  Y.  96;  Kiniian  v.  Sullivan 
County  Club,  26  N.  Y.  App.  Div.  213; 
50  N.  Y.  Supp.  95;  Trust  cfc  Savings 
Co.  V.  Home  Lumber  Co.,  118  Mo. 
447;  24  S.  W.  129;   Bank  of  Atchison 


Co.  V.  Durfee,  118  Mo.  431 ;  24  S.  W. 
133;  40  Am.  St.  Rep.  396;  Bank  of 
Holly  Springs  v.  Pinson,  58  Miss. 
421;  38  .\m.  Rep.  330;  Rosenback 
V.  Salt  Sprvigs  Xat.  Bank,  53  Barb. 
(N.  Y.)  495 ;  New  Orleans  Xat.  Bank- 
ing Ass'n  V.  Wiltz,  10  Fed.  330  (head- 
note  inadequate). 

Cf.  Feckheimer  v.  Nat.  Exchange 
Bank,  79  Va.  80. 

But  see  Lockwood  v.  Mechanics 
Nat.  Bank,  9  R.  I.  308;  11  Am.  Rep. 
253;  Wain's  Assignees  v.  Bank  of 
N.  Am.,  8  S.  &  R.  (Pa.)  73;  11  Am. 
Dec.  575  (where  the  lien  was  estab- 
lished by  usage  equivalent  to  a  by- 
law); Cunningham  v.  Ala.  Life  Ins., 
etc.  Co.,  4  Ala.  652;  Re  Bachman,  2 
Fed.  Cas.  310;  Gerjer  v.  Western  Ins. 
Co.,  3  Pittsburg  (Pa.)  41 ;  Young  v. 
Vough,  23  N.  J.  Eq.  325 ;  Child  v. 
Hudson's  Bay  Co.,  2  P.  Wms.  207; 
McDowell  V.  Bank  of  Wilmington,  1 
Harr.  (Del.)  27;  Knight  v.  Old  Nat. 
Baiik,  3  Cliff.  429;  Wetherell  v. 
Thirty-first  Street,  etc.  Ass'n,  153  111. 
361;  39  N.  E.  143;  Re  Bachman.  2 
Cent.  L.  J.  1 19. 

As  to  a  by-law  purporting  to  give 
the  company  a  lien  wliere  by  statute 
loans  on  security  of  the  company's 
own  shares  are  forbidden,  .see  Evan- 
ville  Nat.  Bank  v.  Metropolitan  Nat. 
Baiik.  2  Biss.  527;  Buffalo  German 
Ins.   Co.   V.    Third  Nat.    Bank.    162 


571 


I  707  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

by-law  is  valid  except  as  against  purchasers  of  shares  without 
notice  of  the  regulation,^  being  effective  even  as  against 
attaching  creditors  of  the  shareholder.-  A  by-law  providing 
that  upon  the  death  of  a  shareholder  his  shares  shall  be  pur- 
chased by  the  company  has  been  held  valid ;  ^  but  according  to 
the  principles  generally  established  in  the  United  States  it  would 
seem  necessarily  to  follow  that  such  a  by-law  should  be  held 
void/  even  apart  from  the  objection  that  it  contemplates  an 
unauthorized  reduction   of  capital. 

§  707.  Efiect  of  Agreement  of  Shareholder  to  abide  by  a  By-law 
restricting  his  Right  of  Alienation. "—  A  shareholder  may  agree  to 
be  bound  by  by-laws  which  impose  restrictions  on  his  power  of 
alienating  his  shares  and  which  might  apart  from  such  agreement 
be  held  null  and  void.  For  instance,  a  person  who  subscribes 
for  shares,  with  knowledge  of  a  by-law  providing  that  any  share- 
holder desirous  of  selling  his  shares,  or  the  executor  of  any 
deceased  shareholder,  shall  sell  the  shares  to  the  company  at  a 
valuation  to  be  placed  thereon  by  the  directors  and  who  accepts 
a  share-certificate  upon  which  that  by-law  is  indorsed,  is  taken 
to  agree  to  be  bound  thereby;    and  consequently,  whether  or 

N.  Y.  163;  56  N.  E.  521 ;   48  L.  R.  v.  Long  Island  Bank,  83  Hun  (N.  Y.) 

A.  107.  affirmed  in  Third  Nat.  Bank  92;    31  N.  Y.  Supp.  406;    Tuttle  v. 

V.  Buffalo  German  Ins.  Co.,  193  U.  S.  Walton,  1  Ga.  43;    Young  v.  Vough, 

581;     24  Sup.  Ct.  524  (where   the  23   N,   J.    Eq.   325;     Pcndergast   v. 

by-law  although    embodied    in  the  Bank  of  Stockton,  2  Sawy.  \0S;  Bank 

share-certificate   was    held    inopera-  of  Culloden  v.  Bank  of  Forsyth,  120 

tive  more  on  account  of  the  supposed  Ga.  575;   48  S.  E.  226;    102  Am.  St. 

pohcy  of  the  law  favoring  the  alien-  Rep.    115;     McKain  and  Canadian 

ability  of  shares  than  on  account  of  Birbeck,  etc.  Co.,  7  Ont.  L.  R.  241 

the  express  provision  in  the  National  (headnote  inadequate). 
Bank  Act  prohibiting  loans  on  secur-  Cf.    Auglo-Californian    Bank    v. 

ity  of  the  bank's  own  shares) ;  Nicol-  Granger's  Bank,  63  Cal.  359;    Tete  v. 

let    Nat.    Bank    v.    City    Bank,    38  Farmers',  etc.  Bank,  4  Brewst.  (Pa.) 

Minn.  85;  35  N.  W.  577;   8  Am.  St.  308;   Costello  v.  Portsmouth  Brewing 

Rep.  643;   Delaware,  etc.  R.  R.  Co.  Co.,   69  N.   H.   405;    43   Atl.   640; 

V.   Oxford   Iron  Co.,  38  N.   J.    Eq.  McDowell  v.  Bank  of  Wilmington,  1 

340;  Bank  v.  Lanier,  11  Wall.  369;  Har.  (Del.)  27;    Just  v.  State  Bank, 

Bullard  v.  Bank,  18  Wall.  589;   Van-  94  N.  W.  200;    132  Mich.  600. 
sands  v.  Middlesex  County  Bank,  26         =^  Farmers',  etc.  Bank  v.  Haney,  87 

Conn.     144;    Knight    v.    Old    Nat.  Iowa  101;   54  N.  W.  61.    See  infra, 

Bank,  3  Chff.  429,  437;    Bridges  v.  §  956. 

Nat.  Bank  of  Troy,  185  N.  Y.  146.  ^  Howe  Grain  &  Mercantile  Co.  v. 

'  Grafjiin    Co.    v.    Woodside,    87  Jones,  21   Tex,   Civ.   App.    198;   51 

Md.    146;     39    Atl.    413    (semble);  S.  W.  24. 

Branson  Electric  Co.  v.  Rheubottom,         *  Herring  v.  Ruskin  Co-op.  Ass'Ut 

122  Mich.  608;  81  N.  W.  563;  Gibbs  52  S.  W.  Rep.  327  (Tenn.). 

572 


§  678-§  738]  WHAT    BY-LAWS    ARE    VALID  §  7QS 

not  the  by-law  would  proprio  vigore  be  operative,  an  executor  of 
a  deceased  shareholder  may  be  com{)elled  by  a  court  of  equitv 
to  assign  his  shares  to  the  company  at  the  valuation  placed 
thereon  by  the  directors.*  Moreover,  if  a  shareholder  is  bound 
in  this  way  by  a  contract  or  agreement  to  recognize  and  abide 
by  restrictions  upon  his  power  of  alienation  sought  to  be  imposed 
by  the  by-law,  any  transferee  taking  with  notice  is  subject  to 
the  same  restriction ;  -  though  the  rule  is  otherwise  where  he  had 
no  notice  thereof.^  Similarly,  if  a  shareholder  with  knowledge 
of  a  by-law  purporting  to  give  the  company  a  lien  on  its  shares 
for  debts  due  from  the  holders  borrows  money  from  the  company, 
he  will  be  deemed  to  pledge  his  shares  to  secure  the  debt  whether 
the  by-law  be  valid  or  not ;  and  any  transferee  from  the  debtor 
would  likewise  be  bound  by  the  lien  unless  he  be  a  bona  fide 
purchaser  for  value/ 

§  708.  Effect  of  accepting  Share-Certificate  referring  to  the  By- 
law. —  According  to  some  authorities,  the  mere  fact  that  a  by- 
law purporting  to  restrict  transfers  is  indorsed  on  a  share-cer- 
tificate gives  it  no  additional  validity;^  but  according  to  other 
cases,  the  acceptance  of  such  a  certificate  in  itself  amounts  to  a 

'  New  England  Trust  Co.  v.  Ab-  bean  "undesirable associate"  should 
bott,  162  Mass.  148;  38  N.  E.  432;  27  have  the  right  to  take  his  shares  at 
L.  R.  A.  271.  The  opinion  of  the  their  cash  value);  Williams  v.  Mont- 
court,  which  of  course  assumes  that  gomery,  148  N.  Y.  519;  43  N.  E.  57 
the  company  has  power  to  acquire  (enforcing  a  contract  between  share- 
its  own  shares,  is  characterized  by  a  holders  not  to  sell  their  shares  for 
breadth  of  view  to  which  few  of  our  si.x  months). 
courts  have  attained.  ^  Bank  of  Atchison  Co.  v.  Durfee, 

Cf.  Blue  ML  Forrest  Ass'n  v.  118  Mo.  431,  445-447;  24S.  W.  133; 
Borrowe,  71  N.  H.  69;  51  Atl.  670;  40  Am.  St.  Rep.  396;  Jennings  v. 
Boswell  V.  Buhl,  213  Pa.  450;  63  Bank  of  California,  79  Cal.  323;  21 
Atl.  56  (upholding  an  express  con-  Pac.  852;  12  Am.  St.  Rep.  145;  5 
tract  between  shareholders  whereby    L.  R.  A.  233. 

any  shareholder  desiring  to  sell  his  ^  Ireland  v.  Globe  Milling  Co.,  21 
shares  agreed  to  offer  them  to  the  R.I.  9;  41  Atl.  258;  79  Am.  St.  Rep. 
other  shareholders  at  a  price  to  be    769. 

determined  by  a  majority  of  the  *  Grafflin  Co.  v.  Woodside,  87  Md. 
stock);  Lindsay's  Estate,  210  Pa.  146;  39  Atl.  413;  Jennings  v.  Bank 
224;  59  Atl.  1074  (similar  point  as  of  California,  79  Cal.  323;  21  Pac. 
last  case);  FUzsimmons  v.  Lindsay,  852;  12  Am.  St.  Rep.  145;  5  L.  R.  A. 
205    Pa.  79;    54    Atl.  488    (similar    233. 

point);  Boggs  v.  Boggs  &  Buhl.  ^  Herring  v.  Ruskin,  etc.  Ass'n, 
(Pa.),  66  Atl.  105  (specifically  en-  52  S.  W.  Rep.  327  (Tenn.);  Third 
forcing  an  express  contract  wliereby  \at.  Bank  v.  Buffalo  Gernmn  Inn. 
the  majority  of  the  shareholders  Co.,  193  U.  S.  581;  24  Sup.  Ct.  524. 
upon  deciding  a  fellow  member  to 


§  709  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

valid  contract  on  the  part  of  the  holder  to  be  bound  by  the 
restriction.'  Necessarily  such  indorsement  gives  notice  of  the 
restriction  to  every  transferee  of  the  certificate,-  and  we  have 
seen  above  that  such  notice  may  be  material.  Indeed,  a  mere 
reference  in  a  share-certificate  to  articles  of  association  subject 
to  which  the  shares  are  held  but  the  terms  of  which  are  not  stated 
has  been  held  sufficient  notice  to  put  a  purchaser  upon  inquiry.^ 
If  bv-laws  which  purport  to  give  the  company  a  lien  on  its  shares 
for  debts  of  the  holder  provide  that  notice  of  the  lien  shall  be 
endorsed  on  the  share-certificate,  a  failure  to  insert  such  a  provi- 
sion in  a  certificate  amounts  to  a  waiver  of  the  lien  on  the  shares 
represented  thereby,  even  if  the  by-law  attempting  to  create  the 
lien  be  valid.* 

§  709.  Observations  on  unfortunate  Condition  of  American  Law 
in  Respect  to  these  Matters.  —  Decisions  striking  down  as  in- 
valid bv-laws  which  qualify  somewhat  the  otherwise  unrestricted 
right  of  a  shareholder  to  alienate  his  shares  present  a  most  forcible 
illustration  of  the  unsatisfactory  character  of  the  informal  Ameri- 
can by-laws.  In  view  of  the  informal  nature  of  by-laws,  no 
different  results,  except  in  some  cases,  could  have  been  reached 
by  the  courts  without  injustice.^    But,  certainly,  the  law  is  in  an 

'  Stafford    v.    Produce    Exchange  Warren  County  Bank,  97  Iowa  204; 

Banking  Co.,   61   Oh.    St.    160;    55  66  N.  W.  154;  McKain  and  Canadian 

N.  E.   162;    76  Am.  St.  Rep.  371;  Birbeck,  etc.  Co.,  7  Ont.  L.  R.  241 

Jennings  v.   Bank  of  California,  79  (where  a  statement  in  the  certificate 

Cal.  323;    21  Pac.  852;    12  Am.  St.  that  the  shares  were  held  subject  to 

Rep.  145;  5  L.  R.  A.  233;  Morrison-  the  "articles"  was  held  not  to  give 

Wentworth  Bank  v.  Kerdolff,  75  Mo.  notice  of  a  by-law  giving  the  com- 

App.  297.  pany  a  lien). 

Cf.  Vansandsx.  Middlesex  County  *  Bank  of  Holly  Springs  v.  Pin- 
Bank,  26  Conn.  144;  Reynolds  v.  son,  58  Miss.  421 ;  38  Am.  Rep.  330; 
Bank  of  Mt.  Vernon,  6  N.  Y.  App.  Trust  &  Savings  Co.  v.  Home  Lumber 
Div.  62;  39  N.  Y.  Supp.  623  Co.,  118  Mo.  447,  460-461 ;  24  S.  W. 
(affirmed  short  in  158  N.  Y.  740;  53  129. 
N.  E.  1131).  *  Cf.  McKain  and  Canadian  Bir- 

^  State  Savings  Ass'n  v.   Nixon-  heck,   etc.    Co.,    7    Ont.    L.    R.    241 

Jones  Printing  Co.,  25  Mo.  App.  642;  (distinguishing  between  unrecorded 

Buffalo  German    Ins.    Co.    v.    Third  by-laws  and   recorded  "articles"  of 

Nat.  Bank,  19  N.  Y.  Misc.  564;    43  EngUsh  companies).     As  to  the  dis- 

N.  Y.  Supp.  550;    Bank  of  Culloden  tinction   in   respect    to   this   matter 

v.  Bank  of  Forsyth,  120  Ga.  575;   48  between  provisions  contained  in  the 

S.  E.  226;    102  Am.  St.  Rep.  115.  recorded   constitution   of    the    com- 

'  Gibbs  V.  Long  Island  Bank,  83  pany  and  similar  provisions  con- 
Hun  (N.  Y.)  92;  31  N.  Y.  Supp.  406.  tained  in  mere  by-laws,  see  Mohawk 

Cf.    Des    Moines    Nat.    Bank    v.  Nat.  Bank  v.  Schenectady  Bank,  78 

574 


§  678-§  738]  WHAT    BY-LAWS    AKK    VALID  §  710 

unfortunate  state  if  tlie  organizers  of  a  corporation  cannot  restrict 
the  right  of  members  to  transfer  their  shares,  —  cannot  create  a 
"close  corporation."  In  England,  the  validity  of  articles  of 
association  having  that  eliect  has  been  uniformly  assumed.  In- 
deed, a  whole  class  of  English  companies  —  so-called  "private 
companies"  —  are  formed  on  this  principle.  This  elasticity  of 
the  13ritish  law  permits  of  the  formation  of  family  corporations 
and  other  companies  whose  shares  are  not  intended  for  j)ul)lic 
subscrij)tion  and  which  are  in  reality  merely  private  partnerships 
authorized  by  law  to  enjoy  the  privilege  of  doing  business  under 
the  corporate  form.  Moreover,  in  England,  an  article  of  associa- 
tion requiring  certain  shareholders  to  .sell  their  shares  to  other 
members  of  the  company  upon  demand  at  not  more  than  their 
par  value  is  valid ;  '  and  a  similar  article  has  been  recently  sus- 
tained in  Ireland.'-  Althougli  the  law  ought  not,  perhaps,  to 
permit  a  corporation  by  altering  its  by-laws  or  regulations  to 
take  away  a  previously  vested  freedom  of  alienating  the  shares, 
upon  the  faith  of  which  the  existing  shareholders  may  have 
acquired  their  shares  —  for  a  by-law  having  such  a  retroactive 
effect  may  well  be  held  unreasonable  —  yet  surely  no  harm  could 
result  from  permitting  the  organizers  of  a  corporation  to  insert 
in  the  original  constitution  of  the  company  provisions  determin- 
ing under  what  restrictions  the  shares  shall  be  transferable. 

§  710.  Rule  against  Perpetuities  not  applicable  to  By-laws  or 
Regulations  restricting  Transfers  of  Shares.  —  Regulations  restrict- 
ing the  transferability  of  shares,  although  perhaps  bad  as  creating 
an  unreasonable  restraint  of  trade,  are  not  obnoxious  to  the  rule 
against  perpetuities.  Thus,  a  provision  that  at  any  time  during 
the  continuance  of  the  company  any  shareholder  who  should  not 
be  a  "manager  or  assistant"  might  be  compelled  by  the  company 
to  transfer  his  shares  to  a  "manager  or  assistant"  for  not  more 
than  their  nominal  value  as  ascertained  by  a  process  of  calcula- 
tion does  not  create  a  perpetuity,  although  the  right  to  call  for 
a  transfer  might  be  exercised  at  any  indefinite  time,  however  dis- 
tant, in  the  future.^    A  share  in  the  capital  of  a  company  cannot 

Hun  (N.  Y.)  90,  91 ;  28  N.  Y.  Supp.  '  Bflrland's  Trustee  v.  Steel  Broth- 

1100;    Bank    of    Attka    v.     Manu-  ers  &  Co.  (1901).  1  Ch.  279. 

fadurers',  etc.  Bank,  20  N.  Y.  501.  =  Attorney-General      v.     Jameson 

Cf.  Blue  ML  Forrest  Ass'n  v.  Bor-  (1904).  2   Ir.   644. 

rowe,  71  N.  H.  69;  51  Atl.  670.     See  '  Borland's  Trustee  v.  Steel  Broth- 

also  supra,  §  122.  ers  tt  Co.  (1901),  1  Ch.  279;  Attomey- 

575 


§  711  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.   XII 

be  likened  to  a  sum  of  money  settled  upon  executory  limitations, 
but  consists  rather  in  a  bundle  of  mutual  agreements  entered 
into  between  the  several  shareholders;  and  the  rule  against 
perpetuities  has  no  reference  to  personal  contracts  or  agreements. 
Consequently,  the  validity  of  this  class  of  by-laws  is  not  to  be 
judged  by  the  hard  and  fast  rule  against  perpetuities,  but  by  the 
more  elastic  standard  of  reasonableness. 

§  711.  By-laws  merely  regulating  Transfers  valid.  —  The  con- 
siderations which  have  led  many  American  courts  to  pronounce 
against  the  validity  of  by-laws  which  interdict  or  to  any  consid- 
erable degree  restrict  transfers  of  shares  have  no  applications 
to  by-laws  which  merely  prescribe  a  particular  mode  of  transfer 
and  do  not  substantially  abridge  freedom  of  alienation.  For 
instance,  a  by-law  is  valid  which  requires  all  transfers  to  be  signed 
in  the  presence  of  an  officer  of  the  company  or  of  two  witnesses/ 
or  which  requires  the  transferor's  share-certificate  (unless  proved 
to  have  been  lost  or  stolen)  to  be  surrendered  before  the  trans- 
feree can  be  registered  as  a  shareholder.^  So,  a  regulation  re- 
quiring a  small  fee  to  be  paid  to  the  company  before  a  transfer 
shall  be  registered  has  been  thought  reasonable.^ 


§  712.  By-laws  attempting  to  restrict  Right  to  resort  to  the 
Courts.  —  In  general,  a  by-law  attempting  to  impair  the  right 
of  a  shareholder  to  resort  to  the  courts  for  redress  in  any  case 
properly  cognizable  by  the  judiciary  is  void.^    To  be  sure,  where 

General  v.  Jameson  (1904),  2  Ir.  644.  that  the  corporation  in  this  case  was 

Cf.  Blue  Mt.  Forrest  Ass'n  v.  Bor-  a    British    Company   and   therefore 

rowe,  71  N.  H.  69;   51  Atl.  670  (up-  governed  by  British  law,  as  to  wliich 

holding    a    by-law  forbidding    sales  see  supra,  §  709.) 
of  shares  without  first  offering  them  *  Cf.    Hope   v.    International  Fv- 

to  the  company  at  the  price  offered  nancial  Sac,  4  Ch.  D.  327  (stated 

by  the  purchaser) ;  Gray  on  Perpe-  supra,    §    702) ;     Daniher   v.    Grand 

tuities,  2d  ed.,  §  329  note  (question-  Lodge,  10  Utah  110;    37  Pac.  245; 

ing     Borland's      Trustee     v.      Steel  State  ex  rel.  Kennedy  v.  Union  Mer- 

Brothers  &  Co.,  ubi  supra).  chants'    Exchange,    2    Mo.    App.   96; 

'  Dane  v.  Young,  61  Me.  160.  People  ex  rel.  Elliott  v.  N.  Y.  Cotton 

^  State    ex   rel.    Martin    v.    New  Exchange,  8  Hnn  (N.Y.)  21Q;  Bauer 

Orleans,  etc.  R.  R.  Co.,  30  La.  Ann.  v.  Samson  Lodge,   102  Ind.  262;    1 

308.  N.  E.  571;    McMahon  v.  Supreme 

»  Giesenv.  London,  etc.  Mgr.  Co.,  Tent,  151  Mo.  522;    52  S.  W.  384; 

102  Fed.  584;  42  C.  C.  A.  515.    (Note  Voluntary  Relief  Dept.  v.  Spencer,  17 

576 


§  G7S-§  "oJSj  WUAT    BY-LAWS    ARE    VALID  §712 

the  bv-laws  of  a  "beneficial  society,"  or  any  similar  organization, 
provide  that  all  claims  of  members  for  "weekly  benefits,"  and 
so  forth,  shall  be  submitted  to  a  court  or  officer  of  the  corporation, 
whose  decision  shall  be  final,  it  is  held  that  a  court  of  law  has 
no  jurisdiction  to  enforce  a  claim  for  "weekly  benefits"  or  the 
like  which  has  been  adversely  passed  upon  by  the  corporation 
court.'  But  such  provisions  do  not  and  cannot  apply  where  the 
point  at  issue  is  whether  or  not  a  certain  person  is  a  member  of 
the  company.-  Moreover,  in  order  that  any  case  should  be  gov- 
erned bv  such  a  provi.sion,  the  proper  corporate  officer  must  have 
passed  upon  the  matter  in  a  f/i/a.v/-judicial  capacity  and  not 
merely  in  the  regular  course  of  his  duties  as  an  administrative 
officer  of  the  corporation  without  any  hearing  before  him.^  Of 
course,  as  the  decision  of  the  highest  court  in  the  land  may  be 
stricken  down  for  fraud,  so  the  fraudulent  decision  of  a  corporate 
tribunal  cannot  be  made  effective  by  any  by-law  or  internal 
ret^ulation.^  By-laws  recjuiring  all  actions  by  members  against 
the  corporation  to  be  brought  within  a  certain  time  after  the 
accrual  of  the  cause  of  action  have  been  held  valid  in  the  case 
of  mutual  insurance  companies.^ 

Ind.  App.  123,  128;    46  N.  E.  477;  way  Pass.,  etc.  Ass'n,  31   Fed.  62; 

Brotherhood   of    Railroad    Trainmen  Bryant  v.  D.  C.  Dental  Soc,  26  App. 

V.  Newton,  79  111.  App.  500.  D.  C.  461  (action  of  semi-social  so- 

Quaere,  as  to  the  validity  of  a  ciety  in  expelling  member  in  accord- 
provision  that  any  action  by  a  share-  ance  with  by-laws  not  reviewable  by 
holder  against  the  company  shall  be  the  courts). 

brought  in  a  particular  court.     Hes-         Cf.    Russell    v.    North    American 

lin  V.   Eastern    Bldg.,  etc.  Ass'n,  28  Benefit   Ass'n,    116   Mich.    699;     75 

N.  Y.  Misc.  376;  59  N.  Y.  Supp.  572;  N.  "W.  137;    Brotherhood  of  Railroad 

Nutev.  Hamilton  Mut.  Fire  his.  Co.,  Trainmen  v.   Newton,   79   111.   App. 

6  Gray   (Mass.)    174;    Amesbury  v.  500;   Black  &  While  Smiths'  Soc.  v. 

Bowditch  Mut.  Fire  Ins.  Co.,  6  Gray  Vandyke,  2  Whart.    (Pa.)    309;    30 

(Mass.)  596.  Am.     Dec.    263;     Union    Fraternal 

'  Anacostia  Tribe  v.  Murdoch,  13  League  v.    Johnston,    124   Ga.    902; 

Md.  91;  71  Am.  Dec.  625;    Burling-  53  S.  E.  241. 

ton  Voluntary  Relief  Dept.  v.  White,         ■  Burlington      Voluntary      Relief 

41  Nebr.  547,  560;    59  N.  W.  747;  Dept.  v.  WhUe,  41  Nebr.  547,  559- 

43  Am.  St.  Rep.  701  (semble);    Van  560;  59  N.  W.  747;  43  Am.  St.  Rep. 

Poucke  v.  Nctherland,  etc.  Society,  63  701. 

Mich.  378;    29  N.  W.  863;    Canfield         ^  Burlington      Voluntary      Relief 

V.    Knights  of  Maccabees,  87   Mich.  Dept.  v.  WhUe,  41  Nebr.  547,  559- 

626;  ^9N.  W.  875;  24  Am.  St.  Rep.  560;  59N.  W.  747;  43  Am.  St.  Rep. 

186;    13  L.  R.  A.  625;    Raymond  v.  701. 

Farmers,  etc.  Ins.  Co.,  114  Mich.  386;         *  Triesler  v.  Wilson,  89  Md.  169; 

72    N.    W.    254;     Osceola    Tribe    v.  42  Atl.  926.     Cf.  infra.  §  713. 
Schmidt,  57  Md.  98;    Rood  v.  Rail-         *  Amesbury    v.     Bowditch     Mut. 
Vol.  I.  — 37                                577 


§  713  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

§  713.  By-laws  attempting  to  bind  Minority  to  Fraudulent  or 
Ultra  Vires  Acts  of  Majority.  —  A  by-law  providing  that  any 
contract  approved  by  a  majority  of  the  shareholders  at  a  general 
meeting  shall  bind  the  company  and  all  the  shareholders  as 
though  approved  by  each  and  all  of  them  cannot  be  invoked  to 
prevent  a  minority  shareholder  from  attacking  an  ultra  vires  or 
fraudulent  contract  authorized  by  the  majority  of  the  share- 
holders.' So,  a  by-law  cannot  prevent  a  shareholder  from  ob- 
jecting to  fraudulent  action  on  the  part  of  the  officers  or  majority 
shareholders. - 

§  714.  Retroactive  By-laws.  —  No  rigid  rule  of  law  pro- 
hibits retroactive  by-laws  or  by-laws  impairing  vested  rights.* 
Thus,  it  seems  that  a  by-law  may  give  to  a  corporation  a  lien  on 
its  shares  for  debts  that  are  due  from  shareholders  at  the  time 
of  its  adoption.*  Nevertheless,  in  the  United  States  a  retrospec- 
tive by-law,  or  by-law  impairing  vested  rights,  will,  to  say  the 
least,  be  looked  upon  with  suspicion ;  ^  and  every  by-law  the 
phraseology  of  which  admits  of  any  doubt  will  be  construed  as 
prospective  merely.®  Certainly,  retrospective  by-laws  would  be 
in  many  cases  unjust,  and  therefore  unreasonable  and  void.^ 
Thus,  a  by-law  purporting  to  give  the  company  a  lien  on  its 
shares  for  debts  owing  by  the  holders  cannot  affect  the  rights 
of  a  transferee  of  shares  claiming  under  a  transfer  which  before 
the  enactment  of  the  by-law  had  been  executed  but  not  entered 

Fire  Ins.  Co.,  6  Gray  (Mass.)  596;  Soc,  82  Cal.  557,  560-561;    22  Pac. 

2     May     on     Insurance,     4th     ed.,  1125. 

§  478.  ■■  Cf.  Allen  v.  Gold  Reefs  of  West 

But    cf.    Mutual    Accident,    etc.  Africa  (1900),  1  Ch.  656.     But  see 

Ass'n    V.    Kayser    (Pa.),    14    Wkly.  Steamship     Dock     Co.     v.     Heron's 

Notes  Cas.  86  (holding  that  the  by-  Adm'x,  52  Pa.  St.  280. 
law  is  inoperative  unless  embodied         *  Cf.    Pulford  v.   Fire  Dept.,   31 

in  the  policy).  Mich.  458  ("Ex  post  facto  laws  are  no 

'  Hodge    v.    United   States    Steel  more   lawful   for  corporations   than 

Corp.,  64  N.  J.  Eq.  807,  813-818;  for  states"). 

54    Atl.     1;     60     L.     R.     A.     742         «  Brotherhood  of  Railroad  Train- 

(semble).  men  v.  Newton,  79  111.  App.  500.    See 

-  Triesler  v.  Wilson,  89  Md.  169;  infra,  §  731. 
42  Atl.  926.  '  Lloyd    v.    Supreme    Lodge,    98 

3  Cf.  Pepe  V.  CUy,  etc.  Bldg.  Soc.  Fed.  66;    38  C.  C.  A.  654 ;    Graft- 

(1893),  2  Ch.  311;  Smith  v.  Galloway  strom   v.    Frost   Council,    19    N.    Y. 

(1898),  1  Q.  B.  71,  77  (headnote  in-  Misc.  180;   43  N.  Y.  Supp.  266. 
adequate) ;      Modern     Woodmen    v.  See  also  infra,  §  722. 

Wieland,  109  111.  App.  340. 

But  see  Stohr  v.  Musical  Fund 

578 


§  G78-§  738]  PENALTIES    F(JU    UKEACII  §  716 

on  the  company's  books.'  So  a  by-law  wjiich  attempts  to  animi 
all  proxies  executed  before  a  certain  date  cannot  be  enforced 
at  the  same  meeting  at  which  it  was  adopted,  so  as  to  have  the 
effect  of  disfranchising  the  members  who  were  represented  only 
by  such  proxies.-' 

§  71 ').  By-laws  must  be  General  and  Uniform.  —  By-laws  nuist 
not  be  confined  to  sj)ecial  cases;  they  must  be  general.^  Indeed, 
we  have  seen  that  generality  is  one  of  the  characteristic  features 
of  by-laws,  distinguishing  them  from  mere  resolutions.*  Inas- 
much as  all  by-laws  must  be  general,  no  validity  is  imparted  to 
an  invalid  by-law  by  a  resolution  of  the  corporation  which  at- 
tempts to  exempt  from  its  operation  the  only  objector.'  On  the 
other  hand,  a  by-law  which  is  general  in  its  terms  is  not  rendered 
invalid  because  a  special  case  formed  the  occasion  or  motive  of 
its  adoption.  Thus,  in  England,  an  alteration  of  the  articles  of 
association  so  as  to  give  the  company  a  lien  on  fully-paid  shares 
for  debts  due  to  the  company  by  the  holders  is  not  void  although 
at  the  time  only  one  shareholder  is  a  debtor  to  the  company, 
and  although  the  regulation  is  adopted  for  the  purpose  of  meet- 
ing his  case." 

So  also  by-laws  must  be  uniform,  and  must  not  discriminate 
arbitrarilv  asainst  or  in  favor  of  certain  shareholders.  ^ 


§  716-§  719.     Saiiction   of   By-laws  —  Fines,  Forfeitures,   and 

oilier  Penalties. 

§  716.  In  general.  —  Unless  by-laws  are  to  be  mere  hrutiim 
fulmen,  there  must  be  some  sanction  attached  —  the  company 
must  have  some  means  of  punishing  infractions  of  its  regulations. 
Now,  all  the  shareholders  of  a  company  by  their  contract  of 
membership  impliedly  agree  to  abide  by  all  lawful  by-laws  that 

^  People  ex  rel.  Bosquix.  Crockett,  inadequate);      Ishester    v.     Murphy 

9  Cal.   112.  Mfg.  Co.,  95  111.  App.   105  (by-law 

Cf.  Steamship  Dock  Co.  v.  Heron's  imposing  a  forfeiture). 
.idm'x,   52    Pa.    St.   280    (headnote         *  Supra,  §  687. 
inadequate).  *  People  ex  rel.  Stewart  v.  Young 

^  Walker    v.    Johnson,    17    App.  Men's,  etc.  Society,  41  Mich.  67. 
(D.  C.)  144,  165-166.  "  Allen    v.    Gold    Reefs    of    West 

'  Budd  V.  Multnomah  Street  Ry.  Africa  (1900),  1  Ch.  656. 
Co.,    15   Oreg.    413;     15   Pac.    659;         '  Xorth-West      Electric     Co.      v. 

3  Am.  Rep.  169;    People  v.  Thrnop,  Walsh,  29  Can.  Sup.  Ct.  33,  49. 
12  Wend.  (N.  Y.)  183,  186  (headnote 

579 


§716  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 


tlie  corporation  may  adopt,  and  therefore  it  would  seem  clear 
that  upon  shareholders  at.  least  the  company  may  visit  penalties 
for  the  violation  of  its  regulations.'  Thus,  the  by-laws  of  medi- 
aeval incorporated  guilds  often  imposed  fines  and  penalities  on 
members  who  were  guilty  of  dishonorable  or  unworkmanlike 
practices.  Upon  the  same  principle,  modern  business  corpora- 
tions rriay  require  their  members  to  pay  promptly  all  calls  and 
lawful  assessments  upon  their  shares,  and  provide  for  a  for- 


'  Graham  v.  House-buUding,  etc. 
Ass'n,  52  S.  W.  Rep.  1011  (Tenn.); 
Matthews  v.  Associated  Press,  136 
N.  Y.  333;  32  N.  E.  981;  32  Am. 
St.  Rep.  741;  Jackson  v.  South 
Omaha  Live  Stock  Exchange,  49 
Nebr.  687;   68  N.  W.  1051. 

Cf.  Kirk  V.  NowUl,  1  T.  R.  118. 
See  also  infra,  §  809. 

As  to  the  necessity  for  notice  and 
an  opportunity  to  contest  the  im- 
position of  a  fine  or  other  penalty, 
see  State  ex  rel.  Cuppel  v.  Milwaukee 
Chamoer  of  Commerce,  47  Wise.  670; 
3  N.  W.  760;  People  ex  rel.  Schmitt 
V.  Saint  Franciscus  Benevolent  Soc, 
24  How.  Pr.  (N.  Y.)  216;  Gray  v. 
Christian  Soc,  137  Mass.  329;  50 
Am.  Rep.  310;  Rex  v.  Company  of 
Fishermen,  8  T.  R.  352,  356;  Wach- 
tel  V.  Noah  Widows,  etc.  Society,  84 
N.  Y.  28;  38  Am.  Rep.  478;  People 
ex  rel.  Doyle  v.  N.  Y.  Benevolent 
Soc.,  3  Hun  (N.  Y)  361;  Erd  v. 
Bavarian,  etc.  Ass'n,  67  Mich.  233; 
34  N.  W.  555;  Lysaght  v.  St.  Louis 
Operative,  etc.  Ass'n,  55  Mo.  App. 
538;  Cotton  Jammers,  etc.  Ass'n  v. 
Taylor,  23  Tex.  Civ.  App.  367;  56 
S.  W.  553;  Purdy  v.  Bankers'  Life 
Ass'n,  74  S.  W.  486;  101  Mo.  App. 
91.  Cf.  Hussey  v.  Gallagher,  61  Ga. 
86;  Green  v.  Board  of  Trade,  174 
111.  585;  51  N.  E.  599;  49  L.  R.  A. 
365 ;  People  ex  rel.  Devorell  v.  Musi- 
cal, etc.  Union,  118  N.  Y.  101;  23 
N.  E.  129;  Byrne  v.  Supreme  Circle 
(N.  J.),  65  Atl.  839. 

But  see  Berkhout  v.  Royal  Ar- 
canum, 62  N.  J.  Law  103;  4.3  Atl.  1; 
People  ex  rel.  Dodson  v.  Board  of 
Trade,  79  N.  E.  611;    224  III.  .370 


(upliolding  a  self-executing  regula- 
tion for  forfeiture  of  membersliip  in 
a  board  of  trade). 

As  to  the  necessity  of  speading  on 
the  records  of  the  corporation  the 
exact  charge  for  which  the  penalty 
is  sought  to  be  imposed,  see  Roehler 
V.  Mechanics'  Aid  Society,  22  Mich. 
86. 

As  to  the  necessity  of  affirmative 
proof  of  commission  of  the  offence, 
see  Rex  v.  Company  of  Fishermen,  8 
T.  R.  352. 

As  to  other  matters  concerning 
the  conduct  of  the  "trial,"  see 
People  ex  rel.  Thacher  v.  N.  Y.  Com- 
mercial Ass'n,  18  Abb.  Pr.  (N.  Y.) 
271 ;  People  ex  rel.  Meads  v.  Alpha 
Lodge,  13  N.  Y.  Misc.  677;  35  N.  Y. 
Supp.  214;  Green  v.  Board  of  Trade, 
174  III.  585;  51  N.  E.  599;  49  L.  R. 
A.  365 ;  Modern  Woodmen  v.  Deters, 
65  111.  App.  368;  Wood  v.  Chamber 
of  Commerce,  119  Wise.  367;  96 
N.  W.  835  (holding  that  the  person 
who  preferred  the  charge  is  not  dis- 
quafified  from  acting  as  one  of  the 
triers,  etc.);  Derry  v.  Great  Hive, 
etc.  of  Maccabees,  98  N.  W.  23;  135 
Mich.  494;  Barker  v.  Great  Hive, 
etc.  of  Maccabees,  98  N.  W.  24;  135 
Mich.  499 ;  Bryant  v.  D.  C.  Dental 
Soc,  26  App.  D.  C.  461  (evidence  if 
heard  before  committee  need  not  be 
submitted  to  society  at  large  when 
report  is  adopted). 

Qucere  whether  a  court  of  equity 
will  lend  its  aid  to  the  enforcement 
of  a  fine  imposed  for  breach  of  a 
by-law;  Shannon  v.  Howard  Mut. 
Bldg.  Ass'n,  36  Md.  383,  393-394. 
See  also  infra,  §  719. 


580 


§  f)7S-§  73S]  PENALTIES    FOU    BREACH  §  "17 

feiture  of  the  shares  in  case  of  defauh.'  A  by-law  providing  for 
a  peiiaky  only  in  case  the  recalcitrant  member  refuses  to  arbi- 
trate is  not  necessarily  bad.^  Instances  of  the  imposition  of 
penalties  for  breach  of  by-laws  most  frequently  occur  in  social  or 
semi-social  corporations;  but  the  same  principle  would  seem  to 
apply  to  ordinary  business  corporations.  The  only  difl'erence  is 
that  in  the  case  of  business  corporations  just  cause  for  the  im- 
position of  penalties  arises  but  seldom.  Undoubtedly,  however, 
the  belief  is  prevalent  among  lawyers  that  modern  business 
corporations  have  no  power  to  enact  by-laws  imposing  fines  or 
penalties  except  in  so  far  as  the  power  may  be  expressly  con- 
ferred by  statute.  Perhaps  this  idea  may  be  due  in  part  at  least 
to  a  notion  that  pecuniary  fines  imposed  by  mere  by-laws  would 
be  obnoxious  to  the  principles  of  limited  liability. 

§  717.  Void  and  unenforceable  Penalties.  —  On  the  other  hand, 
while  the  power  in  some  cases  to  enforce  by-laws  by  penalties 
inflicted  upon  delinquents  is  submitted  to  be  on  principle  in- 
contestable; yet  penalties  and  forfeitures  are  never  favored  in 
law.  Thus,  a  by-law  of  a  society  of  cutlers  purporting  to  author- 
ize its  officers  to  seize  and  confiscate  any  unworkmanly  wares 
found  in  the  shops  of  any  of  its  members  was  held  to  be  void.^ 
The  power  of  the  company  to  enforce  its  regulations  by  fines 
or  amercements  was  undoubted,  and  was  indeed  expressly  con- 
ferred ;  but  this  by-law  went  further,  and  by  vesting  a  dangerous 
discretion  in  the  officers,  especially  in  respect  to  so  delicate  a 
matter  as  a  forfeiture,  transcended  the  limits  of  reason,  and  was 
therefore  void.  So,  it  is  held  that  a  by-law  imposing  a  penalty 
on  a  penalty  —  that  is,  a  penalty  for  non-payment  of  a  penalty  — 
is  void.'*  For  this  reason,  where  a  by-law  prohibits  members 
from  becoming  members  of  a  rival  corporation  and  imposes  a 
pecuniary  fine  on  those  who  disregard  the  regulation,  a  provision 
that  delinquents  shall  forfeit  all  rights  to  participate  in  the  com- 

•  Sparks  v.  Company,  etc.  of  the  *  Kirk  v.  Nowill,  1  T.  R.  118. 

Liverpool   Waterworks,   13  Ves.  428.  ■•  Cf.  Hagerman  v.  Ohio  Bldg.,  etc. 

See  infra,  §  809.    Ci.  CahUl  v.  Kala-  Ass'n,    25    Oh.    St.    186,    202-203; 

mazoo  Mid.  Im.  Co., 2Doug.  CSlich.)  Lynn   v.    Freemansburg,   etc.    Ass'n, 

124,  137-139;  43  Am.  Dec.  457.  li7  Pa.  St.  1  (headnote  inadequate); 

i  Haehler  v.  A^.   Y.  Produce  Ex-  11  Atl.  537;    2  Am.  St.  Rep.  639; 

change,  149  N.  Y.  414;   44  N.  E.  87.  Albers   v.   Merchants'   Exchange,  39 

But   see   State   ex   ret.    Kennedy   v.  Mo.  App.  583. 
Union  Merchants'  Exchange,  2  Mo. 
App.  96. 

681 


§  718  BY-LAWS    AXT)    INTERNAL    REGULATIONS       [ChAP.  XII 

puny's  profits  until  the  fine  is  paid  is  void,  irrespective  of  the 
question  whether  it  be  permissible  to  prohibit  members  from 
joining  rival  companies.'  So  a  by-law  of  a  mutual  insurance 
company  which  increases  the  penalties  to  which  members  are 
subjected  for  non-payment  of  assessments  is  not  binding  upon  a 
member  who  has  never  received  notice  of  the  change  in  the 
regulations.-  Moreover,  a  by-law  which  imposes  a  penalty  out 
of  all  proportion  to  the  olfence  will  be  held  unreasonable  and 
therefore  void  '  even  though  the  right  to  impose  fines  be  ex- 
pressly conferred  by  statute.'  The  only  penalties  that  can  as  a 
rule  be  imposed  are  either  pecuniary  fines  or  forfeiture  of  mem- 
bership ;  for  a  corporation  has  no  power  to  imprison  a  member 
for  breach  of  a  by-law.^  A  by-law  which  purports  to  leave  the 
amount  of  the  fine  entirely  to  the  discretion  of  the  directors  is 
void ; "  but  if  the  by-law  fix  a  reasonable  maximum  penalty,  there 
is  no  objection  to  a  provision  that  the  precise  amount  of  the 
penalty  shall  be  discretionary  with  the  company  in  each  case.^ 

§  718.  Penalties  attempted  to  be  imposed  for  doing  what  the 
Member  has  a  legal  Right  to  do.  —  A  by-law  which  attempts  to 
fine  or  otherwise  punish  a  member  for  doing  that  which  he  has 
a  legal  right  to  do  —  for  example,  for  refusing  to  defray  the 
expense  of  a  dinner  for  the  members  of  the  company  —  is 
plainly  void.**  This  principle  is  sufficient  to  sustain  a  decision 
that  a  by-law  of  a  corporation  owning  a  creamery  which  pro- 
vided for  the  forfeiture  of  shares  owned  by  any  member  who 
should  refuse  to  furnish  milk  to  the  company  is  void.^ 

§719.  Remedies  for  Enforcement  of  Fines  —  Defences.  —  A 
fine  imposed  under  a  valid  by-law  may  be  recovered  from  a 
delinquent  shareholder  in  an  action  of  debt  or  assumpsit.    The 

'  Adley  v.  Reeves,  2  M.  &  S.  53.  ^  Albers  v.  Merchants'  Exchange, 

*  Northwestern    Life    Ins.    Co.    v.    39  Mo.  App.  583. 

Erlenkoetter,  90  111.  App.  99.  '  Piper  v.  Chappell,  14  M.  &  W.  624. 

^  Graham  v.   House-building,  etc.  *  Carter  v.  Sanderson,  5  Bing.  79 ; 

A.s.s'n,  52  S.W.  Rep.  1011,  1013-1014  Master     cfc     Company     of     Frame- 

(Tenn.);      Lynn    v.    Freemansburg ,  workers  v.  Green,  1  Ld.  Raym.  113; 

etc.  Ass'n,  117  Pa.  St.  1;   11  Atl.  537;  and  cases  cited  infra,  §  809. 

2  Am.  St.  Rep.  639.  *  March  v.   Fairmount  Creamery 

*  Vierling  v.  Mechanics',  etc.  Ass'n,  32  Pa.  Super.  Ct.  517.  The 
Ass'n,  179  111.  524;   53  N.  E.  979.  court    rested    its    decision    on    the 

*  Carter  v.  Sanderson,  5  Bing.  79,  ground  that  a  by-law  of  a  joint- 
89  (per  Best,  C.  J.);  McGannon  v.  stock  corporation  cannot  impose 
Central  Bldg.  Ass'n,  19  W.  Va.  726  a  forfeiture  without  statutory 
(semble).  authority. 

582 


§  G78-§  738]  AMENDMENT    AND    REPEAL  §  721 

declaration,  however,  must  set  out  the  hy-hiw  that  tlie  court  rnav 
judge  of  its  suflicieucy,'  and  hence  recovery  cannot  he  liad  under 
the  common  counts.-  It  seems  that  a  suit  in  equity  cannot  be 
maintained  to  enjoin  tlie  iinj)ositi()n  of  a  pecuniary  fine  under  an 
invahd  hy-hiw;  for  the  remedy  at  law  by  resisting  an  attempt  to 
collect  the  fine  is  ample.^ 


§  720-§  727.     Amendment  and  Repeal  of  By-laws. 

§  720.  In  general.  —  In  general,  l)y-laws  may  be  amended 
or  repealed  at  the  pleasure  of  the  authority  by  whom  they  were 
enacted.^ 

§  721.  Amendment  or  Repeal  affecting  the  Company's  Consti- 
tution. —  In  England,  the  Companies  Act  confers  upon  every 
company  in  unrestricted  terms  the  power  to  amend  its  articles  of 
association.  Nevertheless,  an  early  case  held  that  tlie  power  of 
alteration  did  not  extend  to  a  change  in  the  company's  con- 
stitidioii.^  Obviously,  however,  this  attempted  distinction  would 
lead  to  all  manner  of  confusion;  for  how  is  it  possible  to  dis- 
tinguish between  by-laws  which  do  and  by-laws  which  do  not 
form  part  of  the  company's  "constitution"?  Accordingly,  the 
attempted  distinction  has  been  overruled  by  a  comparatively 
recent  case,  where  the  English  Court  of  Appeal  held  that  articles 
of  association  which  did  not  originally  provide  for  preferred 
shares  might  be  altered  so  as  to  permit  an  increase  of  capital  by 

•  Master,  etc.  of  Fdtmakers,  1  B.  Equitable  Bldg.,  etc.  Soc.,  186  111. 
<fe  P.  98.  183;    57  N.  E.  873.     Cf.  Van  Atten 

'  Ottawa     Union    Bldg.    Soc.    v.  v.  Modern  Brotherhood  (Iowa),   108 

Scott,  24  Up.  Can.  Q.  B.  341.  N.  W.  313.     See  also  supra,  §  120. 

3  Thomas  v.  Musical,  etc.  Union,         As   to    the    necessity    for   giving 

121  N.  Y.  45;  24  N.  E.  24;   8  L.  R.  notice  of  an  intention  to  move  an 

A.  175.     Cf.  supra,  §  716  n.  amendment    to    the    by-laws,     see 

*  Rex  V.  AshweU,  12  East  22;  Bagley  v.  Reno  Oil  Co.,  201  Pa.  78; 
Scanlan  v.  Snmc,  2  App.  D.  C.  137,  50  Atl.  760;  56  L.  R.  A.  184. 
154-155;  Domes  v.  Supreme  Lodge,  Qucere  whether  by-laws  proved 
75  Miss.  466;  23  So.  191;  Supreme  to  have  been  once  adopted  should 
Lodge  v.  Knight,  117  Ind.  489;  20  be  presumed  to  continue  in  force. 
N.  E.  479;  3  L.  R.  A.  409.  Of  course,  Messer  v.  Grand  Lodge  United 
when  so-called  "by-laws"  arelnade  Workmen,  180  Ma.ss.  321;  62  N.  E. 
a  part  of  the  incorj)oration  paper,  252. 

they  are,  like  any  otlier  part  of  that         *  Hutton  v.  Scarborough  Hotd  Co., 
instrument,  unanioiidable.     Fritzev.    2  Dr.  &  Sm.  521. 

583 


§  722  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

issue  of  shares  carrying  preferential  rights.'  Whether  or  not 
this  decision  is  in  all  respects  beyond  criticism,  it  is  clearly 
correct  in  so  far  as  it  holds  that  by-laws  or  their  English  counter- 
part, articles  of  association,  are  not  unalterable  merely  because 
thev  pertain  to  the  company's  "constitution."  If  in  any  particu- 
lar case  thev  are  not  amendable,  the  unalterability  must  rest  on 
some  other  grountl. 

§  722.  Amendments  afEecting  Vested  or  Contractual  Rights 
acquired  under  By-law.  —  For  example,  rights  may  vest  under 
a  by-law  which  would  render  its  amendment  or  repeal  unjust 
and  unreasonable,  and  therefore  void.-  Thus,  where  the  rights 
of  shareholders  in  respect  to  dividends  and  the  like  have  been 
fixed  by  a  by-law,  a  subsequent  alteration  in  those  rights  is  not 
permissible,  although  the  power  of  altering  by-laws  be  conferred 
by  statute  in  unlimited  terms.^  So,  too,  a  corporation  may 
incorporate  certain  provisions  of  the  by-laws  into  a  contract  so 
that  the  same  cannot  be  repealed  so  far  as  their  application  to 
that  particular  contract  is  concerned.* 


'  Andrews  v.  Gas  Meter  Co.  (1897), 
1  Ch.  361.  Cf.  Stephenson  v.  Yokes, 
27  Ont.  (Can.)  691. 

*  See  Boisot  on  By-Laws,  2d  ed., 
§  120,  §  124;  Wiedynska  v.  Pulaski 
Polish  Benev.  Soc,  110  N.  Y. 
App.  Div.  732;  97  N.  Y.  Supp. 
413. 

*  Kent  v.  QuicksUver  Mining  Co., 
78  N.  Y.  159;  Gellerman  v.  Atlas 
Foundry,  etc.  Co.  (Wash.),  87  Pac. 
1059. 

*  Allen  V.  Gold  Reefs  of  West 
Africa  (1900),  1  Ch.  656,  673-674, 
676,  679;  British  Equitable  Ins.  Co. 
V.  BaUey  (1906),  A.  C.  35,  36 
(semble) ;  Punt  v.  Symons  cfc  Co. 
(1903),  2  Ch.  506,  511;  Morrison  v. 
Wisconsin  Odd  Fellows,  etc.  Ins.  Co., 
59  Wise.  162;  18  N.  W.  13;  Nelson 
V.  Gibson.  92  111.  App.  595;  Wist  v. 
Grand  Lodge,  22  Oreg.  271 ;  29  Pac. 
610;  29  Am.  St.  Rep.  603;  Smith. v. 
Supreme  Lodge,  83  Mo.  App.  512; 
A'orthwestern,  etc.  Ass'n  v.  Wanner, 
24  III.  App.  358;  Covenant  Mut. 
Life  Ass'n  v.  Kentner,  188  111.  431; 
68  N.  E.  966;    Ins.  Co.  v.  Connor,  17 


Pa.  St.  136;  Becker  v.  Farmers'  Mut, 
Ins.  Co.,  48  Mich.  610;  12  N.  W. 
874;  Pokrefky  v.  Firemen's  Fund 
Ass'n,  121  Mich.  456;  80  N.  W.  240; 
Holyoke,  etc.  Ass'n  v.  Lewis,  1  Colo. 
App.  127;  27  Pac.  872;  Savage  v. 
People's  Bldg.,  etc.  Ass'n,  45  W.  Va. 
275;  31  S.  E.  991;  Becker  v.  Berlin, 
etc.  Soc,  144  Pa.  St.  232;  22  Atl. 
699;  27  Am.  St.  Rep.  624;  Court  of 
Honor  v.  Hutchens  (Ind.),  82  N.  E. 
89;  Rollins  v.  Co-operative  Bldg. 
Bank,  98  N.  Y.  App.  Div.  606;  90 
N.  Y.  Supp.  631;  Field  v.  Eastern, 
etc.  Loan  Ass'n,  90  N.  W.  717;  117 
Iowa  185. 

Qucere  whether  the  company  could 
be  enjoined  from  adopting  a  by-law 
or  regulation  incon-sistent  with  the 
contract  or  whether  the  company 
should  not  be  permitted  to  make 
such  changes  in  its  regulations  as  it 
sees  fit,  leaving  the  stipulations  of 
the  contract  capable  of  enforcement 
notwithstanding  the  alteration.  Cf. 
Punt  v.  Symons  &  Co.  (1903),  2  Ch. 
506. 


584 


§  678-  §  738]  AMENDMENT    AND    REPEAL  §  724 

§  723.  General  power  to  alter  By-laws  cannot  be  surrendered 
by  Contract  or  Provision  in  the  Regulations  themselves.  —  ( )ii  the 
other  hand,  a  C()in{)aiiy  eaniiot  contract  itself  out  of  its  general 
power  to  alter  its  ref^ulations.'  Moreover,  a  provision  in  by-laws, 
or  Enf]^lish  "articles  of  association,"  that  they  shall  be  un- 
amendable  is  ineffective.^  So,  where  the  by-laws  provide  that 
they  shall  be  amended  only  by  a  two-thirds  vote,  they  may  never- 
theless l)e  amended  by  a  mere  majority.^  Upon  this  principle, 
where  a  by-law  provides  no  proposition  shall  become  a  "statute" 
of  the  corporation  until  it  shall  have  passed  three  successive 
readinffs,  the  final  vote  being  taken  bv  veas  and  navs,  etc.,  an 
amendment  to  the  by-laws  will  nevertheless  be  valid  upon 
adoption  by  the  corporation,  although  in  its  passage  the  pro- 
vision above  referred  to  may  not  have  been  observed.*  So,  where 
the  power  of  adopting  and  amending  by-laws  is  vested  in  the 
directors,  a  provision  in  the  by-laws  that  no  amendment  thereto 
shall  become  operative  until  approved  by  the  sliareholders  is 
void.^  A  forfimi,  a  by-law  purporting  to  intrust  to  the  directors 
the  exclusive  power  of  amending  the  by-laws  is  void." 

§  724.  Contracts  with  Company  to  be  construed  if  possible  so 
as  not  to  interfere  with  Power  of  altering  By-laws.  —  Moreover,  a 
contract  will  not  be  held  to  render  any  of  the  company's  regu- 
lations unamendable,  even  as  regards  rights  vested  under  that 
contract,  unless  such  is  demonstrated  to  have  been  the  clear 

'  Punt  V.  Srjtnons  &  Co.  (1903),  to  be  correct.    Cf.  Connell  v.  Stalker, 

2  Ch.  506,  511.  21  N.  Y.  Misc.  609,  612;    48  N.  Y. 

2  Walker    v.    London    Tramways  Supp.    77;     Flaherty    v.    Benevolent 

Co.,  12  Ch.  D.  705.  Society,  99  Me.  253;    59  Atl.  58. 

^Richardson    v.     Union    Congre-  *  Supreme  Lodge  v.  Kutscher,  179 

gational  Society,  OS'S.  H.  187;    Katz  111.   340,  345-346;    53   N.   E.   620; 

V.  H.  &  H.  Mfg.  Co.,  95  N.  Y.  Supp  70    Am.    St.    Rep.    115;     Supreme 

663;    109  N.  Y.  App.    Div.    49,  af-  Lodge    v.   Trebbe,   179    111.  348;    53 

firmed  in  183  N.  Y.  578.  N.  E.  730;    70  Am.  St.  Rep.  120. 

But  see  Baltimore,  etc.  R.  R.  Co.  v.  But  see  Mutual  Aid,  etc.  Soc.  v. 

Baltimore,  etc.  Relief  A.fs'n,  77  Md.  Monti,  59  N.  J.  Law  341;    36  Atl. 

566, 570-572  (headnote  inadequate) ;  666. 

26  .\tl.  1045;    Loewenthal  v.  Rubber  Cf.  Dorne.'i  v.  Supreme  Lodge,  75 

Reclaiming  Co.,   52   N.   J.    Eq.   440,  Miss.  466;  23  So.  191. 

445  (headnote  inadequate);    28  Atl.  *  Manufacturers'  Exhibition  Bldg. 

454;    Van  Atten  v.  Modern  Brother-  Co.  v.  Landay,  76  N.  E.  146  (head- 

hood   (Iowa).    108   N.    W.   313.      In  note  misleading) ;   219  111.168. 

Scanlon  v.  Snow,  2  App.  D.  C.  137,  «  Alters  v.  Journeyman,  etc.  Ass'n, 

the  view  contrary'  to  that  .stated  in  19  Pa.  Super.  Ct.  272. 
the  te.xt  was  assumed  by  the  court 

585 


§  724  BY-LAWS    AND    INTERNAL    REGULATIONS       [ClIAP.   XII 

intention,  particularly  where  the  by-laws  or  regulations  them- 
selves provide  for  alteration/  Said  Lindley,  M.R.,  in  a  famous 
case:  "A  company  cannot  break  its  contracts  by  altering  its 
articles,  but,  when  dealing  with  contracts  referring  to  revocable 
articles,  and  especially  with  contracts  between  a  member  of  the 
companv  and  the  company  respecting  his  shares,  care  must  be 
taken  not  to  assume  that  the  contract  involves  as  one  of  its 
terms  an  article  which  is  not  to  be  altered."  -  Upon  this  principle 
the  court  decided  that  a  vendor  who  transfers  property  to  a 
companv  in  consideration  of  fully  paid  shares  has  no  contract 
binding  the  com})any  not  to  alter  its  articles  so  as  to  acquire  a 
lien  on  its  paid-up  shares  for  debts  owing  by  their  holders.^ 
So,  a  provision  in  English  articles  of  association  that  a  certain 
proportion  of  the  capital  shall  not  be  called  in  except  in  the  case 
of  a  winding-up,  although  subscribers  have  taken  shares  on  the 
faith  thereof,  does  not  prevent  the  company  from  altering  its 
articles  so  as  to  permit  a  call  presently.^  The  principles  respect- 
in  o-  the  limits  of  the  power  of  a  corporation  to  alter  its  by-laws 
are  most  frequently  applied  in  the  case  of  mutual  insurance 
companies,  and  the  like,  where  the  members  occupy  a  dual 
relation  as  members  and  as  creditors;  and  the  courts  will  be 
much  more  inclined  to  hold  void  an  alteration  in  the  by-laws 

>  East  Tennessee,  etc.  R.  R.   Co.  362;    Pepe  v.   City,  etc.   Bldg.  Soc. 

V.   Gammon,  5  Sneed   (Tenn.)   567,  (1893),  2  Ch.  311;    Wright  v.  Incor- 

571-572;    Ponltney  v.  Bachman,  31  porated  Synod,  11  Can.  Sup.  Ct.  95. 

Hun  (N.  Y.)  49;    Stohr  v.  Musical  See    Boisot    on    By-Laws,    2d    ed., 

Fund  Soc,   82   Cal.   557;    22   Pac.  §  119,  §  122. 

1125;    Reynolds  v.  Supreme  Council         In  some  cases  such  as  Bornstein 

(Mass.),   78  N.   E.    129;     192   Mass.  v.   District   Grand  Lodge   (Cal.),   84 

150;    7  L.  R.  A.   1154;    Gaines  v.  Pac.  271,  a  provision  in  a  contract 

Supreme    Council,    140    Fed.    978;  to  abide  by  such  by-laws  as  might 

Mock  V.  Supreme  Council,  106  N.  Y.  be  adopted  was  held  to  refer  only  to 

Supp.  155.  such  by-laws  as  might  be  reasonable 

Cf.  Crittenden  v.  Southern  Home  in    view    of    the    rights   which    had 

Bldg.,  etc.  Ass'n,   111   Ga.   266;    36  already  vested  under  the  contract. 

S.  E.  643;  Suprem-e  Lodge  v.  Knight,  Cf.  Strang  v.  Camden  Lodge  (N.  J.), 

117    Ind.    489;    20    N.    E.    479;    3  64   Atl.   93;    Lange  v.   Royal  High- 

L.  R.  A.  409;    Pain  v.  Societe  St.  landers  (Nehr.),  106  N.W.  224. 
Jean  Baptiste,    172   Mass.    319;    52         ^  Allen    v.    Gold    Reefs    of    West 

N.  E.  .502;    70  Am.  St.  Rep.  287;  A/rica  (1900),  1  Ch.  6.56,  673. 
Supreme  Commandery  v.  Ainsworth,         ^  Allen    v.    Gold    Reefs    of    West 

71    Ala.    436;     Engelhardt   v.    Fifth  Africa  (1900),  1  Ch.  656. 
Ward  Loan  Ass'n,   148  N.  Y.  281 ;         *  Malleson  v.  National  Ins.  Corp. 

42  N.   E.   710;    35  L.   R.   A.   289;  (1894),  1  Ch.  200. 
Fugure  v.   Mutual  Society,  46  Vt. 

586 


§  678-738]  AMENDMENT    AND    REPEAL*  §  720 

which  alters  their  rights  as  creditors  than  if  their  rights  as 
members  were  alone  allected.'  The  decisions  are  far  from 
harmonious  upon  the  question  what  alterations  of  by-laws  will 
be  deemed  to  violate  the  contract  between  the  corporation  and 
persons  who  became  members  prior  to  the  change;  but  as  the 
question  has  usually  arisen  in  respect  to  other  than  ordinary 
joint-stock  corporations,  a  detailed  consideration  of  the  cases 
would  be  inappropriate.  As  intimated  above,  the  English  courts 
probably  go  further  than  the  American  courts  in  permitting 
amendments  of  by-laws  or  articles  of  association  to  disturb 
vested  rights  or  expectations. 

§  725.  Whether  Provision  in  the  By-laws  may  authorize  Amend- 
ment without  complying  with  statutory  Requisites.  —  \\  liere  a 
statute  provides  that  by-laws  shall  not  be  amended  except  by  a 
two-thirds  vote,  or  the  like,  the  by-laws  cannot  be  legally  altered 
in  any  other  way.  Hence,  a  clause  in  the  articles  of  association 
or  by-laws  of  a  Canadian  company  purporting  to  authorize  an 
amendment  at  any  meeting  of  the  company  by  mere  majority 
vote  is  invalid  where  the  act  of  parliament  requires  a  "special 
resolution"  -  in  order  to  alter  the  articles.^ 

§  720.  Repeals  by  Implication.  —  Where  a  new  code  of  by- 
laws, apparently  complete,  is  adopted  as  "the  by-laws"  of 
the  company,  all  the  old  by-laws  are  to  be  deemed  repealed 
by  implication.^ 

'  Knights   Templars',  etc.   Co.   v.  garded  as  an  outsider  in  so  far  as  he 

Jarman,    104    Fed.    638,    644;     44  contracts  with  the  company  other- 

C.  C.  A.  93.  wise  than  in  respect  of  his  shares. 

Cf.    Bnrnstein    v.    District   Grand  It  would  be  dangerous  to  hold  that 

Lodge  (Cal.),  84  Pac.  271.  in  a  contract  of  loan  or  a  contract  of 

In     Baiiy    v.     British    Equitable  service   or   a   contract  of   insurance 
Assurance  Co.  (1904).  1  Ch.  374,  385  validly  entered  into  by  a  company 
(reversed    on    a    different    point    in  there  is  any  greater  power  of  varia- 
Briti-sh   Equitable   Assuran^ce  Co.   v.  tion  of  the  rights  and  liabilities  of 
Baily    (1906),    A.    C.    3."));     Cozens-  the  parties  than  would  exist  if.  in- 
Hardy,  L.  J.,  speaking  for  the  court,  stead  of  the  company,  the  contract- 
said:  "The  rights  of  a  shareholder  in  ing  party  liad  been  an  individual." 
respect  of  iiis  shares,  except  so  far         But  see  Punt  v.  Syrtwns  &  Co. 
as  they   may   be   protected   by   the  (1903).  2  Ch.  506.  514-515. 
memorandvun  of  association,  are  by         -  As  to  the  meaning  of  this  term, 
statute  made  liable  to  be  altered  by  see  infra,  §  1241. 
special  resolution.   .  .  .   But  the  case         '  Tioigg  v.   Thunder  Hill  Mining 
of  a  contract  between   an   outsider  Co.,  3  Brit.  Columb.  101. 
and  the  company  is  entirely  different,         *  Murphy   v.    Pacific    Bank,    130 
and  even  a  shareholder  must  be  re-  Cal.  542,  549-550;    62  Pac.  1059. 


§  727  BY-LAWS    AND    INTERNAL    REGULATIONS       [ClIAP.  XII 

§  727.  Repeals  by  Desuetude.  —  We  have  seen  above  that 
custom  may  have  the  force  of  a  by-hiw ;  ^  and  a  necessary  corol- 
lary of  that  proposition  is  that  a  similar  custom  may  also  repeal 
a  by-law.  Consequently,  long-continued  disregard  of  the  pro- 
visions of  a  by-law  may  be  equivalent  to  an  express  repeal. 
Even  a  by-law  which  has  been  formally  adopted  may  lapse  or 
be  repealed  by  desuetude.^ 


§  728.  Disregard  of  By-laws  without  formal  Repeal.  —  By-laws 
may  in  any  individual  case  be  disregarded  by  the  same  authority 
by  which  they  might  be  formally  repealed.^  In  England,  how- 
ever, the  articles  of  association  can  be  amended  or  repealed  only 
by  a  "special  resolution"  of  the  shareholders,  —  that  is  to  say,  a 
resolution  passed  by  a  three-fourths  vote  at  one  general  meeting 
and  confirmed  at  a  subsequent  general  meeting,*  —  and  until 
so  amended  or  repealed,  they  bind  the  shareholders  as  well  as 
the  directors,  and  no  mere  resolution  of  the  shareholders 
inconsistent  with  the  articles  can  be  given  effect.^ 


'  Supra,  §  688. 

=*  Bank  of  Holly  Springs  v.  Pin- 
son,  58  Miss.  421 ;  38  Am.  Rep.  330 ; 
Henry  v.  Jackson,  37  Vt.  431 ;  Buck 
V.  Troy  Aqueduct  Co.,  56  Atl.  285; 
76  Vt.  75  (by-law  requiring  five 
directors  held  to  be  repealed  or 
amended  by  the  custom  of  the  com- 
pany so  as  to  require  only  three) ; 
Blair  v.  Metropolitan  Sav.  Bank,  67 
Pac.  609;  27  Wash.  192. 

Cf.  RichmondviUe  Mfg.  Co.  v. 
Prall,  9  Conn.  487;  Currier  v.  Con- 
tinental Life  Ins.  Co.,  53  N.  H.  538 
(headnote  inadequate);  National 
Gross  Lodge  v.  Jung,  65  111.  App.  313 ; 
Attorney-General  v.  Middleton,  2  Ves. 
Sr.  327,  3.30;  Grand  Valley  Irr.  Co. 
V.  Fruita  Imp.  Co.  (Colo.),  86  Pac. 
324,  329,  330-.331. 

But  see  Watson  v.  Bendigo  Bldg. 
Soc,  10  Vict.  Rep.  (cases  at  law) 
26  (as  to  "rules"  of  a  building  soci- 
ety) ;  Sperry  v.  Dransfield,  2  New 
Zeal.  (Sup.  Ct.)  319  (ap  to  "rules" 
of  a  building  society)  ;    Connell  v. 


Stalker,  21  N.  Y.  Misc.  609,  611-612; 
48  N.  Y.  Supp.  77;  District  Grand 
Lodge  v.  Cohn,  20  111.  App.  335, 
344-345;  Campbell  v.  Watson,  62 
N.  J.  Eq.  396,  421;  50  Atl.  120  (by- 
law prescribing  duties  of  directors 
not  repealed  by  long  disobedience 
on  their  part);  Coughlin  v.  Knights 
of  Columbus  (Conn.),  64  Atl.  224. 

^  Bank  of  Holly  Springs  v.  Pin- 
son,  58  Miss.  421,  439;  38  Am.  Rep. 
330;  Samuel  v.  Holladay,  1  Woolw. 
400,  408-409  (by-law  regulating 
method  of  convening  meetings  of 
directors);  Martino  v.  Commerce 
Fire  Ins.  Co.,  47  N.  Y.  Sup.  Ct.  520; 
Royal  Bank  of  India's  Case,  4  Ch. 
252,  258. 

Cf.  Sorrentln^  v.  Ciletti,  lo  N.  Y. 
App.  Div.  507;   78  N.  Y.  Supp.  322. 

But  see  Flaherty  v.  Benevolent 
Soc,  99  Me.  253;   59  Atl.  58. 

*  See  infra,  §  1241. 

*  Boschoek  Proprietary  Co.  v. 
Fuke  (1906),  1  Ch.  148. 


588 


§  078-  §  7:J'^]  WAIVEH    OF    BV-I.AWS  §730 

§  720.  Reformation  of  Mistakes  in  By-laws.  —  In  Enfj^land  it 
has  l)een  held  that  the  general  power  of  a  court  of  ecjuity  to 
reform  mistakes  in  written  instruments  does  not  extend  to  the 
correction  of  mistakes  in  the  articles  of  assoc-iation  of  a  company 
incorporated  under  the  Companies  Acts.'  The  ground  of  tliis^ 
decision  was  that  the  articles  of  association  of  an  English  com- 
pany are  a  statutory  instrument  like  the  incorjx)ration  paper. 
This  reasoning  does  not  apply  with  the  same  force  to  the  by- 
laws of  an  American  coiporation. 

§  730.  Waiver  of  By-laws  intended  for  Company's  Benefit. — The 
corporation  may  always  waive  by-laws  that  are  intended  for  its 
benefit,-  such  as  a  by-law  giving  to  it  a  lien  on  the  shares  of  its 
members  for  debts  owing  by  them,^  or  a  by-law  of  a  mutual  life 
insurance  company  prescribing  a  maximum  age  for  applicants  for 
membership.*  This  principle  relates  rather  to  the  con.struction 
of  the  by-law  than  to  its  validity  or  efficacy,  or  to  its  continuance 
in  force.  Any  provision  in  by-laws,  by  whomsoever  adopted, 
that  is  clearly  intended  for  the  benefit  of  the  company,  may  be 

'  Evans  v.   Chapman,   86   L.   T.  Wise.   162;    18  N.  W.   13;    Susqm- 

381.  hanna  Mut.  Fire  Ins.  Co.  v.  Elkins, 

■  See  SwedM,  etc.  Mission  Soc.  124  Pa.  St.  484;  17  Atl.  24. 
V.  Lawrence,  79  Minn.  124 ;  81  N.  W.  Cf.  Priest  v.  CUizens  MiU.  Fire 
756;  McKenney  v.  Diamond  State  Ins.  Co.,  3  Allen  (Mass.)  602  (head- 
Loan  Ass'n,  8  Houst.  (Del.)  557;  note  inadequate) ;  Brewer  v.  Chelsea 
18  Atl.  905;  Delaney  v.  Delaney,  Mutual  Fire  Ins.  Co.,  14  Gray 
175  111.  187;    51  N.  E.  961;    Inde-  (Mass.)  203. 

j)endcnt   Order   v.   Haggerty,   86    111.  See  also  as  to  waiver  of  require- 

App.  31;    Burlington  Voluntary  Re-  ments  for  registration  of  transfers, 

lief  Dept.  v.   White,  41   Nebr.  547;  infra,  §  861 ;  Smith  \\  People's  Mut., 

59  N.  W.  747;  43  Am.  St.  Rep.  701;  etc.  Soc,   19  N.  Y.  Supp.  432;    64 

Watts  V.    Equitable  Mut.   Life   Ins.  Hun   534.     As  to  waiver  of  other 

Co.,  82  N.  W.  Rep.  441;    111  Iowa  restrictions  on  transfers  of   shares, 

90;   Grand  Lodge  v.  Reneau,  75  Mo.  see  infra,  §  949-§  950. 

App.  402;    Metropolitan  Ace.  Ass'n  ^  Trust  &  Savings  Co.  v.   Home 

V.  Froiland,  161   III.  30;    43  N.  E.  Lumber  Co.,  118  Mo.  447,  460-461; 

766;    52  Am.  St.  Rep.  359  (by-law  24S.  W.  129;   Bank  of  Holly  Springs 

limitinc;    time   for    suing    company  v.   Pinsnn,   58   Miss.   421;    38   Am. 

waived  by  refu.sal  to  sliow  copy  to  Rep.  330. 

member  on  request);    McMahon  v.  Cf.    Currier    v.    Continental    Life 

Supreme    Tent,    151    Mo.    522;     52  Ins.  Co.,  53  N.   H.   538;    Supreme 

S.  W.  384   (provision  for  forfeiture  Tent  v.   Volkert,  25  Ind.  App.  627; 

of  policy  in  mutual  insvirance  com-  57    N.    E.    203.      See    also    infra, 

pany) ;  Davidson  v.  Old  People's,  etc.  §  957. 

Soc,  39  Minn.  303;    39  X.  W.  803;  *  Wiberg  v.  Minnesota,    etc   Re- 

1  L.  R.  A.  482;    Morrison  v.  TT'is-  lief  Ass'n,  73  Minn.  297;    76  N.  W. 

consin  Odd  Fellows,  etc  Ins.  Co.,  59  37. 

589 


§  731  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

waived  by  it;  but  though  this  rule  is  not  per  sc  objectionable, 
yet  the  courts  have  applied  it  in  some  rather  doubtful  cases. 
Thus,  a  by-law  of  a  benefit  society  requiring  members  to  desig- 
nate in  \M-iting  the  name  of  the  beneficiary  may  be  waived,  so 
that  a  person  designated  as  beneficiary  by  parol,  with  the  com- 
pany's assent,  is  entitled  to  the  rights  of  a  beneficiary.'  So,  the 
fact  that  a  member  of  a  building  society  is  permitted  to  hold  a 
greater  number  of  shares  than  is  allowed  by  the  by-laws  is  no 
defence  to  an  action  by  the  company  for  dues  or  assessments  on 
shares  so  held ;  -  the  limitation  on  the  number  of  shares  being 
for  the  company's  l)enefit  may  be  waived  by  it. 

§  731.  Construction  of  By-laws.  —  The  rules  which  govern  the 
construction  of  by-laws  do  not  differ  from  those  for  the  construc- 
tion of  other  similar  instruments.  Wherever  a  code  or  set  of 
by-laws  is  in  force,  all  must  be  construed  together,  so  as  to  har- 
monize, if  possible,  apparent  discrepancies.'*  By-laws  imposing 
forfeitures  or  penalties  will  be  strictly  construed.^  The  courts 
will  lean  against  a  construction  which  would  give  a  by-law  a 
retroactive  effect.^  We  have  seen  that  a  long-continued  custom 
in  a  corporation  may  have  the  eflfeet  of  a  by-law  or  of  repealing 
a  pre\'iously  adopted  by-law ; "  and  a  fortiori,  therefore,  the 
usage  of  the  company  may  be  deferred  to  in  the  construction  of 
by-laws  which  in  themselves  are  ambiguous.^  But  the  admis- 
sion of  parol  evidence,  such  as  the  opinions  of  officers  of  the 
corporation,  as  to  the  meaning  of  an  unambiguous  by-law  is  a 
very  different  thing,  and  will  not  be  permitted.* 

'  Hanson    v.     Minnesota    Scan-  643-644;    44  C.  C.  A.  9.3;    Ancient 

dinavian,  etc.  Ass'n,  59  Minn.   123;  Order  v.   Brown,    112   Ga.   545;    37 

60N.  W.  1091.  S.  E.   890;    Gundlach  v.  Germania, 

2  Hagerman    v.    Ohio,    etc.    Bldg.  etc.  Inst.,  49  How.  Pr.  (N.  Y.)   190 

Ass'n,  25  Oh.  St.  186.  (headnote     inadequate) ;      Roxhury 

'  Cf.     Hartford     v.     Co-operative  Lodge  v.  Hocking,  60  N.  J.  Law  439; 

Homestead  Co.,   128  Mass.   494.  38  Atl.   693;    Modern   Woodmen  v. 

*  Occidental    Bldg.,   etc.    Ass'n   v.  Wieland,  109  III.  App.  340;    Taylor 

Svllivan,  62  Cal.  394 ;   Ottawa  Union  v.  Modern  Woodmen,  72  Kans.  443 ; 

Bldg.  Society  v.  Scott,  24  Up.  Can.  83  Pac.   1099;    United  Workman  v. 

Q.  B.  341.  Haddock,  72  Kans.  35;    Kaemmerer 

'  Brotherhood  of  Railroad  Train-  v.  Kaemmerer  (111.),  83  N.  E.  133. 

men  v.   Newton,   79   111.   App.    .TOO;  "  Supra,  §  688,  §  727. 

Wist  V.  Grand  Lodge,  22  Oreg.  271;  ''  McDonough    v.    Hennepin,    etc. 

29  Pac.  610;    29  Am.  St.  Rep.  603;  Ass'n,  62  Minn.  122;   64  N.  W.  106; 

Lloyd  V.  Supreme  Lodge,  98  Fed.  66;  State    ex    rel.     Attorney-General     v. 

38C.  C.  A.  654;    Knights  Templars',  Conklin,  H4  Wise.  21. 

etc.   Co.   V.   Jarman,    104   Fed.   638,  *  Brendon    v.    Worley,    8    N.    Y. 

590 


§  678-73S] 


CONSTRUCTIVE    NOTICE 


§732 


The  construction  of  ii  written  by-law  is  for  the  court,  rather 
than  tl)e  jury,  to  the  same  extent  as  the  construction  of  a  written 
contract,  a  deed,  or  a  will.' 


§  732-§  73o.     (Constructive  Notice  of  By-laivs. 

§  732.  Strangers  to  the  Company.  —  Of  the  ordinary  Ameri- 
can by-laws,  strangers  to  the  company,  according  to  the  almost 
uniform  current  of  authority,  are  not  afFectcd  with  constructive 
notice.  Indeed,  this  feature  is  one  of  the  chief  inhrmities  of  the 
American  system  of  by-laws.  As  the  by-laws  are  not  matter  of 
record,  strangers  could  not  be  charged  with  constructive  knowl- 
edge of  them  without  the  greatest  injustice."  Thus,  where  the 
by-laws  contain  a  limitation  upon  the  powers  of  some  officer  or 
agent  of  the  company,  a  stranger  who  contracts  with  him  is  not 
affected  by  the  limitation  without  actual  notice  thereof.^     Of 


Misc.  253;  28  N.  Y.  Supp.  557; 
Thomas  v.  Societa  Italiena,  10  N.  Y. 
Misc.  746;  31  N.  Y.  Supp.  815; 
Badesch  v.  Congregation  Bros.,  23 
N.  Y.  Misc.  160;  50  N.  Y.  Supp. 
958. 

'  Cf.  State  ex  rd.  Attorney-General 
V.  Conklin,  34  Wise.  21;  Traders' 
Mut.  Life  Ins.  Co.  v.  Humphrey,  109 
lU.  App.  246,  affinned,  69  N.  E.  875. 

-  So,  the  by-laws  of  a  Canadian 
company,  as  a  learned  judge  has 
pointed  out,  "are  not  pubUc  prop- 
erty. They  concern  matters  of  in- 
ternal management.  Those  who 
deal  with  the  company  have  no 
means  of  access  to  them,  no  right  to 
pry  into  the  company's  archives  or 
interrogate  its  officials.  "  Montreal, 
etc.  Poiver  Co.  v.  Robert  (1906), 
A.  C.  196,  202-203  (headnote  inade- 
quate). 

*  Royal  Bank  of  India's  Case,  4 
Ch.  252,  262;  Montreal,  etc.  Power 
Co.  V.  Robert  (1906),  A.  C.  196, 
202-203  (by-law  fixing  a  quorum 
of  directors — headnote  inadequate) ; 
Pine  Beach,  etc.  Corp.  v.  Columbia 
Amusement  Co.  (Va),  56  S.  E.  822; 
Russell  V.  Wa.thington  Sav.  Bank,  23 
App.  D.  C.  308;    Arapahoe,  etc.  Co. 


V.  Stevens,  13  Colo.  534;  22  Pac. 
823;  Moyer  v.  East  Shore  Terminal 
Co.,  41  S.  Car.  300;  19  S.  E.  651; 
44  Am.  St.  Rep.  709;  25  L.  R.  A. 
48;  Trawick  v.  Peoria,  etc.  Ry.  Co., 
68  III.  App.  156;  Ten  Broek  v.  Boiler 
Compound  Co.,  20  Mo.  App.  19; 
Smith  V.  Martin  Anti-Fire,  etc.  Co., 
19  N.  Y.  Supp.  285;  47  N.  Y.  St. 
Rep.  26;  Fay  v.  Noble,  12  Cush.  1; 
SmUh  V.  Smith,  62  lU.  493;  WaU  v. 
SmUh,  92  111.  385;  Ward  v.  Johnson, 
95  111.  215,  248;  Union  Mut.  Life 
Ins.  Co.  V.  WhUe,  106  111.  67; 
Barnes  Bros.  v.  Coal  Co.,  101  Tenn. 
354;  47  S.  W.  498;  Metropole  Bath 
Co.  V.  Garden  City  Fan  Co.,  50  111. 
App.  681;  Rathbun  v.  Snow,  123 
N.  Y.  343;  25  N.  E.  379;  10  L. 
R.  A.  355  (semble) ;  Perry  v.  Council 
Bluffs,  etc.  Co.,  67  Hun  (N.  Y.)  456; 
22  N.  Y.  Supp.  151;  M illedgeviUe 
Water  Co.  v.  Edwards,  121  Ga.  555; 
49  S.  E.  621;  Lyndon  Sav.  Bank  v. 
International  Co.,  54  Atl.  191;  75 
Vt.  224  (by-law  requiring  promis- 
sory notes  of  the  company  to  be 
signed  by  treasurer  and  counter- 
signed by  two  directors);  Powers 
V.  Schlicht  Heat,  etc.  Co.,  23  N.  Y. 
App.  Div.  380;  48  N.  Y.  Supp.  237; 
591 


§  733  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

course,  a  bv-law  may  appoint  an  agent  with  such  closely  limited 
authority,  or  may  define  the  powers  of  officers  in  such  a  way, 
that  acts  clearly  in  excess  of  the  authority  so  marked  out  will 
not  bind  the  corporation ;  but  tliis  is  not  because  persons  who 
deal  with  such  asrents  or  officers  are  charged  with  notice  of  the 
limitations  on  their  powers  contained  in  the  by-laws,  but  be- 
cause an  agent  who  acts  altogether  bevond  his  authority  does 
not  bind  his  principal  whether  the  third  party  does  or  does  not 
know  the  limits  of  the  agent's  powers.'  As  strangers  are  not 
chargeable  with  notice  of  the  provisions  of  by-laws,  a  policy  of 
insurance  issued  by  a  benefit  society,  the  terms  of  which  con- 
flict with  the  by-laws  of  the  society,  may  nevertheless  be  bind- 
ing according  to  its  terms.-  So,  where  the  by-laws  of  a  fire 
insurance  company  establish  different  rates  for  different  kinds 
of  property,  even  a  deliberate  mis-classification  of  property  by 
the  directors  will  not  necessarily  vitiate  the  policy.^ 

§  733.  Shareholders.  —  Indeed,  there  is  autluority  for  the 
view  that  even  members  of  the  corporation  are  not  chargeable 
with  constructive  notice  of  its  by-laws.*    Thus,  a  transferee  of 

affirmed  short  in  165  N.  Y.  662;  59  agent  to  bind  company  is  admissible 

N.    E.    1129;    Equitable   Endowment  in  evidence  in  favor  of  corporation 

Ass'n  V.  Fisher,  71  Md.  430;   18  Atl.  when  plaintiff  counts  on  an  actual 

808;    Produce    Exchange    Trust    Co.  contract  and  not  on  an  estoppel  — 

v.    Bieberbach,   58  N.   E.    162;     176  sed    quaere);     Northwestern    Packing 

Mass.  577.  Co.  v.  Whitney  (Cal.),  89  N.  W.  981. 

But  see  Adriance  v.   Roome,  52         '  Cf.  Carney  v.  A^.   Y.  Life  Ins. 

Barb.  (N.  Y.)  399,  411;    Haden  v.  Co.,  162  N.  Y.  453;    57  N.  E.  78; 

Farmers',   etc.   Fire   Ass'n,   80    Va.  76  Am.  St.  Rep.  347;    49  L.  R.  A. 

683,    691;     Dabney    v.    Stevens,    2  471;    Davis  v.   Rockingham   Invest- 

Sweeney    (N.    Y.)    415;     40    How.  menf  Co.,  89  Va.  290;    15  S.  E.  547; 

Pr.  (N.  Y.)  341  (semble);   Bohm  v.  Twelfth  Street  Market  Co.  v.  Jackson, 

Loewer's,  etc.  Brewery  Co.,  9  N.  Y.  102   Pa.    St.   269;     Railway  Equip- 

Supp.    514;     16   Daly   (N.   Y.)   80;  ment,  etc.  Co.  v.  Lincoln  Nat.  Bank, 

DeBost  V.  Palmer  Co.,  1  How.  Pr.,  82  Hun  (N.  Y.)  8,   11;    31  N.  Y. 

N.  s.    (N.    Y.),    501;  35  Hun  386;  Supp.  44. 

Harvey  v.  Schuylkill  Real  Estate,  etc.         ^  Davidson   v.    Old  People's,   etc. 

Co.,  24  Pa.  Co.  Ct.  Rep.  593;   Mill-  Soc,  39  Minn.  303;    39  N.  W.  803; 

ward-Cliffe  Cracker  Co.'s  Estate,  161  1  L.  R.  A.  482.     See  also  Fitzgerald 

Pa.  St.   157;    Worthington  v.  Skuyl-  v.  Equitable,  etc.  Life  Ass'n,  3  N.  Y. 

kUlElectricRy.  Co.,  195  Fa.  St.  211;  Supp.  214;    18  N.  Y.  St.  Rep.  914. 
45  Atl.  927;    Kansas  City  Hay  Press         ^  Union  Mutual  Fire  Ins.  Co.  v. 

Co.  V.  Devol,  72  Fed.  717,  721  (head-  Kerjser,  32  N.  H.  313;    64  Am.  Dec. 

note  inadequate).  375.      See    also    Campbell    v.    Mer- 

Cf.     Tres    Palacios,    etc.    Co.    v.  chants,  etc.   Ins.  Co.,  37  N.  H.  35; 

Eidman  (Tex.),  93  S.  W.  698  (hold-  72  Am.  Dec.  324. 
ing  that  by-law  restricting  power  of         *  Northwestern  Life    Ins.    Co.   v. 

592 


§  678-  §  738]  CONSTRUCTIVE    NOTICE  §  735 

shares  is  not  aflFected  with  constructive  notice  of  a  by-law  pur- 
porting to  create  a  hen  on  the  shares  in  favor  of  the  company.' 
So,  a  person  who  lends  money  on  the  security  of  a  share-cer- 
tificate signed  and  issued  by  the  company's  treasurer  is  not 
chargeable  witii  notice  of  by-laws  limiting  the  powers  of  the 
treasurer  in  that  regard. - 

§734.  Directors  and  Officers. — The  directors  and  higher 
officers  whose  duties  re([uire  an  intimate  knowledge  of  the  com- 
pany's internal  affairs  may  fairly  be  charged  with  constructive 
notice  of  the  by-laws,^  or  at  least  with  such  by-laws  as  have 
been  duly  published  and  entered  in  the  company's  minutes.  At 
any  rate,  knowledge  will  be  presumed,^  and  the  burden  of  prov- 
ing ignorance  will  rest  on  the  directors.  It  would  seem  that  a 
subordinate  employee  of  the  company  cannot  be  similarly  affected 
by  such  presumptive  or  constructive  notice.'^ 

§  73').  Persons  who  are  in  act  of  becoming  or  who  subsequently 
become  Members  or  Officers.  —  In  determining  whether  a  per- 
son is  to  be  charged  with  constructive  notice  of  a  company's 
by-laws  as  a  member  or  otherwise,  some  authorities  maintain 
that  regard  must  be  had  to  his  status  at  the  time  the  contract 
was  made,  and  that  it  is  immaterial  whether  the  effect  of  the 

Erlenkoetter,  90  111.  App.  99;  McKen-  Co.,  59  N.  Y.  96;    Bank  of  Holly 

ney  V.  Diamond  State  Loan  Ass'n,  8  Springs   v.    Pinson,    58    Miss.    421; 

Houst.    (Del.)    557;     18    Atl.    905;  38  Am.  Rep.  330.    See  infra,  §  956 

UnderhUl  v.  Satita  Barbara,  etc.  Co.,  and  supra,  §  706. 

93  Cal.  300,  311-312;    28  Pac.  1049         -  Tome    v.    Parkersburg    Branch 

(semble);      Williamson    v.    Eastern  i?. /2.  Co.,  39  Md.  36,  74-75;   17  Am. 

Bldg.,   etc.    Ass'n,   54    S.   Car.    582;  Rep.  540. 

32  S.  E.  765;   71  Am.  St.  Rep.  822.  *  Darrah  v.  Wheeling  Ice,  etc.  Co., 

But  see  Pfister  v.  Gerwig,  122  Ind.  50  W.  Va.  417;   40  S.  E.  373. 
507;     23    N.    E.    1041;     Harvey    v.         Cf.  Jones  v.   Vance  Shoe  Co.,  92 

Grand  Lodge,  50  Mo.  App.  472,  477;  111.  App.  158;    Mutual  Life  Ins.  Co. 

Bauer  v.   Samson  Lodge,    102    Ind.  v.    McSherry,    68    Md.    41,    45-46 

262;   IN.  E.  571;  Came  v.  Brigham,  (headnote     inadequate);      11     Atl. 

39  Me.  35,  38;    Crittenden  v.  South-  577;    Beers  v.  New  York  Life  Ins. 

ern  Home  Bldg.,  etc.  Ass'n,  111  Ga.  Co.,  66  Hun  (N.  Y.)  75;    20  N.  Y. 

266;    36  S.  E.  643;    Coles  v.   Iowa  Supp.  788. 

State,   etc.    Ins.   Co.,    18    Iowa  425;         *  Hunter  v.  Sun  Mut.   Ins.  Co., 

Mitchell  V.  Lycoming  Mut.  Ins.  Co.,  26  La.  Ann.  13;    Ellis  v.  X.  C.  In- 

51  Pa.  St.  402;    People's  Bldg.,  etc.  stiiution,  68  N.  Car.  423. 
Ass'n  V.  Purdy,  78  Pac.  (Colo.)  465;         *  Mayer  v.  East  Shore  Terminal 

Columbia  Bldg.,  etc.  Ass'n  v.  Jun-  Co.,  41  S.  Car.  300;    19  S.  E.  651; 

quist.  111  Fed.  645;  Richardson  v.  44  Am.  St.  Rep.  709 ;  25  L.  R.  A.  48. 
Devine  (Mass.),  79  N.  E.  771.  But  see  Hunter  v.  Sun  Mutual 

'  Driscoll    V.    West   Bradley,   etc.  Ins.  Co.,  26  La.  Ann.  13. 
VOL.  I.  — 38                                  593 


§  736  BY-LAWS    AND    INTERNAL    REGULATIONS       [ChAP.  XII 

contract  may  be  to  make  him  an  officer  or  member  of  the  com- 
pany ;  ^  but  the  weight  of  authority  supports  a  different  view  on 
this  point.-  At  all  events,  the  rights  of  a  party  under  a  contract 
witli  the  corporation  made  in  disregard  of  by-laws  of  which  he 
had  no  notice  will  not  be  affected  by  the  fact  that  subsequently 
by  an  independent  transaction  he  becomes  a  member  of  the 
company.^ 


§  736.  Who  are  subject  to  By-laws.  —  The  power  of  a  cor- 
poration to  enforce  its  regulations  by  penalties  or  forfeitures 
must  necessarily  be  confined  to  members,  and  cannot  extend  to 
strangers  who  have  never  consented  to  be  bound  by  its  rules. 
To  be  sure,  officers  and  agents,  and  others  who  contract  with 
the  company  with  knowledge  of  its  regulations,  must  be  deemed 
to  have  agreed,  so  far  as  their  agency  or  contract  is  concerned, 
to  abide  thereby.*  Indeed,  if  a  person  who  contracts  with  a 
corporation  has  actual  notice  of  the  terms  of  by-laws  affecting 
his  contract  or  the  authority  of  the  agents  or  officers  of  the 
company  by  whom  it  was  made  to  enter  into  it  —  for  example, 
if  the  contract  is  in  writing  and  expressly  incorporates  the 
by-laws  in  question  —  it  has  even  been  said  that  he  is  bound  by 
all  the  provisions  of  the  by-laws  to  the  same  extent  as  if  they 
had  been  statutes  of  the  state.^  Only  shareholders,  however, 
are  permanently  subject  to  the  by-laws,  and  subject  to  them  as 
rules  prescribed  by  a  lawgiver.^     Moreover,  even  members  of 

1  Moyer  v.  East  Shore  Terminal  7  L.  R.  A.  822.     See  also  books  on 

Co.,  41  S.  Car.  300;    19  S.  E.  651;  mutual  insurance. 
44  Am.  St.  Rep.  709;    25  L.  R.  A.         ^  w^-^  ^  Smith,  92  111.  385. 
48.  *  Cummings  v.    Webster,   43   Me. 

Cf.    Equitable    Endowment    Ass'n  192,   197.     Cf.   Bank  of  Wilmington 

V.  Fisher,  71  Md.  430;    18  Atl.  808  v.    Wollaston,    3    Harr.    (Del.)    90; 

(contract  of  employment  as  general  Sanitary    Can    Co.    v.    Mullins,    86 

manager).      See  also  supra,  §  733.  N.  Y.  App.  Div.  450;  83  N.  Y.  Supp.  ' 

=  Hunter  v.  Sun  Mutual  Ins.  Co.,  918. 
26  La.  Ann.  13;    Ellis  v.  N.  C.  In-         *  Cannon  v.  Farmers'  Mut.  Fire 

stUution,  68  N.  Car.  423;    Jones  v.  A.5s'n,  .58  N.  J.  Eq.  102;  43  Atl.  281; 

Vance  Shoe  Co.,  92   111.   App.    158;  Ameshuryv.  Bowditch  Mut.  Fire  Ins. 

Darrah  v.  Wheeling  Ice,  etc.  Co.,  50  Co.,  6  Gray  (Mass.)  596,  603. 
W.  Va.  417;   40  S.  E.  373;   Colpe  v.         Cf.  Nufe  v.  Hamilton  Mut.   Ins. 

Jubilee  Mining  Co.   (Cal.),  84  Pac.  Co.,  6  Gray  (Mass.)  174. 
324;     Douglass   v.    Merchant.^'    Ins.         ^  Mechanics,  etc.  Bank  v.  Smith, 

Co.,  118  N.  Y.  484;    23  N.  E,  806;  19  Johns  (N.  Y.)   115.     Cf.  Seneca 

594 


§  G78-73S]  PLEADIXG     AND    PROOF  §  738 

the  corporation  are  not  .suljject  to  tlie  corporate  jurisdictiijn 
except  in  tlieii'  capacity  as  incinl)er.s.  Thus  a  hy-hi\v  attempting 
to  impose  a  liiic  on  meinhers  lor  non-payment  of  interest  on 
debts  owing  by  thi'in  to  the  corporation  has  been  held  V(^id.' 
On  the  other  hand,  tlie  a})phcation  of  tliis  principle  to  the  mem- 
!)ers  of  such  corporations  as  mutual  insurance  companies,  the 
menil)ers  of  wliich  occuj)y  a  dual  relation,  as  members  and  as 
creditors,  will  be  found  very  dillicult. 

§  737.  Who  may  take  Advantage  of  By-laws.  —  Conversely,  a 
stranger  to  the  company  can,  in  general,  acquire  no  right  of 
action  by  virtue  of  the  by-laws.-  As  was  said  by  a  Massachu- 
setts judge:  "The  office  of  a  by-law  is  to  regulate  the  conduct 
and  define  the  duties  of  the  members  toward  the  corporation 
and  between  themselves.  So  far  as  its  provisions  are  in  the 
nature  of  contract,  the  parties  thereto  are  the  members  of  the 
association,  as  between  themselves;  or  the  corporation  upon 
the  one  side,  and  its  individual  members  upon  the  other.  The 
right  of  any  tiiird  party,  stranger  to  the  association,  to  estab- 
lish a  legal  claim  through  such  a  by-law,  must  depend  u{X)n 
the  general  principle  applicable  to  express  contracts."  ^  Thus, 
a  stranger  cannot  sue  to  recover  a  penalty  which  a  by-law  directs 
to  be  paid  to  him  by  some  delinquent  member.'  Upon  the  same 
principle,  a  provision  in  the  articles  of  association  of  an  English 
company  purporting  to  adopt  a  contract  made  by  promoters 
on  behalf  of  the  company  prior  to  its  incorporation  will  not 
enable  the  other  party  to  the  contract  to  sue  the  company 
thereon.^ 

§  738.  Pleading  and  Proof  of  By-laws.  —  In  pleading,  the 
degree  of  particularity  necessary  in  mentioning  or  setting  out 
by-laws  depends  so  largely  on  the  local  system  of  pleading  that 
little  can  be  profitably  said  on  the  subject."  In  an  action  of 
debt  to  recover  a  fine  imposed  by  virtue  of  a  by-law,  the  terms 

County    Bank    v.    Lamb,    26    Barb.  ^  Flint   v.    Pierce,    99   Mass.    68, 

(N.  Y.)  595,  597-598;   State  v.  Over-  70-71;  96  Am.  Dec.  691;  per  Wells, 

ton,  24  N.  J.  Law  4.35,  440-442;   61  J. 
Am.  Dec.  671.  *  Bodwic  v.  Fennell,  1  ^Yils.  233; 

'  Hagerman    v.    Ohio    Bldg.,    etc.  d.  Graves  v.  Colhij,  9  Ad.  &  E.  356. 
Ass'n,  25  Oh.  St.  186,  203;    Parker         »  Supra.  §  328. 
v.  U.  S.  Bldg.,  etc.  Ass'n,  19  W.  Va.  «  Cf.     Hingston    v.     Montgomery 

''•*■*•  (Mo.).  97  S.  W.  202.  205  (where  a 

^  Flint  V.  Pierce,  99  Mass.  68;  96  by-law  which  was  not  pleaded  waa 

Am.  Dec.  691.  enforced). 

595 


§  738  BY-LAWS    AND    INTERNAL   REGULATIONS       [ChAP.  XII 

of  the  by-law  must  be  set  out  in  the  declaration ;   for  otherwise 
it  may  be  held  bad,  at  least  on  special  demurrer.' 

By-laws  must  be  proved  like  other  resolutions  of  a  corpo- 
ration.- If  in  actions  at  law  the  existence  of  a  by-law  is  in 
dispute,  its  adoption  must,  where  the  evidence  is  conflicting  or 
inconclusive,  be  left  to  the  jury.^ 

'  Master,  etc.  of  Feltmakers,  IB.         ^  Cotton  Jammers,  etc.   Ass'n  v. 

&  P.  98.  Taylor,  23  Tex.  Civ.  App.  367;    56 

="  See  Boisot  on  By-laws,  2d  ed.,  S.  W.  553. 
§  158,  §  159. 


596 


CHAPTER  XITI 

PAYMENT   FOR   SHARES 

Section 

Liability  to  contribute  to  company's  capital  —  scheme  of  treatment  739 

Normal  liability 740-77:i 

In  general  —  liability  to  pay  on  call 74U 

Nature  of  liability  before  and  after  call 741-742 

In  general  —  effect  of  call  —  liability  as  for  a  debt   ....  741 

Whetlier  liability  is  statutory,  contractual,  etc 742 

What  a  call  is 743-74G 

In  general 743 

Re(iuirement  of  uniformity 744 

Call  not  necessarily  demand  for  immediate  payment  — calls 

payable  by  instalments 745 

Particulars  as  to  hour,  place,  and  manner  of  payment  not 

necessary  to  be  stated  in  call 746 

Notice  of  calls 747-752 

Whether  necessary 747 

Kind  of  notice 748 

Length  of  notice 749 

To  whom  notice  should  be  given 750 

Waiver  of  notice  by  repudiating  liability 751 

Effect  of  lack  of  notice 752 

Time  and  amount  of  calls 753-757 

In  general  —  discretion  of  company 753 

Calls   before    company  authorized    to    commence  business 

—  defence  of  incomplete  subscription  of  capital .    .    .  754 
Calls  after  abandonment  of  business  by  company      ....  755 
Calls   after  ultra  vires   acts  —  after  acceptance   of  uncon- 
stitutional lef;islative  amendment  to  charter  ....  756 
Statutory    and   other  regulations  as  to  amount  and  fre- 
quency of  calls      757 

By  whom  calls  may  be  made  —  by  directors,  shareholders,  etc.   .  758 

How  calls  may  be  paid  —  cash  —  set-off 759 

Liabihty  of  sliareholders  for  interest 760 

Statute  of  limitations  as  defence 761 

Who  are  subject  to  tlie  liability 762-773 

Actual    shareholders    as    distinguished    from    mere    sub- 
scribers    762 

Owners  of  shares  at  time  of  call  liable 763 

Criterion  of  o\\  nership  of  shares  for  this  purpose 764 

Effect  of  transfer  of  shares  upon  liability 765 

Statutes   making   former  shareholders  liable  notwith- 
standing transfer      766 

Liability  in  respect  of-  shares  heUl  in  trust,  etc.  —  habihty 

of  holder  of  legal  title      767 

597 


PAYMENT    FOR    SHARES  [ChAP.   XIII 

Normal  liability  (continued)  Section 

Liability  of  executor  or  administrator      768 

American  statutes  exempting  trustees,  executors,  pledgees, 

etc.,  from  personal  liabilitj' 769 

Infant  shareholders      770 

Effect  of  bankruptcy  of  shareholder 771 

Holder    of   less   than    minimum   or   more   than    maximum 

number  of  shares  allowed  to  be  held  by  one  person   .  772 
Holder    of    shares    issued    without    authority    of    law    or 

irregularly      773 

Special    agreements    varying    normal    liabiUty  —  subscriptions    on 

special  terms 774-799 

In  general  —  validity       774 

Issue  of  shares  at  a  premium 775 

Special    agreements    amounting  to   complete  or  partial  release 

from  liability  to  pay  par  value  —  issue  at  a  discount    .    .  776 

Issue  as  security  for  debt  of  the  company 777 

Effect  of  striking  down  stipulation  for  exemption  from  habiUty 

for  full  par  value 778 

Whether  prohibition  of  issue  of  shares  at  a  discount  applies  to 
reissue  of  shares,  to  issue  as  a  part  of  increase  of  capital, 

or  to  other  issue  of  shares  by  a  going  concern 779 

Disregard  by  directors  of  resolution  of  shareholders  on  increas- 
ing capital  forbidding  issue  of  new  shares  for  less  than  par  780 
Liability  of  holder  of   shares  issued  at  discount  distinguished 
from  liability  under  executory  contract  to  pay  less  than 

par  for  paid-up  shares 781 

Effect  of  impossibiUty  of  paying  in  the  mode  specially  stipu- 
lated     782 

Stipulations  for  payment  at  fixed  dates  instead  of  on  call ....  783 

Statutes  requiring  shares  to  be  paid  up  before  a  certain  time .    .  784 

Payment  in  property  or  services 785 

Evils  of  "watered  stock" ^ 786 

Statutory  attempts  to  remedy  the.se  evils 787-799 

Companies  Act  of  1867 787-795 

In  general      787 

Importance  to  American  la^vyers  of  ca.ses  arising  under 

this  statute 788 

Act   not    applicable   to   executory  contracts   to   issue 

shares 789 

Act  functus  officio  when  contract  registered 790 

Who  charged  with  burden  of  seeing  to  registration  of 

contract .-    -    •  791 

What  amounted  to  sufficient  registration  of  a  contract   .  792 

When  contract  must  be  registered 793 

What  is  payment  in  cash 794 

Objections  to  the  Companies  Act  of  1867 795 

Companies  Act  of  1900 796 

American  Statutes 797-799 

Statutes   requiring  payment  in  cash  —  what  amounts 

to  payment  in  cash 797 

Statutes  forbidding  the  issue  of  shares  except  in  ex- 
change for  money,  property,  or  services  .    .    .  798 

598 


§   739-§  807]  NORMAL    LIAIilLITY  §  740 

Special  agreements  varying  normal  lialjility  (continued)  Sectioa 

Statutes  re(niiring  reronling  of  contracts  for  payment 

of  shares  otherwise  than  in  cash 799 

Estoppel  of  company  to  exact  payment  for  shares  which  have  not 

been  paid  up 800-801 

Estoppel  in  favor  of  a  transferee  of  the  shares 800 

Estoppel  in  favor  of  original  allottee 8U1 

Assessments  on  paid-up  sliaros 802-806 

In  general  not  lawful 802 

Assessments  by  agreement  of  shareholders      803 

Assessments  authorized  by  statute 804 

Assessments  in  reorganization 805 

Attempts    to   evade    the    rule  prohibiting  assessments  on 

paid-up  shares 806 

Liabilities  of  shareholders  to  creditors      807 


§  739.  Liability  to  contribute  to  Company's  Capital  —  Scheme 
of  Treatment.  —  The  statu.s  of  shareholder  carries  with  it  certain 
rights  and  certain  obUgations.  Chief  among  the  latter,  at  least 
according  to  the  theory  of  the  law,  is  the  obligation  of  contribut- 
ing to  the  capital  of  the  company  an  amount  equal  to  the  nominal 
value  of  the  shares.  The  nature  of  this  obligation  and  the 
methods  of  enforcing  it  should  first  be  considered,  and  sub- 
set] uently  the  question  should  be  considered  how  far  this  normal 
obligation  may  be  departed  from  or  varied  by  special  agreement 
between  the  shareholders  and  the  company. 

§  740- §  773.      NORMAL   LIABILITY. 

§  740.  In  general  —  Liability  to  pay  on  Call.  —  Normallv  everv 
shareholder  is  bound  to  pay  in  cash  the  par  value  of  the  shares 
held  by  him,  in  such  instalments  and  at  such  times  as  the  com- 
pany may  call  for  the  same.'  In  the  absence  of  some  special 
regulation  or  agreement,  an  applicant  for  shares  is  not  bound  to 
pay  a  deposit  on  allotment  or  issue  of  the  shares,  but  is  merely 
bound  to  pay  on  call.-  Payment  of  deposits  on  application  or 
allotment  or  both  is,  however,  often  required  by  statute.  Under 
such  statutes,  the  authorities  are  in  conflict  whether  non-payment 
of  the  required  deposit  renders  the  subscription  whollv  void.^ 
If  by  statute  or  by  valid  internal  regulations  of  the  company 

'  But  see  Harris  v.  Gateway  Land  -  Alexander  v.  Automatic  Tele- 
Co.,  29  So.  611;    128  Ala.  652.  phone  Co.  (1900),  2  Ch.  56. 

*  See  supra,  §  200. 
599 


§741 


PAYMENT   FOR   SHARES 


[Chap.  XIII 


payment  is  required  at  certain  fixed  periods,  there  is  then  no 
necessity  for  a  call;  ^  and  a  fortiori  the  same  is  true  where  the 
time  of  payment  is  fixed  in  the  subscription  itself.^ 


§  741- §  742.     Nature  of  Liability  before  and  after  Call. 

§  741.  In  general  —  Effect  of  call  —  Liability  as  for  a  Debt.  — 
Until  a  call  i.s  made,  the  liability  of  the  shareholders  is  potential 
merelv ;  ^  but  immediately  upon  the  call  the  shareholders  become 
debtors  to  the  company  for  the  amount  of  the  call*  From  that 
time  on  the  obligation  scarcely  differs  from  any  other  debt.^ 
To  be  sure,  in  one  or  two  New  England  states,  it  has  been  held 
that  a  corporation  cannot  sue  a  shareholder  in  debt  or  assumpsit 
to  recover  the  amount  of  a  call,  unless  his  subscription  for  the 
shares  contained  an  express  promise  to  pay  for  them ;  ^  but  this 
doctrine  is  unsupported  by  any  sound  principle,  has  been 
uniformly  discountenanced  by  the  best  text- writers,^  and  is 
opposed  to  the  overwhelming  weight  of  authority  in  the  common- 
law  world.*    The  remedy  of  the  company  by  forfeiture  of  the 


»  Waukon,  etc.  R.  R.  Co.  v.  Dwyer, 
49  Iowa  121. 

Cf.  Phoenix  Warehousing  Co.  v. 
Badger,  67  N.  Y.  294,  300. 

See  also  infra,  §  774,  and  §  783. 

^  Williams  v.  Matthews,  103  Va. 
180;   48  S.  E.  861.    Cf.  infra,  §  783. 

See  also  California,  etc.  Co.  v. 
Callender,  94  Cal.  120,  127-128;  29 
Pac.  859;  28  Am.  St.  Rep.  99  (hold- 
ing that  where  a  subscription  by  its 
terms  is  payable  "at  such  time  and 
in  such  manner  as  may  be  deter- 
mined by  the  board  of  directors," 
action  may  be  brought  without  prov- 
ing a  call  complying  with  the  statu- 
tory formalities). 

»  Cawley  &  Co.,  42  Ch.  D.  209; 
Ex  parte  Rudolph,  11  W.  R.  806; 
South  Milwaukee  Co.  v.  Murphy,  112 
Wise.  614;  88  N.  W.  583;  58  L.  R. 
A.  82. 

But  see  Pittsburgh,  etc.  R.  R.  Co. 
V.  Clarke,  29  Pa.  St.  146. 

As  to  the  right  of  a  creditor  to 
enforce  payment  from  shareholders 
though  no  call  has  been  made,  see 


Hatch  V.  Dana,  101  U.  S.  205,  214- 
215;  Glen  Iron  Works,  17  Fed.  324; 
affirmed,  20  Fed.  674;  Cleveland 
Rolling-MUl  Co.  v.  Texas,  etc.  Ry. 
Co.,  27  Fed.  250.     Cf.  infra,  §  807. 

*  A  call  is  "owing"  from  the  time 
it  is  made  although  not  payable  until 
afterwards.  Faure  Electric,  etc.  Co. 
V.  Phillipart,  58  L.  T.  525. 

*  Cf.  Crawford  v.  Roney  (Ga.),  55 
S.  E.  499  (holding  that  where  call  is 
proved,  onus  of  proving  payment  is 
cast  upon  shareholder  as  in  any  other 
case  of  debt). 

*  Atlantic  Cotton  Mills  v.  Abbott,  9 
Cush.  423 ;  Katama  Land  Co.  v.  Jer- 
negan,  126  Mass.  155;  Kennebec, 
etc.  R.  R.  Co.  V.  Kendall,  31  Me.  470; 
Jay  Bridge  Co.  v.  Woodman,  31  Me. 
573. 

Cf.  Penobscot,  etc.  R.  R.  Co.  v. 
Dunn,  39  Me.  .587,  594  (agreement 
to  "take  and  fill"  a  certain  number 
of  shares). 

^  E.  g.  1  Morawetz  on  Priv.  Corps., 
2d  ed.,  §  128-§  129. 

*  Hughes  v.  Antietam  Mfg.  Co., 


600 


§  739-§  so: 


WHAT    A    CALL    IS 


§743 


shares  is  cumulative/  and  heing  in  the  nature  of  security  for  the 
debt,  may  be  waived  without  ati'ecting  the  right  to  enforce  the 
call  by  action  of  assumpsit.^ 

§  742.  Whether  LiabiUty  is  Statutory,  Contractual,  etc.  —  The 
obligation  to  pay  calls  grows  out  of  the  relation  of  shareholder, 
and  may  indeed  be  regarded  as  founded  upon  the  incorjwration 
act.^  It  does  not  originate  in  the  written  contract  of  subscription  * 
of  which  therefore  profert  need  not  be  made  in  an  action  to 
recover  a  call  even  though  by  the  lex  fori  in  actions  on  written 
contracts,  as  at  common  law  in  actions  on  specialties,  profert  is 
required.^    On  the  other  hand,  the  liabihty  sounds  in  contract." 


§  743- §  746.     What  a  Call  is. 

§  743.  In  general.  —  What,  then,  is  necessary  to  consti- 
tute a  call  ? '  A  call  is  a  demand  by  the  company  upon  the 
shareholders  for  the  payment  at  some  designated  time  of  a 
definite  sum  not  exceeding  the  amount  remaining  unpaid  on 


34  Md.  316,  326;  Webster  v.  Upton, 
91  U.  S.  65;  Ogdenshurgh,  etc.  R.  R. 
Co.  V.  Frost,  21  Barb.  541;  Rennsa- 
laer,  etc.  Co.  v.  Barton,  16  N.iY.  457n. ; 
Western  R.  R.  Co.  v.  Avery,  64  N. 
Car.  491;  Nashua  Savings  Bank  v. 
Anglo- American  Co.,  189  U.  S.  221; 
23  Sup.  Ct.  517;  Sigua  Iron  Co.  v. 
Brown,  171  N.  Y.  488;  64  N.  E.  194; 
Campbell  v.  American  Alkili  Co., 
125  Fed.  207;   61  C.  C.  A.  317. 

'  People's  Home  Sav.  Bank  v. 
Sadler  (Cal.),  81  Pac.  1029;  Tar 
River  Nav.  Co.  v.  Xeal,  3  Hawks  (N. 
Car.)  520.  See  also  cases  cited  in 
last  note.  But  see  Xeiv  Hampshire 
Central  R.  R.  v.  Johmon,  30  N.  H. 
390;  64  Am.  Dec.  300  (declaring 
that  when  the  sub.scriber  makes  no 
express  promise  to  pay,  he  cannot  be 
held  personally  liable  until  the  com- 
pany has  forfeited  and  sold  the 
shares,  when  he  can  be  sued  for  the 
balance). 

Cf.  International  Fair,  etc.  Ass'n 
V.  Walker,  83  Mich.  386,  394;  47 
N.  W.  338. 


-  American  Alkili  Co.  v.  Camp- 
bell, 113  Fed.  398;   125  Fed.  207. 

3  Cork,  etc.  Ry.  Co.  v.  Goode,  13 
C.  B.  826. 

But  cf.  Xeury,  etc.  Ry.  v.  Coombe, 
3  Ex.  565  (headnote  inadequate). 

*  But  see  Gold  v.  Paynter  (Va.), 
44  S.  E.  Rep.  920;  Lester  v.  Bemis 
Lumber  Co.,  74  S.  W.  518;  71  Ark. 
379;  McCoy  v.  World's  Columbian 
Exposition,  186  111.  356,  363  (head- 
note  inadequate);  57  N.  E.  1043; 
78  Am.  St.  Rep.  288;  Christensen 
V.  Eno,  106  N.  Y.  97,  102;  12  X.  E. 
648;  60  Am.  Rep.  429  (a  passage 
quoted  infra,  p.  630,  n.  2). 

^  Mississippi,  etc.  R.  R.  Co.  v. 
Gaster,  20  Ark.  455. 

«  Commercial  Bank  v.  Warthen, 
119  Ga.  990;  47  S.  E.  536. 

^  We  are  deaUng  here  exclusively 
mth  calls  by  the  corporation.  Calls 
made  by  the  court  or  by  the  official 
liquidator  or  receiver  in  winding-up 
proceedings  Ue  outside  the  scope  of 
this  work. 


601 


§744 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


their  shares.*  A  call  made  before  a  person  subscribes  is  of 
no  effect  as  to  him.'- 

§  744.  Requirement  of  Uniformity.  —  A  call  must  be  uni- 
form upon  all  the  shareholders  similarly  situated:  the  directors 
or  the  company  have  no  right  to  discriminate  between  the 
shareholders  by  making  demands  upon  some  of  them  while 
suffering  their  fellows  to  escape.^  But  if  a  greater  proportion  has 
been  paid  upon  some  of  the  shares  than  upon  others,  the  dis- 
parity not  only  may  but  must  be  corrected  before  a  call  can  be 
made  on  those  who  have  paid  in  the  greater  amount.*  If  the  call 
be  uniform  by  its  terms,  the  mere  failure  to  enforce  it  against 
some  of  the  shareholders  will  not  release  the  others.^ 

§  745.  Call  not  necessarily  Demand  for  immediate  Payment  — 
Calls  payable  by  Instalments.  —  The  resolution  making  the  call 
need  not  demand  immediate  payment.  On  the  contrary,  a 
resolution  may  be  passed  that  a  call  be  made  at  some  certain 
date  in  the  future,  payable  some  time  thereafter.^  So,  a  call  may 
be  made  payable  by  instalments :  ^  or,  in  other  words,  several 
successive  calls  may  be  resolved  upon  at  the  same  time. 

§  746.  Particulars  as  to  Hour,  Place,  and  Manner  of  Payment 
not  necessary  to  be  stated  in  Call.  —  It  is  not  necessary  that  the 
resolution  making  the  call  should  state  all  the  details  —  such  as 
the  precise  hour  and  place  for  payment.^     Such  matters  are 


I 


'  "A  call  is  notliing  more  than 
an  official  declaration  that  the  sums 
subscribed  are  required  to  be  paid. 
A  direction  to  collect  such  sums  in- 
volves, necessarily,  such  a  declara- 
tion." Braddock  v.  Philadelphia, 
etc.  R.  R.  Co.,  45  N.  J.  Law,  36.3,  365. 

-  Pike  V.  Bangor  Shore  Line  R.  R. 
Co.,  68  Me.  445. 

*  Brockway  v.  Gadsden,  etc.  Land 
Co.,  102  Ala.  620;  15  So.  431;  Pike 
V.  Bangor  Shore  Line  R.  R.  Co.,  68 
Me.  445;  1  Morawetz  on  Priv.  Corps., 
2d  ed.,  §  154. 

But  see  Odessa  Tramways  v. 
Men/Ms,  8  Ch.  D.  2-35,  245,  where 
it  was  held  that  the  company's  arti- 
cles dispensed  with  this  requirement 
of  uniformity.  Shares  owned  by  the 
company  itself  may  of  course  be 
excluded    from    the    call.     Western 


Improvement  Co.  v.  Des  Moines  Nat. 
Bank,  103  Iowa  455;   72  N.  W.  657. 

••  Great  Western  Tel.  Co.  v.  Buriv- 
ham,  79  Wise.  47;  47  N.  W.  373;  24 
Am.  St.  Rep.  698;  Bowen  v.  Kuehn, 
79  Wise.  53 ;  47  N.  W.  374.  See  also 
supra,  §  519. 

^  Hambleton  v.  Glenn,  72  Md. 
331;  20  Atl.  115.  Cf.  Hambleton  v. 
Glenn,  72  Md.  351 ;  20  Atl.  121  (hold- 
ing that  a  release  of  some  share- 
holders, being  ultra  vires  and  void, 
will  not  discharge  the  others). 

See  also  infra,  §  752. 

"  Sheffield,  etc.  Ry.  Co.  v.  Wood- 
cock, 7  M.  &  W.  574. 

^  London,  etc.  Ry.  Co.  v.  M'Mich- 
ael,  5  Exch.  855;  Ambergate  Ry.  Co. 
V.  Norcliffe,  20  L.  J.  Ex.  234. 

*  Lnndnn,  etc.  Ry.  v.  Fairclough, 
2  M.  &  Gr.  674;   Rutland,  etc.  R.  R. 


002 


§  739-§  S07] 


NOTICE    OF    CALLS 


§74: 


merely  administrative,  and  may  therefore  he  left  to  the  company's 
executive  officers.  If  no  time  is  fixed  for  payment,  the  call  is 
payable  immediately  or  after  the  expiration  of  the  recpiired  notice 
at  the  option  of  the  shareholder.'  On  the  other  liand,  a  resolu- 
tion calling  for  payment  either  in  cash  or  in  "land  contracts," 
without  stating  who  should  have  the  option  as  to  the  mode  of 
payment,  is  too  indefinite  to  constitute  a  valid  call.^  A  provision 
in  articles  of  association  re(juiring  the  directors  to  specify  the 
person  to  whom  a  call  should  be  payable  has  been  construed  to 
apply  only  to  cases  where  the  call  is  payable  at  some  place  other 
than  the  company's  registered  office.^ 


§  747- §  752.     Notice  of  Calls. 

§  747.  Whether  Notice  is  necessary.  —  A  call  is  generally  not 
enforceable  until  some  notice  thereof  be  given  to  the  share- 
holders. Such  notice  is  often  explicitly  recjuired  by  statute  * 
or  the  company's  regulations.  Upon  principle,  it  is  submitted 
that  notice  is  necessary  even  without  any  express  requirement,^ 
but  the  contrarv  doctrine  is  laid  down  as  settled  law  bv  some 


Co.  V.  Thrall,  35  Vt.  536;  Great 
North  of  England  Ry.  Co.  v.  Bid- 
didph,  7  M.  &  W.  243;  American 
Pastoral  Co.  v.  Gurney,  61  Fed.  41 ; 
Western  Imp.  Co.  v.  Des  Moines 
Nat.  Bank,  103  Iowa  455;  72  N.  W. 
657. 

Cf.  Andrews  v.  Ohio,  etc.  R.  R.  Co., 
14  Ind.  169;  Banet  v.  Alton,  etc.  R. 
R.  Co.,  13  111.  504  (headnote  itiade- 
quate);  Hays  v.  Pittsburgh,  etc.  R. 
R.  Co.,  38  Pa.  St.  81  (in  which  cases 
the  amount  of  the  call  as  well  as  the 
place  for  payment  was  loft  unde- 
termined by  the  resolution);  Rjick 
T.  Caledonia  Silver  Mining  Co.  (Cal.), 
92  Pac.  194  (statute  requirinfj  that 
call  state  place  of  payment  held 
mandatory). 

'  Baile  v.  Calvert  Coll.,  etc.  Soc, 
47  Md.  117,  124.  Cf.  Western  Imp. 
Co.  V.  Des  Moines  Nat.  Bank,  103 
Iowa  455;    72  N.  W.  657. 

But  see  Cawley  cfc  Co.,  42  Ch.  D. 
209  (where  the  court  held  that  a 
resolution  for  a  call  leaving  the  date 

CO 


for  payment  blank  could  not  amount 
to  a  call  until  the  blank  was  filled). 

^  North  M ilwaukee  Town  Site  Co. 
V.  Bi'ihop,  103  Wise.  492 ;  79  N.  W. 
785;   45  L.  R.  A.  174. 

^  Re  Kozminsky,  16  Vict.  L.  R. 
137. 

*  Hughes  v.  Antietam  Mfg.  Co., 
34  Md.  316;  Scarlett  v.  Academy  of 
Music,  43  Md.  203;  Macon,  etc.  R. 
R.  Co.  V.  Vason,  57  Ga.  314,  318; 
Carlisle  v.  Cahawba,  etc.  R.  R.  Co., 
4  Ala.  70. 

Cf.  Rutland,  etc.  R.  R.  Co.  v. 
Thrall,  35  Vt.  536. 

*  Miles  V.  Bough,  3  G.  &  D.  119; 
Hughes  v.  Antietam  Mfg.  Co.,  34 
Md.  316,  330-331;  Germania  Iron, 
etc.  Co.  V.  King,  94  Wise.  439:  69 
N.  W.  181;  36  L.  R.  A.  51  (semblc): 
Alabama,  etc.  R.  R.  Co.  v.  Rowley, 
9   Fla.  508. 

Cf.  Maltby  v.  Northwestern  Vo. 
R.  R.  Co.,  16  Md.  422 ;  10  C>'c.  p.  496 
(per  Judge  Thompson). 


§748 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


standard   American   text-writers/   and   is   supported   by   some 
adjudicated  cases.'- 

§  748.  Kind  of  Notice.  —  Usually,  notice  by  advertisement  is 
pro\'ided  for  by  statute  or  by  the  company's  regulations ;  and  per- 
haps such  notice  would  be  sufficient  in  the  absence  of  any  such 
provision.^  At  all  events,  unless  the  matter  is  governed  by  some 
positive  regulations,  any  reasonaV)le  notice  will  be  sufficient.* 
In  the  absence  of  an  explicit  regulation  on  the  subject,  the  notice 
need  not  specify  the  place  for  payment.^  Oral  notice  is  good 
unless  wTitten  notice  be  affirmatively  required.''  Explicit  regu- 
lations should,  however,  be  observed.^  For  example,  where  an 
act  of  incorporation  provided  that  all  notices  of  every  sort  should 
be  sisrned  bv  three  directors  or  bv  their  clerk  by  their  order,  a 
notice  of  a  call  must  conform  to  those  requirements.*  Thus, 
where  the  statute  requires  personal  demand  or  notice  by  publica- 
tion, notice  by  posting  a  letter  in  the  public  mails  is  not  sufficient.^ 
On  the  other  hand,  where  the  shareholder  receives  actual  notice 
of  the  call,  the  fact  that  the  notice  may  not  have  been  in  the 
required   form  is  perhaps   immaterial."^     If   the   statute   con- 


*  1  Morawetz  on  Priv.  Corps.,  2d 
ed.,  §  147;  2  Clark  &  Marshall  on 
Priv.  Corps.,  §  500. 

^  Eakright  v.  Logansport,  etc.  R. 
R.  Co.,  13  Ind.  404,  408  (headnote 
inadequate) ;  Heaston  v.  Cincinnati, 
etc.  R.  R.  Co.,  16  Ind.  275;  79  Am. 
Dec.  430;  Lake  Ontario,  etc.  R.  R. 
Co.  V.  Mason,  16  N.  Y.  451 ;  Eastern 
Plank  Road  Co.  v.  Vaughan,  20  Barb. 
155;  United  Fruit  Growers  Co.  v. 
Eisner,  22  N.  Y.  App.  Piv.  1,  5;  47 
N.  Y.  Supp.  906;  HiU  v.  Nisbet,  100 
Ind.  .341,  356. 

3  Hall  V.  U.  S.  Ins.  Co.,  5  Gill 
(Md.)  484. 

But  see  Lake  Ontario,  etc.  R.  R. 
Co.  V.  Mason,  16  N.  Y.  451,  46.3-464 
(semble) ;  Alabama,  etc.  R.  R.  v. 
Rowley,  9  Fla.  508.  As  to  what  is 
a  reasonable  notice  by  publication, 
see  Moore  v.  Wheal  Byjerkerno  Tin 
Mining  Co.,  17  Vict.  L.  R.  680. 

*  Cf.  National  Ins.  Co.  v.  Egle- 
son,  29  Grant  (Can.)  406. 

*  Vawter  v.  Franklin  College,  53 
Ind.  88. 


«  Smith  V.  Plank  Road  Co.,  30 
Ala.  650. 

^  As  to  what  is  a  shareholder's 
"regular  address"  within  the  mean- 
ing of  a  by-law  requiring  notice  to 
be  sent  to  him  there,  see  Bange  v. 
Supreme  Council  (Mo.),  105  S.  W. 
1092. 

»  MUes  V.  Bough,  3  G.  &  D.  119, 
132. 

®  Hughes  v.  Antietam  Mfg.  Co., 
34  Md.  316,  331. 

Cf.  Braddock  v.  Philadelphia,  etc. 
R.  R.  Co.,  45  N.  J.  Law  363;  Morris 
V.  Metalline  Land  Co.,  164  Pa.  St. 
326;  30  Atl.  240;  44  Am.  St.  Rep. 
614;   27  L.  R.  A.  305. 

'0  Britkh  Sugar  Co.,  3  K.  &  J.  408; 
Mississippi,  etc.  R.  R.  Co.  v.  Caster, 
20  Ark.  455. 

Cf.  Jones  V.  Sisson,  6  Gray  (Mass.) 
288 ;  Sands  v.  Sanders,  26  N.  Y.  239 ; 
Grand  Valley  Irr.  Co.  v.  Fruita  Imp. 
Co.  (Colo.),  86  Pac.  324,  329,  330- 
331;  1  Morawetz  on  Priv.  Corps., 
2d  ed.,  §  147,  p.  148. 

But  see  Morris  v.  Metalline  Land 


604 


§  739 -§  S07]  NOTICE   OF   CALLS  §  750 

templates  "such  notice  as  may  be  prescribed  by  the  by-laws," 
nevertheless,  if  no  by-laws  on  the  subject  are  adopted,  any 
reasonable  notice  will  be  sufficient.'  How  far  the  terms  of  the 
notice  must  be  approved  by  the  directors  and  how  far  such 
details  may  be  committed  to  executive  officers  will  depend  very 
largely  upon  the  terms  of  the  laws  and  regulations  governing  the 
company.- 

§  749.  Length  of  Notice.  —  Provisions  as  to  the  length  of 
notice  are  mandatory.  Where  notice  of,  say,  twenty-one  days  is 
required,  there  must  be  twenty-one  clear  days  exclusive  both  of 
the  terminus  a  quo  and  the  terminus  ad  quern;  so  that  even  in  a 
leap  year  notice  given  on  Februrary  9th  of  a  call  payable  on 
March  1st  would  be  invalid.^  However,  a  call  may  by  its  terms 
be  payable  on  a  date  prior  to  the  expiration  of  the  stipulated 
length  of  notice,  although  it  will  not  be  collectible  until  after- 
wards.* Where  "at  least  sixty  days'  notice"  by  publication  is 
required,  the  notice  need  not  be  published  daily  throughout  the 
sixty  days,  but  if  the  first  publication  be  sixty  days  before  the 
time  fixed  for  payment,  that  is  enough.^ 

§  750.  To  whom  Notice  should  be  given.  —  Notice  of  a  call 
addressed  to  a  deceased  member  at  his  late  address  is  good.^ 
No  notice  need  be  given  to  a  person  who  as  director  was  present 
at  the  meeting  at  which  the  call  was  made.^    In  the  case  of  shares 

Co.,  164  Pa.  St.  326;  30Atl.  240;  44  *  Scarlett  v.  Academy  of  Music, 

Am.    St.    Rep.   614;    27    L.    R.    A.  46  Md.  132. 

305.  Cf.  People's  Home  Savings  Bank 

»  Danbury,  etc.  R.  R.  Co.  v.  WU-  v.  Rauer  (Cal.),  84  Pac.  329. 
son,  22  Conn.  435.  ^  Muskingum     Valley     Turnpike 

But  see  Germania  Iron,  etc.  Co.  v.  Co.  v.  Ward,  13  Oh.  120;    42  Am. 

King,  94  Wise.  439;    69  N.  W.  181;  Dec.  191. 

36  L.  R.  A.  51  (holding  that  no  call  *  New  Zealand  Gold  Co.  v.  Pea- 
could  be  collected  until  the  adoption  cock  (1894),  1  Q.  B.  622. 
of  by-laws  prescribing  the  notice  to  Cf.  Allen  v.  Gold  Reefs  of  West 
be  given);  Xorth  Milwaukee  Town  Africa  (1900),  1  Ch.  656. 
Site  Co.  V.  Bishop,  103  Wise.  492;  As  to  notice  to  the  representatives 
79  N.  W.  785;  45  L.  R.  A.  174  (a  of  a  deceased  shareholder,  see  fur- 
eimilar  case).  ther.  South  Milwaukee  Co.  v.  Mur- 

■  See   Sheffield,    etc.    Ry.    Co.    v.  phy,  112  Wise.  614;   86  N.  W.  583; 

Woodcock,  7  M.  &  W.  574;   London,  58  L.    R.    A.    82.     See   also   infra, 

etc.  Ry.  Co.  v.  Fairdough,  2  M.  &  Gr.  §  976  et  seq. 
674.  ^  Schenectady,  etc.  Co.  v.  Thatcher, 

'  Re  Jennings,  1  Ir.  Ch.  236,  240-  11  N.  Y.  102. 
241.  Cf.   Graebner  v.   Post,   119  Wise. 

Cf.  National  Ins.  Co.  v.  Egleson,  392;    96  N.  W.  783;    100  Am.  St. 

29  Grant  (Can.),  406,  412.  Rep.  890. 

605 


§  751  PA'i'^VIEXT    FOR    SHARES  [ChAP.  XIII 

owned  by  copartners,  or  |>erhaps  by  any  two  persons  jointly, 
notice  to  one  is  notice  to  all.' 

§  751.  Waiver  of  Notice  by  repudiating  Liability.  —  It  has  been 
held  that  a  shareholder  who  altogether  repudiates  ownership  of 
the  shares  and  the  attendant  liabihty,  thereby  waives  notice  of  all 
subsequent  calls.-  Although  no  reason  was  assigned  by  the  court 
for  tliis  conclusion,  doubtless  the  basis  of  the  doctrine  is  that 
notice  need  not  be  given  to  one  who  has  shown  that  the  notice 
will  be  useless. 

§  752.  EfEect  of  Lack  of  Notice.  —  A  shareholder  who  has 
received  regular  notice  of  a  call  cannot  defend  an  action  therefor 
because  other  shareholders  may  not  have  been  duly  notified.^ 
This  rule  is  proper,  and  indeed  almost  necessary;  yet  one  should 
observe  that  it  enables  directors,  if  they  should  be  so  minded,  to 
evade  the  rule  which  requires  calls  to  be  uniform  on  all  share- 
holders, merely  by  omitting  to  give  notice  to  those  shareholders 
whom  they  desire  to  favor.* 

§  753-§  757.     Time  and  Amount  of  Calls. 

§  753.  In  general  —  Discretion  of  Company.  —  The  object  of 
the  law  in  requiring  subscriptions  to  the  capital  of  a  corporation 
to  be  paid  in  instalments  when  called  for  by  the  company  is  of 
course  to  enable  the  company  to  call  in  only  so  much  of  its 
capital  as  its  necessities  from  time  to  time  may  require.  Never- 
theless, the  company  or  the  directors  are  the  exclusive  judges 
of  whether  or  not  the  corporation  needs  the  capital  called  up; 
and  a  shareholder,  therefore,  cannot  resist  payment  of  a  call 
because  the  money  is  not  in  fact  needed  by  the  company.^    So, 

*  National  Ins.  Co.  v.  Egleson,  *  Odessa  Tramways  v.  Mendel,  8 
29  Grant  (Can.)  406  (semble).               Ch.  D.  235;    Penobscot  R.  R.  Co.  v. 

2  Cass  V.  Pittsburgh,  etc.  Rrj.  Co.,  White,  41  Me.  512,  518-520;  66 
80  Pa.  St.  31.  Am.  Dec.  257;   Visalia,  etc.  R.  R.  Co. 

3  Shackleford,  Ford  &  Co.  v.  v.  Hyde,  110  Cal.  632;  43  Pac.  10; 
Danger  field,  L.  R.  3  C.  P.  407,  411;  52  Am.  St.  Rep.  136  (where  the 
Baile  v.  Calvert  College,  etc.  Soc,  47  unsuccessful  defence  was  that  the 
Md.  117,  125  (headnote  inadequate);  call  was  made  for  the  purpose  of 
Hastings  Lumber  Co.  v.  Edwards,  75  paying  liabilities  contracted  before 
N.  E.  57;    188  Mass.  587.  defendant    became   a    shareholder); 

Cf.  Hambleton  v.  Glenn,  72  Md.  Judah  v.  American,  etc.   Ins.  Co.,  4 

331;   20  Atl.  115.  Ind.  333;  Chouteau  Ins.  Co.  v.  Floyd, 

*  Cf.  1  Mora wetz  on  Priv.  Corps.,  74  Mo.  286;  Budd  v.  Multnomah 
2d  ed.,  §  154.  Street  Ry.  Co.,  15  Oreg.  413;   15  Pac. 

606 


§  739- §  <S07: 


TIME    OF    CALLS 


§754 


too,  the  amount  of  calls  is  wholly  discretionary  with  the  company. 
To  be  sure,  in  one  case  it  was  held  that  the  corporation  could  not 
call  in  the  whole  amount  of  the  stock  at  once ;  '  l)ut  this  decision 
is  opposed  to  the  reason  of  the  law  and  to  other  decided 
cases. - 

§  754.  Calls  before  Company  authorized  to  commence  Business 
—  Defence  of  incomplete  Subscription  of  Capital.  —  On  the  other 
hand,  except  for  preliminary  expenses,  a  corjX)ration  can  have 
no  need  of  capital  until  it  is  competent  to  commence  business; 
and  until  that  time  should  have  no  power  to  make  calls  upon  its 
shareholders  for  the  purpose  of  engaging  in  business.^  We  have 
seen  above  that  according  to  the  American  rule  a  corporation 
may  not  commence  business  unless  by  unanimous  consent  until 
its  authorized  capital  has  been  fully  subscribed.*  Accordingly, 
in  America,  until  the  whole  authorized  capital  of  the  company 
has  been  subscribed,  no  call  can  be  made,^  except  for  the  pur- 


659;  3  Am.  Rep.  109;  Xashua  Sav- 
ings Bank  v.  Anglo-American  Co., 
189  U.  S.  221 ;  23  Sup.  Ct.  517  (leav- 
ing the  question  open  wlietlier  an 
assessment  made  imnecessarily  and 
in  bad  faith  would  be  enforceable); 
Anglo-American  Land,  etc.  Co.  v. 
Dtjer,  181  Mass.  593;  64  N.  E.  416; 
92  Am.  St.  Rep.  437;  Fitzgerald's 
Estate  V.  Union  Sav.  Bank,  90  N.  W. 
994;    65  Nebr.  97. 

Cf.  Bailey  v.  Birkenhead,  etc.  Ry. 
Co.,  12  Beav.  433;  Bank  of  China 
V.  Morse,  168  N.  Y.  4.58;  85  Am.  St. 
Rep.  676;  61  N.  E.  774;  56  L.  R.  A. 
139. 

'  Spangler  v.  Indiana,  etc.  Ry. 
Co.,  21  111.  276. 

^  Ilaun  V.  Midberry,  etc.  Co.,  33 
Ind.  103;  Budd  v.  Midtnomah  Street 
Ry.  Co.,  15  Oreg.  413;  15  Pac.  659; 
3  Am.  Rep.  169. 

^  But  see  United  Fruit  Growers 
Co.  v.  Eij^ner,  22  N.  Y.  App.  Div.  1, 
6-7;    47  N.  Y.  Supp.  906. 

*  Supra,  §  177. 

'  Hughes  v.  Antietam  Mfg.  Co., 
34  Md.  316;  Salem  Mill  Dam  Corp. 
v.  Ropes,  6  Pick.  (Mass.)  23;  Denny 
Hotel  Co.  V.  Schram,  6  Wash.  134 ;  32 
Pac.    1002;    36  Am.   St.   Rep.    130; 


Livesey  v.  Omaha  Hotel  Co.,  5  Nebr. 
50;  Haskell  v.  Worthington,  94  Mo. 
560;  7S.  W.  481;  Allman  v.  Havana, 
etc.  R.  R.  Co.,  88  111.  521;  Galveston 
Hotel  Co.  V.  Bolton,  46  Tex.  633  (not- 
withstanding a  statute  which  pro- 
vided that  the  corporation  migiit  be 
"organized"  when  ])art  only  of  the 
capital  should  be  subscribed) ;  Xew 
Hampshire  Central  R.  R.  v.  Johnson, 
30  N.  H.  390;  64  Am.  Dec.  300; 
Proprietors  of  Cabot,  etc.  Bridge,  6 
Cush.  (Mass.)  50. 

But  see  Hamilton,  etc.  Co.  v.  Rice, 
7  Barb.  (N.  Y.)  157,  166-167; 
Schenectady,  etc.  Co.  v.  Thatcher,  11 
N.  Y.  102;  Jeivett  v.  Valley  Ry.  Co., 
34  Oh.  St.  601. 

This  rule  has  no  application  if 
the  company  is  expressly  authorized 
by  statute  to  commence  business 
before  the  capital  is  completely 
taken.  1  Morawetz  on  Priv.  Corps., 
2d  ed.,  §  140:  Jewett  v.  Valler/  Rif. 
Co..  34  Oh.  St.  601. 

Calls  may  be  made  upon  subscrib- 
ers to  the  original  capital  although 
the  capital  has  been  increa.sed  and 
the  new  siiares  have  not  been  fully 
subscribed.  McCoy  v.  iror/(/'.s  Co- 
lumbian Exposition,  186  111.  356;   57 


607 


§754 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


pose  of  defraying  preliminary  expenses.'  In  England,  however, 
inasmuch  as  a  company  may,  except  where  prohibited  by  statute, 
commence  business  before  its  capital  is  subscribed,  the  rule 
just  stated  probably  does  not  prevail ;  -  and  so,  too,  whenever  in 
the  United  States  a  corporation  is  authorized  to  commence 
business  before  its  capital  is  fully  subscribed,  it  may  levy  calls 
upon  the  shareholders  as  soon  as  it  is  authorized  to  start  business.^ 
INIoreover,  in  America,  the  defence  of  non-complete  subscription 
of  the  capital  is  always  one  which  may  be  waived  either  expressly 
or  by  participating  in  the  commencement  or  transaction  of 
business  by  the  company  with  knowledge  of  the  incomplete  sub- 
scription of  capital.^     In  order  to  have  that  effect,  however,  the 

N.  E.   1043;    78  Am.  St.  Rep.  288.  tinning  the  business  notwithstand- 

Cf.  supra,  §  589.  ing  the  incomplete  subscription,  was 

A   requirement  that   the   capital  held  void);   Lindley  on  Companies, 

must  be  subscribed  by  "responsible  6th  ed.,  576-577  (where  the  learned 

persons"  is  satisfied  if  the  subscrib-  author  states  the  EngUsh  law  in  sub- 

ers  are  bona  fide  believed  to  be  sol-  stantial    accord  with  the  American 

vent.     Penobscot  R.  R.  Co.  v.  Dum-  law). 

mer,  40  Me.  172;    63  Am.  Dec.  654;  Even  where  the  subscription  of  a 

Penobscot  R.  R.  Co.  v.  White,  41  Me.  certain  proportion  of  the  capital  of  a 

512;   66  Am.  Dec.  257.  railway  company  is  expressly  made 

'  Salem  Mill  Dam  Corp.  v.  Ropes,  a  condition  to  the  right  of  the  com- 

6  Pick.  (Mass.)  23;   1  Morawetz  on  pany    to    exercise    its    powers,    the 

Priv.  Corps.,  2d  ed.,  §  139.  Court  of  Exchequer  held  that  a  call 

-  Ornamental  Pyrographic  Co.  v.  might  be  made  before  that  amount 

Brown,  2  H.  &  C.  63;  Re  Jennings,  of   capital   was   taken.      Waterford, 

1  Jr.  Ch.  236,  241-243;  Mandel  v.  etc.    Ry.    Co.    v.    Dalbiac,    6    Eng. 

Siya/i  Land  Co.,  154  111.  177,  188;  40  Ry.    Cas.   753;    6    Ex.    443.      But 

N.  E.  462 ;  45  Am.  St.  Rep.  124 ;  27  see    contra :    Norwich,    etc.    Naviga- 

L.  R.  A.  313  (governed  by  the  law  tion   v.    Theobald,   1    Moody    &    M. 

of  Great  Britain);   London,  etc.  Ass.  151. 

Co.  V.  Redgrave,  4  C.  B.,  n.  s.,  '  Hunt  v.  Kansas,  etc.  Bridge  Co., 
524.  11  Kans.  412;  Willamette  Freight- 
But  of.  Hawbeach  Coal  Co.  v.  ing  Co.  v.  Stannus,  4  Oreg.  261; 
Teague,  5  H.  &  N.  151 ;  Elder  v.  New  Nichols  v.  Burlington,  etc.  Co.,  4  G. 
Zealand  Co.,  30  h.T.  285;  Pitchford  Greene  (Iowa)  42;  Boston,  etc.  R. 
v.  Davis,  5  M.  &  W.  2;  Galvanized  R.  Co.  v.  Wellington,  113  Mass. 
Iron    Co.    v.    Westoby,    8    Ex.    17;  79. 

North  Stafford  Steel,  etc.  Co.  v.  Ward,  *  StUlman  v.  Dougherty,  44  Md. 
L.  R.  3  Ex.  172  (where  the  articles  380;  Hager  v.  Cleveland,  36  Md.  ilQ; 
provided  that  in  case  all  the  shares  Anderson  v.  Railroad,  91  Tenn.  44; 
should  not  be  allotted  the  existing  17S.  W.  803;  Masonic  Temple  Ass'n 
subscribers  should,  if  the  directors  v.  Channell,  43  Minn.  353;  45  N.  W. 
should  so  declare,  continue  associated  716;  Internati/mal  Fair,  etc.  Ass'n  v. 
for  the  objects  of  the  company,  and  Walker,  83  Mich.  386;  47  N.  W.  338; 
a  call  made  without  any  previous  Corwith  v.  Culver,  69  111.  502;  De- 
resolution  of  the  directors  for  con-  troit  Driving  Club  v.  FiZzgerald,  109 

608 


§  739-§  807]  TIME    OF    CALLS  §  755 

participation  must  be  qua  shareliolder:  it  is  not  enough  that  the 
shareholder  may  have  dealt  with  the  company  as  any  stranger 
niiflit  do.'  The  defence  may  be  waived  in  advance  by  a  stipu- 
lation in  the  subscription,-  or  the  shareholder  will  be  pre- 
cluded from  raising  it  if  at  the  time  he  subscribed  the  com])any 
was  already  engagetl  in  business.^  On  the  other  hand,  the 
payment  of  one  call  which  was  unauthorized  because  the  capital 
had  not  been  fully  subscribed  will  not,  it  has  been  held,  neces- 
sarily estop  the  shareholder  from  resisting  on  that  ground 
subsecpient  calls;*  for  the  first  payment  may  have  been  made 
without  knowledge  of  the  facts  or  in  the  belief  that  the  money 
was  needed  for  preliminary  expenses. 

§  755.  Calls  after  Abandonment  of  Business  by  Company.  — 
The  abandonment  by  the  company  of  its  enterprise  or  under- 
takincr  constitutes  no  defence  to  an  action  for  calls.^  So,  the 
sale  of  the  entire  undertaking  and  franchise  of  the  company  by 
wav  of  foreclosure  of  a  mortgage  will  not  affect  a  shareholder's 
obligations."  Perhaps  the  money  may  be  needed  to  discharge 
obligations  incurred  prior  to  such  abandonment.  .1  fortiori,  the 
abandonment  of  a  part  only  of  the  undertaking  will  not  exoner- 
ate a  shareholder  from  payment  for  his  shares.^ 

Mich.    670;    1    Morawetz    on    Priv.  construction  by  the  company  should 

Corps.,  2d  ed.,   §   156.  progress). 

But  see  Oldtoion,  etc.  R.  R.  Co.  v.  Cf.  Andersonv.  Railroad,  91  Tenn. 

Veazie,  39  Me.  571.  44;    17  S.  W.  803;   Lail  v.  Mt.  Ster- 

Cf.  Xew  Hampshire  Central  R.  R.  ling  Coal  Road  Co.,  13  Bush  (Ky.)  32. 

V.  Johnson,  30  N.  H.  390;    64  Am.  ^  Musgravev. Morrison, 54Ud.\dl. 

Dec.  300  (where  there  was  held  to  be  *  Somerset,  etc.  R.  R.  Co.  v.  Cush- 

no  waiver  by  attending  meetings  of  ing,  45  Me.  524,  533 ;   Xorth  Stafford 

the    corporation    \\ithout    assenting  Steel,  etc.  Co.  v.  Ward,  L.  R.  3  Ex. 

to  the  transaction  of  business).  172  (headnote  inadequate) ;  Garling 

1  Gettysburg  Xat.  Bank  v.  Brown,  '  v.  Baechtel,  41  Md.  305,  326. 

95  Md.  367 ;   52  Atl.  975.  *  Re  Jennings,  1  Ir.  Ch.  236,  241 ; 

-  Emmitt  V.  Springfield,  etc.  R.  R.  Phoenix  Warehousitig  Co.  v.  Badger, 

Co.,  31  Oh.  St.  23;  Sweeney  v.  Tenn.,  67  N.  Y.  294;    Arm.^trong  v.  Karsh- 

etc.   R.   R.  Co.  (Tenn.),   100    S.  W.  n€r,  47  Oh.  St.  276;  24  N.  E.  897. 

732  (where  the  defence  was  held  to  But  see  South  Georgia,  etc.  R.  R. 

be  precluded  by  a  provision  for  pay-  Co.  v.  Ayres,  56  Ga.  230. 

ment  of  the  subscription  at  definite  *  Buffalo,  etc.  R.  R.  Co.  v.  Gif- 

times,  so  that  no  call  need  be  made  ford,  87  N.  Y.  294;   Buffalo,  etc.  R.  R. 

by   the    company   before    enforcing  Co.  v.  Clark,  22  Hun  (N.  Y.)  359. 

payment);    St.  Charles  Mfg.  Co.  v.  Cf.  .4 rw.s^ro/!^  v. /vars/mer,  47  Oh. 

BriUon,  2  Mo.  App.  290;    Iowa,  etc.  St.  276;   24  N.  E.  897. 

R.  R.  Co.  v.  Perkins,  28  Iowa  281  '   Buffalo,  etc.  R.  R.  Co.  v.  Clark, 

(agreement  to  pay  as  certain  work  of  22  Hun  (N.  Y.)  359. 

VOL.  I.— 39  609 


§   756  rAY.MEXT    FOR    StL\RES  [ChAP.  XIII 

§  ToO.  Calls  after  Ultra  Vires  Acts  —  After  Acceptance  of  Un- 
constitutional legislative  Amendment  to  Charter.  —  By  parity  of 
reasoning,  excess  of  power  by  the  corporation  will  not  justify  a 
dissenting  shareholder  in  refusing  to  pay  calls.'  On  the  other 
hand,  with  apparent  inconsistency,  the  courts  have  held  that 
the  acceptance  of  an  unconstitutional  legislative  amendment  to 
the  charter  bv  the  majority  of  the  shareholders  will  release  the 
dissentins  minority  from  anv  further  liability,-  unless  some  one 
or  more  of  the  minority  choose  to  enjoin  the  corporation  from 
actine:  under  the  amendment.-' 

§  757.  Statutory  and  other  Regulations  as  to  Amount  and  Frequ- 
ency of  Calls.  —  Not  infrequently,  by  statute  or  by  a  company's 
regulations,  some  limit  is  placed  on  the  amount  which  may  be 
called  in  from  the  shareholders  at  any  one  time,  and  a  minimum 
interval  to  elapse  between  calls  is  prescribed.  If  a  call  be  made 
for  more  than  the  prescribed  maximum,  or  if  it  be  made  too 
soon  after  a  previous  call,  it  is  invahd  and  unenforceable.^  If 
an  act  of  incorporation  provides  that  at  least  two  months  shall 
elapse  between  calls,  a  call  made  within  two  months  after  an- 
other call  is  invalid  even  though  the  earlier  call  was  itself  invalid 
because  made  within  two  months  of  a  still  earlier  call,  unless 
the  second  call  had  been  collected  from  none  of  the  share- 
holders and  had  been  formally  declared  void  by  the  company.' 
Regulations  limiting  the  amount  which  may  be  assessed  at  any 
one  time  apply  to  the  amount  which  is  required  to  be  paid  at 
any  one  time,  and  do  not,  according  to  American  decisions, 
invalidate  successive  calls  voted  at  one  time  but  payable  sep- 
arately.^    The  contrary,  however,  was  held  by  the  House  of 

»  Cartwright    v.     Dickinson,     88  2d  ed.,  §  119-§  120,  153;   2  Clark  & 

Tenn.  476;    12  S.  W.  1030;    17  Am.  Marshall    on    Priv.    Corps.,    §    482, 

St.  Rep.  910;  7  L.  R.  A.  706;  Pro-  §  484. 

prietors  of  City  Hotel  v.  Dickinson,         But  cf.  Midland,  etc.  Ry.  Co.  v. 

6  Gray  (Mass.)  586;    1  Morawetz  on  Gordon,  16  M.  &  W.  804.     As  to  the 

Priv.  Corps.,  2d  ed.,  §  115-§  117;   2  effect  of  forfeiture   of   shares   upon 

Clark   &   Marshall  on  Priv.  Corps.,  liabihty    of    the    holder    see    infra, 

§  488.  §  828. 

But  see  South  Georgia,  etc.  R.  R.         ^  Rutland,  etc.  R.  R.  Co.  v.  Thrall, 

Co.  V.  Ayres,  56  Ga.  230.  35  Vt.  536. 

^  Ashton    V.    Burbank,    2    Dillon         *  Cf.  Re  Jennings,  1  Ir.  Ch.  236. 
435;     Oldtown,    etc.    R.    R.    Co.    v.  ^  Welland  Ry.  Co.  v.  Berrie,  6  H. 

Veazie,  39  Me.   571;    Hartford,  etc.  &  N.  416. 

R.  Co.  V.   Croswell,  5   Hill   (N.   Y.)  "  Penobscot   R.    R.    Co.   v.   Dum- 

383;     1   Morawetz  on  Priv.  Corps.,  mer,  40  Me.  172;   63  Am.  Dec.  654; 

010 


§  739-§  807]  SET-OFF  §  7.59 

Lords.'  But  even  according  to  this  English  doctrine,  while  the 
voting  of  the  two  calls  simultaneously  is  irregular,  the  one  pay- 
able first  is  valid.-  Moreover,  if  the  retjuirrd  interval  elapse 
between  the  time  when  the  resolution  for  the  first  call  is  made 
and  the  time  when  the  resolution  for  the  second  call  is  made, 
as  well  as  betw(ten  the  time  fixed  for  payment  of  the  fir.st  call 
and  that  fixed  for  j)ayment  of  the  second,  both  calls  are  valid; 
the  court  "cannot  construe  the  time  of  the  making  of  the  call  to 
be  the  time  when  the  call  is  payable  in  the  one  ca.se,  and  in  the 
other  case,  the  time  when  the  resolution  for  the  call  is  made."  ^ 
If  the  law  prohibits  the  makmg  of  a  call  while  a  previous  call 
remains  unpaid  unless  an  attempt  has  InHm  made  to  enforce 
its  collection,  the  off-setting  of  a  fraudulent  claim  against  the 
former  call  is  not  such  payment  as  will  authorize  the  second  call.* 


§  758.  By  whom  Calls  may  be  made  —  By  directors,  by  Share- 
holders, etc.  —  Where  the  statutes  applicable  to  a  company  as 
well  as  its  regulations  are  silent  upon  the  question  by  whom 
calls  shall  be  made,  the  power  of  levying  them  may  be  exercised 
by  the  directors.^  If  the  power  be  expressly  conferred  upon  the 
directors  or  other  agents,  it  cannot  be  delegated  by  them ;  ^  but 
nevertheless  a  general  meeting  of  the  shareholders,  the  supreme 
corporate  authority,  might,  it  is  submitted,  take  the  matter 
into  its  own  hands  and  call  in  unpaid  capital.^  Where,  how- 
ever, by  the  express  terms  of  the  subscription  it  is  payable 
on  call  by  the  directors,  a  call  levied  by  a  meeting  of  shareholders 
is  ineffective.^ 

§  759.  How  Calls  may  be  paid  —  Cash  —  Set-off.  —  Calls  are, 
in  the  absence  of  special  agreement  —  a  matter  which  is  treated 

Rutland,  etc.  R.  R.  Co.  v.  ThraU,  35  '  Ambergate,     etc.     Ry.     Co.     v. 

Vt.  536;    Penobscot,  etc.  R.  R.  Co.  v,  Mitchell,  i  Exch.  540,  543. 

Dunn,  39  Me.  587.  *  Strouse    v.    Sylvester,    66    Pac. 

*  BaUlie    v.    Edinburgh    OU    Gas  660;     134   Cal.   xx. 

Light  Co.,  3  CI.  &  Fin.  6:39;    Strat-  «  See  infra,  §   1435. 

ford,  etc.  Ry.  Co.  v.  Stratton,  2  B.  &  "1  Morawetz  on  Priv.  Corps.,  2d 

Ad.  518.  ed.,  §  145.      Cf.  infra,  §  1467. 

Cf.    Ambergate,    etc.    Ry.    Co.    v.  '^  See  infra,  §  1191. 

Mitchell,  6  Eng.  Ry.  Cas.  235.  *  Cf.    Brockway   v.    Gadsden,   etc. 

^BaUlie  v.  Edinburgh  OU  Gas  La?wi  Co.,  102  Ala.  620;  15  So.  431. 
Light  Co.,  3  CI.  &  Fin.  639,  661. 

611 


§  759  PAYMENT    FOR    SHARES  [ChAP.   XIII 

below  —  payable  only  in  cash.  They  go  to  make  u])  a  fund  — 
often  called  in  America  a  "trust-fund"  —  for  defraying  the 
expenses  and  paying  the  debts  of  the  company.  If  the  require- 
ment of  payment  in  cash  be  rigorously  enforced,  a  shareholder 
who  may  happen  also  to  be  a  creditor  of  the  company  should 
not  be  permitted  to  set-off  his  liability  for  calls  against  that 
indebtedness.'  Such  is  the  law  where  the  company  is  insolvent 
and  has  ceased  to  be  a  going  concern,  both  in  England  -  and 
America ;  ^  and  similarly  the  shareholder  cannot  deduct  the 
amount  of  the  unpaid  calls  from  the  indebtedness  and  prove 
against  the  company  for  the  balance,'  nor  can  he  prove  for  the 
full  amount  of  the  debt  and  set  off  the  calls  against  the  dividend 
payable  to  him  on  his  claim.''  Hence,  too,  a  shareholder  cannot 
set  off  sums  which  he  has  paid  upon  void  shares  issued  in 
excess  of  the  company's  authorized  capital  against  his  liability 
for  unpaid  subscriptions  to  the  lawful  capital.''  In  the  United 
States  the  same  rules  apply  where  the  company  has  been  adju- 
dicated a  bankrupt,  and  that  too  although  the  bankrupt  act 
expressly  provides  that  set-off  shall  be  allowed  in  all  cases  of 
mutual  debts.^  In  England  that  precise  question  cannot  arise, 
since  corporations  are  not  within  the  British  Bankrupt  Acts.  It 
is,  however,  held  by  the  English  courts,  that  where  a  shareholder 
becomes  bankrupt,  debts  owing  to  him  by  the  company  may  by 

*  So-called  set-off  by  agreement         '  Sawyer  v.  Hoag,  17  Wall.  610; 

with  the  company  is  really  payment,  Bausman  v.  Kinnear,  79  Fed.  172; 

and  is  valid.   Goodwin  v.  McGehee,  15  24  C.  C.  A.  473. 
Ala.  232,  249.    See  infra,  §  794,  §  797.         Cf.  Boulton  Carbon  Co.  v.  Mills, 

As  to  crediting  sums  paid  promoters,  78  Iowa  460;  43N.  W.  290;  5  L.  R. 

Nash  \.  Rosenthal  {Ca\.),M'P3iC.?>bQ.  A.  649;    Hall  v.   U.  S.   Ins.  Co.,  5 

2  Black  &  Co.'s  Case,  8  Ch.  254;  Gill  484. 
Washington  Diamond  Co.  (1893),  3         *  Grissell's  Case,  1  Ch.  528. 
Ch.  95;    Whitehouse  &  Co.,  9  Ch.  D.         Cf.  Addison  v.  Pacific  Coast  MUl- 

595;  Hiram  Maxim  Lam-p  Co.  (1903),  ing  Co.,  79  Fed.  459  (holding  that  a 

1  Ch.  70  (where  the  company  went  shareholder  who  is  indebted  to  the 

into  liquidation  after  plea  of  set-off  company   for    unpaid    subscriptions 

but  before  judgment  in  an  action  by  cannot  in  respect  to  a  claim  against 

the    company    against    the    share-  the    company   for   wages    have    the 

holder  to  recover  the  call).  benefit  of  a  statute  making  claims 

But  see  Clark's  Case,  7  Eq.  550.  for  wages  preferred  claims) ;   Somer- 

Cf.    H olden' s    Case,    8    Eq.    444  set  Nat.  Banking  Co.  v.  Adams,  72 

(where  an  attempt  was  made  to  pay  S.  W.  il25;  24  Ky.  Law  Rep.  2083. 
calls    with    coupons    cut    from    the         *  Grissell's  Case,  1  Ch.  528. 
company's  debentures) ;    Re  G.   E.         ^  ScovUl  v.  Thayer,  105  U.  S.  143. 
B.  (1903),  2  K.  B.  340.  ^  Sawyer  v.  Hoag,  17  Wall.  610. 

612 


§  739- §  807]  INTEREST  §  760 

virtue  of  the  provision  in  the  haiiknijjt  law  for  set-off  of  mutual 
debts  l)e  set  off  against  ealls,  whetlier  the  (h^ht  is  less  than  the 
calls,  so  that  the  (juestion  arises  in  the  bankruptcy  proceeding,' 
or  whether  it  is  greater  than  the  calls,  so  that  the  question  must 
be  decided  in  the  winding-uj)  of  the  company.-  A  shareholder 
who  is  also  a  creditor  of  the  company  may  prove  against  it  in 
liquidation  proceedings  pari  passu  with  other  creditors  even 
though  iiis  shares  are  not  fully  paid-up,  provided  only  all  calls 
then  due  have  been  paid.'  The  (juestion  whether  set-off'  can 
be  allowed  against  a  shareholder's  statutory  liability  to  creditors 
is  entirely  distinct  and  is  not  here  considered.'' 

§  7()0.  Liability  of  Shareholders  for  Interest.  —  As  a  share- 
holder is  not  in  default  until  a  call  is  made  and  the  requisite 
notice  given,  it  follows  that  interest  should  not  begin  to  run 
against  him  until  that  time;  and  such  is  undoubtedly  the  law.^ 
On  the  other  hand,  upon  the  expiration  of  the  prescribed  period 
of  notice,  interest  runs  against  the  shareholders  in  default,  ac- 
cording to  some  authorities  in  the  discretion  of  the  jury  ®  and 
according  to  others  as  a  matter  of  right. ^  So,  w^here  by  the 
terms  of  a  subscription  to  shares,  payment  is  to  be  made  in 
regular  monthly  instalments,  the  instalments  should  ordinarily 
carry  interest  from  the  time  they  respectively  fall  due.**  If  a 
statute  expressly  enact  that  interest  shall  run  on  overdue  calls, 
the  interest  wull  be  recoverable  whether  the  declaration  contain 

'  Re  Duckworth,  2  Ch.  578.  interest  and  no  call  for  payment) ; 

Cf.  Kingstown  Yacht  Club,  21  L.  Johnson  v.  Lyttle's   Iron  Agency,  5 

R.  Ir.  199;   Re  G.  E.  B.  (1903),  2  K.  Ch.  D.  687. 

B.  340.  *  Musgrave  v.  Morrison,  54  Md. 

2  Ex  parte  Strang,  5  Ch.  492.  161 ;  Frank  v.  Morrison,  55  Md.  399. 

3  GrisseU's  Case,  1  Ch.  528.  '  HanMeton  v.  Glenn,  72^^.331; 

*  As  to  tliis  see  CahUl  v.  Original  20  All.  115  (as  to  law  of  Virginia); 
Big  Gun,  etc.  Ass'n,  94  Md.  353;  50  North  River  Meadotv  v.  Shrewsbury 
All.  1044;  89  Am.  St.  Rep.  434;  3  Church,  22  N.  J.  Law  424;  53  Am. 
Clark  &  Marsliall  on  Priv.  Corps.,  Dec.  258;  Gouldv.0neonta,7l'^.Y. 
§  827,  and  cases  cited.  298;    McCoy  v.   World's  Columbian 

*  Hambleton  v.  Glenn,  72  Md.  Exposition,  186  111.  356;  57  N.  E. 
331;  20  All.  115;  Jackson,  etc.  Ins.  1043;  78  Am.  St.  Rep.  288.  Cf. 
Co.  V.  n'a//e,  105  La.  89;  29  So.  503.  Lackey    v.    Richmond,    etc.    R.    Co., 

Cf.  Seattle  Trust  Co.  v.  PUner,  18  17  B.  Monr.  (Ky.)  43. 
Wash.  401;    51   Pac.   1048  (holding         Contra:    Frank  v.   Morrison,  55 
that  interest  docs  not  run  on  a  note  Md.  399.     Cf.  American  Pastoral  Co^ 
given  in  payment  of  a  subscription  v.  Gurney,  61  Fed.  41. 
to  shares,  even  after  maturity,  where         *  Hawkins  v.  Citizens'  Real  Es- 
thete was  no  express  stipulation  for  tate,  etc.  Co.  (Oreg.),  64  Pac.  320. 

613 


§  "61 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


a  count  for  interest  or  not.'  A  provision  in  a  company's  regu- 
lations stipulating  that  overdue  calls  shall  carry  interest  at  a 
high  rate  applies  only  to  calls  made  by  the  company  while  a 
going  concern,  and  not  to  calls  made  by  the  liquidator  or  receiver 
in  the  winding-up.-  In  England  interest  is  allowed  on  unpaid 
calls  under  the  statute,  3  &  4  Will.  4,  c.  42,  §  28." 

§  701.  Statute  of  Limitations  as  Defence.  —  The  statute  of 
limitations  begins  to  run  when  a  call  is  made  and  notice  given,* 
but  not  before  that  time,''  except  in  a  few  states  in  which  it  runs 
from  the  date  of  the  defendant's  subscription."  If  by  the  terms 
of  the  subscription  the  shareholder  agrees  to  pay  at  some  fixed 


'  Southampton  Dock  Co.  v.  Rich- 
ards, 1  Man.  &  Gr.  448. 

As  to  statutes  allowing  interest 
by  way  of  penalty  for  non-payment 
of  calls,  see  further,  Lackey  v.  Rich- 
mond, etc.  R.  Co.,  17  B.  Monr.  (Ky.) 
43. 

-  Welsh  Flannel  Co.,  20  Eq.  360. 

^^Ex  parte  Lintott,  4  Eq.  184; 
Barrow's  Case,  3  Ch.  784;  Welsh 
Flannel  Co.,  20  Eq.  360. 

But  cf.  Slacken' s  Case,  3  Ch.  412. 

See  also  Faure  Electric,  etc.  Co. 
V.  Phillipart,  58  L.  T.  525. 

*  Baltimore,  etc.  Turnpike  Co.  v. 
Barms,  6  H.  &  J.  (Md.)  57;  Western 
R.  R.  Co.  V.  Avery,  64  N.  Car.  491. 

Cf.  Morrison  v.  Savage,  56  Md. 
142. 

«  Glenn  v.  Williams,  60  Md.  93; 
Scovill  V.  Thayer,  105  U.  S.  143 
(where  the  company  iiad  become  a 
bankrupt) ;  Taggart  v.  Western  Md. 
R.  R.  Co.,  24  Md.  503,  597;  89  Am. 
Dec.  760;  Hawkins  v.  Glenn,  131 
U.  S.  319;  9  Sup.  Ct.  739;  Glenn  v. 
Marbury,  145  U.  S.  499;  12  Sup.  Ct. 
914;  Moses  v.  Ocoee  Bank,  1  Lea 
(Tenn.)  398;  Curry  v.  Woodward, 
53  Ala.  371 ;  Vanderwerken  v.  Glenn, 
85  Va.  9;  6  S.  E.  806;  Semple  v. 
Glenn,  91  Ala.  245;  6  So.  46;  9  So. 
265;  24  Am.  St.  Rep.  894;  Glenn  v. 
Howard,  81  Ga.  383;  8  S.  E.  636; 
12  Am.  St.  Rep.  318;  Great  West- 
ern Tel.  Co.  V.  Gray,  122  III.  630; 
14  N.  E.  214;    Glenn  v.  Macon,  32 


Fed.  7;  Glenn  v.  Liggett,  135  U.  S. 
533;  10  Sup.  Ct.  867;  Brockway  v. 
Gadsden,  etc.  Land  Co.,  102  Ala.  620; 
15  So.  431;  Union  Savings  Bank  v. 
Leiter,  145  Cal.  696;  79  Pac.  441; 
Otter  View  Land  Co.'s  Receiver  v. 
Bowling's  Extx.,  70  S.  W.  834;  24 
Ky.  Law  Rep.  1157;  Cook  v.  Car- 
penter, 61  Atl.  799;  212  Pa.  165; 
108  Am.  St.  Rep.  854;  Haggert 
Bros.  Mfg.  Co.,  19  Ont.  App.  582. 

Cf.  New  England  Fire  Ins.  Co.  v. 
Haynes,  71  Vt.  306;  45  Atl.  221;  76 
Am.  St.  Rep.  771;  Union  Savings 
Bank  v.  Leiter,  145  Cal.  696,  709; 
79  Pac.  441  (where  a  call  was  made 
and  then  rescinded,  and  a  subse- 
quent call  made) ;  West  v.  Topeka 
Savings  Bank,  66  Kans.  524;  72 
Pac.  252;  97  Am.  St.  Rep.  385;  63 
L.  R.  A.  137;  Fitzgerald's  Estate  v. 
Union  Sav.  Bank,  90  N.  W.  994;  65 
Nebr.  97. 

*  Great  Western  Tel.  Co.  v.  Purdy, 
83  Iowa  430;  50  N.  W.  45  (affirmed, 
in  so  far  as  federal  questions  were 
decided,  in  162  U.  S.  329;  16  Sup. 
Ct.  810);  Harris  v.  Gateway  Land 
Co.,  29  So.  611;    128  Ala.  652. 

Cf.  Pittsburgh,  etc.  R.  R.  Co.  v. 
Plummer,  37  Pa.  St.  413;  Chilberg 
V.  Siebenbaum,  41  Wash.  663;  84 
Pac.  598  (holding  that  against  the 
derivative  right  of  creditors  the 
statute  begins  to  run  upon  the  de- 
clared or  notorious  insolvency  of  the 
corporation). 


614 


§  739- §  807]      WHO    ARE   SUBJECT   TO    THE    LIABILITY  §  762 

time  or  times,  then,  as  stated  aljove,  there  is  no  necessity  for  a 
call,  and  consequently  the  statute  of  limitations  l>egins  to  run 
as  soon  as,  by  the  terms  of  the  subscription,  payment  l>ecomes 
due.'  The  period  applicable  would  seem  to  be  that  which  gov- 
erns actions  on  simple  contract;  but  in  an  English  case,  the 
court  held  that  the  claim  Wius  founded  u{X)n  a  statute,  the  incor- 
poration act,  which  is  deemed  a  specialty,  and  that  accordingly 
the  action  would  not  be  barred  until  the  lapse  of  the  perimi 
applicable  to  actions  on  specialties."  An  Alabama  case  holds 
that  after  the  lapse  of  twenty  years  the  subscription  will  be 
presumed  to  have  l)een  paid,  although  no  call  had  been  made, 
so  that  the  statute  of  limitations  would  not  be  a  bar;^  but  it 
would  seem  that  the  same  reasons  which  prevent  limitations 
from  running  should  also  prevent  the  rise  of  any  presumption 
of  payment  from  mere  lapse  of  time.  The  fact  that  the  remedy 
of  the  corporation  against  a  shareholder  is  barred  by  limitations 
does  not  have  the  same  effect  as  actual  payment,  and  hence  the 
shareholder  in  such  a  case  has  no  right  to  a  certificate  stating 
the  shares  to  be  paid-up.* 

§  762- §  773.     Who  are  subject  to  the  Liability. 

§  762.  Actual  Shareholders  as  distinguished  from  mere  Sub- 
scribers. —  The  liability  incident  to  the  status  of  shareholder 
attaches  to  those  persons,  and  those  only,  who  have  actually 
attained  that  status.*  What  is  necessary  and  what  is  not  neces- 
sary in  order  to  constitute  a  person  a  shareholder  has  been 
already  considered,  and  need  not  be  repeated.^  When  a  sub- 
scriber attains  the  status  of  a  shareholder,  he  becomes  subject 
to  the  liabilities  of  a  shareholder.  For  example,  as  the  issue  of 
a  share-certificate  is  not  necessary  in  order  to  make  a  man  a 
shareholder,  it  follows  that  he  may  be  held  for  calls  without 
proof  of  the  issue  or  even  of  the  readiness  to  issue  the  same.'' 

'  Williams  v.  Matthews,  103  Va.  *  Johnson  v.   Albany,  etc.   R.   R. 

180;     48    S.    E.    861;     Williams   v.  Co.,  54  N.  Y.  416. 
Taylor,  99  Md.  306;   57  Atl.  641.  *  Xew  Brunswick,  etc.  Ry.  Co.  v. 

2  Cork,  etc.  Ry.  Co.  v.  Goode,  13  Muggeridge,   4   H.   &  N.  580.     See 

C.  B.  826.  infra,  §  778. 

'  Semple  v.  Glenn,  91  Ala.  245;         »  Supra,  §  170  et  seq. 
6  So.  46;    9  So.  265;    24    Am.  St.         '  Ilawley   v.    Upton,    102    U.    S. 

Rep.  894.  314.     Cf.  supra,  §  171. 

615 


§  763  PATJIENT    FOR    SHARES  [ChAP.  XIII 

§  763.  Owners  of  Shares  at  Time  of  Call  liable.  —  As  between 
successive  owners  of  shares,  by  transfer  and  so  forth,  the  HabiHty 
to  pay  calls  attaches  to  the  person  who  holds  the  shares  when 
the  call  is  made.  The  date  when  the  call  is  payable  is  not 
material ;  the  crucial  point  is  the  date  of  the  making  of  the  call.^ 
Prima  facie,  this  means  the  date  of  the  passage  of  the  resolu- 
tion making  the  call ;  but  as  we  have  seen  a  resolution  may  be 
passed  that  a  call  be  made  at  some  fixed  date  in  the  future,  and 
in  such  a  case  the  liability  attaches  to  the  person  who  holds  the 
shares  at  the  date  so  fixed. 

§  764.  Criterion  of  Ownership  of  Shares  for  this  Purpose.  — 
For  the  purposes  of  this  rule,  the  ownership  of  the  shares  must  in 
general  be  determined  by  the  company's  share  register  or  stock- 
book.'  One  of  the  most  important  reasons  for  requiring  the 
company  to  keep  a  register  of  its  members  is  to  enable  it  to 
know  who  may  be  held  liable  as  shareholders  at  any  given 
time.  Hence,  the  register  must  serve  this  function.  If,  how- 
ever, the  register  is  erroneous  through  the  company's  own  fault, 
the  person  whose  name  is  improperly  registered  will  be  exempted 
from  liability,  and  the  person  whose  name  ought  to  have  been 
registered  will  be  liable  in  his  stead.^  It  is  often  thought  that 
the  liability  of  a  person  whose  name  is  registered  as  shareholder 
while  the  entire  beneficial  interest  is  in  another  must  rest  upon 

•  Campbell    v.    American    Alkili  61  Atl.  804;   212  Pa.  177;   People's 

Co.,  125  Fed.  207;   113  Fed.  398;  61  Home    Sav.    Bank     v.    Stadtmvller 

C.  C.  A.  317.  (Cal.),  88  Pac.  280  (where  a  .statute 

-  Giesen  v.  London,  etc.  Mge.  Co.,  expressly  enacted  that  an  unregis- 

102    Fed.    584;     42   C.    C.    A.    515;  tered  transfer  should  not  be  valid  ex- 

Russell  V.  Easterbrook,  71  Conn.  50;  cept  as  between  the  parties). 

40  Atl.  905 ;   Visalia,  etc.  R.  R.  Co.  v.  But  see  Cutting  v.  Damarel,  88 

Hyde,  110  Cal.  632;   43  Pac.  10;    52  N.  Y.  410;  Dain  Mfg.  Co.  v.  Trum^ 

Am.  St.  Rep.  136;    Plumb  v.  Bank  bull  Seed  Co.,  95  Mo.  App.  144;    68 

of    Enterprise,    48    Kans.    484;     29  S.  W.  951;    Vale  Mills  v.  Spalding, 

Kans.    699;     Worrall   v.   Judson,   5  62  N.  H.  605. 

Barb.   210;    Johnson   v.   Somerville  ^  Hunt  v.  Seeger,  98  N.  W.  91; 

Dyeing,  etc.   Co.,    15    Gray    (Mass.)  91  Minn.  264;    Earle  v.  Carson,  188 

216;    Brown  v.  Morton,  58  .\tl.  94;  U.    S.   42;    23   Sup.  Ct.  254  (as  to 

71  N.  J.  Law  26;    Hurlburt  v.  Ar-  statutory    liability    under   National 

thur,  140  Cal.  103;   73  Pac.  734;   98  Banking  Act);   Hayes  v.  Shoemaker, 

Am.  St.  Rep.  17 ;    White  v.  Comm-er-  39  Fed.  319  (same  point  as  last  case) ; 

cial,  etc.  Bank,  66  S.  Car.  491 ;  45  S.  Bracken  v.  Nicol  (Ky.),  99  S.  W.  920; 

E.  94 ;   97  Am.  St.  Rep.  803 ;   Sher-  Smith  v.  Bank  of  Nova  Scotia,  8  Can. 

wood  V.  Illinois  Trust,  etc.  Co.,  195  Sup.  Ct.  558;  Alston's  Case,  22  Vict. 

111.  112;   62  N.  E.  835;   88  Am.  St.  L.  R.  243  n. 

Rep.  l83;    Cook  v.  Carpenter  (Pa.),  See  infra,  §  861. 

616 


§  739- §  807]  EFFECT    OF   TRANSFERS  §  705 

estoppel;  but  if  the  theory  of  the  legal  title  to  shares  which  is 
advocated  below  is  correct,  the  liability  of  the  registered  share- 
holder rests  rather  on  the  fact  that  he  is  the  holder  of  the  legal 
title.  In  order  that  the  registered  owner  be  held  liable,  the  doc- 
trine of  estoppel  need  be  resorted  to  only  when  by  statute  a 
trustee  of  shares  is  exempted  from  liability.'  The  cases  which 
deal  with  the  question  whether  the  registered  holder  or  the 
"true  owner"  is  the  person  subject  to  the  statutory  liability  to 
creditors  -  depend  perhaps  upon  somewhat  different  considera- 
tions, and  are  not  treated  here. 

§  765.  Effect  of  Transfer  of  Shares  upon  Liability.  —  It  follows 
that  a  transfer  of  shares  completed  by  a  proper  entry  in  the 
company's  books  releases  the  transferor  from  all  liability  for 
subsequent  calls.^  This  is  true  although  the  transferor  was  the 
original  allottee,*  his  case  not  being  assimilated  to  that  of  an 
original  lessee  of  land,  whose  liability  persists  in  spite  of  an 
assignment  of  the  term.  Probably,  a  transfer  would  release  the 
original  allottee  from  future  liability  even  though  he  might  have 
expressly  promised  at  the  time  of  subscribing  to  the  shares  to 
pay  their  par  value.^  A  transfer  works  a  complete  novation,  so 
that  the  transferee  may  be  sued  in  assumpsit  for  any  calls  made 
after  the  transfer,  although  he  may  have  made  no  express  prom- 
ise to  pay  the  same ;  ^  and  a  declaration  or  complaint  charging 
the  defendant  as  subscriber  to  shares  has  been  held  to  be  sus- 
tained by  proof  that  the  defendant  acquired  shares  by  transfer.^ 

*  See  infra,  §  769.  Commercial  Nat.  Bank  v.  Gibson,  37 

*  E.  g.  Ohio  Valley  Nat.  Bank  v.  Nebr.  750,  764-765;    56  N.  W.  616. 
Hulitt,   204    U.    S.    i62;     White   v.         Cf.  Aultmati's  .Appeal,  9S  Fa,.  St. 
Marquardt,    105    Iowa   145;    74   N.  505  (semble).    See  also  infra,  §  766. 
W.  930.     As  to  liability  under  the         *  But  see  Schenectady,  etc.  Co.  v. 
National   Bank  Act,  see  also  infra,  Thatcher,  11  N.  Y.  102,  108. 

p.  621,  n.  3,  and  p.  622,  n.  2.  «  Webster  v.  Upton,  91  U.  S.  65; 

»  Brinkley  v.  Hambleton,  67  Md.  Visalia,  etc.  R.  R.  Co.  v.  Hyde,  110 

169,  176;   8  Atl.  904  (semble).  Cal.  632;    43  Pac.  10;    53  Am.  St. 

*  H udder sfield  Canal  Co.  \.  Buck-  Rep.  136;  Bend  v.  Susquehanna 
ley,  7  T.  R.  36;  Rochester,  etc.  Land  Bridge  Co.,  6  H.  &  J.  (Md.)  128;  14 
Co.  V.  Raymond,  158  N.  Y.  576;  53  Am.  Dec.  261;  Sigua  Iron  Co.  v. 
N.  E.  507;  47  L.  R.  A.  246;  Stewart  Brown,  171  N.  Y.  488;  64  X.  E.  194. 
V.  Walla  Walla,  etc.  Pub.  Co.,  1  Wash.  Cf.  BcU's  Appeal,  1 15  Pa.  St.  88 ;  8 
St.  521;  20  Pac.  605;  Finletter  v.  Atl.  177;  2  Am.  St.  Rep.  532  (review- 
Acetylene  Light  Co.,  215  Pa.  86;  64  ing  earlier  Pennsylvania  cases);  Reid 
Atl.  429.  v.Dejarnette,  123Ga.  787;  51  S.  E.  770. 

Contra  in  Nebraska  by  virtue  of  ^  Glenn  v.  Porter,  73  Fed.  275; 
a  provision  in  the  state  constitution.    19  C.  C.  A.  503. 

617 


§  765  PAYMENT   FOR    SHARES  [ChAP.  XIII 

As  intimated  above,*  however,  the  transferor  and  not  the  trans- 
feree is  Hable  for  any  calls  that  were  made  prior  to  the  transfer,^ 
even  though  payable  afterwards.^  The  •  transferor  is  not,  how- 
ever, relieved  from  liability  for  future  calls,  whether  the  transfer 
be  absolute  or  security  for  a  debt,  until  the  transfer  is  registered,* 
unless  the  failure  to  register  is  occasioned  by  the  company's  own 
wrongful  refusal.^  Accordingly  the  transferor  remains  liable 
when  the  transfer  books  were  lawfully  closed  when  the  transfer 
was  presented  for  registration,  and  the  company  became  in- 
solvent before  the  transfer  could  be  registered.^  If  the  transferor 
promise  the  transferee  to  pay  future  calls,  the  question  whether 
the  company  can  sue  upon  that  promise  depends  upon  the  law 
of  the  lex  fori  as  to  the  right  of  a  stranger  to  sue  upon  a  con- 
tract performance  of  which  would  inure  in  part  to  his  benefit.^ 
In  order  that  the  transfer  should  relieve  the  transferor  from 
future  liability,  the  only  requirement  in  England  is  that  the 
transfer  be  absolute,  the  transferor  retaining  no  interest  in  the 
shares.^  The  American  law,  on  the  other  hand,  refuses  to 
relieve  the  transferor  from  liability  where  the  assignment  was 
made  w4th  knowledge  of  the  company's  failing  condition  and 
for  the  purpose  of  escaping  liability  and  where  the  transferee 
is  insolvent.*     Even  in  America,  a  creditor  who  has  acquired 

»  Supra,  §  763.  ed.,   1122-1124.     Cf.  Nat.   Bank  v. 

=  Visalia,  etc.  R.  R.  Co.  v.  Hyde,  Case,  99  U.  S.  628.    But  see  Discov- 

110  Cal.  632;    43  Pac.  10;    52  Am.  erers'   Finance  Corp.    (1908),   1    Ch. 

St.  Rep.  136.  141    (holding  that  the  fact  of  the 

2  Campbell    v.    American    Alkili  transfer  being  "out  and  out"  is  not 

Co.,   125    Fed.    207;    61    C.    C.    A.  conclusive   against   the   transferor's 

317.  continuing  liabihty). 

*  Plumb  V.   Bank  of  Enterprise,  Cases  where  the  transfer  is  merely 

48  Kans.  484;    29  Pac.  699;    Mc-  colorable,    the    transferor    retaining 

Donald  v.  Dewey,  134  Fed.  528;    67  the  beneficial  ownership,  constitute 

CCA.  408;   Kenyan  v.  Fowler,  155  an  exception  to  the  rule  that  the 

Fed.  107,  109;    Knickerbocker  Trust  trustee  and  not  the  cestui  que  trust 

Co.  V.  Myers,  133  Fed.  764  (affirmed  of  shares  is  liable  in  respect  thereof, 

in    139   Fed.    111).     See  also  cases  See  King's  Case,  6  Ch.  196;   Massey 

cited  supra,  §  764.  &  Griffin's  Case  (1907),  1  Ch.  582. 

.«  Seesupra,§  764,  and  infra,  §861.  Cf.    Cox's   Case,   33   L.   J.    Ch.    145 

«  Cook  V.  Carpenter,  61  Atl.  804;  (where  the  trust  was  created  in  order 

212  Pa.  177.  to  "bull"  the  company's  shares  in 

'  See  Crown  Slate  Co.  v.  Allen,  the  market). 

48  Atl.  Rep.  968;    199  Pa.  239.    But  «  Aultman's  Appeal,  98  Pa.    St. 

cf.  Discoverers  Finance  Corp.  (1908),  505;    Burt  v.  Real  Est.  Exch.,   175 

1  Ch.  141.  Pa.  St.  619;  34  Atl.  923;  52  Am.  St. 

»  2  Lindley  on  Companies,  6th  Rep.  858;    Bowden  v.  Johnson,  107 

618 


§  739- §  807]  EFFECT    OF    TRANSFERS  §  7C5 

shares  as  security  for  a  (l(>l)t  is  relieved  from  any  future  liability 
by  a  transfer  in  exercise  of  a  jx)wer  of  sale  contained  in  the 
contract  of  hypothecation,  although  the  sale  was  made  U)r  a 
nominal  consideration  and  although  his  only  motive  in  making 
it  was  to  escape  liai)ility  as  shareholder.'  Even  if  a  transfer 
be  colorable  merely,  so  that  the  company  might  continue  to 
hold  the  transferor  liable  as  shareholder,  yet  if  it  registers  the 
transfer  and  sues  the  transferee  to  collect  a  call,  it  cannot  there- 
after change  front  and  sue  the  transferor.-  Although  perhaps 
a  transfer  from  the  insolvent  transferee  to  a  solvent  person  would 
relieve  the  first  transferor  from  further  liability,  yet  the  burden 
is  upon  the  latter  to  establish  the  defence  by  proving  the  solvency 
of  the  second  transferee.^  A  transfer  to  a  fictitious  transferee 
will,  of  course,  leave  the  transferor  liable.^ 

If  the  transfer  is  made  to  a  bona  fide  purchaser  without  notice 
that  the  shares  are  not  paid-up,  the  purchaser,  as  will  presently 
be  shown,  incurs  no  liability,^  and  therefore  necessarily  the 
vendor  remains  liable  for  any  sum  which  the  company  is  thus 
prevented  from  collecting  from  the  purchaser.* 

U.  S.  251;   2  Sup.  Ct.  246;   Rider  v.  26  Sup.  Ct.  731   (as  to  whether  the 

Morrison,  54  Md.  429,  444  (headnote  transferor  can  be  held  hable  for  the 

inadequate) ;   People's  Home  Savings  benefit  of  subsequent  creditors). 
Ba7ik  V.  Richard,  139  Cal.  285;    73         Cf.   McConey  v.    Belton  Oil,   etc. 

Pac.    858;     Stuart   v.    Hayden,    169  Co.,  97  Minn.   190;    106  N.  W.  900 

U.   S.    1;     18    Sup.  Ct.  274   (distin-  (holding  that  if  transfer  proved  to 

guished  in  Earle  v.  Carson,  188  U.  S.  have  been  made  without  considera- 

42;    23  Sup.  Ct.  254);    Gottschalk  v.  tion  and  when  company  was  insol- 

Stover,  85  Mo.  App.  566;   Lamson  v.  vent,  "fraudulent"  intent  to  escape 

Hutchings,  118  Fed.  321  (transferor  Uabihty  is  presumed), 
hable    at    law    and    not    merely    in  '  Magruder    v.    Colston,    44    Md. 

equity);     Baker  v.   Reeves.  85   Fed.  349;   22  Am.  Rep.  47. 
837  (both  transferor  and  transferee  ^  Rochester,  etc.  Land  Co.  v.  Ray- 

liable);     McDonald   v.    Dewey,    202  mond.  158  N.  Y.  576;  53  N.  E.  507; 

U.  S.  510;   26  Sup.  Ct.  731  (burden  47  L.  R.  A.  246. 

of  proving  solvency  of  transferee  on  But   see   People's  Home  Savings 

defendant);     Earle   v.    Carson,    188  Bank  v.  Richard,  139  Cal.  285;    73 

U.  S.  42;    23  Sup.  Ct.  254;    Central  Pac.  858   (where  the  company  was 

Agricultural,  etc.  Ass'n  v.  Gold  Life  insolvent). 

Ins.  Co.,  70  Ala.  120  (burden  of  prov-  ^  People's  Home  Savings  Bank  v. 

ing  solvency  of  transferee  on  trans-  Richard,    139    Cal.    285;     73    Pac. 

feror).     Anglo-American    Land,    etc.  858. 

Co.  v.  Lombard,  132  Fed.  721,  738-         *  Mushingum  Valley,  etc.  Co.  v. 

739     (transfer     of     all     the    shares  TFard,  13  Oh.  120;   42  Am.  Dec.  191. 

togetlier  with  all  the  assets   of   the  Cf.  infra,  §  879. 
company   to   another   corporation);  *  Infra,  §  800. 

McDonald  v.  Dewey,  202  U.  S.  510;  '  McBryan  v.   Universal  Elevator 

G19 


766 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


A  transferee  of  shares,  who  is  duly  registered,  cannot  escape 
liabiUty  for  calls  bv  showing  that  he  was  induced  to  purchase 
the  shares  by  the  fraud  of  the  transferor,  even  though  the  trans- 
feror was  an  officer  of  the  company.^ 

§  766.  Statutes  making  former  Shareholders  liable  notwithstand- 
ing Transfer.  —  Statutes  sometimes  provide  that  past  members 
of  a  corporation  shall  continue  liable  for  calls  for  some  time  after 
the  transfer.-  In  such  cases,  the  transferor  is  a  quasi  surety  for 
the  transferee,  and  if  he  is  called  upon  to  pay  has  a  right  to 
compel  the  transferee,  or  whoever  holds  the  shares  at  the  time  of 
the  call,  to  reimburse  him.^ 

§  767.  Liability  in  respect  of  Shares  held  in  Trust,  etc.  —  Lia- 
bility of  Holder  of  Legal  Title.  —  The  liability  ordinarily,  and  in 
the  absence  of  statute,  attaches  to  the  holder  of  the  legal  title 
to  the  shares.  For  example,  where  shares  are  held  in  trust,  the 
trustee  and  not  the  cestui  que  trust  is  liable ;  *  but  he  has  of  course 
a  right  to  be  indemnified  by  the  trust  estate,^  or  if  the  benefi- 


Co.,  89  N.  W.  683;  130  Mich.  Ill; 
97  Am.  St.  Rep.  453. 

Contra:  Wiarton  Beet  Sugar  Co., 
12  Ont.  L.  R.  149. 

>  Hart  V.  Globe  Ins.  Co.,  113  Fed. 
307. 

Cf.  Stufflebeam  v.  DeLashmutt, 
83  Fed.  449.      See  also  infra,  §  963. 

'  See  Sprague  v.  National  Bank 
of  America,  172  111.  149;  50  N.  E. 
19;  64  Am.  St.  Rep.  17;  42  L.  R.  A. 
606;  Pittsburgh,  etc.  R.  R.  Co.  v. 
Clarke,  29  Pa.  St.  146. 

3  Infra,  §  972. 

*  Mitchell's  Case,  9  Eq.  363 ;  Wil- 
liams' Case,  1  Ch.  D.  576  (headnote 
inadequate);  Ex  parte  Bugg,  2 
Drewry  &  Sm.  452;  Hawkins  v. 
Glenn,  131  U.  S.  319;  9  Sup.  Ct.  739; 
Pullman  v.  Upton,  96  U.  S.  328,  330; 
McKim  V.  Glenn,  66  Md.  479;  8  Atl. 
130;  Hampton  v.  Foster,  127  Fed. 
468;  Union  Savings  Bank  v.  Willard 
(Cal.),  88  Pac.  1098;  Kerr  v.  Urie,  86 
Md.  72 ;  37  Atl.  789 ;  63  Am.  St.  Rep. 
493;  38  L.  R.  A.  119  (where  the 
cestui  que  trust  was  an  infant). 

But  see  Ulster  Ry.  Co.  v.  Bain- 
bridge,  Jr.  Rep.  2  Eq.  190;   Lloyd  v. 


Preston,  146  U.  S.  630,  644-645;  13 
Sup.  Ct.  131  (arising  under  an  Ohio 
statute  enacting  that  cestuis  que 
trust  of  stock  should  be  deemed 
stockholders). 

Cf.  Preston  v.  Grand  Collier  Dock 
Co.,  11  Sim.  327  (where  the  cestui 
que  trust  was  the  company  itself) ; 
Colonial  Investment  &  Agency  Co., 
19  Vict.  L.  R.  381  (where  the  cestui 
que  trust  was  the  company  itself  and 
where  the  argument  that  the  com- 
pany itself  had  paid  for  the  shares 
in  full  did  not  prevail);  Winston  v. 
borsett,  etc.  Co.,  129  111.  64;  21  N.  E. 
514;  4  L.  R.  A.  507  (where  the 
shares  were  held  in  trust  for  the 
other  shareholders) ;  Andrews  v.  Nat. 
Foundry,  etc.  Works,  76  Fed.  166; 
22  C.  C.  A.  110;  77  Fed.  774;  23 
C.  C.  A.  454  (where  the  shares  were 
held  by  a  mortgagee  from  the  com- 
pany). As  to  cases  where  the  cor- 
poration is  the  cestui  que  trust,  see 
further,  supra,  §  202. 

«  Mitchell's  Case,  9  Eq.  363  (sem- 
ble);  Morse  v.  Pacific  Ry.  Co.,  93 
111.  App.  33,  37  (semble). 


620 


§  739- §  807]  SHARES    HELD    IN    TRUST  §  7(j7 

ciary  be  sui  juris  by  the  cestui  que  trust  personally.'  If  the 
name  of  the  trustee  and  not  that  of  the  cestui  que  trust  appears 
on  the  company's  books,  the  former  is  lial^le  under  the  doctrine 
which  has  been  mentioned  above,  that  ordinarily  the  registered 
shareholder  should  be  liable ;  but  if  the  shares  are  registered  in 
the  name  of  "A,  trustee  for  B,"  then  A's  liability  can  rest 
only  upon  the  ground  that  the  trustee,  or  holder  of  the  legal 
title,  is  the  person  who  is  subject  to  the  burdens  of  ownership.'- 
The  rule  that  the  trustee  and  not  the  beneficiary  is  liable  as 
shareholder  applies  even  where  the  trust  is  created  by  the  cestui 
que  trust  for  the  purpose  of  avoiding  liability,^  unless  indeed 
tiie  cestui  que  trust  has  already  become  the  legal  owner  of  the 
shares,  or  at  any  rate  has  agreed  with  the  company  to  take 
them,  before  they  are  put  in  the  name  of  his  nominee  or 
trustee/  The  rule  exempting  the  cestui  que  trust  from  direct 
personal  liability  to  the  company  has  been  applied  where  the 
trustee  or  nominee  was  an  infant.^  But  where  shares  are  regis- 
tered in  the  name  of  a  married  woman  who  was  incapable  of 
contracting  and  signed  the  application  at  her  father's  instance 
and  in  ignorance  of  its  effect,  the  court  held  that  the  daughter 
was  not  a  trustee  for  the  father,  but  that  her  name  was  a  mere 
alias  for  his,  just  as  if  a  fictitious  name  had  been  used,  so  that  he 
was  liable  as  shareholder.®  A  person  to  whom  shares  are  trans- 
ferred as  security  for  a  debt  and  who  is  registered  as  share- 

'  Ilardoon     v.     Bdilios     (1901),  33  C.  C.  A.  574;    Ohio  Valley  Xat. 

A.  C.  118.  Bank  v.  Ilulitt,  204  U.  S.  162  —  may 

="   Uiiion    Sav.    Bank    v.    Willard  be  supported  on  the  ground  that  the 

(Cal.),  88  Pac.  1098.  National  Hanking  Act  expressly  pro- 

»  King's  Case,  6  Ch.  196  (semble) ;  vides  that  trustees  shall  not  be  per- 

Higgins  v.  Fidelitij  Ins.,  etc.  Co.,  108  sonally    liable,    but   that    the    trust 

Fed.  475;    46  C.  C.  .\.  509  (where  a  estate  shall  be  liable  instead, 

pledgee  of  shares  had  them  registered  *  See  supra,  §  765. 

in  the  name  of  an  employee  rather  *  Massey  A  Griffin's  Case  (1907), 

than  in  his  own);    Hayes  v.  Fidelity  1  Ch.  582.     But  see  Victorian  Mtge., 

Ins.,  etc.  Co.,  105  Fed.  160.  etc.    Bank   v.   Australian   Financial, 

The  cases  holcHng  that  the  "real  etc.  Co.,  19  Vict.  L.  R.  680  (where 

owner"  of  shares  in  a  national  bank  the  cestui  que  trust  had  procured  the 

may  always  be  liable  as  shareholder,  company's  assent  to  the  transfer  by 

—  e.  g.  American  Alkali  Co.  v.  Kurtz,  a  fraudulent  representation  that  the 

134  Fed.  663;    Dunn  v.  Iloice.   107  infant  had  paid  value  for  the  shares). 

Fed.  849;    47  C.  C.  A.   13  (holding  «  Pugh  and  Sharsman's  Case,    13 

that  both  the  registered  holder  and  Eq.  566. 

the   "real  owner"   may   be   liable);  Cf.    Hulitt   v.    Ohio    Valley    Xat. 

Houghton  v.  Hubbell,  91   Fed.  453;  Ba«A-,  137  Fed.  461 ;  69  C.  C.  A.  609. 

621 


§  7CS  PAYMENT    FOR    SHARES  [ChAP.  XIII 

holder  is  liable  in  respect  of  the  shares.^  Even  if  the  shares 
were  registered  in  his  name  expressly  as  pledgee,  it  would  seem 
that  he  might  well  be  deemed  the  holder  of  the  legal  title  and 
therefore  liable. - 

§  7GS.  Liability  of  Executor  or  Administrator.  —  Even  an  ex- 
ecutor who  applies  for  shares  qua  executor  is  liable  personally  in 
respect  thereof/  with,  however,  the  same  right  of  indemnity  as  a 
trustee.  Upon  a  shareholder's  death,  although  the  title  to  the 
shares  devolves  upon  his  executor,  yet  the  latter  is  liable  for  calls 
made  before  or  after  the  testator's  death,  not  individually,  but  in 
his  representative  capacity,''  iniless  the  shares  are  with  his  consent 
registered  in  his  name.^  The  liabilities  of  an  executor  or  adminis- 
trator of  a  deceased  shareholder  are  considered  at  length  below.® 

§  7G9.  American  Statutes  exempting  Trustees,  Executors,  Pledg- 
ees, etc.,  from  personal  Liability.  —  In  the  United  States,  statutes 
are  frequently  foimd  which  enact  that  a  trustee,  executor, 
or  pledgee  of  shares  shall  not  be  liable  in  respect  thereof,  but 
that  the  cestui  que  trust,  the  estate  of  the  testator,  or  the  pledgor, 
shall  be  liable  instead.'^  The  United  States  Supreme  Court  has 
held  that  such  a  statute  exempts  from  liability  one  who  has 
accepted  shares  of  stock  as  collateral  security  for  a  debt  of  the 
company,**  and  that  the  exemption  may  be  claimed  although  the 
certificates  of  stock  and  the  entries  on  the  company's  books  do 
not  disclose  the  fact  that  the  shares  are  not  held  in  his  own  right 
by  the  apparent  owner,'*  and   although    the    registered   holder 

'  TuthUl  Spring  Co.  v.  Smith,  90  ^  i^p^ds  Banking  Co.,  1  Ch.  231. 

Iowa  331;    57  N.  W.  853;    Bend  v.  *  Houldsworth  v.  Evans,  L.  R.  3 

Susquehanna  Bridge  Co.,  6  H.  &  J.  H.  L.  263;    Baird's  Case,  5  Ch.  725. 

(Md.)  128;    14  Am.  Dec.  261;    Pull-  See  also  infra,  §  976. 

man  v.  Upton,  96  U.  S.  328;  People's  «  Buchan's  Case,  4  A.  C.  549. 

Home  Savings  Bank  v.  Rauer  (Cal.),  "  Infra,  §  976  et  seq. 

84  Pac.  329.  ^  In  addition  to  cases  cited  below, 

^  But  see  Pauly  v.  State  Loan,  etc.  see  Fowler  v.  Gowing,  152  Fed.  801 ; 

Co.,  165  U.  S.  606;    17  Sup.  Ct.  465.  Lucas  v.  Coe,  86  Fed.  972;   Sayles  v. 

This  case  arising  under  the  National  Bates,   15  R.  I.  342,  345  (headnote 

Banking  Act,  there  was  a  dilemma:  inadequate);   5  Atl.  497  (as  to  a  suit 

if   the    creditor   was   invested    with  against  the  trustee  in  order  to  reach 

legal     title     to     the     hypothecated  the  assets  of  the  trust  estate).    And 

shares,    he    was    a    trustee,   and    as  see  supra,  p.  621    n.  3. 

such    exempted    from    liability    by  *  Burgess  v.  Seligman,  107  U.  S. 

the   express  terms  of  the   statute;  20;   2  Sup.  Ct.  10. 

and  if  he  was  not  the  holder  of  the  ^  Burgess  v.  Seligman,  107  U.  S. 

legal  title,  he  was  exempted  because  20;    2   Sup.   Ct.    10;    McMahon  v. 

he  was  not  a  shareholder.  Macy,  51  N.  Y.  155;    Colonial  Trust 

622 


§  739-§  807]        BANKRUITCY    OF    SHAREHOLDER  §   771 

muy  have  voted  on  the  shares.'  Other  courts,  however,  have 
held  that  tlie  statute  is  no  protection  unless  the  company's 
books  disclose  the  fact  that  the  shares  were  held  in  a  fiduciary 
capacity. - 

§  770.  Infant  Shareholders.  — -  The  right  of  an  infant  who 
has  subscribed  to  the  siiares  of  a  corporation  to  repudiate  the 
contract,  disown  the  shares,  and  escaj)e  liability,  has  already 
been  considered.^  So,  too,  the  status  of  an  infant  transferee  of 
shares  is  considered  below.*  Inasmuch  as  the  obligation  to  pay 
for  shares  attaches  to  the  ownership  thereof,  it  follows  that  an 
infant  who  has  become  the  owner  of  shares  not  by  virtue  of  con- 
tract, but  by  will  or  by  devolution  of  law,  may  be  liable  as  share- 
holder unless  he  disown  the  shares.^ 

§  771.  Effect  of  Bankruptcy  of  Shareholder.  —  If  any  of  the 
shareholders  becomes  bankrupt,  the  company  may  prove  against 
his  estate  for  any  calls  that  were  overdue  at  the  time  of  the 
bankruptcy."  If,  however,  the  company  has  a  lien  on  the  shares 
for  overdue  calls,  it  must  either  deduct  from  its  claim  the 
market  value  of  the  shares  and  prove  merely  for  the  balance,  or 
else  it  must  surrender  its  lien  for  the  general  benefit  of  all  cred- 
itors.^ Under  bankrupt  laws  which  permit  proof  for  contingent 
claims,  a  corporation  cannot  prove  in  respect  of  its  potential 
claim  for  future  calls,  estimated  according  to  the  probabilities 
of  calls  being  made ;  *   but  where  the  statute  provides  for  proof 

Co.  V.  McMillan,  188  Mo.  547;    87  liability.    iVa^  Banfc  v.  Case,  99  U.  S. 

S.  W.  93.3;    107  Am.  St.  Rep.  335.  628,   631;     Pavly  v.   State  Loan   & 

Cf.  May  V.  Genesee  County  Savings  Trust  Co.,  165  U.  S.  606;   17  Sup.  Ct. 

Bank,  120  Mich.  330;   79  N.  W.  630.  465  (semble). 

»  Burgess  v.  Seligman,  107  U.  S.  ^  Supra,  §  198. 

20;   2  Sup.  Ct.  10.  *  Infra,  §  877. 

'  Hurlburt    v.    Arthur,    140    Cal.  *  Leeds,  etc.  Ry.  Co.  v  Fearnley,  4 

103;    73  Pac.  734;   98  Am.  St.  Rep.  Ex.  26,  31  (semble). 

17;    Sherwood  v.   Illinois  Trust,  etc.  «  Re  McMahon  (1900),  1  Ch.  173; 

Co.,  195  111.  112;    62  N.  E.  835;    88  Glenn  v.  Howard,  65  Md.  40,  58;    3 

Am.  St.  Rep.  183;    Morse  v.  Paci/ic  Atl.  895. 

Ry.  Co.,  93  111.  App.  33;    Adams  v.  ■   Re  Jennings,  1  Ir.  Ch.  236,  243- 

Clark  (Colo.),  85  Pac.  642  (a  well  con-  244. 

sidered   case).      Compare   the   cases  *  Glenn  v.   Howard,   65   Md.   40; 

in  which  the  United  States  Supreme  3  Atl.  895;    Sayre  v.  Glenn,  87  Ala. 

Court   has   declared    that   a   person  631;    6  So.  45;    Furdonjee's  Case,  3 

who  is  registered  as  shareholder  in  Ch.  D.  264. 

a  national  bank  is  liable  by  estoppel  Under  some   in.solvent   laws   tlie 

although  the  National  Hanking  .\ct  corporation's  potential  claim  is  dis- 

expressly    exempts    trustees    from  charged  by  the  release,  although  not 

C23 


§  772  PAYMENT    FOR    SHARES  [ClIAP.  XIII 

for  any  liability  or  possibility  of  an  obligation  to  pay  money  or 
money's  worth,  the  potential  claim  for  future  calls  has  been 
held  to  be  provable.'  In  consequence  of  such  proof,  however, 
the  shares  do  not  become  fully  paid  shares,  although  the  bankrupt 
is  discharged  from  all  personal  liability  in  respect  of  them ;  and 
consequently  the  assignee  cannot  receive  any  dividends  in  the 
liquidation  or  winding-up  of  the  company  without  first  paying 
the  amount  which  after  receipt  by  the  company  of  the  dividend 
from  the  bankrupt's  estate  still  remains  unpaid  on  the  shares.^ 
The  assignee  or  trustee  in  bankruptcy  is  at  liberty  to  refuse  to 
accept  the  shares  if  he  deems  the  ownersliip  of  them  too  onerous ;  ^ 
and  if  he  do  so,  neither  he  nor  the  assets  in  liis  hands  will  be,  it 
seems,  subject  to  any  individual  liability  for  debts  of  the  company 
imposed  by  statute  upon  shareholders.* 

§  772.  Holder  of  less  than  minimum  or  more  than  maximum 
Number  of  Shares  allowed  to  one  Person.  —  A  provision  in  a 
company's  regulations  that  no  person  shall  be  allowed  to  hold 
less  than  a  certain  number  of  shares  will  not  have  the  effect  of 
exonerating  from  liability  a  person  who  holds  less  than  such 
minimum ;  ^  and  similarly  a  provision  that  no  person  shall  hold 
more  than  a  certain  number  of  shares  will  not  relieve  from 
liability  a  person  who  holds  more  than  the  maximum." 

§  773.  Holder  of  Shares  issued  without  Authority  of  Law  or 
Irregularly.  —  The  question  is  often  raised  whether  ownership 
of  shares  issued  without  authority  of  law  or  irregularly  will 

provable.     See  Glenn  v.   Clabaugh,  Ch.  17.3  (where  the  contrary  propo- 

65  Md.  65,  67;  3  Atl.  902  (semble).  sition  was  assumed  by  counsel  and 

In  one  case  the  liability  for  un-  court), 
called  subscriptions  to  capital  was         ^  Sayre  v.   Glenn,   87   Ala.    631; 

deemed   to   be   a   present   debt   sol-  6  So.  45;    Glenn  v.  Howard,  65  Md. 

vendum  in  futuro,  and  as  such  prov-  40 ;   3  Atl.  895. 

able   against   the    bankrupt    estate.         Cf.    Re  Hooley   (1899),   2   Q.    B. 

Glenn  V.  Ahell,Z^Ye(\.  10.  579;    South  Staffordshire  Ry.  Co.  v. 

Cf.  Carey  v.  Mayer,  79  Fed.  926;  Burnside,  5  Ex.  129.     See  also  infra, 

25  C.  C.  A.  239 ;   South  Staffordshire  §  983. 
Ry.  Co.  V.  Burnside,  5  Ex.  129.  *  American  File   Co.    v.    Garrett, 

1  Re  McMahon  (1900),  1  Ch.  173.  110  U.  S.  288;   4  Sup.  Ct.  90. 

For  a  clear  analysis  of  the  Eng-         But  see  Graham  v.  Piatt,  65  Pac. 

lish  cases,  which  are  somewhat  con-  30;   28  Colo.  421. 
fusing,  see  1  Lindley  on  Companies,         ®  Leeds  Banking  Co.,  1  Ch.  231. 
6th  ed.,  pp.  7.52-754.  '  Hagerman    v.    Ohio    Bldg.,    etc. 

'  Rowe's  Trustee's  Claim  (1906),  Ass'n,  25  Oh.  St.   186  (leaving  the 

1  Ch.  1.  question  open  as  to  the  effect  of  a 

But  see  Re  McMahon  (1900),   1  similar  provision  in  a  statute). 

624 


§  739- §  S07]  SPECIAL    AGREEMENTS  §  774 

subject  the  holder  to  the  Habihties  incident  to  ownership  of 
shares  of  stock.  This  (juestiou  is  discussed  in  connection  with 
the  subject  of  illegal  or  irregular  increases  of  capital.' 


§  774-§  790.     SPECIAL     AGREEMENTS     VARYING    NORMAL 
LIABILITY  — SUIiSCRII'TIONS  ON  SPECIAL   TERMS. 

§  774.  In  general  —  Validity.  —  We  have  given  above  a 
brief  statement  or  description  of  the  liability  which  normally,  if 
not  most  frecjuently,  attaches  to  the  holder  of  shares  in  a  corpora- 
tion ;  we  must  now  consider  how  far  the  nature  or  extent  of  that 
liabilitv  may  be  varied  by  agreement  between  the  company  and 
the  shareholder.  The  general  rule  is  that  subscriptions  on 
special  terms  —  that  is  to  say,  suljscriptions  on  terms  which  do 
not  involve  an  obligation  to  pay  the  amount  of  the  shares  in  cash 
as  and  when  called  for  by  the  company  —  are  quite  permissible.- 
For  example,  a  company  may  stipulate  with  some  applicants  for 
shares  for  the  payment  of  a  deposit  on  application  or  allotment 
although  no  such  payment  is  exacted  of  other  subscribers ;  ^  or 
a  shareholder  may  promise  to  pay  his  subscription  at  a  fixed  date 
without  any  call  or  notice.*  Likewise,  the  company  may  exact 
from  the  subscriber  a  waiver  of  the  general  rule  of  American 
law  that  calls  cannot  be  made  until  the  entire  authorized  capital 
has  been  subscribed,"  or  may  insist  upon  a  stipulation  dispensing 
with  statutory  formalities  as  to  calls  and  assessments.^    So,  the 

'  See  supra,  §  579,  §  592.  be  made  until  shares  are  issued,  dif- 

'  See  supra,  §  228.  fering  in  this  respect  from  a  deposit 

It  is  submitted  that  even  where  payable  on  application  or  allotment. 

a  statute  expressly  lays  down  the  Croskey  v.   Bank  of  Wales,  4  Giff. 

rule  that  subscriptions  to  shares  shall  314,  330-331. 

be  payable  on  call,  yet  special  con-  ■•  Northwood   Union  Shoe  Co.   v. 

tracts  providing  for  payment   in  a  Pray,  67  N.  H.  435;    32  Atl.   770; 

different  way  should  not  be  deemed  Ruse  v.   Brotnberg,  88  Ala.   619;    7 

prohibited.       But    see    Tliigpen    v.  So.  384. 

Mvisissippi   Central   R.    R.    Co.,   32  CL  California,  etc.  Co.  v.  Callender, 

Miss.  347.  94  Cal.  120;    29  Pac.  859;    28  Am. 

As  to  the  result  of  an  unauthor-  St.   Rep.  99;    Bohrer  v.   Adair,  61 

ized  attempt  of  an  agent  to  make  Nebr.  824 ;  86  N.  W.  495. 

special  terms  as  to  the  mode  of  pay-  ^  Emmitt  v.  Springfield,  etc.  R.  R. 

ment,    see    Nippeno.<<e   Mfg.    Co.    v.  Co.,  31  Oh.  St.  23.     See  supra.  §  754. 

Stadon,  68  Pa.  St.  256.  '^  People's    Home    Sav.    Bank    v. 

»  Alcrandcr    v.    Automutic    Tele-  Sadler    (Cal.),   81    Pac.    1029,    1032 

phone  Co.  (1900),  2  Ch.  56.  (headnote  inadequate). 
A  call,  properly  speaking,  cannot 
VOL.  I.  — 10                                   625 


§  775  PAYMENT    FOR    SHARES  [CbA.P.  XIII 

corporation  may  receive  payment  in  advance  of  calls,  and  may 
agree  to  pay  interest  on  the  snms  so  advanced.^  So,  also,  where 
shares  have  been  issued  subject  to  payment  in  a  particular 
manner,  the  company  may  agree  to  accept  payment  in  any  other 
mode  that  it  may  deem  advisable." 

§  775.  Issue  of  Shares  at  a  Premium.  —  A  peculiar  form  of 
subscription  on  special  terms  is  exhibited  by  the  issue  of  shares 
at  a  premium  —  that  is  to  say,  for  more  than  their  par  value.=* 
This  is  an  expedient  often  resorted  to  in  the  organization  of 
banks  and  trust  companies  and  other  corporations  upon  whose 
shareholders  there  rests  some  additional  statutory  liability 
regulated  as  to  its  amount  by  the  par  value  of  the  shares  held  by 
them  respectively.  In  such  cases,  for  the  purpose  of  diminishing 
the  extent  of  the  statutory  liability,  all  persons  who  subscribe  to 
shares  are  often  required  to  take  them  at  a  premium,  thus 
raisino-  a  working  capital  in  excess  of  the  nominal  capital  of  the 
company.  Although  in  this  way  the  statute  which  imposes  the 
liability  is  to  a  certain  degree  evaded,  it  seems  that  the  validity  of 
the  practice  has  never  been  challenged  on  that  score.  The 
amount  of  the  premium  so  voluntarily  paid  by  the  shareholder 
cannot  be  claimed  as  a  credit  in  an  action  to  enforce  his  lia- 
bility upon  his  unpaid  subscription  to  the  capital,"  and  certainly 
cannot  be  recovered  either  from  the  company  or  the  other 
shareholders.^ 

§  770.  Special  Agreements  amounting  to  complete  or  partial  Re- 
lease from  Liability  to  pay  par  Value  —  Issue  at  a  Discount.  —  But 
while  special  terms  inserted  in  subscriptions  may  affect  the  time 
or  manner  of  payment,  yet  they  should  not  amount  to  a  virtual 
release  from  payment,  in  whole  or  in  part.  If  a  subscriber 
accepts  shares  upon  the  faith  of  the  company's  agreement  that 
he  shall  not  be  called  on  to  pay  anything,  or  at  any  rate  not  the 
whole  of  their  nominal  amount,  the  stipulation  is  certainly  not 

1  Lock  V.  Queensland,  etc.  Co.  v.  Matabele,  etc.  Co.  (1901),  2  Ch. 
(1896),  A.  C.  461 ;  Rutland,  etc.  R.  R.    23.    Cf.  supra,  §  603. 

Co.  V.  Thrall  35  Vt.  536.  As  to  the  effect  of  issue  of  shares 

See  also  infra,  §  1340.  at  a  premium  and  as  to  the  rights 

2  See  New  Albany  v.  Burke,  1 1  of  holders  of  such  shares,  see  supra, 
Wall.  96.  §  522. 

»  As  to  whether  shares  can  law-  *  Musgrave  v.  Morrison,  54  Md. 

fully    be    issued    at    par    when    the    161. 

market  price  is  higher,  see  HUder  v.         =  Esgen  v.  SmUh,  84  N.  W.  954; 
Dexter  (1902),  A.  C.  474;    Burrows    113  Iowa  25. 

626 


§  739-§  807] 


ISSUE    AT    A    DISCOUNT 


§77G 


countenanced  by  the  law.'  In  England,  in  such  a  case,  the 
attcm|)t  to  relieve  from  payment  is  cjuite  nugatory,  and  the 
shareholder  may  be  coinpellcd  either  by  the  eor{)oration  or  its 
licjuidator  to  pay  in  full  the  par  value  of  the  shares.-'  This 
liability  exists  although  the  company  may  be  perfectly  solvent, 
so  that  creditors  could  not  possibly  be  injured  by  the  arrange- 
ment, and  although  payment  is  sought  to  be  enforced  for  the 
benefit  of  other  shareholders  •'  who  perhaps  had  themselves 
approved  or  even  participated  in  the  arrangement,  or  who  held 
their  shares  by  assignment  from  persons  who  had  approved  or 
participated  therein.* 

In  the  United  States,  on  the  other  hand,  such  agreements  for 
the  issue  of  shares  at  a  discount  are  by  the  weight  of  authority 
valid  so  far  as  the  rights  of  the  assenting  shareholders  inter  sese 
are  concerned,''  or  even  as  against  prior  creditors,"  or  subsequent 


'  As  to  construing  a  contract  of 
subscription,  if  possible,  so  as  not  to 
provide  for  an  issue  for  less  than 
par,  see  Tulare  Sav.  Bank  v.  Talbot, 
131  Cal.  45;  63  Pac.  172. 

"  Sociehj  of  Practical  Knowledge 
V.  Abbot,  2  Beav.  559;  Ooregum 
Gold  Mining  Co.  v.  Roper  (1892), 
A.  C.  125. 

So  in  Canada.  North-West  Elec- 
tric Co.  V.  Walsh,  29  Can.  Sup.  Ct. 
33  (where  the  company  declared  tlie 
shares  forfeited  for  non-payment  of 
the  full  par  value). 

De  Ruvigne's  Case,  5  Ch.  D.  306, 
and  other  similar  cases,  which  are 
sometimes  cited  as  inconsistent  with 
this  rule  (see  2  Clark  &  Marshall  on 
Priv.  Corps.,  §  401  a),  proceed  on 
principles  elsewhere  explained.  See 
infra,  §  1619.  Cf.  Innes  A  Co.  (1903), 
2  Ch.  254;  Leinster  Contract  Corp. 
(1902),  1  Ir.  349. 

As  to  what  amounts  to  an  issue 
at  a  discount,  see  Midland  Electric, 
etc.  Co.,  37  W.  R.  471. 

See  also  infra,  §  785,  as  to  issue 
for  property,  .services,  etc. 

»  Welton  V.  Saffery  (1897),  A.  C. 
299. 

Cf.  Ooregum  Gold  Mining  Co.  v. 
Roper  (1892),  A.  C.  125;  Weytnouth, 

62 


etc.  Steam  Packet  Co.  (1891),  1  Ch. 
66. 

*  Society  of  Practical  Knowledge 
V.  Abbot,  2  Beav.  559. 

But  see  Gold  Co.,  11  Ch.  D.  701. 

*  Goodnow  v.  Am.  Writing  Paper 
Co.  (N.  J.),  66  Atl.  607;  Green  v. 
Abietine  Med.  Co.,  96  Cal.  322;  31 
Pac.  100;  Arnold  v.  Searing  (N.  J. 
Ch.),  67  Atl.  831  (holding  that  a 
person  claiming  under  such  a  con- 
tract is  not  within  the  rule  that  a 
plaintiff  in  equity  must  come  into 
court  with  clean  hands). 

"  Rickerson  Roller  Mill  Co.  v. 
Farrell,  etc.  Co.,  75  Fed.  554;  23 
C.  C.  A.  302 ;  Hundley  v.  Stutz,  139 
U.  S.  417,  43-5-436;  1 1  Sup.  Ct.  530 ; 
Peter  v.  Union  Mfg.  Co.,  56  Oh.  St. 
181;  46  N.  E.  894;  Felker  v.  Sulli- 
van (Colo.),  83  Pac.  213. 

But  see  Morrow  v.  Xashville  Iron 
&  Steel  Co..  S7  Tenn.  262;  10  S.  W. 
495;  10  Am.  St.  Rep.  658;  3  L.  R.  A. 
37;  Zelaya,  etc.  Co.  v.  Meyer,  8  N.  Y. 
Supp.  487:  28  N.  Y.  St.  Rep.  759; 
Xew  Haven  Trust  Co.  v.  Gaffney,  73 
Conn.  480;  47  Atl.  760;  Eai^ton 
Nat.  Bank  v.  Am.  Brick- A  Tile  Co. 
(N.  J.),  64  Atl.  917  (an  able  opinion). 

In  some  cases  where  i.ssue  at  a 
discount  is  prohibited  by  statute, 
7 


§776 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


creditors  who  contracted  their  claims  with  knowledge  of  the 
circumstances  of  the  previous  issue;'  and  consequently  pay- 
ment in  full  can  be  enforced  only  by  or  for  the  benefit  of  subse- 
quent creditors  of  the  company  who  were  ignorant  that  the 
shares  were  not  really  fully  paid,^  or  perhaps  by  dissenting 
shareholders.'' 

Even  in  England,  so  long  as  the  company  continues  to  be  a 
going  concern,  a  person  to  whom  shares  have  been  issued  at  a 
discount  may  repudiate  the  issue  as  ultra  vires,  rescind  the 
contract,  and  have  his  name  removed  from  the  register  of  share- 
holders,* unless  indeed  he  be  barred  by  laches.^     Of  course  it 


the  courts  have  held  that  the  at- 
tempted issue  for  less  than  par  is 
wholly  void,  so  that  the  allottees 
neither  enjoy  the  rights  nor  are  sub- 
ject to  the  liabilities  of  shareholders. 
2  Clark  &  Marshall  on  Priv.  Corps., 
p.  1231-1232. 

'  Northwestern  Mut.  Life  Ins.  Co. 
V.  Cotton  Exch.,  etc.  Co.,  70  Fed.  155; 
Bent  V.  Underdown,  156  Ind.  516, 
520;  60  N.  E.  307  (where  the  sub- 
sequent creditors  were  held  to  have 
constructive  notice  by  reason  of  the 
contract  being  embodied  in  the  in- 
corporation paper) ;  Cunningham  v. 
Holly,  Mason,  Marks  &  Co.,  121 
Fed.  720;  58  C.  C.  A.  140;  Euston 
V.  Edgar  (Mo.),  105  S.  W.  773;  Col- 
onial Trust  Co.  v.  McMillan,  188  Mo. 
547 ;  87  S.  W.  933 ;  107  Am.  St.  Rep. 
335;  Meyer  v.  Ruby-Trust,  etc.  Co.,  90 
S.  W.  821;  192  Mo.  162;  Lea  v.  Iron 
Belt  Mercantile  Co.  (Ala.),  42  So.  415. 

But  see  Easton  Nat.  Bank  v.  Am. 
Brick  &  TUe  Co.  (N.  J.),  64  Atl.  917. 

^  Rickerson,  etc.  Co.  v.  Farrell, 
etc.  Co.,  75  Fed.  554 ;  23  C.  C.  A.  302 ; 
Flinn  v.  Bagley,  7  Fed.  785;  Hand- 
ley  V.  Stutz,  139  U.  S.  417;  11  Sup. 
Ct.  .530;  Berry  v.  Rood,  168  Mo.  316, 
333-335;  67  S.  W.  644;  Honeyman 
V.  Haughey  (N.  J.),  66  Atl.  .582. 

Cf.  Hawley  v.  Upton,  102  U.  S. 
314;  Gogebic  Investment  Co.  v.  Iron 
Chief  Min.  Co.,  78  Wise.  427;  47 
N.  W.  726;   23  Am.  St.  Rep.  417. 

That   subsequent   creditors   con- 


tracted their  claims  in  ignorance  of 
the  fact  that  shares  had  been  issued 
at  a  discount  will  be  presumed  in 
the  absence  of  allegation  and  proof 
to  the  contrary.  Northwestern  Mut. 
Life  Ins.  Co.  v.  Cotton  Exch.,  etc.  Co., 
46  Fed.  22. 

It  seems  that  this  right  of  subse- 
quent creditors  is  equitable  as  dis- 
tinguished from  legal.  First  Nat. 
Bank  v.  Peavey,  69  Fed.  455 ;  Thom^ 
son-Houston,  etc.  Co.  v.  Dallas,  etc. 
Ry.  Co.,  54  Fed.  1001;  5  C.  C.  A. 
11. 

3  2  Clark  &  Marshall  on  Priv. 
Corps.,  §  397. 

Cf.  Foreman  v.  Bigelow,  4  Cliff. 
508;  Kraft  v.  Griffon  Co.,  82  N.  Y. 
App.  Div.  29;  81  N.  Y.  Supp.  438; 
Dickerman  v.  Northern  Trust  Co., 
176  U.  S.  181,  202,  203;  20  Sup.  Ct. 
311  (indicating  that  minority  share- 
holders have  no  right  to  object  to 
issue  of  shares  at  a  discount) ;  Sivin 
V.  Mutual  Match  Co.  (N.  J.),  66  Atl. 
921  (where  complaining  shareholders 
failed  being  in  pari  delicto). 

*  Almada  and  Tirito  Co.,  38  Ch. 
D.  415  (overruling  Plaskynaston  Tube 
Co.,  23  Ch.  D.  542,  and  Ince  Hall,  etc. 
Co.,  23  Ch.  D.  545  n.);  Midland 
Electric,  etc.  Co.,  37  W.  R.  471;  Ex 
parte  Higgins,  60  L.  T.  383. 

*  Railway  Time  Tables  Co.,  42 
Ch.  D.  98. 


628 


§  739- §  807]  ISSUE  at  a  discount  §  778 

would  be  idtra'vires  for  a  corporation  to  pay  out  of  its  own  funds, 
deposits,  etc.,  ostensibly  T)aid  by  sul)scribers  to  its  caj)ital.'  On 
the  other  hand,  where  the  sul)scriber  is  to  pay  for  the  shares  in 
full,  a  collateral  stipulation  wliereby  the  company  agrees  to  buy 
a  certain  class  of  floods  exclusively  from  him  has  been  held  to  be 
unobjectionai)le  and  enforceable  and  not  to  amount  to  an  issue 
of  the  shares  at  a  discount ;  -  but  this  decision  certainly  opens 
the  way  to  the  evasion  of  the  rule  against  issuing  shares  at  a  dis- 
count, and  perhaps,  therefore,  its  soundness  may  be  questioned. 
§  777.  Issue  as  Security  for  Debt  of  Company.  —  The  issue  of 
shares  as  collateral  security  for  a  dei>t  of  the  company  seems  to 
be  upheld  in  America,^  although  it  may  result  in  the  company 
receiving  for  the  shares  less  than  their  par  value.* 

§  77S.  Effect  of  striking  down  Stipulation  for  Exemption  from 
Liability  for  full  par  Value  of  Shares.  —  The  effect  of  striking 
down  an  agreement  which  if  valid  would  operate  to  release  a 
subscriber  from  the  payment  of  the  full  par  value  of  the  shares 
is  to  leave  him  subject  to  the  normal  liability  of  a  shareholder, 
—  that  is,  a  liability  to  pay  on  call ;  and  hence  he  cannot  be  held 
without  due  proof  of  a  call  as  if  he  had  promised  to  pav  in  full 
in  cash  upon  allotment.^  Some  cases  hold,  or  seem  to  hold, 
that  even  where  shares  are  deliberately  issued  for  less  than  their 
par  value,  the  only  remedy  is  to  rescind  the  contract  of  sub- 
scription in  toto,  and  that  the  subscriber  cannot  under  anv 
circumstances  be  held  liable  for  more  than  the  amount  which 
he  agreed  to  pay,  even  where  creditors  are  concerned ; "  but,  as 
stated  in  a  former  paragraph,  this  is  not  the  general  rule.^  The 
difficulty  has  sprung  from  failing  to  recognize  the  difference 
between  a  liability  on  the  contract  to  take  shares  and  the  lia- 
bility as  shareholder.**      Until  the  subscriber  has  become  an 

'  Spackman  v.  Lattimore,  3  Girf.  (headnote  misleading) ;  Lemsfer  Con- 

16.  trad  Corp.  (1902),  1  Ir.  349. 

^  Bouchard  v.  Prince's  Hall  Res-  Cf.  De  Ruvigne's  Case,  5  Ch.  D. 

taurant,  20  Times  L.  R.  574.  306  (supra,  p.  627,  n.  2) ;  Innes  &  Co. 

3  Powell  V.  Blair,  1.33  Pa.  St.  550;  (1903),  2  Ch.  254. 
19  Atl.  559.  ■   Berrtj   v.    Rood,    168    Mo.    316, 

See  also  supra,  §  224.  335-336;  67  S.  W.  644 ;  Street  d-  Co., 

*  Peterborough  R.R.  Co.  v.Xashua,  17    Vict.    L.    R.    717;     Xorth-We.<it 

etc.  R.  R.  Co..  59  N.  H.  385.  Electric  Co.  v.  Wahh,  29  Can.  Sup. 

'  Granite  Roofing  Co.  v.  Michael,  Ct.  33,  and  cases  cited  supra,  §  776. 
54  Md.  65.  «  See  infra,  §  781,  where  the  dis- 

'  DuPont  V.   Tildcn,  42  Fed.  87  tinction  is  elaborated. 

G29 


§779 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


actual  shareholder,  he  cannot  be  held  liable  unless  the  com- 
pany is  able  and  willing  to  issue  to  him  shares  which  on  pay- 
ment of  the  amount  stipulated  to  be  paid  by  him  shall  be  legally 
paid-up  shares,  and  the  only  effect  of  striking  down  the  provision 
for  issue  at  a  discount  is  to  exempt  him  from  any  liability  at 
all.'  But  after  the  shares  have  been  issued,  the  liability  to  pay 
the  par  value  "in  meal  or  in  malt"  attaches  raiionc  icnura\^ 
and  is,  or  should  be,  independent  of  any  illegal  stipulations  in 
the  contract  of  subscription. 

§  779.  Whether  Prohibition  of  Issue  of  Shares  at  a  Discount  ap- 
plies to  Reissue  of  Shares,  to  Issue  as  Part  of  Increase  of  Capital  or 
to  other  Issue  of  Shares  by  a  going  Concern.  —  Rules  of  law  for- 
bidding the  issue  of  shares  for  less  than  their  par  value,  whether 
thev  be  the  result  of  judicial  decisions  or  be  laid  down  by  the 
legislature,  have  no  application  to  the  reissue  of  shares  which, 
having  been  once  legally  issued,  have  by  forfeiture,  gift,  or  in 
anv  other  legal  mode  reverted  to  the  company ;  but  such  shares 
may  legally  be  reissued  or  sold  for  whatever  can  be  obtained 
for  them.^  According  to  some  strong  American  authorities,  the 
same  thing  is  true  of  shares  issued  by  way  of  increase  of  capital 
by  a  going  concern.*  Indeed,  according  to  high  authority,  wher- 
ever a  corporation  has  carried  on  business  with  its  original 
authorized  capital  not  fully  subscribed,  so  that  the  shares  have 

*  Handleij  v.  Stutz,  139  U.  S.  417; 
11  Sup.  Ct.  530;  Stein  v.  Howard, 
65  Cal.  616;  4  Pac.  662  (notwith- 
standing a  statutory  provision  for- 
bidding the  issue  of  stock  except  for 
money,  labor,  or  property,  and  de- 


'  Ecuadorian  Ass'n  v.  Ecuador 
Co.  (N.  J.),  65  Atl.  1051.  See  supra, 
§  233  and  infra,  §  781,  §  789. 

*  But  see  Christensen  v.  Eno,  106 
N.  Y.  97,  102;  12N.  E.  648;  60  Am. 
Rep.  429,  where  the  court  said, 
"The  liabihty   of  a  shareholder  to    daring  that  all  fictitious  increase  of 


pay  for  stock  does  not  arise  out  of 
his  relation  but  depends  upon  liis 
contract,  express  or  imphed." 

3  RamwelVs  Case,  50  L.  J.  Ch. 
827;  Mosher  v.  Sinnott,  79  Pac. 
(Colo.)  742  (where  the  shares  had 
been  issued  in  excliange  for  property 
and  were  returned  by  the  allottees 
as  "treasury  stock")- 

Cf .  Campbell  v.  McPhee,  36  Wash. 
593;    79  Pac.  206  (where  the  shares 


stock  shall  be  void)  ;    Speer  v.  Bor- 
deleau,  79  Pac.  (Colo.)  332. 

But  see  Richer  son  Roller-Mill  Co. 
v.  Farrell,  etc.  Co.,  75  Fed.  554; 
23  C.  C.  A.  302  (attempting  to  dis- 
tinguish Handley  v.  Stutz,  ubi  supra) ; 
Jackson  v.  Traer,  64  Iowa  469,  482; 
20  N.  W.  764;  52  Am.  Rep.  449; 
Kraft  V.  Griffon  Co.,  82  N.  Y.  App. 
Div.  29;  81  N.  Y.  Supp.  438;  Don- 
ald V.  American  Smelting,  etc.  Co., 
62  N.  J.  Eq.  729;   48  Atl.  771  (issue 


had  not  been  fully  paid  by  the  first 

ahottee   and   where  the   second   al-    enjoined  at  suit  of  a  shareholder) 

lotlee,  being  charged  with  notice  of 

that  fact,  was  held  liable). 

630 


I  739- §  807]  ISSUE  at  a  discount  §  780 

acquired  a  rating;  in  the  market,  the  unsubscribed  shares  of  the 
original  authorized  capital  may  be  issued  for  whatever  they 
would  bring  in  the  market,  even  though  less  than  par,'  and  if 
the  shares  have  no  market  value  they  may  be  issued  gratuitously .^ 
'I'iie  trround  for  these  conclusions  is,  that  where  the  capital  of  the 
company  has  been  impaired  by  losses,  so  that  its  shares  are  sell- 
ing below  par,  no  one  would  be  willing  to  subscribe  for  new 
shares  at  par,  so  that  unless  the  new  shares  can  be  issued  for 
less  than  par  they  cannot  be  issued  at  all.  It  is  submitted,  how- 
ever, that  tliis  reasoning  is  fallacious.  The  proper  course  to 
pursue  in  such  a  case  would  be,  first,  to  reduce  the  nominal 
capital  until  it  corresponds  with  the  actual  capital  as  diminished 
by  losses,  and  then  the  old  shares  will  be  worth  par,  and  the 
new  shares  may  likewise  be  issued  at  par. 

§  7S0.  Disregard  by  Directors  of  Resolution  of  Shareholders 
upon  Increase  of  Capital  forbidding  Issue  for  less  than  par.  — 
This  American  rule  which  permits  shares  to  be  issued  by  an 
established  corporation  for  less  than  par,  provided  their  actual 
market  value  be  paid,  does  not  prevent  the  corporation  —  that 
is,  the  shareholders  —  from  providing  that  no  shares  shall  be 
issued  even  upon  an  increase  of  capital  for  less  than  their  par 
value,  and  in  that  event  the  directors  have  no  authority  to  issue 
tht-m  at  a  discount.  If  the  directors  should  do  so,  and  if  the 
allottee  had  knowledge  of  the  restriction  on  their  powers,  the 
transaction  would  be  void:  the  allottee  would  get  no  title  to 
the  shares  and  would  be  subject  to  no  liability  as  shareholder. 
At  least,  this,  it  is  conceived,  would  be  his  position  on  principle. 
A  learned  court  has  held,  however,  that  he  can  be  compelled  in 
such  a  case  to  pay  the  full  par  value  of  the  shares,  just  as  if  the 
prohibition  of  issue  at  a  discount  originated  in  statute  or  law, 
and  as  if  the  obligation  to  pay  the  nominal  value  of  the  shares 
were  an  inseparable  incident  to  their  ownership.^ 

'  Clark  V.  Bever,   139  U.  S.  96;  Civ.  App.  58;   20  S.  W.  1015;   Renv- 

11     Sup.    Ct.    468;     Kellernmn    v.  ington  Aiitomobile  ct  Motor  Co.,  139 

Maier,  116  Cal.  416;    48  Pac.  377;  Fed.  766  (affirmed  in  155  Fed.  345); 

McDowell  V.  Lindsay,  213  Pa.  591;  Vaughn  v.   Ala.  Xat.   Bank,  42   So. 

63  Atl.  130.  64;    143  Ala.  572. 

Contra:     Jackson    v.    Traer,    64  -  Fogg  v.  Blair,  139  V.  S.  118:   11 

Iowa  469;    20  N.  W.  704;    52  Am.  Sup.  Ct.  476. 
Rep.  449.  '  Peck  v.  Elliott,  79  Fed.  10.  18- 

Cf.   Mathis  V.   Pridham,    1   Te.\.  19;  24C.  C.  A.  425;  38  L.  R.  A.  616. 

631 


§  781  PAYMENT    FOR    SHARES  [ChAP.  XIII 

§  781.  Liability  of  Holder  of  Shares  issued  at  Discount  distin- 
guished from  Liability  under  executory  Contract  to  pay  less  than  par 
for  paid-up  Shares.  —  The  principle  that  a  liolder  of  shares  issued 
at  a  discount  is  nevertheless  liable  to  pay  their  full  par  value  ap- 
plies only  when  the  shares  have  been  actually  issued  and  accepted 
by  the  allottee.  An  executory  contract  to  issue  paid-up  shares 
cannot  be  enforced  by  the  company  or  by  its  liquidator  or  receiver 
unless  the  company  is  able  to  issue  shares  which  shall  be  truly 
and  legally  fully  paid-up,  not  merely  as  against  the  corporation 
itself,  but  also  against  its  creditors.^  The  same  result  —  namely, 
that  an  executory  contract  to  issue  shares  for  less  than  their 
nominal  value  is  unenforceable  —  is  sometimes  reached  in  Amer- 
ica by  the  reasoning  that  the  contract  is  illegal  and  therefore 
will  not  support  an  action.-  If,  however,  the  shares  are  actually 
issued  as  fully  paid,  while  in  fact  and  in  law  they  are  not  fully 
paid,  the  allottee  who  accepts  them  not  merely  undergoes  a 
liability  to  pay  the  full  par  value  for  the  benefit  of  the  company's 
creditors,  but  also  is  precluded  from  maintaining  any  claim 
against  the  company  —  at  any  rate,  after  it  has  gone  into  liqui- 
dation —  for  breach  of  its  contract  to  issue  paid-up  shares.^  If 
a  contract  for  the  issue  of  fully  paid-up  shares  at  a  discount  be 
abandoned  before  the  shares  are  issued,  it  would  seem  clear,  on 
principle,  that  the  subscriber  may  recover  back  any  deposit  he 
may  have  paid  to  the  company  on  account  of  the  shares.* 

§  782.  Effect  of  Impossibility  of  paying  in  the  Mode  specially 
stipulated.  —  Inasmuch  as  a  stipulation  that  a  shareholder  shall 

'  Arnot's  Case,   36  Ch.   D.   702;  against  the  company  was  held  not 

Macdonald,  Sons  &  Co.  (1894),  1  Ch.  sustainable). 

89;    New  Eberhardt  Co.  v.  Menzies,  Quaere,    whether   the    subscriber, 

43  Ch.   D.    118;    Knox  v.  Childers-  according  to  this  view,  can  recover 

hurg  Land  Co.,  86  Ala.  180;    5  So.  back  the  amount  paid  by  him  under 

578;    Ecuadorian  Ass^n  v.  Ecuador  the    contract.      Clarke    v.    Lincoln 

Co.,    61    Atl.    481.     Cf.    Barnes    v.  Lwwber  Co.,  59  Wise.  65.5;    18  N.  W. 

Brown,    80    N.    Y.   527.      See  also  492;      Knowlton     v.     Conrees,     etc. 

supra,  §  233,  §  778.  Spring  Co.,  57  N.  Y.  518;    Spring 

But    see    Odessa    Tramways    v.  Co.   v.   Knowlton,    103  U.   S.   49;    2 

Mendel,  8  Ch.  D.  235.  Clark  &  Marshall  on  Priv.   Corps., 

==  Cf.   Nickerson  v.   English,    142  pp.  12.35t1236. 
Mass.  267;   8  N.  E.  45;   Edgerton  v.         ^  Addlestone    Linoleum    Co.,    37 

Electric  Imp.  Co.,  50  N.  J.  Eq.  354;  Ch.  D.  191. 

24  Atl.  540;    Garrett  v.  Kansas  City         *  Spring    Co.    v.    Knowlton,    103 

Coal  Mining  Co.,  113  Mo.  330;    20  U.  S.  49  (headnote  misleading).    But 

S.  W.  965;    35  Am.    St.    Rep.    713  cf.  supra,  note  2. 
(where  a  bill  to  enforce  the  contract 

632 


§  739- §  807]  IN    PKOl'EUTY    OR    SERVICES  §  785 

not  be  liable  to  pay  the  full  nominal  amount  of  his  shares  is 
void,  it  follows  that  if  the  special  mode  of  payment  stipulated 
for  in  the  subscription  becomes  for  any  reason  impracticable, 
payment  of  the  full  par  value  of  the  shares  must  be  made  in 
cash.  For  example,  where  the  agreement  is  that  payment  shall 
be  effected  by  setting-off  calls  against  the  price  of  goods  to  be 
ordered  by  the  company  from  the  shareholder,  if  the  company 
goes  into  licpiidation,  and  therefore  can  purchase  no  more  goods, 
payment  must  be  made  in  cash." 

§  783.  Stipulations  for  Payment  at  fixed  Dates  instead  of  on 
Call.  —  Similarly,  a  special  agreement  by  which  the  shareholder 
is  to  pay  at  some  fixed  future  date  does  not  exempt  him  from 
litiliility  to  pay  before  that  time  if  the  company  is  wound  up 
before  that  date  arrives.-  Where  a  subscription  is  made  on  the 
terms  that  payment  shall  be  made  in  instalments  payable  on 
certain  fixed  dates,  a  demand  for  payment  of  such  instalments 
is  not  a  call,  and  need  not  comply  with  the  formalities  required 
with  respect  to  giving  notice  of  a  call.^ 

§  784.  Statutes  requiring  Shares  to  be  paid  up  before  a  certain 
Time.  —  A  statute  requiring  the  entire  capital  of  the  company  to 
be  paid  in  within  a  certain  time  will,  as  between  the  corporation 
and  the  shareholder,  be  construed  as  directory  merely.*  Hence,  a 
subscription  upon  the  understanding  that  payment  shall  be  made 
in  small  weekly  instalments,  so  that  the  payment  w^ould  not  be 
finished  within  the  period  prescribed  by  the  statute,  the  subscrip- 
tion is  not  void,  nor  can  it  be  treated  as  a  contract  to  pay  within 
the  statutory  period  so  as  to  cause  the  statute  of  limitations  to 
run  in  favor  of  the  shareholder  from  the  expiration  thereof.^ 

§  785.  Payment  in  Property  or  Services.  —  Inasmuch  as  sub- 
scriptions on  special  terms  are  comj^etent,  it  follows  that  the 

'  Elkington's    Case,    2   Ch.    511;  Leiter,     145     Cal.     696:      79     Pac. 

Bridger's  Case,  5  Ch.  305.  441. 

Cf.  Thomson's  Case,  4  De  G.  J.  &         But  see  Paducah,  etc.  Railroad  v. 

S.  749;    Vogeler  v.  Punch  (Mo.),  103  Parks,  86  Tenn.  554;   8  S.  W.  842. 
S.  W.  1001  (licadnote  inadequate  —         ^  Croskey   v.    Bank   of    Wales,    4 

refusal   of   company   to   accept   ser-  Giff.    314,    331-.332;     Morrison    v. 

vices  which  were  to  be  in  payment  Dorsey,  48  Md.  461.    See  also  supra, 

for  stock  held  not  to  deprive  stock  §  740. 
of  its  paid-up  character).  *  Cf.  Phoenix  Warehousing  Co.  v. 

2  Ccrrdma  Union  Gold  Co.  (1891),  Badger,  67  N.  Y.  294,  300. 
2  Ch.  580.  «  Frank  v.  Morrison,  55  Md.  399. 

Cf.      Union     Savings     Bank     v. 

633 


§785 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


company  may  agree  ^nth  the  subscriber  to  accept  payment  in 
property,  or  in  work  and  labor  in  lieu  of  cash/  Indeed,  agree- 
ments of  this  sort  are  exceedingly  common,  and  may  even  be 
said  to  constitute  part  of  the  usual  scheme  for  the  organization 
of  corporations.  For  example,  a  company  is  incorporated  to 
work  a  certain  mine,  to  develop  certain  patents,  or  to  operate  a 
certain  factory;  the  vendors  of  the  mine,  the  patents,  or  the 
factory,  receive  payment  in  shares  issued  as  fully  paid ;  and  at 
the  same  time  other  shares  likewise  issued  as  fully  paid  are 
bestowed  on  the  promoters  and  attorneys  of  the  company  in  pay- 
ment for  services  rendered  or  supposed  to  have  been  rendered 
in  and  about  the  incorporation  of  the  company.  Unless  the 
matter  be  the  subject  of  special  statutory  regulation,  the  issue 
of  fully  paid  shares  in  this  way  is  entirely  lawful.  Shares  may, 
by  special  contract  between  the  company  and  the  allottee,  be 
issued  either  for  money  or  for  money's  worth.^ 

Not  only  so,  but  according  to  the  weight  of  reason  and  author- 
ity the  value  placed  by  the  company  on  the  property  transferred 
or  services  rendered  in  exchange  for  the  shares  is  conclusive,^ 


1  Drummond's  Case,  4  Ch.  772; 
Pell's  Case,  5  Ch.  11;  Baglan  Hall 
Colliery  Co.,  5  Ch.  346;  PhUadel- 
■phia,  etc.  R.  R.  Co.  v.  Hickman,  28 
Pa.  St.  318;  Bank  of  Fort  Madison 
V.  Alden,  129  U.  S.  372,  378-379; 
9  Sup.  Ct.  332 ;  Liehke  v.  Knapp,  79 
Mo.  22;  49  Am.  Rep.  212;  Dayton, 
etc.  R.  R.  Co.  V.  Hatch,  1  Disney 
(Ohio)  84;  Phelan  v.  Hazard,  5 
Dillon  45 ;  Brant  v.  Ehlen,  59  Md.  1 ; 
Vofjeler  v.  Punch  (Mo.),  103  S.  W. 
1001  (services  part  of  which  were  to 
be  rendered  in  the  future,  and  which 
future  services  the  company  refused 
to  accept). 

But  see  Pellat's  Case,  2  Ch.  527; 
Black  &  Co.'s  Case,  8  Ch.  254,  265; 
Coddington  v.  Canaday,  157  Ind. 
243,  262-263;  61  N.  E.  567.  For  a 
full  consideration  of  the  question, 
see  Frost  on  Incorporation  and  Or- 
ganization of  Corporations,  §  104- 
§  106,  where  the  conflicting  authori- 
ties are  reviewed  and  classified. 

2  It  was  once  judicially  declared 
that  the  goodwill  of  a  partnership 


■was  "of  too  unsubstantial  and 
shadowy  nature  to  be  capable  of 
pecuniary  estimation  in  this  connec- 
tion," and  therefore  could  not  be 
used  to  pay  for  shares.  Camden  v. 
Stuart,  144  U.  S.  104,  115;  12  Sup. 
Ct.  585.  But  see  contra:  Washburn 
v.  National  W all-Paper  Co.,  81  Fed. 
17;  26  C.  C.  A.  312;  White,  Corbin 
&  Co.  v.  Jones,  79  N.  Y  App.  Div. 
373;  79  N.  Y.  Supp.  583.  Cf.  See  v. 
Heppenheimer  (N.  J.),  61  Atl.  843. 

It  has  been  said  that  payment  in 
Confederate  currency  could  not  be 
accepted  instead  of  payment  in  law- 
ful money.  Macon,  etc.  R.  R.  Co.  v. 
Vason,  57  Ga.  314. 

^  Pell's  Case,  5  Ch.  11;  Baglan 
Hall  Colliery  Co.,  5  Ch.  346;  Re 
Wragg  (1897),  1  Ch.  796;  Chap- 
man's Case  (1895),  1  Ch.  771;  Bank 
of  Fort  Madvion  v.  Alden,  129  U.  S. 
372,378-379;  9  Sup.  Ct.  332;  Hess 
Mfg.  Co.,  23  Can.  Sup.  Ct.  644;  2 
Clark  &  Marshall  on  Priv.  Corps. 
§  401  e. 

But   see   Camden  v.   Stuart,    144 


634 


§  739-§  807]  IN    PROPERTY    OR    SERVICES 


§  7S5 


unless  the  agreement  to  overvalue  the  services  or  j)r(j])erty  he 
ohtained  l>y  fraud  practised  hy  the  allottee  upon  the  c(jiniKiny, 
or  unless  the  overvaluation  is  intentional  and  the  result  of  a 
collusive  scheme  between  the  company  and  the  allottee  lor  the 
purpose  of  evading  the  law  which  prohibits  the  issue  of  shares 
at  a  discount.'  To  be  sure,  so  long  as  the  agreement  of  sub- 
scription remains  executory,  any  shareholder  may  enjoin  its  con- 
summation unless  the  value  of  the  property  to  be  accepted  in 
pavment  is  in  fact  equal  to  the  nominal  value  of  the  shares  ir- 
respective of  the  valuation  which  the  directors  may  have  hon- 
estly placed  u{:K)n  it ;  -  but  after  the  shares  have  been  issued 
the  holder  is  protected  from  any  further  liability  in  the  absence 
of  fraud  or  collusion.  Hence,  if  the  shareholder  refuse  to  con- 
vey the  land  which  was  to  be  transferred  in  payment  for  the 
shares,  the  company  can  recover  from  him  merely  the  real  value 


U.  S.  104;  12  Sup.  Ct.  585;  Taylor 
V.  Cummings,  127  Fed.  108;  62  C. 
C.  A.  108  (where  the  vahiation  of 
the  company  was  based  on  an  error 
in  bookkeeping);  Meyer  v.  Ruby- 
Trust,  etc.  Co.,  90  S.  W.  821;  192 
Mo.  162;  Shickle  v.  Watts,  94  Mo. 
410;  7  S.  W.  274;  Berry  v.  Rood, 
168  Mo.  316;   67  S.  W.  644. 

A  fortiori,  the  rule  stated  in  the 
text  applies  where  payment  in  prop- 
erty, etc.,  is  expressly  authorized  hy 
statute.  Coit  v.  Gold  Amalga- 
mating Co.,  119  U.  S.  34.3;  7  Sup. 
Ct.  231;  Bank  v.  Bellington  Coal, 
etc.  Co.,  51  W.  Va.  60;  41  S.  E.  390; 
Richardson  v.  Treasure  Hill,  etc.  Co., 
65  Pac.  74 ;   23  Utah  366. 

Cf.  Buck  V.  Jones,  70  Pac.  951; 
18-Colo.  App.  2.50  (where  the  share- 
holder was  held  liable  because  the 
title  to  the  property  .sought  to  be 
conveyed  in  p.ayment  of  his  subscrip- 
tion had  failed). 

'  Re  Wragg  (1897).  1  Ch.  796; 
Lloyd  V.  Preston,  146  U.  S.  6.30;  13 
Sup.  Ct.  131;  Xorthivestern  Mut. 
Life  Ins.  Co.  v.  Cotton  E.rcfi.,  etc.  Co., 
46  Fed.  22;  Boulton  Carbon  Co.  v. 
MUls,  78  Iowa  460;  43  N.  \V.  290;  5 
L.  R.  A.  649;  Arapahoe,  etc.  Co.  v. 
Stevens,  13  Colo.  534;   22  Pac.  823; 


Flour  City  Xat.  Bank  v.  Shire,  88 
N.  Y.  App.  Div.  401 ;  84  N.  Y.  Supp. 
810;  affirmed  .short,  179  N.  Y.  587; 
72  N.  E.  1141;  Dean  v.  Baldwin,  99 
111.  App.  582  (formula;  for  compound- 
ing dyes  taken  at  overvahiation); 
See  v.  Heppenheimer  (N.  J.),  61  Atl. 
843;  Hobgood  v.  Ehlen  (N.  Car.),  53 
S.  E.  857;  Strickland  v.  Xat.  Salt 
Co.  (N.  J.),  64  Atl.  982  (semble); 
Honeyman  v.  Haiighey  (N.  J.),  66 
Atl.  582. 

Cf.  Innes  &  Co.  (1903),  2  Ch.  254 
(queere,  whether  this  case  is  in  har- 
mony with  other  English  cases); 
Easton  .\at.  Bank  v.  Am.  Brick  & 
TUe  Co.  (N.  J.),  64  Atl.  1095;  Lein- 
ster  Contract  Corp.  (1902),  1  Ir.  349 
(a  ca.se  difficult  to  reconcile  with  the 
English  decisions);  Hood  v.  Eden, 
36  Can.  Sup.  Ct.  476. 

In  any  case,  according  to  the 
prevalent  American  rule,  the  shares 
would  be  deemed  fully  paid  except 
as  against  subsequent  creditors  or 
dissenting  shareholders. 

See  supra,  §  776,  and  Miller  v. 
Higginbotham  (Ky.),  93  S.  W.  655. 

-  Donald  v.  American  Smelting, 
etc.  Co.,  48  Atl.  771;  62  N.  J.  Eq. 
729. 


035 


§785 


PAYMENT   FOR   SHARES 


[Chap.  XIII 


of  the  land  and  not  necessarily  the  nominal  value  of  the  shares.' 
The  fact  that  the  vendors  agree  to  surrender  some  of  the  shares 
to  the  company  as  "treasury  stock"  to  be  sold  for  less  than  par 
has  been  held  not  to  be  conclusive  evidence  that  the  arrange- 
ment is  a  mere  device  to  issue  the  shares  at  a  discount;  for  it 
was  thought  that  the  vendors  might  honestly  believe  the  property 
sold  to  be  worth  the  nominal  value  of  the  shares,  and  yet  might 
be  willing  to  surrender  and  sacrifice  part  of  the  shares  with  a 
view  to  increasing  the  value  of  the  remainder."  Such  decisions 
show  how  reluctant  some  courts  are  to  strike  down  palpable 
evasions  of  the  law.  Of  course,  very  great  disparity  between 
the  value  of  the  property  or  of  the  services  accepted  in  payment 
for  shares  and  the  nominal  value  of  the  shares  is  very  strong 
e^^dence  to  prove  that  the  arrangement  is  a  mere  collusive 
device  to  enable  shares  to  be  issued  at  a  discount ;  ^  and,  as 
intimated  above,  if  such  a  device  or  evasion  be  established,  the 
allottee  could  be  held  for  the  difference  between  the  actual  value 
of  the  property  transferred  or  services  rendered  and  the  par 
value  of  the  shares,^  to  the  same  extent  as  if  the  shares  had 
been  openly  issued  at  a  discount  of  that  amount.^ 

Even  though  no  such  fraud  or  collusion  be  proved,  the  agree- 
ment to  credit  the  shares  as  fully  paid  must  be  supported  by 
some  legal  consideration.  For  example,  if  the  shares  are  issued 
as  fully  paid  upon  a  past  consideration,  —  for  example,  in  con- 


'  Dayton,  etc.  R.  R.  Co.  v.  Hatch, 
1  Disney  (Oh.)  84. 

'^  Lake  Superior  Iron  Co.  v.  Drexel, 
90  N.  Y.  87. 

Cf.  Davis  Bros.  v.  Montgomery 
Furnace,  etc.  Co.,  101  Ala.  127;  8 
So.  496;  Finletter  v.  Acetylene  Light 
Co.,  215  Pa.  86;  64  Atl.  429  (where 
the  person  to  whom  the  shares  were 
issued  as  fully  paid  presented  some 
of  them  as  a  bonus  to  other  persons 
for  subscribing). 

^  Coit  V.  Gold  Amalgamating  Co., 
119  U.  S.  343,  345;  7' Sup.  Ct.  231 
(semble);  Coleman  v.  Howe,  154  111. 
458;  39  N.  E.  725;  45  Am.  St.  Rep. 
133;  Macbeth  v.  Banfield,  78  Pac. 
(Oreff.)693;  45  0reg.  553;  106  Am. 
St.  Kep.  670;  Lester  v.  Semis  Lum- 
ber Co.,  74  S.  W.  518;    71  Ark.  379. 


*  Wallace  v.  Carpenter  Mfg.  Co., 
70  Minn.  321;  73  N.  W.  189;  68 
Am.  St.  Rep.  530;  Coleman  v.  Howe, 
154  111.  458;  39  N.  E.  725;  45  Am. 
St.  Rep.  133;  Macbeth  v.  Banfield, 
78  Pac.  693 ;  45  Oreg.  553 ;  106  Am. 
St.  Rep.  670;  Remington  Auiomobile 
&  Motor  Co.,  139  Fed.  766  (whefe 
the  directors  naively  placed  a  val- 
uation upon  the  property  lower 
than  the  par  value  of  the  shares), 
affirmed,  153  Fed.  345;  Rathbone 
V.  Ayer,  105  N.  Y.  Supp.  1041  (where 
property  which  promoters  had  just 
bought  for  $85,000  was  turned  over 
to  the  corporation  at  a  valuation 
of  $500,000).  See  also  cases  cited 
supra,  p.  635,  n.  1. 

®  As  to  tliis  see  supra,  §  776. 


636 


§  739-§  807]  WATERED    STOCK  §  780 

siderutioii  of  past  services  gratuitously  renrlered,  —  the  case 
stands  precisely  as  if  the  shares  had  been  issued  as  fully  paid 
without  any  pretence  of  consideration.' 

The  property  or  services  which  the  corporation  accepts  in 
payment  for  its  shares  must  of  course  be  such  as  it  has  power 
to  acquire  or  receive,  and  pay  for  out  of  its  funds;-  but  if  the 
companv  accepts  in  payment  property  which  the  law  forbids  it 
to  hold,  the  sul)scriber  cannot  insist  on  a  rescission  of  the  con- 
tract and  a  cancellation  of  the  shares,  inasmuch  as  he  is  a 
conspirator  ///  ])ari  (Iclirlo.'' 

§  7S().  Evils  of  "  Watered  Stock."  —  This  liberty  of  contract 
by  which  the  corporation  and  the  allottee  of  shares  are  per- 
mitted to  engraft  upon  the  subscription  such  special  terms  as 
they  please  has  led  to  the  abuse  which  is  known  in  America  as 
"watered  stock."  Shares  are  issued  as  fully  paid  but  repre- 
senting little  or  nothing  of  real  value.  The  company's  nominal 
capital  is  placed  at  a  fabulous,  infllated  figure;  and  unwary 
investors  —  "lambs"  in  the  language  of  the  stock-exchange  — 
are  deceived  into  believing  that  a  company  with  so  large  a  capi- 
tal must  have  sufficiently  strong  financial  support  to  insure  its 
success.  Evils  of  this  sort  are  even  greater  than  the  danger  that 
the  company  will  obtain  credit  on  the  faith  of  its  largely  fictitious 
capital ;  for  although  the  law  is  very  solicitous  about  the  rights 
of  creditors,  yet  experience  shows  that  creditors  and  money- 
lenders are  usually  sharp-sighted  enough  to  guard  themselves 
from  imposition.  It  is  investors  in  the  company's  securities,  and 
the  public  at  large,  upon  whom  the  evil  weighs  most  heavily. 
At  all  events,  the  rules  of  law  which  prohibit  fraudulent  or  col- 
lusive overvaluations  of  property  accepted  in  payment  for  shares 
afford  little  or  no  protection.  In  the  first  place,  it  is  usually  im- 
possible to  prove  the  fraud  or  collusion.  Moreover,  even  if  the 
proof  be  forthcoming,  the  fraudulent  allottees  will  have  "un- 

'  Eddystone     Marine     Ins.     Co.  vires  part  of  the  agreement  lias  been 

(1893),  3  Ch.  9.  fully   executed    by    transfer   of   the 

Cf.  Chapman's  Case  (1895),  1  Ch.  property  wliich  the  company  has  no 

771,    where    the    consideration    was  powe^- to  hold,  the  subscriber  cannot 

alleged  to  be  "illusory."  be  compelled  to  pay  over  again  in 

-  Lester  v.  Bemis  Lumber  Co.,  74  cash). 

S.  W.  518;  71  Ark.  379.  '  Continental    Securities    Co.     v. 

But  see  Ea.tt  N.  Y.,  etc.  R.  R.  Co.  Northern  Securities  Co.,  57  Atl.  876; 

V.  Lighthnll,  36  How.   Pr.   (N.   Y.)  66  N.  J.  Eq.  274. 
481    (holding    that   after   the    ultra 

637 


§  787  PAYMENT    FOR    SHARES  [ChAP.  XIII 

loaded"  the  shares  upon  an  unsuspecting  pubHc  before  the 
transaction  is  questioned,  and  the  transferees  being  bona  fide 
purchasers  will  be  protected  from  any  liability  to  make  good 
the  "water  ";  and  even  the  original  allottees  who  were  parties 
to  the  collusive  overvaluation  are  not,  according  to  the  prevalent 
American  rule,  under  any  obligation  to  make  good  the  deficiency 
except  for  the  benefit  of  subsequent  creditors.  Upon  the  whole, 
therefore,  the  situation  demanded  some  remedial  legislation.  And 
the  legislatures  on  both  sides  of  the  Atlantic  have  recoo-nized  the 
necessity  for  intervention,  although  the  remedies  applied  have 
not  always  been  either  judicious  or  efficacious. 

§  787- §  799.      STATUTORY     ATTEMPTS     TO     REMEDY     EVILS     OF 
WATERED    CAPITAL. 

§  787.  Companies  Act  of  1867  —  In  general.  —  In  Great 
Britain  an  attempt  was  made  by  the  Companies  Act  of  1867  to 
remove  or  at  least  diminish  the  evils  above  referred  to.  Section  25 
of  that  statute  enacted  as  follows :  "  Every  share  in  any  com- 
pany shall  be  deemed  and  taken  to  have  been  issued  and  to 
be  held  subject  to  the  payment  of  the  whole  amount  thereof 
in  cash,  unless  the  same  shall  have  been  otherwise  determined 
by  a  contract  duly  made  in  writing,  and  filed  with  the  registrar 
of  joint-stock  companies  at  or  before  the  issue  of  the  shares."  * 
In  other  words,  the  act  left  untouched  the  power  of  companies 
to  stipulate  with  allottees  of  shares  to  accept  payment  in  prop- 
erty or  services  or  anything  which  the  company  might  deem 
of  value  but  it  aimed  to  secure  publicity  and  prevent  fraud  and 
deception  by  the  provision  that  the  special  contract  for  pay- 
ment otherwise  than  in  cash  should  be  filed  with  the  registrar 
and  thus  exhibited  to  the  public.  A  company  might  accept 
payment  in  peppercorns,  if  the  directors  honestly  believed  them 
to  be  worth  the  par  value  of  the  shares;  but  if  so,  the  fact 
of  such  payment  must  be  disclosed  to  the  public.  If  the  contract 
was  not  recorded,  the  shareholder  was  bound  to  pay  the  value  of 
the  shares  in  cash,  even  though  he  might  have  given  full  value  in 
property  or  services. 

§  788.  Importance  to  American  lawyers  of  Cases  arising  under 
this  Statute.  —  The  cases  which  arose  under  this  Act  of  1867, 

'  30&31  Vict.,  c.  131,  sec.  25. 
638 


§  739-§  807]  ENGLISH    STATUTES  §  791 

which  was  repealed  by  the  Companies  Act  of  1900,  are  important 
to  American  lawyers  not  merely  because  an  understandint^  of 
them  is  essential  to  a  thorough  comprehension  of  the  historical 
develo{)ment  of  Entflish  law,  but  also  for  the  more  practical 
reason  that  they  have  a  direct  bearing  upon  the  construction 
of  some  American  statutes  passed  with  a  similar  object. 

§  7S9.  Act  not  applicable  to  cxrcntorij  Contracts  to  {.suite  Shares. 
—  In  the  first  place,  the  act  applied  only  when  shares  had  actually 
been  issued;  in  a  case  of  a  mere  agreement  to  issue  shares 
credited  as  paid-up,  the  law  remained  as  before  the  passage  of 
the  act  —  that  is  to  say,  the  company  could  not  hold  the  allottee 
liable  unless  it  were  ready  and  willing  to  issue  shares  which  could 
subject  the  holder  to  no  possible  liability.' 

§  790.  Act  functus  ofpcio  lohen  Contract  Registered.  —  If  the 
contract  was  duly  registered,  the  act  was  functus  officio,  and  the 
liability  of  the  shareholder  remained  as  before  its  passage. 
Hence,  the  registration  of  a  contract  to  issue  shares  for  a  money 
consideration  less  than  their  nominal  value  was  no  protection 
against  the  liability  to  pay  the  difference;-  but  the  valuation 
placed  by  the  company  in  the  registered  contract  upon  property 
or  services  received  in  lieu  of  cash  was  conclusive  in  the  absence 
of  fraud  or  collusion.^  On  the  other  hand,  the  consideration 
must  be  real  and  not  illusory,*  and  a  "past"  or  executed  con- 
sideration was  not  sufficient ;  ^  for  in  these  cases  there  was  no 
binding  contract  at  all. 

§  791.  WJw  charged  with  Burden  of  seeing  to  Registration  of 
Contract.  —  The  act  did  not  throw  upon  the  company  the  burden 
of  seeing  to  the  registration  of  the  contract,  so  as  to  estop  it  from 
claiming  a  benefit  from  a  failure  to  register  the  same.**  On  the 
contrary,  any  shareholder  who  claimed  exemption  from  liability 

»  Macdonald.  Sons  &  Co.  (1894),  *  Anderson's  Case,  7  Ch.   D.   7."); 

1  Ch.  89.    Cf.  supra,  §  233,  §  781.  Chapman's  Case  (1895),  1  Ch.  771. 

As  to  when  sliares  are  deemed  to  But   see  Leinster  Contract  Corp. 

be  issued,  see  supra,  §  170  et  seq.  (1902),  1  Ir.  349. 

'  Ooregum   Gold   Minin{f    Co.    v.  ^  Eddystnne     Marine     Ins.     Co. 

Roper  (1892),  A.  C.  125;    Welton  v.  (1893).  3  Ch.  9. 
Saffery  (1897),  A.  C.  299.  "  Neither  is  that  burden  thrown 

^  Re   Wragg   (1897),    1   Ch.    796;  on  the  shareholder  or  applicant  for 

Chapman's  Case  (1895),  1  Ch.  771;  shares;    but  the  party  who  asserts 

Anderson's  Case,  7  Ch.  D.  75.  the   siiarfts   to   be   fully    paid   must 

Cf.  Ames's  Case,  W.    N,  (1896)  prove  the  registration  of  tlie  con- 

79.  tract.    Arnot's  Case,  36  Ch.  D.  702. 

639 


§792 


PAYMENT    FOR    SHARES 


[CILA.P.  XIII 


to  payment  in  cash  must  prove  the  registration  of  a  vahd  contract 
conferring  such  exemption.^  jNIoreover,  the  shareholder  had  no 
remedy  against  the  company  ex  delicto  for  representing  the  shares 
to  be  fully  paid.- 

§  792.  What  amounted  to  sufficient  Registration  of  a  Contract. 
—  The  entire  contract  must  be  registered ;  it  was  not  enough  to 
record  some  memorandum  or  note  thereof.  Hence,  the  registra- 
tion of  a  mere  offer,  leaving  the  acceptance  to  be  proved  by 
evidence  dehors  the  record,  did  not  satisfy  the  statute.^  As  the 
entire  contract  had  to  be  registered,  a  reference  to  an  unrecorded 
paper  in  which  alone  some  essential  term  was  stated  was  not 
sufficient ;  *  but  if  the  recorded  paper  set  out  by  way  of  recital 
an  unrecorded  paper  containing  an  essential  term  of  the  con- 
tract, that  was  enough.^  Inasmuch  as  the  whole  contract  re- 
quired registration,  the  recorded  paper  necessarily  had  to  state 
the  consideration  for  which  the  shares  were  to  be  issued ;  ^  but 
no  very  high  degree  of  particularity  was  necessary  in  specifying 
the  consideration.^  The  recorded  contract  must  show  what 
shares  were  to  be  issued  thereunder,^  but  needed  not  to  specify 
their  denoting  numbers,  notwithstanding  that  in  England  each 
share  is  designated  by  a  number."  Registration  of  a  contract 
which  gave  the  company  an  option  to  require  payment  either  in 
cash  or  in  property  was  not  sufficient,"*  since  the  exercise  of  the 
option  would  be  left  for  proof  dehors  the  record.  Since  a  pro- 
visional agreement  made  by  promoters  on  behalf  of  an  intended 
company  is  not  a  contract  binding  on  the  company  when  in- 


*  Eisner  and  McArthur's  Case 
(1895),  2  Ch.  750;  Blyth's  Case,  4 
Ch.  D.  140. 

-  Blyth's  Case,  4  Ch.  D.  140. 

^  New  Eberhardt  Co.  v.  Menzies, 
43  Ch.  D.  118. 

Cf.  Transvaal  Exploring  Co.  v. 
Albion  Gold  Mines  (1899),  2  Ch.  370. 

*  Kharaskhoma  Syndicate  (1897), 
2  Ch.  451;  Robert  Watson  &  Co. 
(1899),  2  Ch.  509. 

Cf.  Markham  &  Darter's  Case 
(1899),  2  Ch.  480. 

=  ,S.  Frost  &  Co.  (1899),  2  Ch.  207. 

"  Kharaskhoma  Syndicate  (1897), 
2  Ch.  451 ;  Robert  Wation  &  Co. 
(1899),  2  Ch.  509;  Re  Maynards 
(1898),  1  Ch.  515. 


'  S.  Frost  &  Co.  (1899),  2  Ch. 
207;  Markham  <&  Darter's  Case 
(1899),  2  Ch.  480. 

But  cf.  Re  Maynards  (1898),  1 
Ch.  515. 

*  Crickmer's  Case,  10  Ch.  614, 
617  (semble). 

Cf.  Pritchard's  Case,  8  Ch.  956, 
901  (headnote  inadequate);  Eisner 
and  McArthur's  Case  (1895),  2  Ch. 
759. 

»  Ex  parte  Forde,  30  Ch.  D.  153; 
Jackson  &  Co.  (1899),  1  Ch.  348 
(semble). 

1"  Jackson  &  Co.  (1899),  1  Ch. 
348;  Coolgardie,  etc.  Mines,  14 
Times  L.  R.  277. 


640 


§  739-§  807]  ENGLISH    STATUTES  §  703 

corporated,  a  registration  thereof  was  not  a  compliance  with 
tlie  act ; '  but  conversely,  of  course,  the  registration  of  a  con- 
firmatory contract  by  the  corporation  adopting  the  antecedent 
provisional  agreement  was  sufficient,-  provided,  of  course,  that 
the  confirmatory  contract  contained  in  itself  all  the  terms  of 
the  at'-reemcnt.  A  provision  in  the  recorded  articles  of  asso- 
ciation for  the  issue  of  certain  shares  otherwise  than  for  cash 
was  not  a  registered  contract  within  the  Act  of  1S()7,  sec.  25.^ 

The  registered  contract  need  not  be  between  the  company  and 
the  allottee  or  the  person  to  whom  the  shares  are  issued ;  on  the 
contrarv,  a  registered  contract  for  the  issue  of  paid-up  shares 
would  protect  from  liability  any  person  to  whom  such  shares 
might  be  issued  with  the  consent  of  the  person  entitled  thereto.* 

§  793.  Time  for  Rccjistration  of  Contract.  —  In  order  that 
the  registered  contract  should,  under  the  Act  of  Parliament, 
afford  any  protection  to  the  shareholder,  it  must  have  been 
recorded  "at  or  before"  the  issue  of  the  shares;  if  recorded 
afterwards,  it  was  of  no  avail. '^  Attention  has  been  directed 
above  to  the  question  when  shares  are  to  be  "issued."  *  If  the 
registration  of  the  contract  could  fairly  be  deemed  part  of  the 
same  transaction  as  the  issue  of  the  shares,  it  was  held  to  have 
taken  place  "at"  the  issue  of  the  shares  within  the  meaning  of 
the  statute.  For  example,  where  the  share-certificate  and  the 
contract  were  together  delivered  to  the  allottee,  the  former  as 
his  muniment  of  title  and  the  latter  for  the  purpose  of  being 
recorded,  although  the  actual  registration  was  deferred  until 
the  succeeding  day  because  the  registrar's  office  was  closed,  the 
registration  was  held  to  be  in  time." 

If  the  shares  were  actually  issued  V)ut  by  mistake  the  contract 
was  not  registered,  the  directors  might,  if  the  company  was 
perfectly  solvent,  cancel  the  allotment,  and  strike  out  the  allottee's 
name  from  the  list  of  shareholders,  and  then  have  the  contract 

'Anglo-Colonial     Syndicate,     65  (1895),  2  Ch.  759;    Kirby's  Case,  46 

L.  T.  847.  L.  T.  682. 

Cf.  Smith  V.  Brown  (1896),  A.  C.  Cf.  Pritchard's  Case,  8  Ch.  956. 

614.  961;   Ames's  Case,  W.  N.  (1896)  79. 

2  Re  Maynard-i  (1898).  1  Ch.  515,  '  FothergilVs  Case,  8  Ch.  270. 

519-520  (headnote  inadequate).  *  Supra,  §  164,  §  170  et  seq. 

»  Criekmer's   Case,    10   Ch.   614;         '  Pool's  Case,  35  Ch.  D.  579. 
Pritchard's  Case,  8  Ch.  956.  See    also    Anglo-Colonial    Sy7}di' 

*  Eisner    and   McArthur's    Case,    cate,  65  L.-T.  847. 
VOL.  I.  —  41  641 


§794 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


registered  and  reissue  the  sluires/  Only  in  that  way  and  under 
those  conditions  could  the  shareholder  obtain  relief;  and, 
accordingly,  the  Companies  Act  of  1898  -  was  passed  to  enable 
the  rectification  of  the  register  nunc  pro  tunc  under  an  order  of 
court.^  Finally,  the  hardships  of  the  Act  of  18G7  led  to  its  repaal.* 
§  794.  What  is  ''Payment  in  Cash."  —  Perhaps  the  point  of 
most  general  importance  that  ever  arose  under  Section  25  of  the 
Companies  Act  of  18G7  was  the  question  what  was  necessary  to 
constitute  "  payment  in  cash."  The  courts  held  that  thoss  words 
did  not  mean  necessarily  payment  in  actual  coin  or  currency, 
but  included  any  transaction  that  would  have  supported  a  plea 
of  payment  as  distinguished  from  a  plea  of  accord  and  satis- 
faction under  the  old  common-law  procedure.^  Hence,  where  a 
shareholder,  being  indebted  to  the  company  in  respect  of  his 
shares  and  having  at  the  same  time  a  present  overdue  claim 
against  the  company,  arising  out  of  an  independent  transaction 
for  goods  sold  and  delivered  or  for  work  and  labor,  agrees  with 
the  corporation  that  the  mutual  debts  shall  be  set  off  and  a 
balance  struck,  the  transcation  amounts  to  payment  in  cash." 
So,  it  has  been  held  that  where  a  shareholder's  alleged  claim 
against  the  corporation  is  compromised  on  the  basis  of  the 
company  crediting  a  certain  amount  on  the  claimant's  shares, 
the  transaction  amounts  to  payment  in  cash.''  Moreover,  a 
present  liability  of  the  company  may  be  set  off  against  the 
potential  or  future  liability  for  calls  not  yet  made.^  On  the  other 
hand,  an  agreement  to  set  off  an  unmatured  claim  against  the 


'  Hartley's  Case,  10  Ch.  157. 
Cf.  SmUh  V.  Brown  (1896),  A.  C. 
614. 

2  61  &  62  Vict.,  c.  26. 

3  See  Jackson  &  Co.  (1899),  1  Ch. 
348;  Jarvis's  Case  (1899),  1  Ch.  193; 
Re  Maynards  (1898),  1  Ch.  515; 
Whitehead  &  Co.  (1900),  1  Ch.  804; 
Roxburghe  Press  (1899),  1  Ch.  210; 
Stephenson's  Case  (1900),  2  Ch.  442; 
Ebenezer  Timmins  &  Sons  (1902),  1 
Ch.  238;  Re  Archibald  D.  Dawney, 
Ltd.,  83  L.  T.  47;  Smithson's  Case, 
68  L.  J.  Ch.  46,  in  which  cases  the 
act  was  considered. 

*  See  infra,  §  797. 

»  Spargo's  Case,  8  Ch.  407,  414. 


«  Spargo's  Case,  8  Ch.  407; 
Adamson's  Case,  18  Eq.  670;  North 
Sydney  Investment  Co.  v.  Higgins 
(1899),  A.  C.  263;  Barrow-in-Fur- 
ness Land  Co.,  14  Ch.  D.  400;  Ex 
parte  Bentley,  12  Ch.  D.  850;  La- 
roque  v.  Beauchemin  (1897),  A.  C. 
358;  Ex  parte  Bentinck,  1  Megone 
12;  Ramwell's  Case,  50  L.  J.  Ch. 
827. 

'  Ferrao's  Case,  9  Ch.  355. 

Cf.  Barrow-in-Furness  Land  Co., 
14  Ch.  D.  400. 

s  Jones,  Lloyd  &  Co.,  41  Ch. 
D.  159.  Cf.  Ex  parte  Bentinck,  1 
Megone  12 ;  Ramwell's  Case,  50  L.  J. 
Ch.  827. 


642 


§  739-§  807]  ENGLISH    STATUTES  §  795 

company  —  for  example,  a  churn  on  bonds  or  debentures  not  yet 
due  —  against  the  shareholder's  liability  is  not  payuiL'iit  in  cash.* 
Moreover,  in  order  to  bring  a  transaction  within  the  rule  in 
Spanjos  Case,  cited  above,  it  is  indispensable  that  the  company 
should  at  some  moment  of  time  be  under  an  obligation  to  pay  in 
money.  For  exam{)le,  where  the  company  buys  goods  or  orders 
services  jjerformed  with  the  understanding  that  payment  shall 
be  made  in  fully  paid  shares,  and  shares  are  accordingly  issued 
as  fully  paid,  the  company  was  at  no  time  bound  to  pay  other- 
wise than  in  shares,  and  therefore  there  is  no  payment  for  the 
shares  in  cash.-  So,  where  a  corporation  purchases  land  under 
an  agreement  to  pay  either  in  money  or,  at  its  option,  in  fully 
paid  shares,  there  being  no  absolute  obligation  on  the  company's 
part  to  pay  in  money,  shares  allotted  in  pursuance  of  the  con- 
tract cannot  be  deemed  to  have  been  paid  for  in  cash.^  Con- 
versely, the  doctrine  o:  Spargo's  Case  cannot  be  applied  unless 
the  shareholder  was  at  one  time  under  an  obligation  to  pay  for 
his  shares  in  money ;  hence,  where  shares  are  issued  to  a  creditor 
as  fully  paid  in  satisfaction  of  his  claim,  the  shares  are  not  paid 
for  in  cash.* 

§  795.  Objections  to  the  Companies  Act  of  1SG7.  —  Some 
method  of  enforcing  publicity  as  to  the  property  which  is  accepted 
in  payment  for  shares  of  stock  is  probably  the  true  remedy  for  the 
conditions  which  occasioned  in  England  the  passage  of  the  Act 
of  1867.  Nevertheless,  in  its  practical  operation,  that  statute 
gave  rise  to  much  dissatisfaction.  Persons  to  whom  "watered" 
shares  were  issued  almost  invariably  took  pains  to  see  that  the 
contract  was  duly  filed  with  the  registrar.  "Unfortunately," 
said  Vaughan  Williams,  J.,  "those  are  not  the  persons  who  are 
causht  in  the  lecnslative  net.  The  cases  which  are  generallv  hit 
by  the  section  are  where  persons  whom  the  liquidator  wishes  to 
place  on  the  list  of  contributories  have  made  honest  agreements 
to  pay  for  the  shares,  not  in  actual  cash,  but  in  something  else 
which  is  really  equivalent  to  a  cash  payment;  and  then  by  the 
negligence  or  mistake  of  some  one,  perhaps  a  clerk  or  solicitor, 

»  Habershon's   Case,   5   Eq.   2S6;         '  Barrow's  Case,  14  Ch.  D.  432. 
Kent's  Case,  30  Ch.  D.  259.  *  Johannesburg  Hotel  Co.  (1891), 

'  Pagin  and  Gill's  Case,  6  Cli.  D.     1  Ch.  119. 
681;    Andress's  Case,  8  Ch.  D.  126; 
WhUe's  Case,  12  Ch.  D.  511. 

643 


§  796  PAYMENT    FOR    SHARES  [ChAP.  XIII 

the  contract  is  not  registered,  the  section  takes  effect,  and  the 
shareholder  has  to  pay  over  again,  and  goes  away  with  a  sense 
that  tlie  Uiw  has  done  him  an  injustice."  ' 

§  796.  Companies  Act  of  1900.  — ■  Tliese  objections  to  the  Act 
of  1867  finally  brought  about  its  repeal  by  the  Companies 
Act  of  1900.-  This  latter  statute,  while  repealing  in.  toto  the 
obnoxious  provision  of  the  Act  of  1867  which  invalidated  un- 
recorded contracts  to  accept  payment  for  shares  otherwise  than 
in  cash,  does  not  abandon  the  attempt  to  secure  publicity; 
on  the  contrary  it  requires  the  company  to  register  all  such 
contracts  or  agreements ;  ^  and  although  non-compliance  with 
these  provisions  does  not  subject  the  shareholder  to  any  liability, 
yet  a  heavy  penalty  is  imposed  on  directors  or  officers  who  are 
responsible  therefor.*  In  other  words,  the  act  does  not  subject 
the  subscribers  to  the  shares  to  any  burden  other  than  that 
which  they  agreed  to  assume  (except  in  case  of  fraud  or  collusive 
overvaluation),  but  visits  with  severe  penalties  the  officers  of  a 
company  who  issue  shares  which  are  not  to  be  paid  for  in  cash 
without  recording  for  public  inspection  the  contract  which  shows 
precisely  what  is  to  be  accepted  in  payment  in  lieu  of  cash. 
Another  provision  of  the  Act  of  1900  requires  certain  deposits  lo 
be  paid  by  applicants  before  allotment.^  Under  this  section, 
it  is  held  that  while  the  delivery  of  a  cheque  may  perhaps  be 
treated  as  the  actual  receipt  of  the  deposit  if  the  cheque  is  after 
the  allotment  duly  honored,  yet  if  the  cheque  is  not  eventually 
honored  the  allotment  is  voidable  even  though  the  company  may 
receive  the  amount  of  the  deposit  from  an  underwriter.^ 

§  797- §  799.     ATnerican  Statutes. 

§  797.  Statutes  requiring  Payment  in  Cash  —  What  amounts  to 
Payment  in  Cash.  —  Statutes  requiring  shares  to  be  paid  for  in 
cash,  either  absolutely  or  conditionally,  —  that  is,  unless  cer- 
tain requirements  and  conditions  are  met,  —  are  sometimes  en- 
countered in  America.     Probably  they  should  receive  the  same 

>  Preservation    Syndicate    (189.')),         ••  Ibid.,  §  7(2). 
2  Ch.  768,  771,  per  Vaughan  Wil-         ^  Ibid.,  §  4. 
]iams,  .1.  *  Hears  v.   Western  Canada,  etc. 

2  f)3  &  64  Vict.,  c.  48,  §  33.  Co.  (1905),  2  Ch.  353. 

3  Ibid.,  §  7(1). 

644 


§  739-§  807] 


AMERICAN'    STATUTES 


§798 


construction  in  respect  to  the  meaning  of  "payment  in  cash  "  as 
the  English  Companies  Act  of  1S()7.'  A  cheque  on  a  bank  in 
which  the  drawer  has  sufficient  funds  may  be  accepted  as 
cash ;  -  but  the  law  seems  to  be  different  if  the  drawer  had  no 
sufficient  funds  to  his  crecHt,  even  though  the  cheque  if  presented 
would  have  been  honored.-'  Of  course,  tlie  subscriber's  own 
promissory  note  cannot  \ye  deemed  money ;  *  the  giving  of  a 
note  is  really  not  payment,  but  rather  a  deferring  of  payment. 
§  79S.  Statutes  forbidding  Issue  of  Shares  except  in  Exchange 
for  Money,  Property,  or  Services.  —  A  not  uncommon  statutory 
provision  in  the  United  States  —  sometimes  even  embodied  in 
state  constitutions  —  is  that  shares  shall  not  l)e  issued  except  in 
exchange  for  money,  property,  or  services.  Such  provisions 
would  seem  to  add  little  or  nothing  to  the  law  as  laid  down  in 
England  under  the  Companies  Act  of  18G2  in  respect  to  what 
will  constitute  payment  for  shares.^    They  have  been  construed 


1  Beach  v.  SmUh,  30  N.  Y.  116; 
Veeder  v.  Mudgett,  95  N.  Y.  295,  315. 

Cf.  Laroque  v.  Beauchemin  (1897), 
A.  C.  358  (where  a  Quebec  statute 
was  construed  by  the  Pri\-y  Coun- 
cil);  Turner  v.  Cowan,  34  Can.  Sup. 
Ct.  160  (transfer  of  property  nomi- 
nally for  cash  to  be  set-off  against 
liability  upon  subscription  to  shares 
not  payment  in  cash  within  meaning 
of  British  Columbia  .statute) ;  Mor- 
ris V.  Union  Bank,  31  Can.  Sup.  Ct. 
594;  People  ex  rel.  Xew  York  Cen^ 
tral,  etc.  R.  R.  Co.  v.  Public  Service 
Commission,  106  N.  Y.  Supp.  968 
(where  the  transaction  was  held  to 
be  a  mere  form  and  not  a  real  pay- 
ment of  cash) ;  State  ex  rel.  Attorney- 
General  V.  Wood,  13  Mo.  App.  139; 
Breck  v.  Barney,  183  Mass.  133;  66 
N.  E.  643;  Clarke  v.  Lexington 
Stoveworks,  72  S.  W.  286;  24  Ky. 
Law  Rep.  1755;  73  S.  W.  288; 
Harvey-Watts  Co.  v.  Worcester  Um- 
brella Co.  (Mass.),  78  N.  E.  886. 

-  People  V.  Stockton,  etc.  R.  R.  Co., 
45  Cal.  306;  13  Am.  Rep.  178;  Syra- 
cxise,  etc.  R.  R.  Co.  v.  Gere,  4  Hun 
(N.  Y.)  392. 

But  see  People  ex  rel.  N.  Y.,  etc. 
R.  R.  Co.  v.  Railroad  Comm'rs,  81 


N.  Y.  App.  Div.  242 ;  81  N.  Y.  Supp. 
20;  affirmed  short,  67  N.  E.  1088; 
175  N.  Y.  516. 

^  People  ex  rel.  Plumas  County  v. 
Chambers,  42  Cal.  201. 

*  Leighty  v.  Pres.,  etc.  of  Turn- 
pike Co.,  14  Serg.  &  R.  (Pa.)  434; 
Williams  v.  Brewster,  93  N.  W.  479; 
117Wi.sc.  370. 

*  See  Grant  v.  East  &  West  R.  R. 
Co.,  54  Fed.  569;  4  C.  C.  A.  511; 
Brown  v.  Duluth,  etc.  Ry.  Co.,  53  Fed. 
889;  Pacific  Trust  Co.  v.  Dorsey,  72 
Cal.  55;  12  Pac.  49;  Van  Cleve  v. 
Berkey,  143  Mo.  109;  44  S.  W.  743; 
42  L.  R.  A.  593;  Rogers  v.  Gladi- 
ator, etc.  Co.  (S.  Dak.),  113  N.  W. 
86;  Andrews  v.  Xat.  Foundry,  etc. 
Works,  76  Fed.  166;  22  C.  C.  A.  110; 
77  Fed.  774;  23  C.  C.  A.  454;  Speer 
V.  Bordeleau,  79  Pac.  (Colo.)  332; 
Lake  St.  El.  R.  Co.  v.  Ziegler,  99 
Fed.  114;  39  C.  C.  A.  431;  Toledo, 
etc.  R.  R.  Co.  V.  Continental  Trust 
Co.,  95  Fed.  497;  36  C.  C.  A.  155; 
Finletter  v.  Acetylene  Light  Co.,  215 
Pa.  86  (headnote  inadequate);  64 
Atl.  429;  Vaughn  v.  Ala.  .\at.  Bank, 
42  So.  64:  143.\la.  572;  2  Clark  & 
Marshall  on  Priv.  Corps.,  §  391. 

Cf.   Altenberg  v.   Grant,  85   Fed. 


645 


§  799  PAYMENT    FOR    SHARES  [ChAP.  XIII 

in  a  multitude  of  not  altogetlier  harmonious  decisions.  An  addi- 
tional provision  that  all  "fictitious  increase  of  stock"  shall  be 
"void"  is  troublesome  and  dangerous.'  Statutes  of  this  class 
are  either  useless  or  pernicious.  L"  construed  conservatively, 
they  are  scarcely  more  than  declaratory,  and  are  therefore  super- 
fluous ;  if  construed  loosely,  they  are  less  tolerable  than  the  evils 
they  were  intended  to  remedy. 

§  709.  Statutes  requiring  Recording  of  Contracts  for  Payment 
for  Shares  otherwise  than  in  Cash.  —  The  expedient  of  recjuir- 
ing  the  recording  of  contracts  for  the  issue  of  shares  otherwise 
than  subject  to  payment  of  their  full  amount  in  cash  has 
heretofore  been  but  seldom  resorted  to  in  the  United  States. 
Such  a  provision  is  contained  in  a  recent  ^Massachusetts  incor- 
poration law.-  A  somewhat  similar  law  has  long  been  in  force 
in  ^laryland,^  but  has  received  a  very  different  interpretation 
from  the  Companies  Act  of  18G7.*  By  requiring  agreements  for 
payment  for  shares  otherwise  than  in  cash  to  be  recorded,  free- 
dom of  contract  is  preserved,  while  at  the  same  time  the  evils 
of  "watered  stock"  are  reduced  to  a  minimum.  Similar  statutes 
are  not  unlikely  to  be  enacted  in  other  states. 

§  800-§  801.     Estoppel  of  Company  to  exact  Payment  for  Shares 
which  have  not  been  paid-up. 

§  800.  Estoppel  in  favor  of  a  Transferee  of  Shares.  —  Although 
shares  are  not  negotiable,  yet  they  have  many  of  the  attributes 
of  negotiability,^  and  are  at  any  rate  exempted  from  the  common- 
law  rule  which  forbids  the  assignment  of  the  legal  title  to  choses 
in  action.    Hence,  shares  which  in  the  hands  of  the  original 

345;    29  C.  C.    A.   185    (construing         *  Baile    v.    Calvert    College,    etc. 

a  slightly  different  provision).     See  Soc,  47  Md.    117;    Southern  Trust, 

also  infra,  §  1695.  etc.  Co.  v.   Yeatman,  134  Fed.  810; 

>  Cf.    Coler  V.    Tacoma   Ry.,   etc.  67  C.  C.  A.  4.56;   Weber  v.  Fickey,  52 

Co.,  65  N.  J.  Eq.  347;    54  Atl.  413;  Md.  501. 

103  Am.  St.  Rep.  786  (holding  that         Cf.  McDowell  v.  Lindsay,  213  Pa. 

when  the  corporation  gives  an  option  591;    63  Atl.   130  (construing  a  W. 

of  $35  in  cash  or  SI 00  in  stock,  the  Va.  statute  requiring  a  publication 

stock  in  excess  of  .?35  par  value  is  of   notice   of  an   intention   to   issue 

"fictitious").     See  also  infra,  §  1695.  stock  for  less  than  par). 

^  Mass.    Acts,    1903,   chap.   437,         *  See  infra,  §  837  et  seq.,  §  912 

§  11,  §  14.  et  seq. 

^  Md.     Code     Pub.     Gen.     Laws 
(1888),  Art.  23,  §  62-§  65. 

646 


§  739- §  807]  ESTOPPEL    TO    EXACT    PAYMENT  §  SOO 

allottee  are  sul)ject  to  calls  may  nevertheless  be  deemed  fully  paid 
in  the  hands  of  a  bona  fide  purchaser  without  notice  of  the  cir- 
cumstances of  the  issue.  For  example,  where  the  certificates 
issued  by  the  corporation  to  an  ori<^inal  allottee  state  errone- 
ously that  the  shares  are  fully  paid  or  that  only  a  certain  sum 
remains  to  be  paid  thereon,  the  company  will  Ixj  estopped  from 
holdirif^  a  bona  fide  transferee  thereof  to  any  greater  liai)ilitv  than 
would  have  attached  if  the  representation  in  the  certificate  had 
been  true.'  The  same  principle  applies  although  a  statute  may 
expressly  enact  that  shares  shall  be  paid  for  in  cash  to  their  full 
amount  unless  certain  conditions  be  complied  with;  for  such 
statutes  do  not  exclude  the  application  of  the  principle  of  estoppel 
although  payment  may  not  have  been  made  as  required  by  the 
legislature.- 

The  purchaser  may  be  protected  even  though  the  share- 
certificate,  in  compliance  with  a  statutory  requirement,  expressly 
states  that  the  shares  are  issued  for  property  purchased  by  the 
company.^  A  fortiori  the  fact  that  the  certificate  states  the  sliares 
to  be  fully  paid  up  without  disclosing  how  they  were  paid  up, 
whether  in  cash  or  otherwise,  is  not  sufficient  to  charge  a  pur- 
chaser with  notice  that  payment  was  not  made  in  cash  as  required 
by  law.^  ^loreover,  the  fact  that  the  transferee  knew  that  some 
shares  had  been  issued  otherwise  than  for  cash  will  not  put  him 
upon  inquiry  whether  the  shares  assigned  to  him  were  among 
that  number.^  The  transferee  may  safely  rely  upon  the  com- 
pany's representation  that  the  shares  are  fully  paid,  and  cannot 

'  Waterhouse  v.  Jamieson,  L.  R.  1004;   Barrow's  Case,  14  Ch.  D.  432; 

2  H.  L.  (Scotch)  29;   Brant  v.  Ehlen,  Sprague  v.  Xational  Bank  of  America, 

59  Md.    1;    Foreman  v.   Bigelow,  4  172  111.  149;    50  N.  E.  19;    64  Am. 

Cliff.  508;   Steacy  v.  LUUe  Rock,  etc.  St.  Rep.  17;   42  L.  R.  A.  606;   Rem- 

R.  R.  Co.,  5  Dillon  348;    Morgan  v.  ington  Automobile  &  Motor  Co.,  153 

Howland.  89  Me.  484;    36  .\tl.  990;  Fed.  345. 

Du  Pont  V.   TUden,  42  P'ed.  87  (a         Cf.  Berrrj  v.  Rood,  168  Mo.  316, 

confu,sed   case);     Rood  v.    Wharton,  332-333;    67  S.  W.  644. 
67  Fed.  434;    Fraser  River  Mining,         ^  Easton  Xat.  Bank  v.  American 

etc.  Co.  V.  Gallagher,  5  Brit.  Columb.  Brick,  etc.  Co.,  60  Atl.   (N.   J.)  54; 

82.  reversed  as  to  other  points,  64  Atl. 

As  to  whether  in  such  cases  tlie  917. 
transferee    is    under   any    statutory         *  Burkinshaw  v.  Nicolls,  3  A.  C. 

liability  to  cretlitors  as  a  holder  of  1004,  1021. 

shares    not    fully    paid,    .see    White,         ''A.   W.  Hall  &  Co.,  37  Ch.  D. 

Corbin  it  Co.  v.  Jones,   167  N.   Y.  712;    Xew  Chile  Gold  Mining  Co., 

158;   60  N.  E.  422.  68  L.  T.  15. 

*  Burkinshaw  v.  Xicolls,  3  A.  C. 

647 


soo 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


he  charfjed  with  notice  of  the  actual  facts  mereh-  hecause  "the 
slightest  inquiry  would  have  disclosed"  the  truth.'  In  order  to 
hold  a  purchaser,  where  the  shares  purport  to  be  fully  paid,  it 
must  be  both  alleged  and  affirmatively  proved  that  he  took  with 
notice.- 

A  purchaser  with  notice  from  a  purchaser  without  notice 
succeeds  to  all  the  latter's  rights,^  even  though  the  second  trans- 
feree was  an  officer  of  the  company  when  the  shares  were  issued ;  * 
but  the  burden  of  proof  is  on  the  second  purchaser  to  show  that 
his  assignor  took  without  notice  of  the  circumstances  under  which 
the  shares  were  issued. "^  A  pledgor  who  has  notice  cannot,  after 
payment  of  the  debt  to  secure  which  the  shares  were  pledged, 
claim  the  rights  of  a  bona  fdc  purchaser  because  the  pledgee 
had  no  notice.®  AYhere  the  transferee  is  protected  as  a  purchaser 
for  value,  it  would  seem  that  the  transferor  or  original  allottee 
should  remain  liable.^ 

The  clearest  case  of  representation  by  the  company  that  shares 
have  been  fully  paid  is  where  the  representation  is  contained  in 
the  official  certificate  issued  by  the  corporation.**  Some  cases 
hold  that  a  bona  fide  purchaser  will  be  protected  unless  the  cer- 
tificate shows  affirmatively  that  the  shares  are  not  fully  paid 
even  though  the  certificate  does  not  state  that  the  shares  are 
paid-up.^     Any  representation  brought  home  to  the  company 

'  Waterhouse  v.  Jamieson,  L.  R.  307;  68  N.  W.  691;  61  Am.  St.  Rep. 
2  H.  L.  (Scotch)  29.  238. 

But  cf.  Garden  City  Sand  Co.  v.         '  Erakine  v.  Loewenstein,  82  Mo. 
American,    etc.    Crematory   Co.,    205    301, 306-306  (headnote  inadequate). 
111.  42;    68  N.  E.  724  (where  a  pur-         See  also  infra,  §  914. 
chaser  was  deemed  to  have  had  such         ^  Supra,  §  765. 
knowledfie  as  a  reasonable  man  in         *  A  statement  in  the  certificate 
his  position  would  have  had).  that  the  shares  though  fully  paid  are 

^  Burkinshaw  v.  Nicolls,  3  A.  C.    liable  to  "assessment"  will  prevent 

a  transferee  from  claiming  the  rights 
of  a  purchaser  for  value  without 
notice.  Wvihard  v.  Han.'^en,  99  Iowa 
307;  68  N.  W.  691;  61  Am.  St.  Rep. 
238;     Western    Improvement   Co.    v. 


1004,  1017-1018;  A.  W.  Hall  &  Co., 
37  Ch.  D.  712;  Hess  v.  Trmnbo,  84 
S.  W.  1153;  27  Ky.  Law  Rep.  320. 
Cf.  Higgins  v.  Illinois  Trust,  etc. 
Bank,  193  111.  394;  61  N.  E.  1024 
(where  the  transferee  was  held  to  be    Des  Moines  Nat.   Bank,    103   Iowa 


affected  with  notice). 

*  Barrow's  Case,  14  Ch.  D.  432. 

*  Barrow's  Case,  14  Ch.  D.  432. 

*  Wallace  v.  Carpenter,  etc.  Mfg. 
Co.,  70  Minn.  321;  73  N.  W.  189; 
68  Am.  St.  Rep.  .530. 

Cf.  Wishard  v.  Hansen,  99  Iowa 

648 


455;    72  N.  W.  657. 

®  West  Nashville  Planing-MUl 
Co.  V.  Nashville  Savings  Bank,  86 
Tenn.  252;  6  S.  W.  340;  6  Am.  St. 
Rep.  835. 


§  739-§  807]  ESTOPPEL   TO    EXACT    PAYMENT  §  801 

though  not  contained  in  the  certificate  will  he  sufficient  to  raise 
the  estoppel.  For  instance,  where  the  secretary  represented  to 
a  transferee  of  shares  that  a  certificate  stating  the  shares  to  he 
fully  paid  had  been  lodged  with  him,  whereas  in  fact  no  cer- 
tificate at  all  or  none  stating  the  shares  to  he  paid-up  had  been 
deposited  with  him,  the  company  was  held  in  England  to  he 
estopped  from  denying  the  shares  to  be  paid-up  to  the  prejudice 
of  the  transferee;'  but  this  decision  is  discredited,  if  not  over- 
ruled, by  a  later  case  in  the  House  of  Lords.-  Indeed,  the 
estoppel  is  not  ordinarily  or  easily  raised  by  mere  parol  decla- 
rations of  officers^  or  in  any  other  way  than  by  the  issue  of  a 
certificate. 

§  801 .  Estoppel  in  favor  of  Original  Allottee.  —  In  some  excep- 
tional cases  the  principle  of  estoppel  may  have  the  effect  of 
exonerating  even  the  original  allottee  from  liability  although 
the  shares  had  not  in  fact  been  paid  for.*  Thus,  where  a  cor- 
poration pledges  its  own  shares  as  security  for  a  loan,  issuing 
to  the  creditor  a  certificate  stating  that  the  shares  have  been 
paid  up  in  full,  the  company  is  estopped  from  holding  the  cred- 
itor liable  as  shareholder  on  the  ground  that  in  fact  the  shares 
were  not  paid  up.^  The  company  might  have  had  power  to 
issue  the  shares  as  collateral  if  they  had  been  fully  paid ;  for 
example,  a  person  who  had  paid  for  shares  in  full  might  have 
been  wiUing  to  support  the  company's  credit  to  the  extent  of 
the  value  of  the  shares,  and  therefore  the  creditor  was  justified 
in  relying  on  the  company's  representation.  In  the  same  way, 
where  P  gave  \V  a  sum  of  money  to  be  used  in  paying  for  one 
hundred  fully  paid  shares  to  be  issued  to  P,  and  W  instead  of  car- 
rying out  this  arrangement  procured  certain  unpaid  shares  to  be 
issued  to  P,  the  certificate,  however,  falsely  stating  the  shares  to 
be  fully  paid,  the  court  held  that  the  company  was  estopped 
from  holding  P,  although  he  was  an  original  allottee,  as  the 

'  McKay's    Case    (1896),    2    Ch.  "treasury  stock");    Remington  Au- 

757.  tomobUe  it-  Motor  Co.,  153  Fed.  345, 

-  George     Whitechurch,     Ld.     v.  349  (as  to  the  Taber  stock). 

Cavanaugh  (1902),  A.  C.  117.  *  Bloomenthal     v.     Ford    (1S97), 

'  Brmvning  v.   Hinkle,  48  Minn.  A.  C.  156;    Gasquet  v.  Crescent  City 

544   (lieadnote  inadequate);    51   N.  Brewing  Co..  49  Fed.  496. 

W.  605;   31  .\m.  St.  Rep.  691.  Cf.    Otter   v.    Brevoort   Petroleum 

*  Cf.  Berry  v.  Rood.  168  Mo.  316,  Co.,  50  Barb.  247. 
332;  67  S.  W.  644  (as  to  purchase  of 

649 


§  802 


PAYMENT    FOR    SHARES 


[Chap.  XIII 


holder  of  unpaid  shares.'  However,  in  such  cases  the  burden 
of  disproving  notice  of  the  fact  that  shares  are  not  paid-up  as 
represented  always  rests  on  the  allottee.^ 


§  802-§  806.     Assessments  07i  paid-up  Shares. 

§  802.  In  general  not  lawful.  —  I^imited  liability  is  at  com- 
mon law  one  of  the  most  important  and  fundamental  character- 
istics of  a  corporation.  Often  it  furnishes  the  chief  incentive  to 
the  organization  of  a  corporation  instead  of  a  partnership  or 
voluntary  association.  The  essence  of  this  limited  liability  is 
that  members  of  the  corporation  who  have  paid  in  full  for  their 
shares  —  that  is  to  say,  who  have  contributed  to  the  common 
fund,  or  the  capital  of  the  company,  all  that  they  agreed  to  put 
in  —  are  under  no  further  liability  whatsoever.^  This  feature  is 
part  of  the  very  constitution  of  the  company,  and  is  indeed  the 
condition  upon  which  alone  the  several  shareholders  consent  to 
become  members.  Hence,  the  corporation  has  no  power  by 
internal  regulations  or  by-laws  to  alter  this  rule,  or  to  levy  calls 
or  assessments  upon  the  holders  of  shares  previously  issued  and 
fully  paid.*  To  be  sure,  by-laws  may  perhaps  impose  upon 
holders  of  fully  paid  shares  fines  for  breaches  of  any  reasonable 
regulations  of  the  company;  ^  but  this  power  is  quite  different 
from  a  power  to  levy  assessments  for  the  purpose  of  raising 
funds. 

§  803.  Assessments  by  Consent  of  Shareholders.  —  Even,  how- 
ever, in  the  case  of  a  limited  company,  the  shareholders,  by 

>  Parbury's  Case  (1896),  1  Ch. 
100;  Kettle  River  Mines  v.  Bleasdel, 
7  Brit.  Columb.  507  (to  substantially 
the  same  effect). 

2  Parbury's  Case  (1896),  1  Ch. 
100,  106  (headnote  inadequate). 

^  1    Morawetz    on    Priv.    Corps., 


N.  E.  716;  27  Ind.  App.  1  (where 
the  defendant  had  voted  in  favor  of 
tlie  assessment) ;  Sullivan  County 
Club  V.  Butler,  26  N.  Y.  Misc.  306; 
56  N.  Y.  Supp.  1 ;  Enterprise  Ditch 
Co.  V.  Moffitt,  58  Nebr.  642;  79 
N.  W.  560;  45  L.  R.  A.  647;  76 
2d  ed.,  131;    2  Clark  &  Marshall  on    Am.  St.  Rep.   122;    Moore  v.  New 


Priv.  Corps.,  §  403. 


Jersey  Lighterage  Co.,  57  N.  Y.  Super. 


*  Gresham  V.  Island  City  Savings    Ct.    1 ;    5  N.   Y.   Supp.    192;    Great 


Bank,  2  Tex.  Civ.  App.  52;  21  S.  W 
556;  Wells  v.  Green  Bay,  etc.  Co., 
90  Wise.  442;  64  N.  W.  69;  Trus- 
tees of  Free  Schools  v.  Flint,  13  Mete. 
(Mass.)  539;  Reid  v.  Eatonton  Mfg. 
Co.,  40  Ga.  98;  2  Am.  Rep.  563; 
Redkey  Citizens,  etc.  Co.  v.  Orr,  60 

650 


Falls,  etc.  R.  R.  v.  Copp,  38  N.  H. 
124. 

But  cf.  Omaha  Law  Library  Ass'n 
v.  Connell,  55  Nebr.  396;  75  N.  W. 
837. 

*  See  supra,  §  716. 


§  739-§  807]        ASSESSMENTS    ON    PAID-UP    SHARES  §  804 

provision  in  tlieir  regulations,  may  contract  that  tlicy  shall  he 
liable  in  excess  of  the  limit  for  the  purj^ose  of  adjusting  the 
equities  inter  sesc,  and  in  that  event  shares  subsequently  issued 
will  be  accepted  subject  to  the  lialjility,  which  may  accordingly 
l)e  enforced  by  the  corporation.'  A  person  who  has  become 
entitled  to  paid-up,  non-assessable  shares  does  not,  it  would 
seem,  waive  his  rights,  or  become  liable  to  pay  assessments  on 
the  shares,  by  accepting  a  ceitificate  which  states  that  the 
shares  are  "non-assessable  beyond  ten  dollars  per  annum"  or 
by  signing  a  receipt  which  states  that  the  shares  are  held  sul)- 
ject  to  the  bv-laws,  which  by-laws  although  attempting  to 
authorize  the  assessments  were  adopted  after  his  right  to  non- 
assessable shares  had  accrued.'  If  shareholders  agree  among 
themselves  to  pay  certain  assessments  on  full-paid  shares,  a 
holder  who  pledges  his  shares  to  the  company  to  secure  the 
payment  of  the  assessment  cannot  subsequently  refuse  to  pay 
on  ground  that  the  assessment  was  ultra  vircs.^ 

§804.  Assessments  authorized  by  Statute. — The  power  to 
levy  assessments  on  the  holders  of  fully  paid  shares  is  sometimes 
conferred  by  statute.*    Such  statutes  being  in  derogation  of  the 

'  Maxwell's    Case,    20    Eq.    585;  (holding     that     tlie     agreement     of 

Mirage    Irrigation    Co.    v.    Sturgeon  shareholders   made    by   signing    the 

(Nebr.),   108  N.  W.  977  (headnote  by-laws    cannot     be    enforced     by 

inadetiiiate  —  a    case    where    share-  creditors). 

holders     accepted     certificates     ex-  As  to  whether  money  voluntarily 

pressly    providing    that    the    shares  paid  by  the  shareholders  to  the  cor- 

were  held  subject  to  the  power  of  the  poration  is  to  be  treated  as  lent  or 

company  to  levy  assessments  over  given  to  the  company,  see  Bidwell 

and  above  tho  par  value) ;    Weeks  v.  v.  Pittsburgh,  etc.  Ry.  Co.,  114  Pa.  St. 

Silver   Islet  Consal.  Mining  Co.,  55  535;    6  Atl.  729  (where  the  transac- 

N.  Y.  Sup.  Ct.  1  (provision  in  share-  tion  was  held  to  be  a  gift.) ;    Leavitt 

certificate    for    forfeiture    for    non-  v.  Oxford,  etc.  Co.,  3  Utah  265;    1 

payment  of  assessments  enforced).  Pac.   356;    Atlas  Loan  Co.,  9  Ont. 

Cf.    Redkey   CUizens,   etc.    Co.    v.  L.  R.  468;   and  infra,  §  1316. 

Orr,  60  N.  E.  716;    27  Ind.  App.  1  ■  Sidlivan  County  Club  v.  Butler, 

(holding  tbat  agreement  of  share-  26  N.  Y.  Misc.  306;   oii  N.  Y.  Supp. 

holders  inter  se.se  after  issue  of  shares  1. 

cannot  be  enforced   by   company);  ^  Piatt  v.   Birmingham  Axle  Co., 

Omaha  Law  Library  Ass'n  v.   Con-  41  Conn.  255. 

ncll,  55  Nebr.  396;  75  N.  W.  837  *  Gardner  v.  Hope  Ins.  Co.,  911.  I. 
(where  liability  to  pay  "dues,"  194;  11  Am.  Rep.  238  (where  the 
recognized  expressly  by  the  by-laws  statute  was  pas.sed  after  the  shares 
and  impliedly  by  the  incorporation  were  issued,  in  pursuance  of  a  re- 
paper,  was  held  to  be  enforceai)le  by  served  power  to  alter  or  repeal  the 
the  corporation):  Flint  v.  Pierce,  act  of  incorporation);  Santa  Cruz 
99    Mass.    68;     96    Am.    Dec.    691  R.  R.  Co.  v.  Sprcckles,  65  Cal.  193; 

651 


§  S04  PAYMENT    FOR    SHARES  [ChAP.  XIII 

common  law  will  be  strictly  construed.  Thus,  a  statute  author- 
izing a  corporation  to  provide  for  payment  of  debts  by  assess- 
ment on  the  shareholders  or  otherwise  has  been  construed  as 
authorizing  assessments  upon  paid-up  shares  for  the  purpose  of 
discharging  such  debts  only  as  by  another  statute  the  share- 
holders are  individually  liable  to  pay.^  So,  a  statute  providing 
that  in  case  the  capital  should  be  impaired  by  losses,  the  directors 
should  "forthwith  repair  the  same  by  assessment,"  was  con- 
strued as  merely  preventing  the  company  from  continuing  busi- 
ness with  impaired  capital,  and  not  as  imposing  any  personal 
liability  upon  the  several  shareholders  to  make  good  the  deficiency 
for  the  benefit  of  creditors  where  the  directors  had  refused 
to  levy  an  assessment  and  had  preferred  to  throw  the  company 
into  liquidation.-  If  the  statute  authorizes  assessments  for  cer- 
tain purposes,  no  assessment  will  be  enforceable  which  is  not 
for  those  purposes  exclusively.^  A  provision  that  the  shares  shall 
not  be  liable  to  assessment  after  the  capital  stock  has  been  paid 
in  except  by  consent  of  three-fourths  of  the  shareholders  does 
impliedly  authorize  assessments  on  paid-up  shares,  but  only  after 
the  capital  stock  shall  have  been  completely  subscribed  and  paid 
in.*  A  prohibition  of  any  assessments  so  long  as  the  company 
has  "treasury  stock"  undisposed  of  does  not  apply  where  the 
treasury  stock  is  valueless  and  unsalable.^  On  the  other  hand, 
a  statutory  provision  that  any  corporation  may  assess  upon  each 
share  of  stock  such  sums  of  money  as  the  company  may  think 
proper,  not  exceeding  the  par  value  of  the  stock,  has  been  con- 

3  Pac.  661,  802  (where  the  statute  Co.,  19  Oh.  St.  369  (same  point); 
which  was  held  to  authorize  the  as-  Sparks  v.  Loiver  Payette  Ditch  Co., 
sessment  ■  was  by  no  means  unam-  2  Idaho  1030;  29  Pac.  134  (uphold- 
biguous);  Younglove  v.  Steimnan,  ing  statute  authorizing  assessments 
80  Cal.  375;  22  Pac.  189  (statute  where  by  pre-existing  law  each 
authorizing  assessment  for  "paying  shareholder  would  have  been  person- 
expenses,  conducting  business  or  ally  hable  for  his  proportion  of  the 
paying  debts"  held  to  authorize  as-  corporate  indebtedness), 
sessment  for  necessary  repairs) ;  '  Ossipee,  etc.  Mfg.  Co.  v.  Canney, 
Gary  v.  York  Mining  Co.,  9  Utah  54  N.  H.  295,  315-318. 
464;   35  Pac.  494.  ^  Deivey  v.  St.  Albans  Trust  Co., 

Cf.  Enterprise  Ditch  Co.  v.  Moffitt,  57  Vt.  332. 
58  Nebr.  642;    79  N.  W.  560;    45         ^  Lanraster  Starch  Co.  v.  Moore, 

L.  R.  A.  647;    76  Am.  St.  Rep.  122  62  N.  H.  671. 

(where  a  statute  authorizing  assess-         *  Atlantic  De  Laine  Co.  v.  Mason, 

ments  was  held  unconstitutional  as  5  R.  I.  463. 

applied  to  shares  previously  is.sued) ;         ^  Jones  v.   Bonanza  Mining,  etc. 

Ireland  v.   Palestine,   etc.    Turnpike  Co.  (Utah),  91  Pac.  273,  277. 

652 


§  739-§  807]        ASSESSMENTS    ON    PAID-UP    SHARES  §  800 

strued  as  conferring  a  power  to  assess  paid-up  shares  and  to 
forfeit  the  shares  for  non-payment.'  Even  where  an  express 
statute  authorizes  assessments  on  paid-up  shares,  it  might  he 
sometimes  held  that  the  company's  only  remedy  is  by  forfeiting 
the  shares  for  non-payment  and  that  the  several  shareholders 
are  subject  to  no  personal  liai)ility  for  the  assessment.-  It  was 
conceded  by  the  court  in  a  Pennsylvania  case  that  the  corpora- 
tion might  by  internal  regulation  or  by-law  limit  its  statutory 
power  to  assess  paid-up  shares.''  If  this  be  correct,  the  liability 
for  assessments  should  be  carefully  distinguished  from  a  liability 
to  creditors,  which,  if  imposed  by  statute,  certainly  cannot  be 
waived  by  the  corporation.  It  has  been  said  that  even  where 
the  power  exists  to  levy  assessments  on  fully  paid  shares,  it  can- 
not be  exercised,  in  the  absence  of  some  element  of  waiver,  unless 
the  entire  capital  has  been  subscribed ;  *  but,  as  we  have  seen, 
the  defence  that  the  capital  has  not  been  fully  subscribed  is  not 
available  against  an  action  for  calls  where  the  company  has  with 
the  defendant's  consent  begun  business  and  incurred  obligations, 
and  as  this  is  almost  always  the  case  before  a  power  to  levy  assess- 
ments on  fully  paid  shares  is  exercised,  the  defence  would  seem 
to  be  rarely  availal)le. 

§  805.  Assessments  in  Reorganization.  —  Sometimes,  under 
schemes  of  reorganization,  so-called  assessments  are  levied  on 
holders  of  paid-up  shares;  but  although  in  practice  the  payment 
of  such  assessments  is  virtually  compulsory,  since  shareholders 
who  refuse  to  pay  will  be  excluded  by  foreclosure  or  otherwise 
from  participation  in  the  reorganization,  yet  in  the  theory  of 
the  law  the  shareholders  are  quite  at  liberty  to  pay  or  not  to 
pay,  as  they  please. 

§  SOG.  Attempts  to  evade  Rule  Prohibiting  Assessments  on  paid- 
up  Shares.  —  The  rule  of  law  prohibiting  compulsory  assess- 
ments upon  paid-up  shares  cannot  be  circumvented  by  any 
device.     Hence,  a  contract  w^hereby  the  entire  business  and 

'  Price's  Appeal  106  Pa.  St.  421.  Co.,  96  Cal.  322;   31  Pac.  100  (where 

*  But  see  Santa  Cruz  R.  R.  Co.  v.  an    assessment    was    sustained    on 

Spreckle.'f,  65  Cal.  193;    3  Pac.  661,  shares    issued  as  fully  paid-up  and 

802  (where  defendant  was  held  per-  unassessable), 
sonally  liable).  ■•  Sullivan  County  Club  v.  Butler, 

«  Price's  Appeal,  106  Pa.  St.  421,  26   N.    Y.    Misc.    306;     56   N.    Y, 

424.  Supp.  1. 

But   cf.   Green  v.   Abietine  Med. 

653 


§  807  PAYMENT    FOR    SHARES  [ChAP.  XIII 

undertaking  of  a  corporation  is  to  be  sold  to  a  new  company  in 
consideration  of  partly  paid  shares  in  the  new  company  and  of 
the  assumption  by  the  new  company  of  the  debts  of  the  old, 
with  a  stipulation  that  in  the  winding-up  of  the  old  company 
the  partly  paid  shares  received  from  the  new  company  should 
be  distributed  among  the  shareholders  of  the  old  company  and 
that  the  quota  of  any  shareholder  who  should  refuse  to  accept 
the  same  should  be  sold  and  the  proceeds  applied  in  reduction 
of  the  debts  which  the  new  company  agreed  to  assume,  is  ultra 
vires  of  the  old  company,  even  though  the  company  had  power 
to  sell  its  undertaking  in  exchange  for  partly  paid  shares ; '  for 
the  whole  agreement  is  an  obvious  scheme  to  force  the  share- 
holders to  accept  partly  paid  shares  in  lieu  of  fully  paid  shares. 
The  same  result  has  been  reached  where  the  proceeds  of  sale  of 
the  quota  of  the  dissentient  shareholders  of  the  old  company  in 
the  shares  of  the  new  company  were  to  be  distributed  among 
such  dissentient  shareholders  pro  rata? 


§  807.  Liability  of  Shareholders  to  Creditors.  —  At  common 
law,  the  liability  of  shareholders  to  pay  the  par  value  of  their 
shares  is  owing  to  the  corporation  alone  and  not  to  its  creditors. 
The  rights  of  creditors  are  derivative,  although  to  be  sure,  as 
explained  above,  the  law  sometimes  strikes  down  agreements 
between  the  subscriber  and  the  company  which,  so  far  as  the 
corporation  is  concerned,  would  be  quite  harmless,  but  which  if 
enforced  would  be  prejudicial  to  creditors.  In  addition  to  these 
derivative  rights  of  creditors,  statutes  often  impose  upon  the 
several  shareholders  further  liabilities  in  their  favor.  Both  the 
common-law,  or  derivative,  and  the  statutory,  or  direct,  rights 
of  creditors  against  the  shareholders  are  of  little  practical  impor- 
tance so  long  as  the  corporation  is  prosperous.  A  business  cor- 
poration must,  as  a  practical  matter,  either  pay  its  debts  when 
judicially  ascertained  or  withdraw  from  Imsiness.  Consequently 
the  various  rights  of  creditors  against  the  shareholders,  whether 
direct  or  indirect,   are  closely  connected  with  the  subject  of 

'  Manners  v.  St.  David's  Gold,  ^  Bisgnod  v.  Nile  Valley  Co. 
etc.  Co.  (1904),  2  Ch.  593.  (1906),  1  Ch.  747. 

654 


§  739-§  807]  LIABILITY   TO    CREDITORS  §  807 

winding-up  and  dissolution,  and  tlierefore  are  excluded  from 
this  work.  For  this  reason  it  is  unnecessary  here  to  classify  the 
various  statutes  snhjeeting  sliareholders  to  liahilities  to  creditors 
of  greater  or  less  extent,  or  to  digest  the  multitudinous  cases  in 
which  such  statutes  have  been  construed  or  applied. 


655 


CHAPTER  XIV 

FORFEITURE   OF   SHARES 

Section 

Authority  of  corporation  to  forfeit  shares 808-810 

Whether  forfeiture  amounts  to  illegal  reduction  of  capital    .    .    .      808 
Whether  power  may  be  conferred  by  by-law  without  statutory 

authority 809 

Whether  power  affected  by  a  charge  on  uncalled  capital      ...     810 

Notice  of  forfeiture 811-814 

Necessity  for  notice 811 

Requisites  of  notice  in  general 812 

Kind  of  notice  —  constructive  or  personal  notice,  etc 813 

To  whom  notice  must  be  given      814 

When  forfeiture  becomes  absolute 815-816 

In  general      815 

Effect  of  provision  for  notice  to  delinquent 816 

Purging  forfeiture  by  payment  or  tender  of  amount  of  call,  etc.      817-819 

When  and  how  forfeiture  may  be  purged 817 

Acceptance  of  payment  after  forfeiture  has  become  absolute  .    .     818 

Effect  of  set-off  against  call 819 

Effect  of  judgment  for  amount  of  call  on  right  to  enforce  forfeiture    .      820 
Effect  of  company's  refusal  to   accord   to  dehnquent  full  rights  as 

shareholder 821 

Forfeiture  invalid  unless  intended  to  benefit  company 822 

Loss  of  right  to  forfeit  shares  by  waiver  or  laches 823 

Waiver  by  shareholder  of  irregularities  in  forfeiture  —  laches      .    .    .      824 

Waiver  by  the  company  of  irregularities  in  forfeiture 825 

Surrender  or  cancellation  of  shares  as  equivalent  to  forfeiture   .      826 
Remedies  of  shareholder  against  irregular  or  void  forfeiture    ....     827 

Consequences  of  forfeiture  of  shares 828-831 

Effect  of  forfeiture  on  Uability  of  shareholder 828 

Sale  or  reissue  of  forfeited  shares       829 

Cancellation  of  forfeiture 830 

Effect  of  forfeiture  on  agent's  right  to  commissions  for  procur- 
ing subscriptions 831 


§  808-§  810.     Authority  of  Corporation  to  Forfeit  Shares. 

§  808.  In  general  —  Whether  Forfeiture  amounts  to  illegal  Re- 
duction of  Capital.  —  Breaches  of  duty  on  the  part  of  share- 
holders and  more  particularly  breaches  of  duty  in  non-payment 
of  calls  are  usually  punishable  by  forfeiture  of  their  shares.  The 
forfeiture  may  take  the  form  of  a  strict  forfeiture,  by  which  the 
forfeited  shares  revert  to  the  company ;  but  sometimes  the  shares 

656 


§  808-§  831]  UNDER    BY-LAWS  §  809 

are  to  be  sold  for  the  account  of  the  dehnquent  holder.  Not  even 
strict  forfeitures  are  ille<;jal  as  a  reduction  of  capital '  for  several 
reasons.  In  the  first  place,  the  incorporation  laws,  as  a  rule, 
either  expressly  authorize  forfeiture  of  shares  for  non-payment 
of  calls  or  else  contain  provisions  which  impliedly  contemplate  it. 
Secondly,  the  forfeiture  involves  no  reduction  of  the  actual 
capital,  but  at  most  affects  the  nominal  capital.  Lastly,  forfeiture 
for  non-payment  of  calls  is  within  the  rule  (which  seems  to  be 
supported  by  the  authorities)  permitting  a  company  to  accept  a 
surrender  of  shares  in  satisfaction  of  a  debt  of  which  payment 
could  be  obtained  in  no  other  way.^ 

§  809.  Whether  Power  may  be  Conferred  by  By-law  without 
Statutory  Authority.  —  Where  forfeiture  of  shares  is  not  affirma- 
tively authorized  by  statute,  a  considerable  number  of  authorities 
hold  that  the  company  has  no  power  to  provide  therefor  by  its 
by-laws  or  regulations ;  ^  but  on  principle  the  contrary  might 
well  be  held,  since  a  forfeiture  is  a  reasonable  means  of  compel- 
ling the  shareholders  to  perform  their  duties.*  Of  course,  any 
by-law  or  regulation  attempting  to  impose  a  forfeiture  for  the 
doing  of  any  act  which  the  shareholder  has  an  absolute  right  to 
do,  such  as  entering  suit  against  the  company  on  a  bona  fide 
claim,  would  be  void.^  In  practice,  forfeitures  are  rarely  imposed 
except  for  non-payment  of  calls. 

The  statutes  or  regulations  authorizing  the  imposition  of  the 
penalty  of  forfeiture  should  be  strictly  construed ;  and  in  order 
that  a  forfeiture  should  be  held  valid  all  the  terms  and  condi- 
tions must  be  strictly  complied  with." 

•  Trevor  v.  Whitworth,   12  A.  C.  458;    Mueller  v.  Madison  Bldg.,  etc. 

409,  417,  429.     Cf.   Dronfield  SUk-  Ass'n,  11  S.  Dak.  43;  75N.  W.  277; 

stone  Coal  Co.,  17  Ch.  D.  76,  79,  84,  Lesseps  v.  Architects'  Co.,  4  La.  Ann. 

per  Jessel,  M.  R.  316  (where  the  shareholders  had  as- 

'  See  supra.  §-638.  sented    to    the    by-law);     Kirk    v. 

^  Long  I.datid  R.  R.  Co.,  \9  Wend.  Nowill,    1    T.    R.    118:     Minnehaha 

37;  32  Am.  Dec.  429;   Budd  v.  Mult-  Driving  Park  Ass'n  v.  Legg,  50  Minn. 

nomah  Street  Ry.  Co.,  15  Oreg.  413,  333,  334;    Barton's  Case,  4  De  G.  & 

417;   15  Pac.  659;  3  Am.  Rep.  169  J.  46. 

(semble);     Purdy    v.    Bankers'    Life  *  See  supra,  §716. 

Ass'n    (Mo.),    74    S.    W.    486;    101  *  Hope  v.  International  Financial 

Mo.  App.  91;  March  v.  Fairmount  Soc,  4  Ch.  D.  327;    and  cases  cited 

Creamery    Ass'n,    32    Pa.    Sup.    Ct.  supra,  §  718. 

517  (supportable  on  anotlier  ground,  Cf.    Allnutt    v.    Sub.<iidiary    High 

for  which  see  supra,  §  718).  Court,  62  Mich.  110;   28  N.  W.  802. 

Cf.  Pulford  V.  Fire  Dept.,  31  Mich.  '  Johnson  v.  Lyttle's  Iron  Agency, 
VOL.  I.  —  42                                   657 


§810 


FORFEITURE    OF    SHARES 


[Chap.  XIV 


§  810.  Whether  Power  affected  by  a  Charge  on  Uncalled  Capital. 
—  The  power  of  the  company  to  enforce  a  forfeiture  of  shares  for 
non-payment  of  calls  is  not  affected  by  the  fact  that  the  com- 
pany may  have  issued  bonds  or  debentures  secured  by  a  charge 
on  the  unpaid  capital.' 


§  811-§  814.     Notice  of  Forfeiture. 

§811.  Necessity  for  Notice.  —  Notice  of  some  sort  to  the 
delinquent  is  usually  prescribed  in  order  to  enable  hira  to  per- 
form his  duties  and  thus  prevent  the  forfeiture.  Even  in  the 
absence,  however,  of  any  affirmative  requirement  of  notice,  it  is 
submitted  that  notice  should  be  essential  to  the  validity  of  a 
forfeiture,^  although  at  least  one  decision  dispenses  with  the 
necessity  of  notice.^  A  provision  for  notice  after  the  forfeiture  has 
been  consummated  and  become  absolute  is  directory  merely,  and 
a  failure  to  give  the  notice  does  not  undo  the  forfeiture ;  *  but  as 
we  shall  presently  see,  the  inclination  of  the  courts  is  to  hold 
that  the  forfeiture  was  not  intended  to  become  absolute  until  the 
expiration  of  the  notice.  In  any  case  of  forfeiture  for  non- 
payment of  calls,  it  is  of  course  necessary  that  the  calls  should 
be  valid,^  and  consequently  that  any  notice  of  the  call  that  may 
be  essential  to  its  enforceability  should  be  given.^ 


5  Ch.  D.  687;  Morris  v.  Metalline 
Land  Co.,  164  Pa.  St.  326;  30  Atl. 
240;  44  Am.  St.  Rep.  614;  27  L.  R. 
A.  305;  Clarke  v.  Hart,  6  H.  L.  Cas. 
633;  Westcott  v.  Minnesota  Mining 
Co.,  23  Mich.  145;  York,  etc.  R.  R. 
Co.  V.  Ritchie,  40  Me.  425;  Dearborn 
V.  Washington  Sav.  Bank,  18  Wash. 
8;  50  Pac.  575;  Crissey  v.  Cook,  72 
Pac.  541;  67  Kans.  20  (semble); 
Corcoran  v.  Sonora  Mining,  etc.  Co., 
71  Pac.  127;  8  Idaho  651;  Germarv- 
town  Pass.  Ry.  Co.  v.  FOler,  60  Pa. 
St.  124. 

*  Agency  Land  &  Finance  Co., 
20  Times  L.  R.  41. 

2  Rutland,  etc.  R.  R.  Co.  v.  Thrall, 
35  Vt.  536;  Pulford  v.  Fire  Dept., 
31  Mich.  458;  Delacy  v.  Neuse  Nav. 
Co.,  1  Hawks  (N.  Car.)  274;  9  Am. 
Dec.  636. 

Cf.  supra,  p.  580,  n.  1. 

658 


^  Germantown  Passenger  Ry.  Co. 
V.  Fider,  60  Pa.  St.  124;  100  Am. 
Dec.  546. 

*  Knight's  Case,  2  Ch.  321. 

^  Garden  Gvlly  Mining  Co.  v. 
McLister,  1  A.  C.  39 ;  Raht  v.  Sevier 
Mining,  etc.  Co.,  18  Utah  290;  54 
Pac.  889. 

Where  a  forfeiture  is  declared  for 
non-payment  of  several  caUs,  it  is 
invalid  if  any  of  the  calls  is  invalid; 
Lewey's  Island  R.  R.  Co.  v.  Bolton, 
48  Me.  451;   77  Am.  Dec.  236. 

"  Morris  v.  Metalline  Land  Co., 
164  Pa.  St.  .326;  .30  Atl.  240;  44  Am. 
St.  Rep.  614;   27  L.  R.  A.  305. 

But  see  Austin's  Case,  24  L.  T. 
932,  upholding  as  against  the  com- 
pany a  forfeiture  for  non-payment  of 
a  call  of  which  due  notice  had  not 
been  given. 


§  80S-§  831]  NOTICE    OF    FORFEITURE  §  813 

The  same  notice  is  sometimes  made  to  serve  the  double  pur- 
pose of  notifying  the  shareholder  that  a  call  has  been  made  and 
of  warning  him  that  unless  payment  is  made  within  a  certain 
time  the  shares  will  be  forfeited. 

§812.  Requisites  of  Notice  in  general.  — Where  notice  of 
forfeiture  is  recjuired,  a  notice  exj)iring  on  an  impo.ssible  date  — 
e.  g.,  on  Monday  the  9th  where  the  9th  falls  on  Friday  —  is  bad.' 
A  notice  demanding,  under  pain  of  forfeiture,  payment  of  a 
larsrer  sum  than  is  due  is  of  no  effect.-  The  notice  must  describe 
the  shares  truthfully ;  and  if  it  contains  a  material  misdescription, 
the  resulting  forfeiture  will  be  invalid. ''  It  is  not  necessary  that 
the  notice  should  specify  that  failure  to  make  payment  as 
required  will  be  followed  by  forfeiture.*  If  the  by-laws  require 
a  notice  from  the  general  secretary  of  the  corporation,  notice 
from  a  local  secretary  w'ould  be  insufficient.''  Where  notice  of 
thirty  days  is  required  before  the  resolution  declaring  the  for- 
feiture or  ordering  the  sale,  notice  given  thirty  days  before  the 
sale  is  insufficient."  If  the  statute  require  such  notice  as  may  be 
prescribed  by  l)y-law,  there  cannot  be  a  valid  forfeiture  unless  a 
by-law  fixing  the  kind  of  notice  be  first  adopted.^  A  regulation 
providing  that  the  notice  must  "require"  the  shareholder  to 
pay  is  complied  with  if  the  notice  indicate  that  failure  to  pay  will 
be  followed  by  forfeiture.* 

§  813.  Kind  of  Notice.  —  Constructive  or  Personal  Notice,  etc. 
—  Personal  notice  should  be  given  where  practicable.  Indeed, 
the  notice  must  be  personal  unless  some  form  of  constructive 
notice  be  provided  for  by  statute  or  by-law.'  A  notice  which  is 
taken  to  the  shareholder's  last  place  of  business  and  forwarded 
in  pursuance  of  directions  there  found,  but  which  in  fact  never 
reaches  him,  is  not  sufficient,'"  unless  the  regidations  provide  that 
notice  sent  to  the  shareholder's  business  address  shall  be  good. 
Where  notice  by  publication  in  a  newspaper  is  directed  by  the 

•  Watson  V.  Bales,  23  Beav.  294.    ton,    48    Me.     451 ;     77    Am.    Dec. 
'  Johnson  v.  Lyttle's  Iron  Agency,    236. 

5  Ch.  D.  687.  ^  Armstrong  v.  Merchants'  Man- 

*  Financial    Corporation,    2    Ch.    Ue  Co.,  32  Ont.  R.  387. 

714.  *  Gray  v.  Stevenson,  25  Vict.  L. 

*  HiR   V.   Nisbet,    100    Ind.   341,    R.  476. 

355-356.  '   Van     Diem^n's    Land    Co.     v. 

'  Cf.  Payn  v.  Mutual  Relief  Soc,  Cockerel!,  1  C.  B.  N.  s.  732. 

17  Abb.  N.  C.  (N.  Y.)  53.  '"  Fields  v.  United  Brotherhood,  60 

•  Lewey's  Island  R.  R.  Co.  v.  Bol-  111.  App.  258. 

659 


§  814  FORFEITURE    OF    SHARES  [ChAP.  XIV 

company's  regulations,  it  must  be  given ;  and  not  even  personal 
notice  to  the  delinquent  will  suffice  to  sustain  the  forfeiture  unless 
the  required  publication  is  had.*  So,  if  the  by-laws  require 
notice  bv  mail  or  personal  notice,  notice  by  pubUcation  is  in- 
effective, even  though  the  notice  as  published  was  actually  seen 
by  the  delinquent  shareholder.^ 

§  814.  To  whom  Notice  should  be  given.  —  Notice  should  be 
given  to  the  registered  owner  of  the  shares.^  Hence,  in  case  of 
a  bankrupt  shareholder  whose  assignee  has  not  been  registered 
on  the  company's  books  as  a  member,  the  notice  should  be  given 
to  the  bankrupt  although  the  company  knows  of  the  bankruptcy.* 

§  815-§  816.     When  Forfeiture  becomes  absolute. 

§  815.  In  general.  —  The  forfeiture  becomes  absolute  at 
whatever  time  the  regulations  by  which  the  company  is  governed 
so  provide.  Usually  a  formal  declaration  of  forfeiture  is  passed. 
Certainly  some  such  formality  is  desirable.  Consequently,  even 
where  the  regulations  provide  that,  upon  the  happening  of  this 
or  that  event,  the  shares  shall  be  forfeited  without  any  further 
act  on  the  company's  part,  nevertheless  the  construction  will  be, 
not  that  the  shares  become  ipso  facto  forfeited,  but  that  the 
company  may  at  its  option  by  some  overt  act  enforce  a  forfeiture.^ 
Any  legal  evidence  of  an  intention  to  exercise  this  option  is 
sufficient  to  complete  the  forfeiture,  a  formal  declaration  of 
forfeiture  by  resolution  of  the  directors  or  shareholders  not  being 
necessary,®  unless  expressly  required  by  statute  or  the  company's 

>  Morris  v.  Metalline  Land  Co.,  Childv.  Hudson's  Bay  Co., 27. Wms. 

164  Pa.  St.  326;  30Atl.  240;  44  Am.  207,  209;    Northwestern,  etc.  Ass'n, 

St.  Rep.  614;   27  L.  R.  A.  305.  v.  Schauss,  148  111.  304;  35  N.  E.  747. 

2  Mitchell  v.  Vermont  Copper  But  see  Weeks  v.  Silver  Islet,  etc. 
Mining  Co.,  40  N.  Y.  Sup.  Ct.  406,  Mi7iing  Co.,  23  Jones  &  S.  (N.  Y.)  1 ; 
413     (headnote    inadequate).       See  Carr  v.  Carr,  1  C.  B.  n.  s.  197. 

S.  C.  67  N.  Y.  280.  Cf.  Freckmann  v.  Supreme  Coun- 

3  Cf.  Armstrong  v.  Merchants'  ciZ,  96  Wise.  133;  70  N.  W.  1113  (as 
Mantle  Co.,  32  Ont.  R.  387.  to   mutual   benefit   societies);     Leh- 

*  Graham  v.  Van  Diemen's  Land  man  v.  Clark,  174  111.  279;   51  N.  E. 

Co.,  1  H.  &  N.  541.  222;    43  L.  R.  A.  648  (as  to  mutual 

Compare  the  cases  as  to  notice  of  insurance    companies) ;      McDonald 

calls,  supra,  §  750.  v.  Ross-Lewin,  29   Hun  (N.  Y.)   87 

^  Bigg's  Case,  1  Eq.  309 ;    Moore  (mutual  benefit   society) ;    Rood  v. 

V.  Rawlins,  6  C.  B.  N.  s.  289;   Canal  Railway  Pa.s.s.  etc.  Ass'n,  31  Fed.  62. 

Co.  V.  Sansom,  1   Binney  (Pa.)  70;  «  Woollaston's  Case,  4  De  G.  &  J. 

660 


§  808-§  831]       WHEN    FORFEITURE    BECOMES    ABSOLUTE       §  816 

regulations.'  But  a  declaration  of  an  intention  to  forfeit  sliares 
at  some  future  day  will  not  become  absolute  by  mere  la|xs'.'  of 
time:  there  must  be  evidence  of  a  present  election  to  treat  the 
shares  as  forfeited.-  Wiien  the  statute  or  by-law  providinj^  for 
the  forfeiture  re(|uircs  a  sale  of  the  forfeited  shares  for  the  ac- 
count of  tiie  deliii(|ueiit  holder,  the  forfeiture  is  not  comjjlete 
until  such  sale  is  had ;  '  but  ordinarily  it  is  no  concern  of  the 
delinquent  wha!;  is  done  by  the  company  with  the  forfeited 
shares. ' 

§  816.  Effect  of  Provision  for  Notice  to  Delinquent.  —  Without 
the  very  clearest  provision  in  the  statute  or  by-law  which  regulates 
the  forfeiture,  the  courts  will  refuse  to  hold  that  the  forfeiture 
becomes  absolute  before  the  expiration  of  the  prescribed  notice.'* 
This  is  true  although  some  of  the  language  of  the  statute  author- 
izing the  forfeiture,  if  taken  by  itself,  might  seem  to  indicate 
that  the  forfeiture  should  become  absolute  before  the  expiration 
of  the  notice;  for  the  very  object  of  prescribing  notice  is  to 
afford  a  period  of  grace  before  the  extreme  penalty  is  exacted." 


437;  Webster's  Case,  32  L.  J.  Ch. 
135.  Cf.  Crissey  v.  Cook,  72  Pac. 
541;  67  Kans.  20  (where  the  resolu- 
tion was  general,  that  all  shares 
upon  which  defaults  had  been  com- 
mitted be  forfeited). 

But  see  Clarke  v.  Hart,  6  H.  L. 
Cas.  633. 

•  Edinburgh,  etc.  Ry.  Co.  v.  Heb- 
blewhUe,  6  M.  &  \V.  707. 

^  Macon,  etc.  R.  R.  Co.  v.  Vason, 
57  Ga.  314;  Hays  v.  Franklin  Co. 
Lumber  Co.,  35  Nebr.  511  (headnote 
inadequate) ;   53  N.  W.  381. 

Cf.  Cri^sey  v.  Cook,  72  Pac.  541; 
67  Kans.  20. 

^  Minnehaha  Driving  Park  Ass'n 
V.  Legg,  50  Minn.  333  (headnote  in- 
adequate);  52  N.  W.  898.  Cf. 
Lewey's  Island  R.  R.  Co.  v.  Bolton, 
48  Me.  451;  77  Am.  Dec.  236; 
Dearborn  v.  Washington  5or.  Bank, 
18  Wash.  8;  50  Pac.  575;  Moore  v. 
Wheal  Byjerkerno  Tin  Mining  Co., 


17  Vict.  L.  R.  680  (holding  that  if 
sale  does  not  take  place  on  day  first 
advertised,  a  new  notice  of  sale  may 
be  given,  preserving,  however,  the 
delinquent's  right  of  redemption  un- 
til a  sale  is  actually  had).  As  to 
difference  between  a  power  to  for- 
feit shares  and  a  power  to  sell  them 
and  apply  the  proceeds  in  payment 
of  the  indebtedness,  see  §  955,  and 
also  Athol,  etc.  R.  R.  Co.  v.  Prescott, 
110  Mass.  213;  Mueller  v.  Madison 
Bldg.,  etc.  Ass'n,  11  S.  Dak.  43;  75 
N.  W.  277. 

*  Weeks  v.  Silver  Islet,  etc.  Min- 
ing Co.,  23  Jones  &  S.  (N.  Y.)  1, 
14 ;  Rutland,  etc.  R.  R.  Co.  v.  Thrall, 
35  Vt.  536;  Murphy  v.  Patapsco  Ins. 
Co.,  6  Md.  99. 

*  Fan  Dieinen's  Land  Co.  v. 
Cockerell,  1  C.  B.  n.  s.  732. 

*  Van  Diemen's  Land  Co.  v. 
Cockerell,  1  C.  B.  n.  s.  732. 


661 


§  S17 


FORFEITURE    OF    SHARES 


[Chap.  XIV 


§  817-§  819.     Purging   Forfeiture  by   Payment   or    Tender   of 

Amount  due. 

§  817.  When  and  how  Forfeiture  may  be  Purged.  —  At  any 
time  before  the  forfeiture  becomes  absolute,  the  deUnquent  may 
purge  the  forfeiture  by  paying  the  overdue  calls  with  interest  and 
expenses.'  Tender  of  the  amount  due  for  calls  will  have  the 
same  effect  as  actual  payment  in  preventing  or  purging  a  for- 
feiture ;  -  and  a  tender  of  a  cheque  may  be  equivalent  to  a  tender 
of  cash  if  no  objection  be  made  on  the  ground  that  commercial 
paper  instead  of  cash  was  offered.^  If  the  delinquent  wishes  to  be 
relieved  of  the  shares  because  his  subscription  was  obtained  by 
fraud  but  is  not  willing  to  run  the  risk  of  forfeiting  money  that 
he  has  already  paid  thereon,  he  may  pay  the  overdue  calls  into 
court  without  prejudice  to  any  right  to  have  his  membership 
rescinded;  but  he  cannot  have  the  forfeiture  enjoined.*  After 
the  forfeiture  has  once  become  absolute,  not  even  a  court  of 
equity  has  jurisdiction  to  relieve  against  it,  even  though  the 
delinquent  should  offer  to  pay  all  calls  with  interest  as  well  as  all 
damages  and  expenses  of  the  company.^ 

§  818.  Acceptance  of  Payment  after  Forfeiture  has  become 
Absolute.  —  Even  after  the  forfeiture  has  become  absolute,  it 
would  seem  that  the  acceptance  by  the  company  of  the  amount 
due  on  the  shares  would  be  equivalent  to  a  waiver  or  cancellation 
of  the  forfeiture ; "  but  the  fact  that  cases  of  former  delinquencies 


'  Van  Diemen's  Land  Co.  v. 
Cockerell,  1  C.  B.  n.  s.  732;  Mitchell 
V.  VerTuont  Copper  Mining  Co.,  67 
N.  Y.  280.  Cf.  Bostock  v.  Edgar,  24 
Vict.  L.  R.  677  (holding  that  under 
the  Victoria  Companies  Act  the  re- 
demption does  not  relate  back  to  the 
time  of  the  delinquency,  but  that 
there  is  an  interval  during  which  the 
delinquent  is  not  a  shareholder). 

2  Mitchell  V.  Vermont  Copper 
Mining  Co.,  67  N.  Y.  280;  Wtison 
V.  Duplin  Telephone  Co.,  52  S.  E.  62; 
139  N.  Car.  395  (where  the  delin- 
quent tendered  more  than  the 
amount  due). 

«  Clarke's  Case,  27  L.  T.  843. 


*  Ripley  v.  Paper  Bottle  Co.,  57 
L.  J.  Ch.  327. 

*  Sparks  v.  Liverpool  Waterworks 
Co.,  13  Ves.  428;  Weeks  v.  Silver 
Islet,  etc.  Mining  Co.,  23  Jones  &  S. 
(N.  Y.)  1 ;  Germantown  Pass.  Ry. 
Co.  V.  Filler,  60  Pa.  St.  124;  100 
Am.  Dec.  546. 

»  Cf.  Lime  City  Bldg.,  etc.  Ass'n 
V.  Black,  136  Ind.  544,  558-560;  35 
N.  E.  829;  Order  of  Chosen  Friends 
V.  Austerlitz,  75  Hi.  App.  75  (ac- 
ceptance of  a  less  sum  in  compro- 
mise);  Metropolitan  Accident  Ass'n 
V.  Windover,  137  111.  417;  27  N.  E. 
538;  Bartling  v.  Edwards,  84  111. 
App.   471;    Supreme  Tribe  v.   Hall, 


662 


§  808- §  831]      ^TIEN  NOT  BENEFICIAL  TO  CORPORATION       §  822 

have  not  been  visited  with  the  penahy  of  forfeiture  does  not 
justify  a  member  in  faihng  to  make  prompt  payment  of  calls 
suhse(|uently  made.' 

§  819.  Effect  of  Set-off  against  Call.  —  A  forfeiture  of  shares 
for  non-pavment  of  calls  is  not  invalidated  by  the  faet  that  the 
supposedly  delinquent  shareholder  has  a  good  set-ott'  against  the 
calls.- 


§  820.  Effect  of  Judgment  for  Amount  of  Call  on  Right  to  enforce 
Forfeiture.  -  It  has  been  held  that  after  a  company  has  recov- 
ered judgment  against  a  shareholder  for  an  overdue  call,  it  cannot 
subsecjuently  enforce  a  forfeiture  for  default  upon  that  very  call ;  ^ 
but  this  decision  turned  largely  on  the  peculiar  terms  of  the 
regulations  by  which  that  particular  corporation  was  governed. 

§  821.  Effect  of  Company's  Refusal  to  accord  to  Delinquent  his 
full  Rights  as  Shareholder.  —  In  one  case  it  was  held  that  a 
forfeiture  for  non-payment  of  assessments  cannot  be  sustained 
where  the  shareholder's  refusal  to  pay  is  induced  by  the  com- 
pany's refusal  to  permit  him  to  exercise  his  right  of  examining 
the  books ;  *  but  it  is  difficult  to  see  why  the  company  should  be 
subjected  to  this  penalty  for  its  failure  to  recognize  the  share- 
holder's right,  and  perhaps  the  decision  was  not  intended  to  lay 
down  a  principle  of  general  application. 

§  822.  Forfeiture  invalid  unless  intended  to  benefit  Company. 
—  No  forfeiture  should  be  enforced  unless  really  beneficial  to  the 
company ;  and  any  forfeiture  which  is  not  believed  bona  fide  to 
be  for  the  good  of  the  company  may  be  set  aside.^     For  this 

24  Ind.  App.  316;   56  N.  E.  780;   79         ^  Giles  v.  Hutt,  3  Ex.  18. 
Am.  St.  Rep.  262 ;  Modern  Woodmen         *  Buker  v.   Leighton  Lea   Ass'n, 

V.  Jameson,  48  Kans.  718;    30  Pac.  164  N.  Y.  557;   58  N.  E.  1085  (re- 

460.  versing  .>^.  c.    18  N.   Y.   App.    Div. 

But  see  Carr  v.  Carr,    1    C.    B.  548:  46  N.  Y.  Supp.  35;  ami  affirin- 

N.  s.  197.  ing  the  dissenting  opinion  of  Follett, 

'  Harvey  v.  Grand  Lodge,  50  Mo.  J.,  in  the  court  below). 
App.  472.     But  see  Moore  v.  Order         *  Richmond's  Case,  4  K.  &  J.  305; 

of  Railway  Conductors,  90  Iowa  721;  Common  v.  McArthur,  29  Can.  Sup. 

57  N.  W.  623.  Ct.  239. 

-  Johnson  v.  Lyttle's  Iron  Agency.  Cf.  Hall's  Case,  5  Ch.  707. 

5  Ch.    D.   687,  689,  692    (headnote 
inadequate).     Cf.  supra,  §  759. 

663 


§  823  FORFEITURE    OF    SHARES  [ChAP.  XIV 

reason  a  forfeiture  of  shares  held  by  a  person  a])out  whose 
solvency  no  doubt  is  entertained  is  in  general  invalid/  So,  too,  a 
forfeiture  of  shares  on  which  nothing  has  been  paid  and  which 
are  not  selling  at  a  premium  cannot  well  be  advantageous  to  the 
company  and  is  therefore  invalid.-  Similarly,  an  agreement  by 
which  a  delinquent  shareholder  is  allowed  to  retire  upon  payment 
of  less  than  could  have  been  collected  from  him  if  a  forfeiture 
had  been  enforced  cannot  be  supported  as  a  forfeiture.^ 

§  823.  Loss  of  Right  to  forfeit  Shares  by  Waiver  or  Laches.  — 
The  company's  right  to  enforce  a  forfeiture  may  be  lost  by  laches 
or  waived  by  the  company  in  any  particular  case.*  Any  action 
or  inaction  on  the  company's  part  which  would  render  the 
enforcement  of  the  forfeiture  unjust  may  be  relied  upon  as 
establishing  such  a  waiver.  It  has  been  held  in  Tennessee 
that  where  a  corporation  has  the  right  to  sell  or  forfeit  shares 
for  non-payment  of  each  call  as  made,  the  company,  after 
omitting  to  exercise  that  power  as  each  call  became  due  and 
having  waited  until  a  number  of  calls  are  made,  loses  by  the 
delay  its  remedy  by  forfeiture  or  sale.^  This  case  stands 
alone,  however,  and  one  may  well  doubt  whether  the  same 
doctrine  would  be  applied  in  other  states."  Indeed,  the  decision 
is  rested  by  the  court  itself  upon  the  peculiar  terms  of  the 
statute  which  was  being  construed,  rather  than  upon  any  general 
principles  of  law. 

§  824.  Waiver  by  Shareholder  of  Irregularities  in  Forfeiture  — 
Laches.  —  Irregularities  in  a  forfeiture  of  shares  may  be  cured 
by  waiver.^  For  instance,  an  objection  to  a  forfeiture  of  shares 
based  upon  the  fact  that  in  the  notice  and  resolution  of  forfeiture 
the  shares  were  described  as  £20  shares  instead  of,  according  to 
the  real  legal  nature,  as  £100  shares,  is  waived  by  asking  a  re- 
mission of  the  forfeiture  as  a  matter  of  grace.^  ]\Iere  laches 
will  not,  however,  disentitle  a  shareholder  to  relief  against  an 
invalid  forfeiture:  there  must  be  evidence  of  abandonment  of 

'  Manisty's  Case,  17  Sol.  J.  745;         *  Cf.  supra,  §  818. 
Esparto  Trading  Co.,  12  Cli.  D.  191.  ^  Stokes   v.    Lebanon,    etc.    Turn- 

-  Ex  parte  Jones,   27   L.   J.   Ch.  pike  Co.,  6  Humph.  (Tenn.)  241. 
666.  «  See  supra,  §  818. 

Cf.    Slee    V.    Broom,    19    Johns.         ''  Cf.  Miller  v.  Grand  Lodge,  72 

(N.   Y.)  456;   10  Am.  Dec.  273.  Mo.  App.  499. 

*  Hall's   Case,    5    Ch.    707.      Cf.         *  Financial    Corporation,    2    Ch, 

supra,   §  636.  714. 

664 


§808-§831]       IHHEGULAU    AND    VOID    FORFEITURES  §827 

his  rights  or  some  facts  sufficient  to  estop  him  from  attacking 
the  forfeiture.' 

§  825.  Waiver  by  the  Company  of  Irregularities  in  Forfeiture. 
—  In  some  cases  a  shareholder  who  is  an.xious  to  retire  sets  uj)  an 
irreguUir  forfeiture  and  rehes  upon  a  waiver  bv  the  company  to 
cure  the  irreguhirities.'-  Notably  was  this  the  case  in  a  series  of 
English  decisions  arising  in  the  winding-up  of  the  Agi-iculturists 
Cattle  Company.-'  That  company  was  incorporated  under  the 
Companies  Act  of  1844  so  that  the  liability  of  its  members  was 
unlimited :  hence  questions  as  to  illegal  reductions  of  capital,  so 
important  in  the  case  of  limited  companies,  did  not  arise.  These 
cases,  therefore,  are  of  little  or  no  general  importance  in  America 
at  the  present  day ;  and  accordingly  it  has  not  seemed  worth 
while  to  attempt  a  statement  or  explanation  of  their  somewhat 
complicated  facts.'* 

§  826.  Surrender  or  Cancellation  of  Shares  as  equivalent  to 
Forfeiture.  —  Inasmuch  as  the  company  and  the  shareholder 
may  respectively  waive  irregularities  in  the  forfeiture,  it  follows 
that  by  agreement  between  them  a  formal  forfeiture  may  be 
entirely  dispensed  with,  the  shares  which  are  liable  to  forfeiture 
being  surrendered  or  cancelled  by  agreement.  But  in  order  to 
be  sustained  as  a  forfeiture,  any  such  cancellation  or  surrender 
of  shares  must  have  been  intended  as,  in  substance,  a  forfeiture.* 

§  827.  Remedies  of  Shareholder  against  Irregular  or  void  For- 
feiture. —  The  shareholder  has  several  remedies  open  to  him 
against  an  irregular  or  void  forfeiture.  In  general,  he  may  have 
the  same  remedies  by  action  for  damages,  ^^Tit  of  mandamus,  or 
bill  in  equity,  which  are  open  to  a  shareholder  whose  name  has 
been  stricken  from  the  list  of  members  in  pursuance  of  a  forged 
or  otherwise  void  transfer.®    He  may  have  an  action  for  damages, 

'  Garden    Gully    Mining    Co.    v.  5  H.   L.   606;    Spackmnn  v.  Evans, 

McLister,l  A.C.39.    CL  Prendergast  L.  R.  3  H.  L.  171;    Hoiddsworth  v. 

V.  Turton,  1  Y.  &  C.  Ch.  98;  Ride  v.  Evans,  L.  R.  3  H.  L.  263. 
Jewell,  18  Ch.  D.  660;  Clarke  v.  Hart,         *  For  a  clear  statement  see  Ham- 

6   H.  L.   Cas.   633;    Raht   v.  Sevier  ilton's  Manual  of  Company  Law, 'Jd 

Mining,  etc.  Co.,  18  Utah  290;    54  ed.,  pp.  222-22.-). 
Pac.  889;  Ormsbjf  v.  Vermont  Copper         ^  Esparto  Trading  Co.,  12  Ch.  D. 

Mining  Co.,  56  N.  Y.  623.    '  191.     See  also  Gower's  Case,  6  Eq. 

'  Crissey  v.  Cook,    72  Pac.  541;  77,  and  supra.  §  636,  §  822. 
67  Kans.  20.  "  Herbert   Kraft   Co.    v.    Bank   of 

3  Sec  Evans  V.  SfnaUcombe,^^..  Orland.    133   Cal.  64;   65  Pac.    143. 

3  H.  L.  249;   Dixon  v.  Evans,  L.  R.  See  infra,  §  935-§  937. 

665 


§828 


FORFEITURE    OF    SHARES 


[Chap.  XIV 


as  for  a  conversion,  against  the  company.^  Or,  he  may  file  a  bill 
in  equity  to  have  the  forfeiture  annulled.-  In  such  a  suit  he 
may  pray  a  declaration  that  the  forfeiture  is  void  instead  of 
a  concellation  of  the  forfeiture  and  return  of  the  shares ;  it  is  all 
one  and  deceives  nobody.^  A  bill  in  equity  to  enjoin  an  irregu- 
lar forfeiture  ^  will  not  lie  unless  the  plaintiff  offers  to  do  equity 
by  paying  any  calls  or  assessments  that  may  be  overdue/'  An 
irregular  forfeiture  is  to  be  distinguished  from  a  void  forfeiture ; 
and  therefore  a  statute  of  limitations  restricting  the  period  within 
which  actions  may  be  brought  for  the  recovery  of  forfeited  shares 
where  the  forfeiture  is  attacked  because  of  some  irregularity  does 
not  apply  wdiere  the  ground  of  attack  is  that  the  assessment  for 
non-payment  whereof  the  forfeiture  was  attempted  w^as  wholly 
void.* 


§  828-§  831.     Consequences  of  Forfeiture  of  Shares. 

§  828.  Effect  of  Forfeiture  on  Liability  of  Shareholder.  —  The 
effect  of  a  consummated  forfeiture  is  that  the  holder  of  the  for- 
feited shares  ceases  to  be  a  member  of  the  company  from  the 
moment  when  the  forfeiture  becomes  absolute.^  From  that  time 
forth,  he  is  a  mere  stranger  to  the  company.    Hence  he  is  not 


'  New  Chile  Gold  Mining  Co.,  45 
Ch.  D.  598;  Allen  v.  Am.  Bldg.  & 
Loan  Ass'n,  49  Minn.  544 ;  52  N.  W. 
144;  32  Am.  St.  Rep.  574.  As  to 
the  measure  of  damages  in  such 
an  action,  see  Budd  v.  Multnomah 
Street  Ry.  Co.,  15  Oreg.  413,  419- 
420  (headnote  inadequate);  15  Pac. 
659;  3  Am.  Rep.  169;  Carpenter 
V.  Am.  Building  &  Loan  Ass'n, 
54  Minn.  403;  56  N.  W.  95;  40 
Am.  St.  Rep.  345;  Nicholson- 
Watson,  etc.  Co.  V.  Urquhart  (Tex.), 
75  S.  W.  45;  32  Tex.  Civ.  App. 
527;  Grand  Valley  Irr.  Co.  v. 
Fruita  Imp.  Co.  (Colo.),  86  Pac. 
324  (full  value  not  recoverable  where 
the  shares  were  bought  in  by  the 
shareholder). 

2  Sweny  v.  Smith,  7  Eq.  324 
(holding  that  the  bill  may  be  filed 
on  behalf  of  plaintiff  and  all  other 
shareholders);     Wilson     v.    Duplin 


Telephone  Co.,  52  S.  E.  62;  139  N. 
Car.  395. 

As  to  the  remedy  by  mandamus, 
see  Delacy  v.  Neuse  Nav.  Co.,  1 
Hawks  (N.  Car.)  274. 

3  Sweny  v.  Smith,  7  Eq.  324,  333. 

*  As  to  whether  the  remedy  at 
law  is  adequate  so  as  to  exclude 
equity  jurisdiction,  see  Isbester  v. 
Murphy  Mfg.  Co.,  95  111.  App.  105 
(headnote  inadequate). 

^  Burham  v.  San  Francisco  Fuse 
Mfg.  Co.,  76  Cal.  26;  17  Pac.  939. 
As  to  bills  to  enjoin  a  forfeiture  of 
shares,  see  further  Schuetz  v.  Ger- 
man-American Real  Estate  Co.,  21 
N.  Y.  App.  Div.  163;  47  N.  Y.  Supp. 
500;  Moore  v.  A'^.  ./.  Lighterage  Co., 
25  Jones  &  S.  (N.  Y.)  1. 

*  Herbert  Kraft  Co.  v.  Bank  of 
Orland,  65  Pac.  143;   133  Cal.  64. 

'  New  Chile  Gold  Mining  Co.,  45 
Ch.  D.  598. 


666 


§  808- §  831]  CONSEQUENCES  §  828 

liable  for  calls  or  assessments  subsequently  made  upon  the 
shareholders.'  It  makes  no  difference  that  his  name  is  not 
removed  from  the  register  of  shareholders  and  that  the  company 
is  in  licpiidation.-  By  the  weight  of  authority,  a  forfeiture  wipes 
out  all  liability  upon  the  forfeited  shares,  even  for  calls  made 
before  the  forfeiture;^  and  the  same  rule  is  applied  where  the 
shareholder  has  given  his  note  for  the  call  or  assessment  in 
question,''  or  where  the  company  prior  to  the  forfeiture  had 
brought  suit  to  recover  the  call.^  But  according  to  some  authori- 
ties and  under  some  statutes,  the  holder  of  forfeited  shares 
remains  liable  for  the  calls  that  were  due  at  the  time  of  the  for- 
feiture;" though  the  amount  realized  by  the  company  from  a 
sale  of  the  forfeited  shares  must  be  credited  in  satisfaction 
fro  ianto  of  any  such  liai)ility.''  The  question  of  course  turns  on 
the  construction  of  the  particular  statute  or  other  instrument 
which  authorizes  the  forfeiture ;  and  for  this  reason  no  general 
rule  can  be  laid  down.  Cases  of  strict  forfeiture  may  be  governed, 
perhaps,  by  slightly  difi'erent  principles  from  cases  of  sale  of  the 
shares  for  the  account  of  the  delinquent  holder.^  Where  the 
regulations  to  which  the  corporation  is  subject  provide  that  a 
holder  of  forfeited  shares  shall  continue  liable  for  all  calls  due 
at  the  time  of  forfeiture,  such  liability  is  an  ordinary  debt  ®  and 
is  therefore  not  barred  by  any  statute  of  limitations  applicable  to 

'  Knight's  Case,  2  Ch.  321.     Cf.         *  Ashton   v.    Burbank,    2    Dillon 

Webster's  Case,  32  L.  J.  Ch.  135.  435.     But  see  contra:    Mitchell  v. 

2  Lyster's  Case,  4  Eq.  233.  Rome  R.  R.  Co.,  11  Ga.  574. 

3  S'tocken's  Case,  3  Ch.  412,  415  ^  Small  v.  Herkimer  Mfg.  Co.,  2 
(semble) ;    Rutland,  etc.  R.  R.  Co.  v.  N.  Y.  330. 

Thrall,    35    Vt.    536;     Macauly    v.  '  Inglis  v.  Great  Northern  Ry.  Co., 

Robinson,   18  La.  Ann.  619;    Allen  1    Macq.    H.    L.    Cas.    112;     GrecU 

V.   Montgomery  R.   R.   Co.,    11   Ala.  Northern    Ry.    Co.    v.    Kennedy,    4 

437;   Small  v.  Herkimer  Mfg.  Co.,  2  Exch.  417;    Siiccession  of  Thomson, 

N.  Y.  3.30.  46  La.  Ann.  1074;    15  So.  379;   Car- 

Cf.   Ladies  Dress   As.<i'n   v.    Pnl-  son  v.   Arctic  Mining  Co.,  5  Mich. 

brook  (1900),  2  Q.  B.  376;    Mandel  288;    Merrimac  Mining  Co.  v.  Bag- 

V.  Swan  Land  Co.,  154  111.  177;    40  ley,  14  Mich.  501. 

N.  E.  462;   45  Am.  St.  Rep.  124;   27  ^  InglU^  v.  Great  Northern  Ry.  Co., 

L.  R.  A.  313;    Imtone  v.  Frankfort  1  Macq.  H.  L.  Cas.  112,  116. 

Bridge  Co.,  2  Bibb  (Ky.)  576,  580-  *  Carson   v.    Arctic   Mining   Co., 

581;     5   Am.    Dec.    638.      See   also  5  Mich.  288,  295  (holding  that  in  a 

Mills  V.  Stewart,  41  N.  Y.  384,  hold-  case  of  sale  the  delinquent  remains 

ing    that    a    statutory    hability    di-  liable). 

rectly  to  creditors  is  destroyed  by  a  "  As  to  right  to  defend  against 

forfeiture,  as  if  the  defendant   had  this  liability  on  the  ground  of  fraud, 

never  owned  siiares  in  the  company,  see  supra,  §  205. 

667 


§  829  FORFEITURE    OF    SHARES  [ChaP.  XIV 

claims  against  shareholders  as  such  or  as  "contributories"  in 
winding-up  proceedings.*  So,  too,  the  liability  which  persists 
after  a  forfeiture  is  not  affected  by  the  company's  acceptance  of  a 
material  amendment  to  its  charter  or  act  of  incorporation.-  Of 
course,  the  mere  fact  that  the  company  has  taken  some  steps 
looking  towards  forfeiture  but  has  not  yet  performed  all  the 
statutory  requirements  of  a  complete  forfeiture  will  not  release 
the  shareholder  from  liability.^    A  former  holder  of  the  forfeited  , 

shares  who  had  transferred  them  prior  to  the  forfeiture  remains  M 

subject  to  any  statutory  liability  attaching  to  past  members,''  and  1 

a  Joriiori  the  person  who  held  the  shares  at  the  time  of  the  for-  " 

feiture  is  similarly  liable.^  The  same  principles  should  be  applied 
where  the  delinquent  is  a  transferee  of  the  shares  and  where  he 
is  an  original  subscriber.*' 

§  829.  Sale  or  Reissue  of  Forfeited  Shares.  —  The  forfeited 
shares  may  be  sold  by  the  company  for  less  than  their  par 
value  without  violating  any  statute  prohibiting  the  issue  of 
shares  at  a  discount.^  Where  the  shares  are  reissued  and  a 
certificate  issued  which  states  the  amount  which  has  been  paid  on 
the  shares  and  that  the  remainder  owing  thereon  has  been  called 
in  but  not  paid,  a  further  provision  in  the  certificate  that  the 
shares  shall  be  held  discharged  from  all  calls  due  prior  to  its  date 
will  not  be  construed  to  make  the  shares  paid-up  shares,  but  will 
merely  prevent  the  vendee  from  being  held  in  default  for  non- 
payment of  the  previous  calls  and  therefore  liable  for  interest 
thereon,  leaving  the  company  at  Hberty  to  make  a  new  call  for 
the  amount  still  owing  on  the  shares  and  to  compel  the  vendee  to 
pay  the  same.^  Moreover,  under  regulations  which  provide  that 
the  former  owner  of  forfeited  shares  shall  pay  all  calls  that  were 
due  at  the  time  of  forfeiture,  the  reissue  of  forfeited  shares  with 

1  Ladies  Dress  Ass'n  v.  Pulbrook  827;  Morrison  v.  Trustees,  etc.  Corp., 
(1900),  2  Q.  B.  376.  79  L.  T.  605. 

2  Mitchell  V.  Rome  R.  R.  Co.,  17  But  see  Randt  Gold  Mining  Co. 
Ga.  574.  V.  New  Balkis  Eerstelling,  85  L.  T. 

3  Edinburgh,  etc.  Ry.  Co.  v.  Heh-  780;  (190.3),  1  K.  B.  461,  affirmed, 
blewhUe,  6  M.  &.  W.  707.  (1904)  A.  C.  165. 

*  Bridgers  and  NeilVs  Case,  4  *  Xew  Balkis  Eerstelling  v.  Randt 
Ch.  266.  Gold  Mining  Co.  (1904),  A.  C.   165 

*  Creyke's  Case,  5  Ch.  63.  (headnote  inadequate). 
«  Merrimac  Mining  Co.  v.  Bagley,         Cf.    Moore   v.   Wheal   Byjerkerno 

14  Mich.  501.  Tin  Mining  Co.   17  Vict.  L.  R.  680. 

Ramwell's  Case,   50   L.   J.   Ch. 

668 


§  808- §  831]  CONSEQUENXES  §  831 

a  proviso  that  the  new  holder  shall  be  subject  to  no  liability 
thereon  nevertheless  leaves  the  amount  of  the  previous  calls  clue 
and  payable  "in  respect  of"  the  shares,  so  that  the  new  holder  is 
debarred  from  voting  by  a  regulation  that  "no  member  shall  be 
entitled  to  vote  .  .  .  whilst  any  sum  shall  be  due  and  payable  to 
the  company  in  respect  of  any  of  the  shares  of  such  meral)er."  ' 
Conversely,  any  sura  which  the  former  owner  of  forfeited  shares 
is  required  to  pay,  after  the  forfeiture,  under  the  company's 
regulations,  is  deemed  to  be  payable  in  respect  of  the  shares  and 
therefore  goes  in  reduction  of  the  liability  of  the  person  to  whom 
the  shares  are  reissued.-  Sometimes  a  sale  of  forfeited  shares  is 
made  compulsory.^  A  statutory  provision  for  a  sale  of  paid-up 
shares  in  the  event  of  non-payment  of  certain  assessments  does 
not  necessarily  mean  that  the  shares  shall  be  forfeited  or  deprive 
the  former  owner  of  the  proceeds  of  sale/ 

§  830.  Cancellation  of  Forfeiture.  —  Inasmuch  as  forfeited 
shares  may  be  reissued,  it  is  competent  to  the  company  with 
the  consent  of  the  former  holder  to  cancel  the  forfeiture :  ^  such 
cancellation  amounts  merely  to  a  reissue  of  the  shares  of  the 
former  owner.  But  after  the  company  has  gone  into  liquidation, 
the  forfeiture  cannot  be  cancelled  even  with  the  consent  of 
both  the  liquidator  and  the  shareholder.^  Moreover,  a  power 
vested  in  the  company  to  cancel  a  forfeiture  without  the  consent 
of  the  former  shareholder,  who  in  consequence  of  a  completed 
forfeiture  has  ceased  to  be  a  member  of  the  company,  would  be 
so  very  extraordinary  that  it  cannot  be  reserved  to  the  company 
without  the  clearest  language.  For  example,  a  provision  in  a 
company's  regulations  that  the  directors  may  "annul"  a  forfeit- 
ure upon  such  conditions  as  they  see  fit  will  not  authorize  them 
to  cancel  a  completed  forfeiture  without  the  consent  of  the  former 
holder  of  the  shares.^ 

§  831.  EfEect  of  Forfeittire  on  Agent's  Right  to  Commissions  for 
procuring  Subscriptions.  —  Where  an  agent  procures  subscript 
tions  to  the  company's  shares  under  a  contract  by  which  he  is  to 
be  paid  a  commission  as  the  subscriptions  are  paid  in,  the  efTect 

»  Randt    Gold    Mining    Co.     v.  Bank  of  Ambia,  86  Fed.   863;    30 

Wainv^ight  (1901),  1  Ch.  184.  C.  C.  A.  443. 

'  Randt  Gold  Mining  Co.  (1904),         *  a.  supra,  §  818. 
2  Ch.  468.  •  Dawes'  Case,  6  Eq.  232. 

'  See  supra,  §  815.  ^  Larkworthy's    Case     (1903),     1 

«  Chicago  Tide,  etc.  Co.  v.  State  Ch.  711. 

669 


§  831  FORFEITURE    OF    SHARES  [ChAP.  XIV 

of  a  forfeiture  of  the  shares  for  non-payment  is  to  prevent  the 
subscription  from  being  paid  and  therefore  to  prevent  the  agent's 
right  to  commissions  from  accruing/  The  court  in  the  case 
last  cited  suggested,  however,  that  the  agent  might  have  some 
remedy  to  compel  the  company  either  to  sell  the  forfeited  shares 
(in  which  case  it  seems  to  have  been  thought  that  the  agent  would 
be  entitled  to  a  commission  on  the  amount  realized)  or  to  remit 
the  forfeiture  and  sue  for  the  amount  due  on  the  subscription.^ 

'  Maryland  Agricultural  College  ^  Maryland  Agricultural  College 
V.  Baltimore,  etc.  R.  B.  Co.,  43  Md.  v.  Baltimore,  etc.  R.  R.  Co.,  43  Md. 
434.  434,  439. 


670 


CHAPTER  XV 

TRANSFER  AND  TRANSMISSION  OF  SHARES 

Section 

Transferability  of  shares 832 

Definition  of  coniplfte  transfer  of  shares  —  transfer  of  legal  title   .    .      833 
Transfer  of  possession  as  a  step  in  the  transfer  of  title  to  shares   .      834 

Transfer  as  distinguished  from  transmission  —  from  sales 835 

Partial  transfers  of  shares 836 

Of    the    doctrine    that    neither    shares    nor    share-certificates    are 

negotiable      837-844 

What  is  negotiability 837-842 

Two  elements  of  negotiability 837 

(1)  Negotiability  as  an  exception  to  the  rule  that  legal  title 

to  choses  in  action  is  not  transferable  —  rights  of 

bona  fide  endorsee  for  value 838 

Shares    have   this   element   of   negotiability    with   its 

consequences 839 

(2)  Negotiability  as  an  exception  to  the  rule  that  a  seller 

of  personal  property  can  pass  no  better  legal  title 
than  he  himself  has  —  rights  of  purchaser  from  a 

thief 840 

Shares  do  not  have  this  element  of  negotiability  .    ...     841 
Share-certificates  do  not,  and  cannot  by  endorsement 
in  blank  be  made  to  have  this  element  of  negoti- 

abiUty 842 

Shares  not  within  the  rule  that  transferee  of  negotiable  instru- 
ment as  security  for  antecedent  debt  deemed  holder  for 

value 843 

Shares  so  far  negotiable  as  to  be  exempt  from  doctrine  of  lis 

pendens 844 

Shares  not  subject  to  doctrine  of  Dearie  v.  Hcdl 845 

Mode  of  effecting  a  transfer  of  shares 846-880 

.    Nature  of  subject  —  comparison  with  conveyancing 846 

Transfer  by  formal  deed  of  assignment 847 

Transfer  by  writing  not  under  seal 848-851 

In  general  848 

Disadvantages  of  separating  the  written  transfer  from  the 

share-certificate 849 

American  practice  of  endorsing  transfer  on  share-certificate  .     850 
Same  principles  applicable  whether  transfer  separate  from 

certificate  or  endorsed  thereon 851 

Transfer  by  mere  delivery  of  certificate  —  "  share  warrants  "     .    .      852 
Transfer  on  the  company's  books  —  registration  of  transfers      853-866 

Transfer  by  mere  entry  in  the  company's  books 853 

Entry  of  transfer  on  books  ineffective  unless  made  by  au- 
thority of  former  owner      854 

671 


TRANSFER   AND    TRANSMISSION             [ChaP.  XV 

Mode  of  eEFecting  a  transfer  of  shares  (^continued)  Section 
Necessity  for  completing  written  transfer  by  entry  or  regis- 
tration in  the  company's  books 853-863 

In  general      855 

Function  of  the  company's  register  of  shareholders  in 
determining  persons  who  are  to  be  officially  rec- 
ognized as  shareholders 856 

Registered  shareholders  as  holders  of  legal  title      .    .    .  857 
Doctrine  that  transfer  not  complete  imtil  registered  858 
Answer  to  argument  that   registration   not  necessary 
unless  affirmatively  required  by  statute  or  by- 
law        859 

Whether  defivery  of  certificate  endorsed  with  transfer 

passes  legal  title 860 

Passing  of  legal  title  without  registration  where  failure 

to  register  is  due  to  company's  fault 861 

Registration  not  necessary  in  order  to  pass  equitable 

title 862 

Whether  registration  necessary  where  transferee  bears 

same  name  as  transferor 863 

What  is  the  proper  book  for  registration  of  transfers    .    .    .  864 
What  entry  amounts  to  registration  of  a  transfer      ....  865 
Power  of  attorney  to  effect  registration  of  transfer  on  be- 
half of  transferor      866 

Issue  of  shares-certificate  to  transferee  or  surrender  of  transferor's 

certificate  not  necessary  in  order  to  pass  complete  title   .    .  867 

Implied  transfers      868 

"Certification"  of  transfers 869 

American  receipts  corresponding  to  English  certifications     .    .    .  870 

Similar  receipts  issued  under  reorganization  schemes 871 

Acceptance  of  transfer  by  transferee 872-879 

Transfer  complete  without  acceptance     .    .  • 872 

Effect  of  renunciation  of  shares  by  transferee 873 

How  acceptance  of  transfer  may  be  proved 874 

Inconvenience  of  trusting  to  parol  proof  of  acceptance     .    .  875 
Regulations  requiring  transfer  to  be  executed  by  transferee 

as  well  as  transferor 876 

Infancy  or  other  disability  of  transferee      877 

Corporations  as  transferees 878 

Fictitious  transferee 879 

Incapacity  of  transferor      880 

Application  of  general  principles  as  to  completeness  of  transfers  to 

certain  special  cases 881—889 

Enumeration  of  five  classes  of  special  cases 881 

(1)  Between  cestui  que  trust  and  purchaser  from  trustee  ....  882 
Where  the  company  is  cestui  que  trust  or  has  some  equity 

against  the  transferor 883 

(2)  Between  donor  and  donee 884 

(3)  Between  successive  transferees  from  the  same  transferor   .    .  885 

(4)  Between  transferee  and  creditors  of  transferor    ....     886-888 

Rights  of  attaching  creditors 886 

Rights  of  trustee  in  bankruptcy 887 

Transfers  in  fraud  of  creditors 888 

672 


§832-§  1011]  SYNOPSIS 

Application  of  general  principles,  etc.  (continued)  Section 
(5)  Transfers  which   ha\e  passed  from  hand  to  hand  —  trans- 
fers in  blank      •         • 889 

Estoppel ' 890-923 

Classification  of  cases  of  estoppel      890 

Estoppel  of  owner  of  shares  to  deny  title  of  person  claiming 

under  a  void  transfer 891-907 

General   principles   wliich  apply   without   reference  to   the 

cause  of  tlie  invalidity  of  the  transfer      891 

Esto{)pel  precluded  by  negligence  of  transferee       .    .    .      892 

Transfers  in  blank 893-903 

Statement  of  problem      893 

English  doctrine 894 

Criticism  of  English  doctrine 895 

American  doctrine 896 

No  estoppel  when  share-certificate  retained  by  trans- 
feror     897 

No  estoppel  unless  transfer  is  regular  on  its  face  ....     898 
Alteration  of  transfer  after  blank  is  filled  up       ....      899 

Transfer  in  blank  by  executors      900 

Transfer  in  blank  by  guardians 901 

Theft  of  certificate  endorsed  with  transfer  in  blank  902-903 
Theft  from  transferor  before  delivery  to  transferee  902 
Theft  from  transferee  or  subsequent  holder  ....      903 

Forged  transfers 904-906 

In  general      904 

Negligence  of  person  whose  name  is  forged 905 

Adoption  of  forged  signature  by  transferor 906 

Altered  transfers 907 

Estoppel  of  company  to  deny  title  of  person  claiming  under  a 

void  transfer 908-923 

Existence  of  estoppel  independent  of  cause  of  invalidity  of 

transfer      908 

Estoppel  by  issue  of  share-certificate 909-921 

In  general      909 

Whether  certificate  estops  company  from  asserting  that 
the  holder  has  lost  his  title,  by  transfer  or  other- 

\\ise,  after  issue  of  certificate 910 

Certificate  issued  to  fictitious  person 911 

In  whose  favor  estoppel  will  be  raised 912-916 

Only  in  favor  of  transferee  who  relied,  and  acted 

reasonably  in  relying,  on  the  certificate      .    .      912 

Mere  volunteers 913 

Estoppel  in  favor  of  the  person  to  whom  the  cer- 
tificate was  issued •.    .     914-921 

When  such  estoppel  will  not  be  raised     ...     914 

When  it  will  be  raised 915 

Whether  person  to  whom  certificate  is  issued 

acts  reasonably  in  relying  thereon       .    .      916 
Requisites  of  certificate  in  order  to  raise  an  estoppel     9 1 7-92 1 
Certificate  must  be  issued  by  authority  of  com- 
pany       917 

Certificate  issued  for  unlawful  purpose 918 

VOL.  I.  —  43  673 


TRANSFER    AISTD    TRANSMISSION  [ChAP.  XV 

Estoppel  (continued)  Section 

Certificate  issued  to  one  of  the  officers  who  sign  it 

on  behalf  of  the  company 919 

Certificates  surrendered  to  company  and  reissued 

without  its  authority 920 

Informal  certificates 921 

Estoppel  otherwise  than  by  issue  of  share-certificate     .      922-923 

In  general      922 

No  estoppel  by  "certification"  of  transfer 923 

Rights  and   habilities   upon   presentation   of   transfer  for   registra- 
tion           924-944 

LiabiUties  of  company 924-939 

Duties  and  rights  of  company  upon  presentation  of  transfer 

for  registration 924-930 

Duty  in  general  to  register  any  valid  transfer  when 

presented 924 

Right  to  regulate  times  at  which  transfers  may  be  reg- 
istered     925 

Right  to  refuse  to  register  transfers  after  insolvency 

of  company 926 

Right  to  delay  for  consideration  of  validity  of  transfer     927 
Right  to  demand  evidence  of  vaHdity  —  production  of 

transferor's  certificate,  etc 928 

Where  transferor  is  trustee  or  other  fiduciary   .    .    .      929 
Right  to  demand  evidence  of  acceptance  by  transferee     930 
To  whom  transfer  should  be  presented  for  registration     .    .      931 
Remedies  against  company  for  wrongfully  refusing  to  reg- 
ister transfer     932-934 

Remedies  of  transferor 932 

Remedies  of  person  selling  shares  under  a  power    .     933 

Remedies  of  transferee 934 

LiabiUty  of  company  for  registering  invalid  transfer   .     935-939 
Company  in  dilemma  when  disputed  transfer  presented 

for  registration  —  interpleader 935 

Right  of  owner  of  shares  to  enjoin  registration  of  invalid 
transfer  or  to  compel  K^ompany  to  cancel  same  if 

registered 936 

Liability  of  company  to  owner  in  damages  for  register- 
ing invalid  transfer      937 

Liability  of  company  for  faihng  to  require  surrender  of 

transferor's  certificate 938 

Estoppel  of  owner  to  proceed  against  company  for  reg- 
istering invalid  transfer 939 

Liability  of  claimant  under  invaUd  transfer  which  is  wrongfully 

registered 940-941 

Liability  to  true  owner  of  the  shares 940 

Liability  to  the  company 941 

Liabihty  of  person  who  presents  invalid  transfer  for  registration     942 
Liability  of  transferor  in  and  about  registration  of  transfer     .    .      943 

Liability  of  transfer  agent  or  clerk 944 

By-laws  and  express  regulations  respecting  transfers 945-962 

Validity  of  by-laws  relating  to  transfers      945 

Regulations  as  to  form  or  manner  of  transfer 946-948 

674 


§  832- §  1011]  SYNOPSIS 

By-laws  and  express  regulations  respecting  transfers  (continued)        Section 

Mandatory  rcprnlations 946 

Directory  rcKulutioiis 947 

Regulation  tliat  sliares  sliall  be  transferable  only  on  the  com- 
pany's books 948 

Waiver  by  company  of  regulations  intended  for  its  benefit  .     94<)-9.50 

In  general      949 

Waiver  of  restrictions  on  shareholder's  right  of  alienation  'JijO 
ReguUitions  authorizing  company  to  reject  transfers  deemed  in- 
imical to  its  interests - 951-952 

Whether  by-laws  prescribing  such  regulations  are  valid    .    .  951 

Operation  and  effect  of  such  regulations  where  valid     .    .    .  952 

Regulations  authorizing  directors  to  prescribe  form  of  transfer    .  953 
Regulations  autliorizing  directors  to  decline  to  register  transfer 

by  shareholder  who  is  indebted  to  the  corporation    .    .    .  954 
Liens  on  shares  for  debts  of  holders  to  the  company     .    .    .      955-961 

When  lien  exists 955 

Nature  and  effect  of  lien  in  general 956 

Waiver  of  lien 957 

Loss  of  lien  otherwise  than  by  waiver      958 

What  is  subject  to  the  lien 959 

What  debts  are  covered  by  the  lien      960 

Enforcement  of  lien 961 

Regulations  giving  company  a  right  of  pre-emption      962 

Rescission  of  transfer  of  shares  for  fraud  of  transferor 963 

Contracts  for  sale  or  transfer  of  shares 964-975 

In  general      964 

Whether  contract  is  several  on  the  part  of  vendors 965 

Whether  non-disclosure  of  contract  for  sale  of  shares  is  a  fraud 

upon  other  persons  interested  in  tlie  company 966 

Description  of  the  shares  to  be  transferred              967 

Statute  of  Frauds 968 

Sales  on  the  stock  exchange  —  usages  of  brokers 969 

When  purchase  money  is  payable 970 

Burden  of  procuring  registration  of  transfer  on  transferee    .    .    .  971 
Obligation  of  purchaser  to  indemnify  vendor  against  liability  as 

shareholder 972 

Implied  warranties  by  vendor 973 

Purchase  on  margin 974 

Specific  performance  of  contracts  for  sale  or  transfer  of  shares   .  975 

Transmission  of  shares 976-984 

Death  of  shareholder 976-981 

In  general  —  rights  and  liabilities  of  executor  or  adminis- 
trator before  entry  of  decedent's  death  in  the  com- 
pany's register  —  mutual  rights  of  specific  and  residu- 
ary^ legatees ' 976 

Registration  of  executor  or  administrator  as  shareholder  977 
Rights  and  liabilities  of  executor  or  administrator  after  reg- 
istration as  shareholder 978 

Devolution  of  title  from  executor  to  legatee 979 

Requisites  of  fonnal  transfer  by  executors      980 

Sales  of  shares  by  executors 981 

Marriage  of  female  shareholder      982 

675 


§  832  TRANSFER   AND   TRANSMISSION  [ChAP.  XV 

Transmission  of  shares  {continued)  Section 

Bankruptcy  of  shareholder 983 

Transmission  or  devohition  under  special  statute 984 

Trusts  of  shares  and  equitable  interests  in  shares      985-994 

Relevancy  of  subject  —  scope  of  treatment 985 

Theory  of  a  trust  applied  to  shares 986 

Tendency  of  American  courts  to  depart  from  this  principle  .  .  987 
The  principle  emphasized  in   England  —  Companies  Act,    1862, 

§  30 988 

Obligation  of  company  to  protect  cestui  que  trust  of  shares  .  .  989 
What  amounts  to  notice  of  existence  and  terms  of  trust      .    .    .     990 

Liability  of  trustee's  bond 991 

Change  of  trustees 992 

Assignments  of  equitable  interests  in  shares 993-994 

In  general      993 

Assignments  by  shareholders  who  have  assented  to  voting- 
trusts,  reorganization  schemes,  etc 994 

Pledges  and  mortgages  or  hypothecation  of  shares 995-1005 

Confusion  in  the  law  of  mortgages  in  general 995 

Difficulty  in  applying  general  principles  of  law  to  mortgages  and 
pledges  of  shares  —  distinction  between  "pledge"  and 

"mortgage"  of  shares 996 

Classification  of  charges  or  liens  upon  shares      997 

(1)  Mere   agreement    that    shares   shall   be    held   as  collateral 

security      998 

(2)  Similar  agreement  coupled  with  dehvery  of  share-certificate, 

without  transfer  or  endorsement  to  creditor 999 

(3)  Delivery  of  share-certificate  coupled  with  transfer  or  endorse- 

ment in  blank       1000-1002 

Rights  of  creditor  with  respect  to  third  persons 1000 

Rights  of  creditor  and  debtor  inter  sese 1001 

Redelivery  of  certificate  to  debtor 1002 

(4)  Transfer  to  creditor  on  the  company's  books  coupled  with 

a   qualification   that   the  shares   are   held  as   collateral 
security  merely 1003 

(5)  Transfer  on  the  company's  books  absolute  in  form    ....    1004 

Parol  evidence  of  terms  of  agreement  between  debtor  and 

creditor      1005 

Co-ownership  of  shares 1006-1008 

Rights  and  liabilities  of  co-owners 1006 

Transfer  to  tenants  in  common,  whether  company  compellable 

to  register 1007 

Joint  ownership  not  evidence  of  trusteeship 1008 

Executory  hmitations  of  shares 1009-1011 

In  general  —  duty  of  company  to  protect  remaindermen  .  .  .  1009 
Liabihty  for  calls  as  between  tenant  for  life  and  remainderman  1010 
Mutual  rights  of  tenant  for  life  and  remainderman  with  respect 

to  dividends,  bonuses,  etc 1011 

§  832.  Transferability  of  Shares.  —  Shares  in  incorporated 
companies  are,  at  common  law  as  well  as  under  modern  incor- 
poration acts,  freely  transferable,  notwithstanding  the  fact  that 

676 


§  S32-§   1011]  THANSFKHS    UF    LEGAL    TITLE  §833 

they  are  choses  in  action,  and  therefore  belong  to  a  class  of  prop- 
erty which  was  generally  inalienable  at  common  law.  In  other 
words,  shares  of  capital  stock  constitute  an  exception  to  the 
rule  that  choses  in  action  are  not  transferable  at  common  law. 
A  statute  authorizing  corporations  to  "render  the  interest  of  the 
stockholders  transferable"  will  not  be  construed  to  abrogate 
this  common-law  rule  so  as  to  make  the  stock  non-transferable 
unless  the  company  adopts  an  enabling  regulation.' 

The  right  of  transfer  is  absolute  and  unfettered  (provided  any 
reasonable  formalities  required  by  the  company  be  observed) 
except  in  so  far  as  it  may  be  cut  down  or  qualified  by  statute  or 
by  the  company's  internal  regulations.  In  England,  the  validity 
of  regulations,  or  articles  of  association,  restricting  the  share- 
holder's otherwise  unfettered  right  of  transfer  has  been  ex- 
pressly adjudged  in  spite  of  objections  founded  upon  the  rule 
against  perpetuities  and  upon  the  principle  of  public  policy 
which  invalidates  restrictions  on  alienation  and  agreements  in 
restraint  of  trade  and  commerce.'  In  many  of  the  United 
States,  on  the  other  hand,  by-laws  restricting  the  freedom  of 
alienation,  as  distinguished  from  by-laws  which  merely  regu- 
late, in  a  reasonable  way,  the  mode  of  alienation,  are  deemed 
contrary  to  public  policy,  and  are  held  void.^  In  those  states, 
therefore,  no  restrictions  upon  the  right  of  alienating  shares  of 
capital  stock  which  transcend  the  limits  of  reasonable  regula- 
tion are  valid  unless  affirmatively  authorized  by  some  statute. 

§  833.  Definition  of  Complete  Transfer  of  Shares  —  Transfer  of 
Legal  Title.  —  A  completed  transfer  of  a  share  invests  the  trans- 
feree with  all  the  rights  and  obligations  incident  to  ownership 
previously  enjoyed  and  borne  by  the  transferor.  The  transfer 
is  complete  when,  and  not  before,  the  transferee  attains  the 
status  of  shareholder  not  merely  with  respect  to  the  transferor 
but  also  with  respect  to  the  corporation.  The  legal  title  to  the 
shares  may  then  be  said  to  pass."    The  most  instructive  analogy 

»  Miller  v.  Farmers'  Milling,  etc.  346;    Fifsher  v.  Essex  Bank,  5  Gray 

Co.  (Nebr.),  110  N.  W.  995.  (Mass.)  373,  378,  where  Shaw,  C.  J., 

»  Borland's  Trustee  v.  Steel  Bros,  said,  "When  a  transfer  is  rightfully 

<fc  Co.  (1901),  1  Ch.  279.  made    and     completed,    it    vests    a 

Accord:  Attorney-General  wJame-  right  in  the  transferee,  not   merely 

son  (1904),  2  Ir.  644.  to  act  in  the  place  of  the  vendor  and 

'  Supra,  §  706  et  seq.  iii  his  name,  but  substitutes  him,  in 

*  Xanney  v.  Morgan,  37  Ch.  D.  all  respects,  as  the  legal  and  only 

677 


§  834  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

is  furnished  by  the  case  of  an  assignment  of  a  term  for  years  in 
real  estate.  The  legal  title  to  the  term  passes  when  the  assignee 
not  merely  acquires  the  rights  and  undergoes  the  liabilities  of 
a  tenant  as  between  himself  and  the  assignor  but  actually  as- 
sumes the  relation  of  tenant  with  respect  to  the  lessor,  all  legal 
formalities  —  the  execution  and  acknowledgment  of  a  deed,  re- 
cording, attornment,  and  the  like  —  having  been  complied  with. 
The  corporation  with  respect  to  an  assignment  of  shares  occu- 
pies a  position  analogous  to  that  of  a  lessor  with  respect  to  an 
assignment  of  the  term. 

§  834.  Transfer  of  Possession  as  Step  in  Transfer  of  Title 
to  Shares.  —  Transfer  of  possession  plays  an  important  part  in 
the  transfer  of  title  to  personal  property  in  general.  Shares, 
being  choses  in  action  and  therefore  intangible  property,  cannot 
be  said,  if  the  proprieties  of  language  be  observed,  to  be  capable 
of  possession.  For  some  purposes,  however,  connected  with 
our  present  subject,  shares  may  be  possessed  constructively  or 
in  law.  For  instance,  an  hypothecation  of  shares  by  a  transfer 
endorsed  upon  the  share-certificate  has  often  been  said  by 
American  judges  to  clothe  the  creditor  with  possession  of  the 
shares  within  the  meaning  of  the  law  of  pledges.  So,  where  a 
married  woman  is  the  owner  of  shares,  an  exercise  of  ownership 
by  the  husband  by  executing  a  transfer  thereof  will  be  deemed 
a  reduction  to  possession  sufficient  to  vest  the  husband  at  com- 
mon law  with  the  absolute  title,  although  the  shares  are  never 
registered  in  his  name  on  the  company's  books.  ^ 

§  835.  Transfer  as  distinguished  from  Transmission  —  From 
Sales.  —  Transfers  should  be  distinguished  from  transmission 
of  shares.    Transfer  implies  a  voluntary  passing  of  title  from  the 

holder  of  the  shares  transferred,  to  Md.  155  (city  stock  not  reduced  to 

the  same  extent  to  which  they  were  possession  by  husband  by  receiving 

before    held    by   the    vendor.      The  dividends  and  demanding  that  the 

title,  therefore,  by  which  such  inter-  stock  be  regisiered  in  his  name,which 

est  is  held,  is  strictly  a  legal  title."  demand  the  city  refused  to  comply 

^  Johnson  V.  Hume,  138  Ala.  56A;  with    unless    the    husband    would 

36  So.  421.  attend  at  the  registration  office  in 

liut   see   Slaymaker   v.    Bank   of  person);    Arnold  v.  Ruggles,  1  R.  I. 

Gettysburg,  10  Pa.  St.  373.  165  (where  the  court  in  holding  that 

Cf.    Burr   v.    Sherwood,    3    Bradf.  shares    had    not    been    reduced    to 

(N.  Y.)  85,  89  (receipt  of  dividends  possession     by    the     husband     em- 

by  the  husband  "only  reduced  the  phasized  the  fact  that  tliey  had  not 

dividends   into  possession  and   not  been  transferred  to  his  name), 
the  stock");     Brown  v.    Bokee,   53 

678 


§S32-§   10111  PARTIAL    TRANSFERS  §836 

transferor  to  the  transferee.  Transmission,  on  the  other  hand, 
is  properly  appHed  to  a  devolution  of  title  by  operation  of  law  — 
for  example,  by  death,  marriage,  or  bankruptcy.'  A  transfer 
must  not  be  confused  with  a  sale.  Thus,  an  assigrmient  of 
shares  to  the  assignor's  sister  in  consideration  of  a  nominal  sum 
and  of  love  and  att'ection,  although  not  a  sale,  is  a  transfer  as 
distinguished  from  a  transmission  of  the  shares.''  So,  an  a.ssign- 
ment  to  the  equitable  owner  from  a  bare  trustee,  in  whose 
name  the  shares  have  been  put  for  convenience,  is  not  a  sale,  ^ 
but  it  clearly  is  a  transfer. 

§  836.  Partial  Transfers  of  Shares.  —  As  already  stated,  a 
complete  and  perfect  transfer  involves  an  assignment  of  all  the 
tfansferor's  rights  of  ownership.  There  may,  of  course,  be  par- 
tial transfers  conveying  some  only  of  those  rights;^  but  such 
partial  transfers  can  operate  only  in  equity,  and  do  not  amount 
to  a  conveyance  of  the  legal  title  to  the  shares.  For  example, 
the  right  to  dividends  is  one  of  the  most  important  rights  inci- 
dent to  the  ownei'ship  of  shares,  yet  an  assignment  by  a  share- 
holder of  his  right  to  receive  dividends  would  not  amount  to  a 
transfer  of  the  legal  title  to  the  shares,  and  would  at  most  con- 
stitute the  assignor  a  trustee  for  the  assignee.^  The  same  thing 
is  true,  speaking  generally,  of  each  of  the  other  rights  which  are 
incident  to  ownership  of  shares  of  stock,  such,  for  example,  as 
the  right  to  vote.  A  transfer  of  the  share  —  that  is,  a  transfer 
of  the  legal  title  to  the  share  —  takes  place,  as  stated  above, 
when  all  the  rights  and  liabilities  of  a  shareholder  are  shifted 
upon  the  transferee  and  when  he  is  substituted  as  a  shareholder 
in  the  place  of  the  transferor  in  the  eyes  of  all  the  world,  and 
particularly  in  the  eyes  of  the  corporation. 

'  Bartoti  V.  London,  etc.  Ry.  Co.,  Div.    575;     69    N.    Y.    Supp.    142; 

24  Q.  B.  D.  77,  88;    Bentham  Mills  State  ex  rel.  Tozer  v.  Probate  Court 

Co.,  11  Ch.  D.  900.  (Minn.),  113N.  W.  888.   Astoexecu- 

-  Copeland  v.  North  Eastern  Ry.  tor\'  limitations  of  shares,  see  infra, 

Co.,  6  E.  &  B.  277.  §  lb09-§  1011. 

'  Victor  a.  Bloede  Co.  v.  Bloede,  84         *  Cf.  Re  Brandreth,  58  N.  Y.  App. 

Md.  129;   34  Atl.  1127;    57  Am.  St.  Div.    575;     69    N.    Y.    Supp.    142. 

Rep.  373:  33  L.  R.  A.  107.  Mortimer  v.  Potter,  213  111.  178;    72 

*  Re  Brandreth,   58  N.   Y.   App.  N.  E.  817. 


679 


§  837  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 


§    837- §    845.       OF   THE   DOCTRINE   THAT   NEITHER    SHARES   NOR 
SHARE-CERTIFICATES    ARE   NEGOTIABLE. 

§  837-§  842.     What  Negotiability  is. 

§  837.  The  two  Elements  of  Negotiability.  —  The  books  often 
state  that  akhough  shares  are  transferable,  yet  neither  the  shares 
themselves  nor  the  certificates  which  represent  them  are  negotia- 
ble.' Such  statements  are  likely  to  prove  misleading  unless  the 
nature,  of  negotiability  be  first  clearly  apprehended.  Negotia- 
bility is  an  9,ttribute  of  certain  choses  in  action  and  consists  of 
two  parts  or  elements  —  first,  an  exception  to  the  rule  that  choses 
in  action  are  non-assignable,  and,  second,  an  exception  to  the 
rule  that  a  transferor  of  personal  property  can  pass  to  an  assignee 
no  greater  legal  title  than  he  himself  possesses.  The  former 
element  or  feature  of  negotiability  is  common  to  all  negotiable 
instruments,  while  the  latter  is  confined  to  instruments  which 
either  by  their  original  tenor  or  by  endorsement  in  blank  are 
payable  to  bearer. 

§  838.  Negotiability  as  an  Exception  to  the  Rule  that  Legal 
Title  to  Choses  in  Action  is  not  transferable  —  Rights  of  Bona  Fide 
Endorsee  for  Value.  —  The  fact  that  a  bona  fide  endorsee  for 
value  takes  commercial  paper  free  of  any  equitable  defences  in 
favor  of  prior  parties  can  readily  be  demonstrated  to  be  due  to 
the  first  element  of  negotiability  —  that  is,  to  be  a  mere  corol- 
lary of  the  proposition  that  negotiable  choses  in  action  differ 
from  other  choses  in  action  in  being,  like  tangible  property, 
freely  transferable.  The  holder  of  legal  title  to  an  ordinary 
chattel,  or  other  tangible  property,  subject  to  some  trust  or 
equity  in  favor  of  a  third  person  can  transfer  the  legal  title  dis- 
charged from  the  trust  or  equity  by  a  sale  to  a  bona  fide  purchaser 
for  value.  The  reason  that  the  same  rule  does  not  apply  to  the 
full  extent  to  the  owner  of  a  non-negotiable  chose  in  action  is 
that,  choses  in  action  being  non-assignable  at  common  law,  an 
attempted  assignment  does  not  confer  legal  title  on  the  assignee 
but  operates  only  as  an  irrevocable  power  of  attorney  to  collect 

'  Weaver  v.  Barden,  49  N.  Y.  286;    Am.  Coal  Co.,  86  Iowa  436;  53  N.  W. 
Hammond  v.  Hastings,  134  U.  S.  401,    291 ;   17  L.  R.  A.  557. 
404-405;    10  Sup.  Ct.  727;   Clark  v. 

680 


§S32-§]()1]]  NON-NEGOTIABILITY  §840 

any  moneys  payable  in  respect  thereof,  and  necessarily  there- 
fore clothes  the  assignee  or  attorney  with  no  greater  rights  against 
the  debtor  or  obligor  than  the  assignor  or  principal  posse.'ised, 
so  that  the  assignee  takes  subject  to  all  ecjuities  of  the  debtor 
or  obligor,  whether  lie  had  notice  of  them  or  not.  As  a  transfer 
or  endorsement  of  a  negotiable  chose  in  action  does  not  operate 
as  a  power  of  attorney  but  as  a  transfer  of  legal  title,  an  en- 
dorsee for  value  takes  discharged  from  all  equitable  defences 
of  prior  parties  of  which  he  had  no  notice.  This  rule  is, 
therefore,  a  mere  consequence  of  the  fact  that  negotial)le  choses 
in  action  are  exempt  from  the  common-law  rule  that  choses  in 
action  are  not  assignable,  and  merely  places  negotiable  choses 
in  action  on  the  same  footing  as  tangible  property. 

§  839.  Shares  have  this  Element  of  Negotiability  with  its 
Consequences.  —  Inasmuch  as  this  important  feature  of  negotia- 
bility is  a  mere  consequence  of  the  fact  that  negotiable  choses 
in  action  are  not  assignable,  it  follows  that  the  same  consequences 
should  attach  to  shares  in  incorporated  companies,  which  are 
also  exempt  from  the  common-law  rule  of  non-assignability. 
Such  is,  indeed,  the  law.  For  although  shares  of  capital  stock 
are  not  negotiable,  yet  being  freely  assignable  they  resemble  in 
this  respect  negotiable  choses  in  action  and  tangible  property 
rather  than  other  non-negotiable  choses  in  action.  In  other 
words,  a  completed  transfer  of  shares  is  a  transfer  of  legal  title, 
and  as  such,  when  made  to  a  purchaser  for  value,  cuts  off  all 
equitable  rights  in  third  persons  '  or  in  the  company  itself  -  of 
which  the  transferee  had  no  notice.^ 

§  840.  Negotiability  as  an  Exception  to  the  Rule  that  a  Seller  of 
personal  Property  can  pass  no  better  legal  Title  than  he  himself  has 
—  Rights  of  Piirchaser  from  a  Thief.  —  The  second  and  more 
peculiar  element  of  negotiability  consists  in  an  exception  to  the 
rule  that  a  possessor  of  personal  property  can  pass  to  an  assignee 
no  better  or  greater  title  —  that  is,  legal  title  —  than  he  himself 
has.  The  only  other  exception,  at  common  law,  to  this  rule  was 
in  the  case  of  a  sale  in  market  overt.    The  exception  which  we 

*  Weaver  v.  Barden,  49  N.  Y.  286  weight    of    American    authority,    a 

(semble) ;    N.   Y.,  etc.  R.  R.  Co.  v.  bona /if/e  purchaser  of  shares  acquires 

Schuyler,  34  N.  Y.  30,  78-81.     See  no  right  to  maintain  a  shareholder's 

infra,  §  882.  bill  on   account   of  transactions  in 

-  See  infra,  §  883.  which  his  assignor  participated  or 

'  Note,    however,    that    by    the  acquiesced.    See  infra,  §  1169. 

681 


§  S41  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

arc  now  considering,  namely,  the  exception  in  the  case  of  nego- 
tiable choses  in  action,  applies  only  to  instruments  which  are 
payable  to  bearer  either  by  their  original  tenor  or  by  virtue  of 
an  endorsement  in  blank.  The  possessor  of  a  negotiable  chose 
in  action  payable  to  order,  unless  he  be  the  payee  —  that  is  to 
say,  unless  he  be  the  holder  of  the  legal  title  —  can  pass  no 
greater  title  than  he  has.  But  in  the  case  of  bearer  paper,  the 
rule  is  different.  If  the  instrument  is  stolen,  the  thief  of  course 
has  no  title  either  at  law  or  in  equity;  but,  nevertheless,  he 
can  pass  an  unimpeachable  title  to  a  bona  fide  purchaser. 

§  841.  Shares  do  not  have  this  Element  of  Negotiability.  — 
Now,  neither  shares  of  stock  nor  share-certificates  have  this 
element  of  negotiability.^  The  shares  themselves,  being  in- 
tangible, are  not  capable  of  manual  possession  or  delivery,  and 
cannot  be  stolen.  An  unauthorized  entry  of  a  transfer  in  the 
company's  books  may  be  deemed  analogous  to  theft  of  tangible 
property;  but  it  is  well  settled  that  such  an  entry  passes  no 
title  and  does  not  affect  the  rights  of  the  true  owner,^  except  that 
he  may,  if  he  so  elect,  treat  the  transaction  as  a  conversion 
of  the  shares.^  In  other  words,  a  thief  of  shares  —  if  a  person 
who  wrongfully  procures  himself  to  be  registered  as  the  owner 
of  shares  which  belong  to  some  one  else  may  be  so  denominated 
—  obtains  no  title  and  can  pass  none  even  to  a  bona  fide  pur- 
chaser. Under  some  circumstances  the  principle  of  estoppel 
may  seem  to  bring  about  exceptions  to  this  rule,  which,  how- 
ever, are  only  apparent. 

§  842.  Share-Certificates  do  not,  and  cannot  by  Endorsement 
in  Blank  be  made  to  have  this  Element  of  Negotiability.  —  Share- 
certificates,  likewise,  are  not  payable  to  bearer,  and  cannot  be 
made  so  payable  by  any  endorsement  thereon  by  the  holder.* 
Consequently,  where  share-certificates  are  stolen,  the  thief  can 
pass  no  title  even  to  a  bona  fide  purchaser,^  unless  indeed  the 
circumstances  are  such  that  the  true  owner  is  estopped  from 

1  Weaver  v.  Barden,  49  N.  Y.  286.    7  Am.  St.  Rep.  73;  2  L.  R.  A.  836; 

*  See  infra,  §  936.  Sherwood  v.  Meadow  Valley  Mining 
»  Infra,  §  937,  §  940.  Co.,  50  Cal.  412;    Barstow  v.  Savage 

*  Colonial  Bank  v.  Cady,  15  A.  C.  Min.  Co.,  64  Cal.  388;  1  Pac.  349; 
267  (headnote  inadequate).  See  49  Am.  Rep.  705  (overruling  Winter 
infra,  §  852.  v.  Belmont  Mfg.  Co.,  53  Cal.  428). 

*  East  Birmingham  Land  Co.  v.  See  infra,  §  889. 
Dennis,   85   Ala.    565;     5   So.    317; 

682 


§  832-§  1011]  NON-NEGOTIABILITY  §  843 

setting  up  his  title  against  the  purchaser.'  It  has  l)een  held 
that  any  custom  of  stock  brokers  to  treat  share-certificates  as  ne- 
gotiable instruments  is  unreasonable  and  void.-  The  true  owner 
may  require  a  bona  fide  purchaser  of  stolen  share-certificates 
to  return  them,  or  if  registered  as  shareholder  to  retransfer  the 
shares;  and  the  fact  that  a  bank  from  whose  custody  the  cer- 
tificates were  abstracted  may  be  paying  the  expenses  of  the 
litigation  does  not  afl'ect  the  true  owner's  right  to  recover  the 
shares.^  Any  transferee  of  a  stolen  share-certificate  is  liable 
for  a  conversion  of  the  shares,  however  innocently  he  may  have 
acted;  and  the  same  is  true  of  a  broker  through  whose  hands 
the  certificate  passes.*  On  the  other  hand,  the  presumption  is 
that  the  possessor  of  a  share-certificate  endorsed  in  blank  is 
legally  entitled  thereto;  and  he  will  not  be  recjuired  to  prove 
his  title  affirmatively  by  showing  that  the  certificate  was  duly 
delivered  by  the  endorser  and  that  it  came  to  his  hands  by  a 
regular  series  of  assignments  without  anv  break  in  the  chain 
by  theft  or  otherwise.^  Share-certificates  not  being  negotiable, 
no  dealing  with  the  certificates  can  pass  any  greater  rights  to  the 
shares  than  if  the  certificates,  regarded  as  mere  pieces  of  paper, 

—  tangible  personal  property,  —  were  the  shares  themselves. 

§  843.      Shares  not  within  Rule  that  Transferee  of  Negotiable 
Instrument  as  Security  for  antecedent  Debt  deemed  Holder  for  Value. 

—  An  incident,  or  test,  of  negotiability  in  many  jurisdictions  is 
that  although,  in  the  case  of  property  in  general,  one  who  takes 
the  same  as  security  for  an  antecedent  debt  is  not  deemed  a 
purchaser  for  value,  yet  the  rule  is  otherwise  in  the  case  of  nego- 
tiable securities.  Shares  or  share-certificates  are  not  negotiable 
within  the  meaning  of  this  rule ;  and  hence  a  person  who  accepts 
share-certificates  as  security  for  a  pre-existing  debt  is  not  deemed 
a  holder  for  value.* 

»  See  §  902,  §  903.  «  Holbrook  v.  New  Jersey  Zinc  Co., 

'  East  Birmingham  Land  Co.  v.  57  N.   Y.   616,   623-624;    Cofferj  v. 

Dennis.  85  Ala.  565;  5  So.  317;  Coffey,  179  111.  283;  53  N.  E.  590. 
7  Am.  St.  Rep.  73;   2  L.  R.  A.  836.         Cf.  Plankinton  v.  Hildehrand,  89 

»  O'Herron    v.    Gray.    168    Mass.  Wise.  209;   61  N.  W.  839. 
573;   47  N.  E.  429;   60  Am.  St.  Rep.         «  National,  etc.  Trust  Co.  v.  Gray, 

411;   40  L.  R.  A.  498.  12  D.  C.  App.  Cas.  276.    Cf.  Kister- 

*  Bercich    v.    Marye.    9    Nevada  book's  Appeal,  127  Pa.  St.  601;    18 

312;   Swimv.   Wilson,  90  Cal.   126;  Atl.    381;     14    Am.    St.    Rep.    868; 

27  Pac.  33;  25  Am.  St.  Rep.  110;   13  Gurley  v.  Reed,  190  Mass.  509,  512; 

L.  R.  A.  605.  77  N.  E.  642;  and  infra,  §  913. 

683 


§  S'44  TRANSFER   AND    TRANSMISSION  [ChaP.  XV 

§  844.  Shares  so  far  Negotiable  as  to  be  Exempt  from  Doctrine 
of  Lis  Pendens.  —  There  is  much  doubt  whether  the  doctrine 
of  constructive  notice  by  lis  pendens  apphes  to  personal  chattels 
or  articles  of  commerce,  and  no  doubt  at  all  that  it  does  not 
apply  to  negotiable  paper.  It  does  not  apply  to  shares  in  the 
capital  of  incorporated  companies.' 

§  845.  Shares  not  within  Doctrine  of  Dearie  v.  Hall.  —  Nego- 
tiable instruments  are  not  subject  to  the  doctrine  laid  down  in 
the  leading  case  of  Dearie  v.  Hall,'  that  of  two  adverse  claim- 
ants to  a  chose  in  action  other  than  the  original  creditor  or 
obligee  he  who  first  gives  notice  of  his  claim  to  the  debtor  or 
obligor  will  prevail.  This  doctrine  as  applied  to  non-negotiable 
choses  in  action  is  accepted  in  England  and  in  some  of  the  United 
States;  but  there  is  much  doubt  whether  it  applies  to  transfers 
of  legal  title  to  shares  in  incorporated  companies.  The  whole 
doctrine  rests,  perhaps,  upon  no  very  satisfactory  ground;  and 
even  if  it  is  to  be  accepted  at  all  it  should  not  be  extended  to 
choses  in  action  of  such  a  very  peculiar  kind  as  shares.^  Indeed, 
the  doctrine  is  purely  an  equitable  one,  whereas  transfers  of 
shares  are  transfers  at  law  as  well  as  in  equity. 


§   846-§  880.       MODE  OF    EFFECTING    A    TRANSFER  OF 
SHARES. 

§  846.  Nature  of  Subject  —  Comparison  with  Conveyancing.  — 
That  branch  of  the  law  which  treats  of  the  methods  by  which 
the  transfer  of  shares  is  effected  is  a  topic  which  might  appro- 
priately be  called  corporate  conveyancing.  Just  as  the  science 
of  conveyancing  treats  of  the  manner  in  which  a  transfer  of  title 

'  Holbrookv.  New  Jersey  Zinc  Co.,  (headnote  inadequate);    Houser   v. 

57  N.  Y.  616;   Davis  v.  MiUer  Signal  Richardson,  90  Mo.  App.  134. 
Co.,   105   III.   App.   657;    American         Note,  however,  that  transfers  of 

Press  Ass'n  v.  Brantingham,  75  N.  Y.  equitable  interests  in  shares  may  be 

App.  Div.  435;   78  N.  Y.  Supp.  305.  subject  to  the  rule  in  Dearie  v.  Hall, 

But  see  Dana  v.  Brown,   1  J.  J.  so    that    the    transferee    who    first 

Marsh.  (Ky.),  304,  306.  notifies  the  tnistee  of  his  claim  may 

^  Dearie  v.  Hall,  3  Russ.  1.  have    prior    right.      Cf.    Houser    v. 

^  Cf.  Pitof  V.  Jo/i?i.son,  33  La.  Ann.  Richardson,  90  Mo.  App.  134;    Holt 

1286;     Continental    Nat.     Bank    v.  v.  Deu;c//,  4  Hare  446  (a  case  relating 

Eliot  Nat.  Bank,  7  Fed.  369,  375-376  to  an  interest  in  British  consols  or 

(headnote  inadequate) ;    Cornick  v.  government  stock).     See  also  infra, 

Richards,   3   Lea   (Tenn.)    1,    16-22  §  993. 

684 


§  832-§   1011]         TRANSFERS    NOT    UNDER    SEAL  §848 

to  real  estate  is  effected,  so  the  subject  which  we  are  now  con- 
sidering rchites  to  the  modes  by  which  a  transfer  of  title  to  shares 
is  accompHshed. 

§  847.  Transfer  by  formal  Deed  of  Assi^ment.  —  In  Eng- 
land, tlie  instrunient  of  transfer  is  often  if  not  usually  a  formal 
deed  of  assignment.  This  deed  is  a  formal  instrument,  entirely 
separate  from  the  share-certificate.  When  the  deed  of  transfer 
is  presented  to  the  company  for  registration  on  its  books,  the 
transferor's  certificate  is  regularly  and  usually  surrendered  to 
the  company ;  but  the  deed  is  not  endorsed  upon  the  certificate 
or  physically  connected  with  it.  Such  a  deed  of  transfer  is  sub- 
ject to  all  the  technical  rules  of  the  common  law  applicable  to 
other  deeds.  For  instance,  authority  to  fill  up  a  material  blank 
left  in  the  instrument  when  sealed  and  delivered  can  only  be 
conferred  by  a  power  of  attorney  under  seal ; '  and  consequently 
a  deed  of  transfer  containing  a  material  blank  —  for  example, 
a  blank  for  the  name  of  the  transferee  —  cannot  pass  legal  title 
to  the  shares.-  Some  diversity  of  opinion  has  existed  among 
English  judges  whether  the  transfer  could  be  validated  by 
estoppel  in  favor  of  a  bona  fide  purchaser  to  whom  the  trans- 
feree after  filling  up  the  blanks  may  have  sold  the  shares.^  Of 
course,  if  the  deed  is  redelivered  by  the  transferor  after  the 
blanks  have  been  filled  up,  then  upon  familiar  principles  the 
instrument  is  valid. ^ 

§  848- §  S.51.     Transfer  by  Writing  not  under  Seal. 

§  848.  In  general.  —  These  technical  rules  of  law  respecting 
deeds  of  transfer  seriously  interfere  with  the  free  alienation  of 
shares  which  is  so  important  in  modern  commercial  or  financial 

'  Hibblewhite    v.     McMorine,     6  Wend.    (N.    Y.)    348,    364-366;   34 

M.  &.  W.  200.  Am.  Dec.  317. 

-  Powell  V.  London  &  Provincial  ^  See  Ex  parte  Swan, 7  C.B.,N. a., 

Bank   (1893),   2  Ch.   555;    Colonial  400;    Swan  v.  North  British  Ausira- 

Bank  v.    Whinney,    11   A.   C.    426;  lasian  Co.,  7  H.  &.  N.  603  (affirmed 

Societe  Generate  de  Paris  v.  Walker,  on  other  grounds,  2  H.  &.  C.  175); 

11    A.    C.    20;     Hibblewhite   v.    Mc-  Tayler    v.    Great    Indian    Peninsula 

Marine,  6  M.  &.  W.  200;    Swan  v.  Ry.  Co.,  4  De  G.  &  J.  559. 

North    British    Australasian    Co.,    2  Cf.  Bridgeport  Bank  v.  New  York, 

H.  &  C.  175.  etc.  R.  R.  Co.,  30  Conn.  231. 

But  see  Bridgeport  Bank  v.  New  *  Cf.  Societe  Generate  de  Paris  v. 

York,  etc.  R.  R.  Co.,  30  Conn.  231;  T]'a/A:cr,  11  A.  C.  20. 
Commercial    Bank    v.    Kortright,    22 

685 


§  849  TRANSFER    AND   TRANSMISSION  [ChAP.  XV 

transactions,  and  particularly  with  the  convenient  practice  of 
executing  transfers  with  a  blank  for  the  name  of  the  transferee. 
The  English  as  well  as  the  American  courts  have  therefore  for- 
tunately held  that  whilst,  particularly  in  the  early  days  of  modern 
incorporated  Joint-stock  companies,  a  deed  of  transfer  was  re- 
garded as  the  normal  method  of  alienation,  yet  a  transfer  by 
simple  instrument  in  wTiting  not  under  seal  is  quite  effective,^ 
unless  the  company's  regulations  require  a  deed,-  even  though 
the  practice  in  the  company  has  been  to  insist  upon  a 
deed.^  The  rigid  common-law  rules  as  to  deeds  are  thus 
escaped. 

§  849.  Disadvantages  of  separating  the  written  Transfer  from 
the  Share-Certificate.  —  Whilst  this  modern  English  method  of 
transferring  shares  by  a  writing  under  the  hand  but  not  under 
the  seal  of  the  transferor  is  much  more  flexible  than  the  older 
method  of  transfer  by  deed,  yet,  inasmuch  as  the  transfer  is 
upon  a  separate  sheet  of  paper  from  the  share-certificate,  there 
is  always  danger  of  inconvenience  in  case  the  two  instruments 
come  into  different  hands.  The  possibilities  of  fraud  are  thus 
increased;  and  the  English  books  contain  a  number  of  cases 
dealing  with  the  relative  rights  of  a  transferee  claiming  under 
such  a  transfer  and  a  person  who  without  knowledge  of  the 
former's  rights  has  got  possession  of  the  share-certificate  —  for 
example,  as  collateral  security  for  a  loan.  Moreover,  there  is 
always  the  possibility  that  the  shares  may  be  misdescribed  in 
the  transfer,  either  accidentally  or  by  fraudulent  design;  and 
in  such  cases  hardship  to  innocent  persons  is  not  unlikely  to 
result.  These  drawbacks  seem  to  be  inseparable  from  the 
English  custom  of  having  the  transfer  upon  a  separate  piece 
of  paper  from  the  share-certificate,  whether  the  transfer  be 
under  seal  or  not. 

§  850.  American  Practice  of  endorsing  Transfer  on  Share-Cer- 
tificate. —  In  America,  all  the  disadvantages  referred  to  in  the 
last  paragraph  have  been  obviated  by  the  simple  expedient  of 
endorsing  the  transfer  upon  the  back  of  the  share-certificate, 

*  Ex  parte  Sargent,   17  Eq.  273;    man  v.  Henderson,  1  Tenn.  Ch.  App. 
Atkinson  v.  Atkinson,  8  Allen  (Mass.)    749. 
15.     Cf.  Fox  V.  Martin,  64  L.  J.  Ch.  ^  ggg  i^fra,  §  946. 

473;  Ortegosa  v.  Brown,  38  L.  T.  145.         *  Ex  parte  Sargent,  17  Eq.  273. 

As  to  an  oral  transfer,  see  Love- 

686 


§832-§1011]       BY    ENDORSEMENT    OF    CERTIFICATE  §851 

which  usually  bears  a  printed  form  of  transfer  to  l>e  filled  out 
and  signed  by  the  transferor.  The  endorsed  transfer  is  rarely 
under  seal,  and  therefore  all  technicalities  of  the  common  law 
respecting  specialties  are  avoided.  ^Moreover,  as  the  transfer 
usually  covers  the  shares  which  are  represented  by  the  certifi- 
cate, and  no  others,  there  is  no  possibility  of  trouble  arising 
from  a  misdescription  of  the  shares  intended  to  be  transferred, 
either  by  mis-stating  their  numl)er  or  the  name  of  the  company. 
Finally,  the  transfer  being  inseparable  from  the  certificate,  no 
question  can  come  up  as  to  the  conflicting  rights  of  the  holder 
of  the  certificate  and  the  holder  of  the  transfer.  This  last  ad- 
vantage of  the  American  system  was  mentioned  and  recognized 
by  Lord  Watson  in  the  House  of  Lords ; '  but  nevertheless  the 
American  method  does  not  seem  to  have  been  adopted  by  any 
English  companies. 

§  85L  Same  Principles  applicable  whether  Transfer  separate 
from  Share-Certificate  or  endorsed  thereon.  —  Transfers  of  shares 
are  governed  by  the  same  principles  whether,  as  in  England, 
they  are  separate  and  distinct  from  the  share-certificate  or 
whether,  as  usually  in  the  United  States,  they  are  endorsed 
upon  it.-  Indeed,  a  transfer  of  shares  in  an  English  company 
endorsed  upon  the  certificate  would  be  quite  as  valid  as  if  it  were 
written  upon  a  separate  paper;  and,  conversely,  in  America,  a 
transfer  disconnected  from  the  certificate  has  the  same  effect 
as  if  endorsed  upon  it.^  The  American  practice  is  one  of  con- 
venience merely.  The  American  system  tends,  however,  to 
emphasize  more  than  the  English  system  the  importance  of  the 
share-certificate,  and  naturally  produces  the  impression  among 

'  Colonial  Bank  v.  Cady,  15  A.  C.  ^  Smith  v.  Savin,  141  N.  Y.  315; 

267,   275.     Said   the   learned   lord:  36N.  E.  338;  DeCaumontv.  Bogcrt, 

"The     system     thus     adopted"—  36  Hun  (N.  Y.)  382;    Mahaney  v. 

that  is,  the  ordinary  American  sys-  Walsh,  16  N.  Y.  App.  Div.  601 ;    44 

tern  of  transfers  endorsed  upon  the  N.    Y.     Supp.    969;      Lipscomb    v. 

share-certificates  —  "has    the  merit  Condon,  56  W.  Va.    416;    49   S.    E. 

of  inseparably  connecting  the  certifi-  392 ;    107    Am.    St.    Rep.    938 ;    67 

cate  witli  tlie  transfer,  and  so  pre-  L.   R.  A.  670  (where  no  certificate 

venting  the  dishonest  creation  of  a  had     been    issued);    Richardson    v. 

legal  right  by  transfer  to  one  person,  Longmont  Supply  Ditch  Co.,  19  Colo, 

and    a    competing    equitable     right  App.  483;   76  Pac.  546. 

by  deposit  of  the    certificate    with  But    see    Tafft   v.    Presidio,   etc. 

another."  R.  R.  Co.,  84  Cal.  131;  24  Pac.  436; 

=>  See  Colonial  Bank  v.  Cady,  15  11  L.  R.  A.  125;  18  Am.  St.  Rep.  166. 
A.  C.  267  (headnote  inadequate). 

687 


?  S52  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

business  men  that  the  certificate  actually  is  the  shares  instead 
of  being  merely  convenient  evidence  of  ownership  of  shares. 


§  852.  Transfer  by  mere  Delivery  of  Certificate  — "  Share 
Warrants."  —  Apart  from  express  statutory  authority,  a  corpor- 
ation has  no  power  to  create  shares  which  shall  be  transferable 
merely  by  delivery  —  in  other  words,  to  issue  certificates  certi- 
fying the  bearer  to  be  the  holder  of  the  shares  represented 
tiiereby.^  To  do  so  is  impliedly  prohibited  by  statutory  provi- 
sions requiring  the  company  to  keep  a  register  of  shareholders 
—  a  provision  which  could  not  be  complied  with  if  shares  were 
made  transferable  by  mere  delivery  of  the  certificate.  To  be 
sure,  in  America,  after  a  certificate  is  endorsed  in  blank,  it 
passes  from  hand  to  hand  much  in  the  same  way  as  commer- 
cial paper  payable  to  bearer ;  but  whilst  in  this  way  as  between 
successive  holders  of  the  certificate,  title  to  the  shares  passes 
by  mere  delivery,  yet  the  legal  title  —  the  only  title  which  the 
company  is  bound  to  recognize  —  remains  in  the  registered 
holder.  It  is  this  legal  title  —  the  title  as  against  the  company  — 
which  cannot  be  made  transferable  by  mere  delivery  of  the  cer- 
tificates." Moreover,  as  stated  above,  transfer  of  a  certificate 
even  when  endorsed  in  blank  passes  no  greater  title  to  the  shares 
than  if  the  paper  on  which  the  certificate  is  printed,  regarded 
as  a  mere  chattel,  were  the  shares  themselves  which  are  repre- 
sented thereby;  and  consequently  a  bona  fide  purchaser  of  the 
en(Jorsed  certificate  from  a  thief  does  not  acquire  a  better  title 
than  the  thief,  as  he  would  do  if  the  certificates  were  negotiable 
by  delivery. 

'  Reuss  V.  Bos,  L.  R.  5  H.  L.  176,  be    made  to    the    effect    that    share- 

191-192,  200;    McEwen  v.  London  certificates    should  be  transferable    to 

Wharves  Co.,  6  Ch.  655.  bearer;  and  that  the  bearer  should  be 

^  "Except  under  the  provisions  entitled  to  be  registered;  but  that  the 

of  the  Companies  Act,  1867,  which  persons  on  the  register  should  alone 

authorize   the   issue    of    share   war-  be  members   of   the   company.    Such 

rants  to  bearer  in  the  case  of  shares  certificates    or   the    share    warrants 

or  stock  fully  paid-up,  shares  trans-  above   referred   to   might   then   be- 

ferable  to  bearer  can  hardly  exist;  come  negotiable  by  usage."  1  Lind- 

for   they    are    not    consistent    wth  ley  on  Companies,  6th  ed.,  656-657. 
the    statutory  enactments    relating         Cf.  Rumball  v.  Metropolitan  Bank, 

to  registers.     But  regulations  might  2  Q.  B.  D.  194,  and  infra,  §  860. 

688 


§  832-§  1011]        ON  THE  company's  books  §  8o3 

In  England,  liowever,  tlie  Companies  Act  of  1867  expressly 
empowers  companies  limited  hy  shares  organized  under  the 
Companies  Acts  to  issue,  for  fully  paid  shares,  certificates  — 
called  share  warrants  -  stating  that  the  hearer  of  the  warrant 
is  entitled  to  the  share  or  shares  therein  specified.'  Similar  pro- 
visions are  found  in  some  other  British  statutes.  By  virtue  of 
these  enactments,  companies  may  make  their  shares  trans- 
ferable Vjv  mere  delivery  of  the  certificate  from  hand  to  hand, 
just  as  bonds  or  debentures  payable  to  Ijearer  are  transferred, 
without  the  necessity  of  registration.  Such  certificates  or  share 
warrants  are  negotiable  irt  the  fullest  sense  of  the  word,  and  if 
lost  or  stolen,  a  bo)ia  fide  purchaser  from  the  thief  gets  a  good 
title.^  In  view  of  the  popularity  in  the  United  States  of  .securi- 
ties such  as  corporation  bonds,  which  are  transferable  by  de- 
livery, and  ownership  of  which  cannot  easily  be  traced  by  tax 
collectors  or  other  in([uisitive  persons,  one  might  not  be  sur- 
prised if  some  state  legislatures  should  authorize  the  issue  of 
securities  like  these-  English  share  warrants ;  but  no  such  law 
is  known  to  be  on  the  statute  books  of  any  state  at  the  present 
time. 

§  853- §   866.      TRANSFER   ON  THE   COMPANY'S   BOOKS  — 
REGISTRATION    OF   TRANSFER. 

§  853.  Transfer  by  mere  Entry  on  the  Company's  Books.  — 
In  view  of  the  principles  which  are  stated  below  as  to  the  func- 
tion in  corporate  conveyancing  of  the  company's  share  register, 
the  simplest  method  of  effecting  a  transfer  of  shares  might  l)e 
tliought  to  be  by  a  mere  entry  in  the  books  of  the  company 
without  the  execution  of  any  previous  transfer.  There  is  no 
reason  to  doubt  that  such  an  entry,  made  by  the  authority  of 
the  transferor,  although  without  any  writing  signed  by  him  or 
by  any  one  as  his  agent,  would  constitute  a  valid  transfer.' 

'  30    &    31    Vict.,  c.   131,    §  27  Oriental  Mills,  17  R.  I.  551;   23  Atl. 

et  seq.  795;   White  v.  Salisbury.  33  Mo.  150. 

'  Webb,  Hale  &  Co.  v.  Alexandria  See  infra.  §  868,  as  to  implied  trans- 

Water  Co.,  93  L.  T.  339,  disposing  of  fers.  and  infra,  §  970. 
doubt    expressed     in    Simmons    v.         Cf.  First  Xat.  Bank  v.  Gifford,  47 

London    Joint    Stock    Bank    (1891),  Iowa  575;    Haynes  v.  Broum  (Okl.), 

1  Ch.  270,296.  89  Pac.  1124  (where  a  statute  pro- 

'  See    American    Nat.    Bank    v.  viding  that  shares  should  be  trans- 
VOL.  I.  —  44                                   669 


§  854  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

Even  if,  as  in  some  of  the  American  States,  a  contract  for  the 
sale  of  shares  be  deemed  to  be  within  the  Statute  of  Frauds,  yet 
an  actual  transfer  on  the  books  of  the  company  even  without 
anv  WTiting  signed  by  the  transferor  would  be  effective;  the 
Statute  of  Frauds  applies  only  to  contracts  for  sale  of  personal 
propertv  and  not  to  transfers  '  completed  by  delivery,  for  which 
an  entrv  in  the  company's  books  is  in  the  case  of  shares  of  capftal 
stock  the  only  possible  substitute  or  equivalent. 

However,  a  transfer  by  a  mere  entry  in  the  books,  though 
le^allv  possible,  is  inconvenient  and  consequently  rare  in  prac- 
tice. In  the  first  place,  the  very  important  fact  of  the  trans- 
feror's assent  to  the  transfer  is  left  to  be  proved  by  parol,  so 
that  if  at  any  time  the  transferor  or  liis  representative  should 
deny  that  the  entry  in  the  books  was  authorized  by  him,  the 
company,  in  order  to  exculpate  itself,  would  be  subject  to  the 
burden  of  estabUshing  such  authority  by  parol  proof, '"  which  in 
convincing  form  might  not  be  readily  forthcoming.  Secondly, 
unless  the  transferor  surrendered  liis  share-certificate,  he  would 
still  retain  the  indicia  of  title  so  that,  as  will  presently  be  more 
fully  explained,  the  company  might  incur  serious  liability  to 
persons  who  might  deal  with  him  on  the  faith  of  the  certificate.^ 
A  transfer  by  mere  entry  in  the  company's  books  is  therefore 
rarely  resorted  to. 

§  854.  Entry  of  Transfer  on  Books  ineffective  unless  made 
by  Authority  of  former  Owner.  —  Of  course,  a  transfer  on  the 
company's  books  is  void,  at  law  and  in  equity,  unless  the  entry 
upon  the  books  is  made  in  pursuance  of  authority  from  the 
transferor.  A  transfer,  though  registered  with  all  possible 
formalities,  is  ineffective  unless  made  by  the  authority  of  the 
supposed  transferor.*     If  for  any  reason  the  entry  is  made  with- 

ferable  on  delivery  of  certificate  and  Div.    205;     70    N.    Y.    Supp.    546 

registration  on  the  company's  books  (holding  a  gift  of  shares  effectuated 

was    thought    to    render    invalid    a  by    mere    entry    in    the    company's 

transfer  on  the  books  without  de-  books  to  be  incomplete), 
livery  of  the  certificate) ;   First  Nat.  '  Cf.   French  v.    White   (Vt.),   62 

Bank  v.   Stribling,    16  Okl.   41;    86  Atl.    35    (where    statute    requiring 

Pac.  512.    See  a.\so  Newell  V.  Willis-  a  transfer  to  be  by   "assignment" 

ton,   1.38  Mass.   240,  243   (where  it  was    held    to  necessitate  a  written 

was    said    obiter    that    registration  transfer). 
would  not  be  effective  unless  there         ^  See  infra,  §  936,  §  937. 
is  a  prior  complete  transfer);    Rich-         ^  See  infra,  §  910. 
ardson  v.   Emmett,  61  N.   Y.   App.         *  France  v.  Clark,  26  Ch.  D.  257. 

690 


M32-§    1011]        NECESSITY    FOR    REGISTRATION  §856 

out  his  authority  —  for  example,  if  the  transferor's  signature 
to  the  transfer  is  a  forgery  —  the  registration  confers  no  title 
whatsoever  upon  the  transferee.'  This  doubtless  is  all  that  is 
meant  by  the  dictum  of  a  learned  judge  that  registration  of  the 
name  of  a  transferee  is  effective  only  in  the  cas'j  of  a  prior  valid 
transfer.-'  Moreover,  registration  of  a  transfer  caimot  confer 
title  unless  the  transferor  had  the  title  to  convey. '  The  transferee 
in  any  of  these  cases  may,  however,  have  valuable  rights  by 
estoppel. ' 

§  855-§  863.     Necessity   for   completing   written    Transfer   hy 
Entry  or  liegisiration  on  the  Company's  Books. 

§  855.  In  general.  —  The  formal  instrument  of  transfer  of 
shares,  whether  it  i)e  under  seal  or  not,  and  whether  it  l)e  sepa- 
rate from  the  certificate  or  endorsed  thereon,  should  as  a  prac- 
tical matter  always  be  followed  by  entry  of  the  transfer  in  the 
company's  books.  It  is  submitted  that  such  an  entry  or  regis- 
tration of  the  transfer  is  required  by  law.  The  consideration 
of  this  {[uestion  involves  a  brief  digression  into  the  law  respect- 
ing the  nature  and  function,  in  general,  of  the  company's  share 
register  or  stock  book. 

§  S.lf).  Function  of  Company's  Register  of  Shareholders  in  de- 
termining the  Persons  who  are  to  be  officially  recognized  as  Share- 
holders. —  Often,  either  by  statute  or  under  by-laws,  the  shares 
are  expressly  made  transferable  only  upon  the  books  of  the  com- 
pany. Even  where  no  such  express  declaration  exists,  some 
statutory  provision,  either  express  or  implied,  requiring  the 
company  to  keep  a  share  register  or  stock  book,  is  usually  to 
be  found ;  and  wherever  a  register  of  shareholders  is  to  be  kept, 
its  very  object  and  purpose  is  to  enable  the  company  to  know 
who  are  its  members  and  to  act  accordingly.  Hence,  the  cor- 
poration should  always  be  protected  in  treating  the  registered 
shareholder  as  the  legal  owner,  either  by  paying  him  dividends,^ 

Cf.  May  V.  Genesee  County  Savings  263.      Cf.   Xeirell  v.   Williston,    138 

Bank,  120  Mich.  330;   79  N.  W.  630.  Mass.  240,  243. 

»  See  infra,    §   904,  as  to  forged  '  Fran<:e  v.  Clark,  26  Ch.  D.  257. 

transfers,  ami  §  8S0,  as  to  transfers  *  See  infra,  §  S90-§  923. 

by  persons  under  disability.  *  See  infra,  §  1369. 

^  France  v.  Clark,  26  Ch.  D.  257,  As  to   dividends   in   liquidation, 

691 


§857 


TRANSFER    AND    TRANSMISSION  [ChAP.  XV 


receiving  his  vote  at  a  general  meeting,*  or  otherwise.-  More- 
over, the  registered  holder  of  shares  is  usually  the  person  who 
is  subject  to  the  liabilities  of  a  shareholder  in  respect  thereof.^ 

§  857.  Registered  Shareholders  as  Holders  of  Legal  Title.  — 
Indeed,  the  generalization  may  be  deduced  that  the  person  who 
is  resristered  as  the  owner  of  shares  is  to  be  deemed  the  holder 
of  the  legal  title :  the  company's  books  as  a  rule  determine  the 
legal  title  to  its  shares.  To  this  principle  there  is  one  important 
exception,  namely,  cases  in  which  the  registry  is  erroneous 
owing  to  the  company's  own  fault  *  —  for  example,  where  the 
company  \\Tongfully  neglects  to  register  a  transfer  which  is  duly 
presented  for  registration.^  Of  course,  a  shareholder  whose 
name  is  stricken  from  the  books,  whether  by  accident  or  design, 
without  his  authority,  does  not  lose  his  shares,  and,  conversely, 
a  person  whose  name  is  inserted  on  the  register  without  his  con- 
sent does  not  become  liable  as  a  shareholder.^  But  in  all  ordi- 
nary cases  ownership  of  shares  does  not  amount  to  complete 
legal  ownership  unless  the  owner's  name  be  entered  on  the  com- 
pany's books.  Persons  other  than  the  registered  holder  can  in 
general  have  no  greater  rights  than  those  of  cestuis  que  trust  or 
equitable,  as  distinguished  from  legal,  owners. 

§  858.  Doctrine  that  Transfer  not  complete  until  registered.  — 
No  traftsfer,  therefore,  can  well  be  deemed  fully  and  in  all  re- 
spects consummated  until  the  transferee's  name  is  entered  as 
a  shareholder  in  the  company's  books  in  the  room  of  the  trans- 
feror.^ A  fortiori,  a  transfer  is  incomplete  until  entered  on  the 
company's  books,  where  a  statute  provides  that  shares  shall  be 
transferable  only  on  the  books  of  the  corporation  in  such  manner 


see  Bath  Savings  Institution  v.  Saga- 
dahoc, 89  Me.  500 ;   .36  Atl.  996. 

'  See  infra,  §  1220. 

2  Cf.  Pray  v.  Todd,  71  N.  Y.  App. 
Div.  391;  75  N.  Y.  Supp.  947;  Hol- 
lister  V.  De  Forest  Wireless  Tel.  Co., 
47  N.  Y.  Misc.  674  (headnote  inade- 
quate) ;  94  N.  Y.  Supp.  504  (corpor- 
ation not  bound  to  allow  unregis- 
tered transferee  of  shares  to  inspect 
its  books). 

But  see  Sylvania,  etc.  Co.  v.  Hoge 
(Ga.),  59  S.  E.  806. 

'  See  supra,  §  764. 

*  See  infra,  §  1221. 


5  See  infra,  §  861. 

9  Welch  V.  Gillelen,  82  Pac.  248; 
147  Cal.  571. 

'  McMurrich  v.  Bond  Head  Har- 
bour Co.,  9  Up.  Can.  Q.  B.  333.  . 

But  see  Sayles  v.  Bates,  15  R.  I. 
342,  346;  5  Atl.  497;  Dain  Mfg. 
Co.  V.  Trumbull  Seed  Co.,  95  Mo. 
App.  144;  68  S.  W.  951;  Crawford 
V.  Provincial  Ins.  Co.,  8  Up.  Can. 
C.  P.  263  (where  the  court  refused 
a  mandamus  to  compel  rcj^stration 
of  a  transfer,  on  the  ground  that 
registration  was  unnecessary). 


692 


§  832- §   1011]        NFXEJ^SITY    FOR    REGISTRATION  §  SCO 

as  the  hy-laios  may  'prescribe  but  where  no  by-laws  are  adopted 
on  the  sul)ject/  A  provision  in  the  share-certificate  refjuirinj^ 
transfers  to  be  registered  would  seem  to  have  the  same  eilect 
as  a  duly  adopted  by-law.-  Some  statutes  go  so  far  as  to  enact 
that  no  transfer  which  is  not  j)romptly  registered  on  the  com- 
pany's books  shall  be  valid  "for  any  purpose"  except  to  render 
the  transferee  liable  for  the  company's  debts.^ 

§  Sr)9.  Answer  to  Argument  that  Registration  not  necessary 
unless  affirmatively  required  by  Statute  or  By-law.  —  Vo  be  sure, 
the  position  is  taken  i)y  some  authorities  that,  at  common  law 
and  apart  from  any  by-laws  or  regulations  on  the  subject,  the 
formality  of  registration  on  the  company's  books  should  not  be 
required  in  the  case  of  a  transfer  of  shares  any  more  than  in  the 
case  of  a  transfer  of  other  personal  property;  but  this  reasoning 
overlooks  the  fact  that  shares  belong  to  a  class  of  property, 
namely,  choses  in  action,  which  is  not  assignable  at  common 
law.  Hence,  there  is,  on  principle,  nothing  to  prevent  a  court 
from  taking  the  position  that  the  same  policy  which  justifies 
in  the  case  of  shares  an  exception  to  the  rule  of  the  non-assigna- 
bility  of  choses  in  action  also  requires  that  a  transfer  of  this 
exceptional  class  of  property  should  not  be  deemed  complete 
at  law  until  entered  on  the  company's  books.  That  position 
is  strongly  reinforced  by  considerations  of  practical  conven- 
ience. At  anv  rate,  some  notice  of  the  transfer  should  be  brought 
home  to  the  company  before  the  novation,  or  substitution  of 
the  transferee  in  place  of  the  transferor,  is  fully  and  legally 
consummated. 

§  860.  Whether  Delivery  of  Certificate  endorsed  with  Transfer 
passes  Legal  Title.  —  ^lany  American  authorities  declare  that, 
even  where  by  statute  or  by-law  shares  are  transferable  only 
upon  the  company's  books,  nevertheless  the  delivery  of  the 
share-certificate  endorsed  in  the  ordinary  way  will  pass  legal 
title  as  between  the  parties.*     It  has  remained  for  a  member 

'  Plumb   v.    Bank   of  Enterprise,         '  Williwns  v.  Mechanics'  Bank,  5 

48  Kans.  484 ;   29  Pac.  699.  Blatclif.  59. 

But  see  Allen  v.  Stewart,  7  Del.         ^  Pueblo  Sav.  Bank  v.  Richardson 

Ch.  287,  297;   44  Atl.  788.  (Colo.),  89  Pac.  799. 

As  to  failure  to  adopt  by-laws  on         *  Carroll    v.    Mullanphy   Savings 

the  suljject  of  transfers,  see  further  Bank,  8  Mo.   App.   249;    Joslyn  v. 

American    Nat.    Bank    v.    Oriental  St.  Paul  Distilling  Co.,  44  },Unn.  183; 

Mills,  17  R.  I.  551;  23  Atl.  795.  46  N.  W.  337  (semble);    Leitch  v. 

693 


§860 


TRANSFER    AND    TRANSMISSION  [ChAP.  XV 


of  the  House  of  Lords  in  a  case  relating  to  a  transfer  of  Ameri- 
can railway  shares  to  explain  what  is  really  meant  by  such  a 
statement  and  to  point  out  that  in  the  bald  form  above  given  it 
is  inaccurate  and  capable  of  misconstruction.  "  Delivery," 
said  Lord  ^Yatson,  referring  to  a  delivery  of  the  certificate 
coupled  with  an  endorsed  transfer  in  blank,  "does  not  invest 
him"  —  i.e.,  the  transferee  —  "with  the  ownership  of  the 
shares  in  the  sense  that  no  further  act  is  required  to  perfect  his 
right.  Notwithstanding  his  having  parted  with  the  certificate 
and  transfer,  the  original  transferor,  who  is  entered  as  owner 
in  the  certificate  and  register,  continues  to  be  the  only  share- 
holder recognized  by  the  company  as  entitled  to  vote  and  draw 
dividends  in  respect  of  the  shares,  until  the  transferee  or  holder 
for  the  time  being  obtains  registration  in  his  own  name.  It 
would,  therefore,  be  more  accurate  to  say  that  such  delivery  passes, 
not  the  property  of  the  shares,  but  a  title,  legal  and  equitable,  which 
will  enable  the  holder  to  vest  himself  with  the  shares  without  risk 
of  his  right  being  defeated  by  any  other  person  deriving  title  from 
the  registered  oiuner."  ^  In  order  that  delivery,  of  the  certificate 
coupled  with  the  endorsed  transfer  should  have  this  effect,  the 
delivery  must  have  been  with  intent  to  pass  title,  unless  the 
registered  owner  is  estopped  from  denying  such  intent,  a  matter 
which  will  be  considered  below.  Some  American  authorities 
state  that  delivery  of  the  certificate  with  the  endorsed  transfer 
confers  only  an  equitable  right;-  but  whilst  such  delivery  may 


Wells,  48  N.  Y.  585;  McNeU  v. 
Tenth  Nat.  Bank,  46  N.  Y.  325, 
331;  7  Am.  Rep.  341;  Comtnercial 
Bank  v.  Kortright,  22  Wend.  (N.  Y.) 
348;  34  Am.  Dec.  317;  Parker  v. 
Bethel  Hotel  Co.,  96  Tenn.  252;  34 
S.  W.  209;  31  L.  R.  A.  706;  Hub- 
bard V.  Bank  of  U.  S.,  12  Fed. 
Cas.  777;  Cherry  v.  Frost,  7  Lea 
(Tenn.)  1. 

Cf.  Johnston  v.  Laflin,  103  U.  S. 
800;  Bank  of  Commerce  v.  Bank  of 
Newport,  63  Fed.  898;  11  C.  C.  A. 
484;  Butler  v.  Montgomery  Grain 
Co.,  85  Mo.  App.  50;  Mahaney  v. 
Walsh,  16  N.  Y.  App.  Div.  601;  44 
N.  Y.  Supp.  969  (holding  that  a 
transferee  claiming  under  a  written 
transfer  not  endorsed  on  the  share- 


certificate  and  never  registered 
might  maintain  trover  against  the 
transferor  for  executing  a  second 
transfer  to  somebody  else). 

'  Colonial  Bank  v.  Cady,  15  A.  C. 
267,  277-278. 

^  Fisher  v.  Essex  Bank,  5  Gray 
(Mass.)  373;  Bercich  v.  Marye,  9 
Nevada  312,  316;  Lippitt  v.  Ameri- 
can Wood  Paper  Co.,  15  R.  I.  141; 
23  Atl.  Ill;  2  Am.  St.  Rep.  886; 
Noble  v.  Turner,  09  Md.  519;  16 
Atl.  124;  Baltimore  Retort,  etc.  Co. 
V.  Mali,  65  Md.  93;  3  Atl.  286;  57 
Am.  St.  Rep.  304;  Bank  of  Com- 
merce's Appeal,  73  Pa.  St.  59;  Tali- 
aferro V.  First  Nat.  Bank,  71  Md. 
200,  214. 


694 


§  832-§   1011]        NECESSITY    FOR    REGISTRATION  §  861 

convey  only  equitable  title  to  the  shares,  it  does  confer  some 
legal  as  well  as  equitahle  rigiits.  The  passage  (juoted  from 
Lord  Watson's  judgment  in  Colonial  Bank  v.  Cady  is  helieved 
to  be  a  sound  and  accurate  statement  of  the  law.  The  conflict 
between  the  various  authorities  upon  this  point  is  largely  a 
dispute   about   words.' 

The  delivery  of  a  certificate  with  a  mere  parol  or  oral  transfer 
will  have  the  same  effect  as  if  the  transfer  were  on  the  certificate 
in  the  usual  way,'  except  where  l)y  statute  or  the  company's 
regulations  transfers  are  required  to  be  in  writing  or  where  the 
case  is  within  the  Statute  of  Frauds. 

§  861.  Passing  of  Legal  Title  without  Registration  where 
Failure  to  register  is  due  to  Company's  Fault.  —  Whilst  registra- 
tion of  a  valid  transfer  invests  the  transferee  w'ith  the  legal 
title,  and  whilst  registration  is  in  general  indispensable  in  order 
to  clothe  the  transferee  with  complete  legal  title,  yet  if  a  failure 
to  register  is  due  to  the  fault  of  the  company,  the  transferee's 
rights  and  liabilities  will  be  the  same  as  if  his  name  had  been 
duly  entered  on  the  register.  In  other  words,  the  legal  title 
to  shares  passes  as  soon  as  an  absolute  right  to  immediate 
registration  accrues  and  is  wrongfully  disregarded  by  the 
company.^ 

'  "Such    a    title    is    sometimes  Berne,  95  N.   Y.   637;    McLean  v. 

called  an  equitable  title  with  an  ir-  Medicine    Co.,    96    Mich.    479;     56 

revocable  power  to  acquire  the  legal  N.  W.  68;    Chemical  Nat.  Bank  v. 

title,  and  sometimes  a  legal  title  as  Colwell,   132  N.   Y.  250;    30  N.   E. 

between  the  parties;    but  this  is  a  644    (where  the  company   kept  no 

question  of  the  proper  use  of  words."  books);    Blooming  Grove  Cotton  Oil 

Fitchburg  Savings   Bank   v.    Torrey,  Co.  v.  First  Xat.  Bank,  56  S.  W.  Rep. 

134  Mass.  239,  242.  552    (Tex.    Civ.    App.);     Hunt    v. 

2  Commonwealtti  v.  Compton,  137  Seeger,    98    N.    W.    91;     91    Minn. 

Pa.  St.  138;    20  Atl.  417;    Walsh  v.  264;    Earle  v.  Carson,  188  U.  S.  42; 

Sexton,  55  Ba.rh.  251.    See  also  infra,  23   Sir{).   Ct.   254;     Earle   v.   Coyle, 

§  884.  97  Fed.  410;  38  C.  C.  A.  226 ;  Equita- 

But   see   Matthews   v.   Hoagland,  ble  Securities  Co.  v.  Johnson  (Cal.), 

48  N.  J.  Eq.  455;  21  Atl.  1054.  85     Pac.     840     (headnote     inade- 

*  Xanney  v.  Morgan,  37  Ch.  D.  quate);     Hayes    v.    Shoemaker,    39 

346,  354  (semble);    Moore  v.  North  Fed.  319. 

Western   Bank    (1891),   2   Ch.    599;         But  see   Perkins  v.   Lyons,    111 

Sargent  v.  Franklin  Ins.  Co.,  8  Pick.  Iowa  192;    82  N.  W.  486;    Pray  v. 

(Mass.)    90;      19    Am.    Dec.    306;  Todd,  71  N.  Y.  App.  Div.  391;    75 

Chouteau  Spring  Co.   v.   Harris,  20  N.   Y.  Supp.  947;    Man  v.   Boykin 

Mo.  382;    Real  Estate  Trust  Co.   v.  (S.  Car.),  60  S.  E.  17  (holding  that 

Bird,   90   Md.    229;     44   Atl.    1048;  transferor    remains    subject    to    lia- 

Robinson  v.  National  Bank  of  Neiv  bilities    of   a    shareholder    altliough 

695 


§8G1 


TRANSFER    AND    TRANSMISSION  [ChAP.  XV 


Where  the  transferee  is  also  an  officer  of  the  company,  de- 
Hvery  of  the  transfer  to  him  as  transferee  and  not  as  an  officer 
of  the  corporation  is  not  equivalent  to  requesting  or  demanding 
registration  of  the  transfer  by  the  company ;  ^  but  the  fact  that 
the  transferor  is  a  director  and  charged  with  the  duty  of  seeing 
that  the  books  are  properly  kept  does  not  prevent  him  from 
beinff  dischargred  from  all  liabilitv  if  the  transfer  is  presented  to 
the  proper  officer  who  states  that  nothing  further  need  be  done 
in  order  to  consummate  the  transfer.-  Of  course,  a  transferee 
does  not,  within  the  meaning  of  this  rule,  have  a  right  to  imme- 
diate registration  unless  the  transferor  had  a  good  title  and  duly 
authorized  registration  of  the  transfer,^  —  in  other  words,  unless 
the  circumstances  are  such  that  an  actual  registration  of  the 
transfer  would,  according  to  the  principles  stated  in  the  fore- 
going paragraphs,  pass  the  legal  title.  And  where  the  directors 
have  a  discretion  to  reject  a  transfer,  a  present  absolute  right 
to  registration,  sufficient  to  clothe  the  transferee  with  legal  title, 
cannot  be  deemed  to  arise  until  the  directors  have  considered 
and  actually  approved  the  transfer.*  In  any  case,  a  corpora- 
tion is  not  bound  to  register  a  transfer  until  the  transferor's 
share-certificate  is  surrendered  or  tendered ;  ^  and  therefore 
until  such  surrender  or  tender,  a  present  absolute  right  to  regis- 


failure  to  register  is  due  to  com- 
pany's own  fault). 

Cf.  Brown  v.  Adams,  5  Biss.  181 
(where  the  court  seems  not  to  have 
had  in  mind  the  rule  of  law  stated 
in  the  text) ;  Isham  v.  Buckingham, 
49  N.  Y.  216;  Plymouth  Bank  v. 
Bank  of  Norfolk,  10  Pick.  (Mass.) 
454;  Ireland  v.  Hart  (1902),  1  Ch. 
522;  Smith  v.  Bank  of  Nova  Scotia, 
8  Can.  Sup.  Ct.  558  (where  in  an 
action  for  calls  a  plea  on  equitable 
grounds  that  defendant  had  trans- 
ferred his  shares  by  a  transfer  which 
the  company  had  improperly  re- 
fused to  register  was  held  good). 

As  to  waiver  of  the  requirement 
of  registration  by  recognizing  a 
transferee  as  shareholder,  see  Upton 
V.  Burnham,  3  Biss.  431.  (an  action 
for  calls);  Cutting  v.  Damerel,  88 
N.  Y.  410;  Laing  v.  Burley,  101  111. 
591  (issue  of  certificate  to  transferee 


equivalent  to  registration) ;  Stewart 
V.  Walla  Walla,  etc.  Pub.  Co.,  1 
Wash.  St.  521;  20  Pac.  605. 

>  Richmond  v.  Irons,  121  U.  S. 
27,  56-59 ;   7  Sup.  Ct.  788. 

Cf.  Earle  v.  Coyle,  97  Fed.  410; 
38  C.  C.  A.  226;  Hamilton  v.  Grant, 
30  Can.  Sup.  Ct.  566  (where  the 
transferor  was  relieved  from  lia- 
bihty  although  the  transfer  had 
never  been  registered,  on  the  ground 
that  the  transferee  had  acted  as  an 
ofTicer,  the  transferred  shares  being 
necessary  to  qualify  him),  affirming 
33  Nova  Scotia  77. 

2  Bracken  v.  Nicol  (Ky.),  99 
S.  W.  920. 

3  Fox  v.  Martin,  64  L.  J.  Ch.  473. 
*  Moore  v.  North  Western  Bank 

(1891),    2    Ch.    599. 

Cf.  Roots  V.  Williamson,  38  Ch. 
D.  485. 

«  See  infra,  §  928. 


696 


§  S32-§   1011]        NECESSITY    FOR    REGISTRATION 


§862 


tration  does  not  accrue  '  nor  does  tlie  legal  title  pa-ss,  unless 
indeed  the  certificate  is  satisfactorily  proved  to  have  been  de- 
stroyed, and  a  suflicient  l)ond  of  indemnity  offered.  More- 
over, a  corporation  is  not  hound  to  register  a  transfer  as  soon 
as  it  is  presented  hut  may  wait  a  reasonai)le  time  to  examine 
into  its  genuineness  and  vahdity;-  and  until  the  lapse  of  such 
reasonable  time  the  company  is  not  in  default  and  the  legal  title 
cannot  he  deemed  to  have  passed.  As  the  company  has  a  right 
to  close  its  books  for  a  reasonable  time  before  a  shareholders' 
meeting,^  the  company  is  not  in  default  for  refusing  to  register 
a  transfer  which  is  presented  while  the  books  are  so  closed.'  If 
by  the  company's  regulations  a  fee  be  required  for  registration 
of  a  transfer,  the  company  is  not  in  default  in  failing  to  register 
a  transfer  unless  the  fee  be  paid  or  tendered.'  So,  if  the  com- 
pany is  forbidden  by  the  revenue  laws  from  registering  an  un- 
stamped transfer,  the  company  is  not  in  default  unless  a  transfer 
presented  for  registration  he  duly  stamped." 

§  862.  Registration  not  necessary  in  order  to  pass  Equitable 
Title.  —  Registration  is,  of  course,  not  necessary  in  order  to 
give  the  transferee  an  equitable  title.  This  is  true  even  when 
a  statute  declares  that  no  transfer  shall  be  effectual,  or  that  no 
transfer  shall  be  effectual  except  as  against  the  transferor  or  his 
administrators,  unless  registered  on  the  company's  books;' 
and  hence  such  a  statute  will  not  avail  a  subsequent  trans- 
feree or  lienor  with  actual  notice  of  the  prior  unrecorded 
transfer.^ 


*  Societe  Generale  de  Paris  v. 
Walker,  11  A.  C.  20. 

*  Societe  Generale  de  Paris  v. 
Walker,  11  A.  C.  20,  41.  See  infra, 
§927. 

3  Infra,  §  925. 

*  Cook  V.  Carpenter  (Pa.),  61  Atl. 
804;   212  Pa.  177. 

*  Giesen  v.  London,  etc.  Mge.  Co., 
102  Fed.  584  (headnote  inadequate) ; 
42  C.  C.  A.  515. 

*  Giesen  v.  London,  etc.  Mge.  Co., 
102  Fed.  584  (headnote  inadequate) ; 
42  C.  C.  A.  515. 

^  Black  V.  Zacharie,  3  How.  483; 
Kellog  v.  Stockwell,  75  111.  68;  John- 
son V.  UnderhUl,  52  N.  Y.  203; 
Shellington  v.  Howard,  53  N.  Y.  371 ; 


Scherck  v.  Montgomery,  33  So.  507; 
81  Miss.  426. 

Cf.  Pueblo  5a?'.  Bank  v.  Richard- 
son (Colo.),  89  N.  W.  799  (where  a 
statute  provided  that  no  transfer 
should  be  vahd  "for  any  purpose" 
except  to  render  the  transferee  liable 
as  shareholder  unless  registered 
within  sixty  days). 

*  Ilotchkiss  V.  Union  Nat.  Bank, 
68  Fed.  76;  15  C.  C.  A.  264;  Prince 
Investment  Co.  v.  St.  Paul,  etc.  Land 
Co.,  68  Minn.  121;   70  N.  W.  1079. 

Cf.  Home  Stock  Ins.  Co.  v.  Sher- 
wood,  72  Mo.  461  (lieadnote  mis- 
leading). 

But  see  First  Nat.  Bank  v.  Hast- 
ings, 7  Colo.  App.  129;  42  Pac.  691. 


697 


§  SG3  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

§  S63.  Whether  Registration  necessary  where  Transferee  bears 
same  Name  as  Transferor,  —  Where  a  transfer  is  made  to  a  per- 
son of  the  same  name  as  the  transferor,  although  convenience 
certainly  dictates  that  some  note  of  the  transfer  should  be  made 
on  the  company's  books,  it  seems  that  no  entry  on  the  register 
is  necessary  in  order  to  vest  the  legal  title  in  the  transferee.  Thus 
-where  shares  standing  in  the  name  of  a  married  woman  passed 
on  her  death  to  the  surviving  husband  by  whom  they  were  given 
to  his  second  wife  who  bore  precisely  the  same  name  as  the 
former  wife,  it  was  held  that,  the  company  having  notice  of  all 
the  above-mentioned  facts,  the  tide  of  the  second  wife  was  com- 
plete without  any  entry  on  the  books  and  without  surrendering 
or  changing  the  certificate  issued  to  the  first  wife.^ 


§  864.  What  is  the  proper  Book  for  Registration  of  Transfers.  — 
In  view  of  the  importance  of  registration  of  transfers  in  the 
company's  books,  it  is  pertinent  to  inquire,  first,  what  book  or 
books  should  be  deemed  for  these  purposes  the  company's  regis- 
tration book,  and  secondly,  what  entries  therein  will  be  deemed 
sufficient.  As  to  the  first  of  these  questions,  it  may  be  said  that 
a  very  informal  or  irregular  book  will  accomplish  the  purpose 
if  no  other  book  is  kept.-  Thus,  the  book  containing  the  stubs 
of  share-certificates  may  be  a  sufficient  share  register.^  "The 
account  in  a  stock  ledger,  showing  the  names  of  the  stock- 
holders, the  number  and  amount  of  the  shares  belonging  to  each, 
and  the  sources  of  their  title,  whether  by  original  subscription 
and  payment  or  by  derivation  from  others,  is  quite  suitable,  and 
fully  meets  the  requirements  of  the  law."  "    On  the  other  hand, 

'  Cotton  V.  WUliams,  65  111.  App.  R.  I.  551;    23  All.  795;    Fisher  v. 

460.  Jones,  82  Ala.  117;   3  So.  13;    U.  S. 

2  Stewart  v.Walta  Walla,  etc.  Pub.  Cast  Iron  Pipe,  etc.  Co.  (N.  J.),  65 
Co.,  1  Wash.  St.  521  (headnote  in-  All.  849  (where  the  cancelled  cer- 
ade'quate) ;   20  Pac.  605.  tificates  were  pasted  in) ;   Perkins  v. 

As  to  the  case  where  the  com-  Lyons,   111    Iowa    192;    82    N.   W. 

pany  keeps  several  share  registers,  486. 

or  stock  books,  not  altogether  har-  But  see  Newell  v.  WUliston,  138 

monious,  see  Noyes  Bros.,  136  Fed.  Mass.  240;   Tourtelotv.  Stoleben,  101 

977,  980  (headnote  inadequate).  Fed.    362.     Cf.    supra,    §    172,  and 

3  Plumb  v.    Bank  of  Enterprise,  infra,  §  1129,  §  1220. 

48  Kans.  484;  29  Pac.  699;   Ameri-         *  National   Bank  v.   Watsontovm 
can  Nat.  Bank  v.  Oriental  MUls,  17    Bank,  105  U.  S.  217,  222. 

698 


§  832-§  1011]       WHAT    AMOUNTS   TO    REGISTKATION 


§  805 


when  once  a  particular  hook  has  been  adopted  either  formally 
or  in  j)ractice  as  the  (•omj)any's  registration  lK)()k,  no  entry  in 
any  other  book  will  be  deemed  a  registration  ot"  the  transfer  un- 
less it  be  intended  that  the  latter  book  shall  supersede  the  former.' 
Thus,  where  a  note  of  a  transfer  is  made  in  a  small  Ixujk  kej)t 
at  the  secretary's  ofhce  with  an  intention  of  entering  it  later  in 
the  large  stock  book  kept  at  another  place,  it  was  held  that  the 
transfer  could  not  be  deemed  to  have  been  regislcicd.- 

§  SGo.  What  Entry  amounts  to  Registration  of  a  Transfer.  — 
As  to  what  entries  in  a  share  register  will  be  deemed  a  sufficient 
registration  of  a  transfer,  little  need  be  said.  Any  entry  indica- 
tive of  an  intention  on  the  part  of  the  company  to  recognize  the 
transferee  as  shareholder  in  the  room  of  the  transferor  with  re- 
spect to  certain  shares  will  suffice.^  The  entry  of  the  transferee 
as  holder  of  shares  bearing  the  same  numbers  as  tho.se  which 
are  still  allowed  to  stand  in  the  name  of  the  transferor  has  been 


'  Cf.  Piiikerton  v.  Manchester, 
etc.  R.  R.  Co.,  42  N.  H.  424,  449 
(where  an  entry  in  the  books  of  a 
transfer  apent  in  a  foreign  state  was 
held  insufficient  on  the  ground  that 
the  law  required  the  record  of  the 
transfer  to  be  made  on  the  books  at 
the  company's  home  office). 

As  to  entries  made  in  books  in  a 
foreign  state,  see  also  Perkins  v. 
Lyons,  111  Iowa  192;  82  N.  W. 
486. 

=  Harpold  v.  Stobart,  4G  Oh.  St. 
397;  21  N.  E.  637;  15  Am.  St.  Rep. 
618.  The  court  saidf  "While  it  is 
not  necessary  that  a  book  of  any 
special  kiiul  be  adopted  for  that  pur- 
pose, yet  when  one  is  selected  and 
used,  that  becomes  the  stock  book, 
and  transfers,  to  be  valid,  must  be 
made  upon  that.  The  object  to  be 
accomplished  by  the  keeping  of  such 
a  book  recjuires  reasonable  cer- 
tainty as  to  its  identity." 

*  See  .\ational  Bank  v.  Watson- 
town  Hank,  10.3  U.  S.  217,  222-223 
(headnote  inadequate) ;  Bank  of 
Commerce  v.  Barik  of  Newport,  63 
Fed.  898,  901-902  (headnote  mis- 
leading); 11  C.  C.  A.  484;  Cham- 
bersburg   Ins.  Co.  v.    Smith,    11   Pa. 

eo9 


St.  120;  Plutnb  v.  Bank  of  Enter- 
prise, 48  Kans.  484  (memorandum 
on  .stubs  of  certificates  sufficient); 
Upton  V.  Burnham,  3  Biss.  431 
(headnote  inadequate);  Stewart  v. 
Walla  Walla,  etc.  Pub.  Co.,  I  Wash. 
St.  521  (headnote  inadequate);  20 
Pac.  605;  Perkins  v.  Lyons,  111  Iowa 
192 ;  82  N.  W.  486  (entry  in  pencil 
on  stub  of  certificate) ;  Fisher  v. 
Jones,  82  Ala.  117,  121-122;  3  So. 
13;  Moore  v.  Marshalltown  Opera- 
House  Co.,  81  Iowa  45;  46  X.  W. 
750. 

Cf.  Cutting  v.  Damerel,  88  N.  Y. 
410;  Northrop  v.  Curtis,  5  Conn. 
246;  Rankin  v.  Fidelity  Trust  Co., 
189  U.  S.  242,  251-252;  23  Sup.  Ct. 
553. 

But  see  Marlborough  Mfg.  Co.  v. 
Smith,  2  Conn.  579;  Northrop  v. 
Newtown,  etc.  Turnpike  Co.,  3  Conn. 
544,  551  (where  it  was  said  that  a 
transfer  is  not  registered  unless 
copied  at  full  length);  Newell  v. 
Williston,  138  Mass.  240. 

As  to  entry  of  a  transfer  "sub- 
ject to  the  rights  of  attaching  credit- 
ors and  othei-s,"  see  State  Ins.  Co. 
V.  Gennett,  2  Tenn.  Ch.  100,  103. 


866 


TRANSFER   AND    TRANSMISSION  [ChAP.  XV 


held  insufficient.'  The  notion  has  been  to  some  extent  preva- 
lent that  a  provision  making  shares  transferable  only  on  the  books 
of  the  company  means  that  the  actual  instrument  of  transfer 
must  be  a  waiting  on  the  company's  books.-  But  the  true  view- 
is  that  such  a  provision  merely  requires  that  some  note  or  record 
of  the  transfer  be  made  on  the  books,  and  that  any  written 
transfer  on  the  back  of  the  certificate  or  elsewhere  is  still  the 
effective  instrument  of  transfer.  Consequently,  the  entry  of  a 
transfer  in  the  company's  books  is  not  the  "execution  of  a 
W'ritten  instrument."  ^ 

§  S66.  Power  of  Attorney  to  effect  Registration  of  Transfer 
on  behalf  of  Transferor.  —  The  ordinary  American  transfer  en- 
dorsed upon  a  certificate  of  stock  is  usually  coupled  with  a  power 
of  attorney  —  or,  to  speak  more  accurately,  comprises  a  power 
of  attorney  —  authorizing  any  one,  the  name  being  usually  left 
blank  in  order  that  the  transferee  may  fill  it  in  at  his  own  con- 
venience, to  apply  for  and  effect  in  the  transferor's  name  a 
transfer  on  the  company's  books.  This  express  power  of  at- 
torney would  seem  to  be  surplusage,  inasmuch  as  the  execution 
of  a  transfer  would  doubtless  of  itself  be  held  to  amount  to  a 
grant  of  implied  authority  to  use  the  transferor's  name  in  de- 
manding registration  of  the  transfer.*  Indeed,  when  once  a 
formal  transfer  has  been  executed,  the  registration  or  entry 
thereof  on  the  company's  books  may  be  accomplished  by  the 
officers  of  the  company  without  any  deputed  authority  from  the 
transferor.^  Moreover,  where  the  name  of  some  particular  per- 
son is  inserted  in  the  power  of  attorney,  yet  if  he  be  unwilling, 
or  neglect,  to  act,  the  rights  of  the  transferee*  will  not  be  preju- 
diced.*'   The  practice  of  giving  these  powers  of  attorney  prob- 


'  Heights  of  Maribyrnong  Estate 
Co.,  22  Vict.  L.  R.  438. 

^  MarlhoroTxgh  Mfg.  Co.  v.  Smith, 
2  Conn.  579 ;  Williams  v.  Mechanics' 
Bank,  5  Blatchf.  59. 

Cf.  Richmx)ndville  Mfg.  Co.  v. 
Prall,  9  Conn.  487;  Northrop  v. 
Curtis,  5  Conn.  246.  Compare  also 
the  English  practice  as  to  Bank  of 
England  stock  and  other  "inscribed  " 
stocks,  Shepherd  v.  Harris  (1905), 
2  Ch.  .310,  315-316. 

*  Pine  V.  Western  Nat.  Bank,  65 
Pac.  690,  692 ;   63  Kans.  462. 


*  Cf.  Plymouth  Bank  v.  Bank  of 
Norfolk,  10  Pick.  (Mass.)  454,  where 
the  transfer  was  to  two  persons  and 
the  power  of  attorney  was  to  one  of 
them  only. 

®  Green  Mount,  etc.  Co.  v.  Bulla, 
45  Ind.  1. 

But  cf.  McFall  v.  Buckeye,  etc. 
Ass'n,  122  Cal.  468;  55  Pac.  253;  68 
Am.  St.  Rep.  47. 

See  also  Mechanics'  Banking 
Ass'n  V.  Mariposa  Co.,  3  Rob.  (N. 
Y.)  395. 

*  Cushman  v.  Thayer  Mfg.  Jew- 


700 


§  832-§  1011]  ISSUE    OF    CERTIFICATE  §867 

ablv  originated  in  the  notion,  which  has  been  shov^Ti  alx)ve  to 
be  unfounded,'  that  a  transfer  on  the  In^oks  means  an  actual 
instrument  of  transfer  in  writing  on  the  company's  IxKjks  and 
is  not  satisfied  by  entering  on  the  books  a  mere  note  or  record 
of  a  transfer.- 

The  power  of  attorney  does  not  have  the  effect  of  connecting 
the  transferor  with  the  person  whose  name  as  attorney  is  sul>- 
sequently  inserted  so  as  to  charge  him  with  the  hitter's  knowl- 
edge of  facts  which  if  communicated  to  the  transferor  would 
invalidate  the  transfer.''  In  one  federal  case,  the  court  said 
that  if  a  failure  to  enter  a  transfer  on  the  company's  books  was 
due  to  the  person  whose  name  was  inserted  in  the  power  of 
attorney,  he  being  an  officer  of  the  corporation,  the  default  was 
attributable  to  him  as  agent  of  the  transferor  and  not  as  agent 
for  the  company,  so  that  the  company  could  not  be  deemed  re- 
sponsible for  the  failure  to  register  the  transfer/  But  such  a 
doctrine  might  be  very  inconvenient  and  indeed  unjust  in  its 
practical  operation;  and  it  is  submitted  that  the  sound  princi- 
ple is  that  the  usual  "power  of  attorney"  connected  with  an 
American  transfer  of  shares  is  Uttle  if  anything  more  than 
matter  of  form.'^ 


§  807.  Issue  of  Share-Certificate  to  Transferee  or  Surrender  of 
Transferor's  Certificate  not  necessary  to  pass  complete  Title.  — 
Of  course  the  issue  of  a  share-certificate  to  the  transferee  is  not 
necessary  in  order  to  effect  a  passage  of  the  legal  title,®  nor  is 
it  necessary  that  the  transferor's  certificate  should  be  surren- 

elry  Co.,  76  N.  Y.  365,  371 ;   32  Am.         *  Re  Bachman,  2  Fed.  Cas.  310. 
Rep.  315.  "  But  see  Taliaferro  v.  First  Nat. 

But  cf.  Re  Bachman,  2  Fed.  Cas.  Bank,  71  Md.  200;  First  Nat.  Bank 

310.  v.  Taliaferro,  T2  Md.   164;    German 

'  Supra,  §  865.  Sav.  Bank  v.  Renshaw,  78  Md.  475, 

'  Compare  the  English  practice  with  which  cases  compare  Kern's 
in  respect  to  consols  and  Bank  of  £'s<a<e,  35  Atl.  231 ;  176  Pa.  St.  373. 
England  stock  and  other  "in-  •  Chouteau  Spring  Co.  v.  Harris, 
scribed"  stock.  Starkey  v.  Bank  of  20  Mo.  382;  National  Bank  v.  Wat- 
England  (1903),  A.  C.  114;  Shep-  sontown  Bank,  105  U.  S.  217,  222 
herd  v.  Harris  (1905),  2  Ch.  310,  (headnote  inadequate);  First  Nat. 
315-316.  Bank  v.  Gifford,  47  Iowa  575;    Ag- 

»  Johnston   v.  Lafiin,  103   U.   S.  ricultural  Bank  v.    Wilson,  24  Me. 

800.  273. 

701 


§  868  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

dered.^  The  certificate  is  merely  evidential  in  its  legal  opera- 
tion ;  and  the  title  of  the  transferee,  if  the  transfer  be  registered, 
is  quite  as  complete,  both  at  law  and  in  equity,  before  it  is  issued 
as  afterwards.  Even  an  express  provision  that  shares  shall  be 
transferable  only  upon  surrender  of  the  transferor's  certificate 
is  construed  as  intended  for  the  company's  benefit,  so  that  a 
failure  to  surrender  the  certificate  would  be  waived  by  registering 
the  transfer.^ 

§  868.  Implied  Transfers.  —  In  some  cases  transfers  can  be 
implied.  For  instance,  a  corporation  accepts  or  attempts  to 
accept  a  surrender  of  shares,  and  subsequently  reissues  the 
shares.  Under  some  circumstances,  where  the  surrender  is, 
as  such,  invalid,  the  transaction  may  be  construed  as  a  transfer 
from  the  original  holder  to  the  second  allottee  so  as  to  release 
the  former  from  liability  as  a  shareholder.^  Such  a  construc- 
tion can,  however,  rarely  if  ever  be  adopted  where  the  company 
has  under  its  control  other  unissued  shares  to  which  the  second 
allotment  can  be  referred.* 

§  869.  "  Certification  "  of  Transfers.  —  The  English  system  of 
separating  the  transfer  from  the  certificate,  operating  in  con- 
junction with  the  greater  length  of  time  that  elapses  in  England 
between  the  presentation  of  a  transfer  for  registration  and  the 
actual  registration  and  issue  of  a  certificate  to  the  transferee,  has 
led  to  what  is  called  "certification"  of  transfers.  That  is,  when 
a  transfer  and  share-certificate  are  deposited  with  the  company 
preliminary  to  the  registration  of  a  transfer,  the  company  issues 
a  receipt  acknowledging,  or  as  it  is  called,  "certifying"  that  a 
share-certificate  has  been  lodged  with  the  company.     The  in- 

'  Boatmen's  Ins.  &  Trust  Co.  v.  41;    Wyman  v.   Bowman,   127  Fed. 

Able,  48  Mo.  136;   Bank  of  Kentucky  257,  266-267;   62  C.  C.  A.  189.    See 

V.  Schuylkill  Bank,  1  Pars.  Eq.  Cas.  also  supra,  §  6.32. 
(Pa.)   180,  247-249;  Colton  v.   WiX-         But  see  Cartvright  v.  Dickinson, 

liams,  65  111.  App.  466.  88  Tenn.  476;    12  S.  W.  1030;    17 

Cf.  supra,  §  853,  infra,  §  882.  Am.  St.  Rep.  910;    7  L.  R.  A.  706; 

2  As  to  the  liability  of  the  com-  Scott  v.  Houpt,  83  S.  W.   1057;    73 

pany  to  a  holder  of  the  certificate  Ark.    78    (wliere   a   creditor   of   the 

for  registering  a  transfer  without  re-  first  allottee  endeavored,  but  with- 

quiring  a  surrender  of  the  certificate,  out  success,  to  attach  the  shares  on 

see  infra,  §  910,  §  938.  tlie  ground  that  the  transfer  was  not 

^  Cf.     Macdonald    Sons     &     Co.  registered  as  required  by  statute). 
(1894),  1  Ch.  89,  101-102;    Ex  parte         *  Wallscourt's    Case,     7    Manson 

Jones,  27  L.  J.  Ch.  666;   Wells  &  Co.  235;    Ex  parte  Jones,  27  L.  J.  Ch. 

V.  Thompson  Mfg.  Co.,  54  Mo.  App.  666. 

702 


§<S32-§1011]  CERTIFICATION  §  SG9 

stnmient  is  a  very  inforinal  one,  consisting  usually  of  some 
such  words  as  these,  "Certificate  for  *  *  *  sliares  has  been 
lodged  at  the  company's  office.  Date  *  *  *^  Secretary."  The 
corporate  seal  is  not  attached.  The  distinction  between  such 
a  certification  and  the  ordinary  share-certificate  is  wide  and 
fundamental. 

As  Lord  Macnaghten  said  in  a  recent  case  in  the  House  of 
Lortls,  "There  is  a  market!  dilt'erence  between  a  certificate  and 
a  certification.  A  certificate  is  under  the  seal  of  the  company. 
By  the  Companies  Act,  1862,  a  certificate  is  made  prima  facie 
evidence  of  title.  If  faith  were  not  given  to  the  solemn  asser- 
tions of  a  company  under  its  common  seal,  'it  would,'  as  Ix)rd 
Cairns  observed  in  Burkinskaw  v.  Nicolls,  'paralyze  the  whole 
of  the  dealings  with  shares  in  public  companies.'  A  certifica- 
tion stands  on  a  different  footing  altogether.  Transfers  are 
never  certified  under  the  company's  seal.  There  is  no  obliga- 
tion on  a  company  to  certify  transfers  at  all.  The  certification 
is  not  passed  by  the  directors  or  brought  before  the  board.  A 
certification,  in  fact,  is  only  recjuired  for  a  temporary'  purpose 
to  meet  the  exigencies  of  business  on  the  Stock  Exchange,  which 
has  stated  days  and  fixed  periods  for  the  different  stages  of  a 
business  transaction  intended  to  be  carried  out  under  its  rides. 
In  dealings  in  shares  not  under  the  rules  of  the  Stock  Exchange, 
a  certification  is  really  out  of  place.  In  such  dealings,  in  the 
case  of  a  purchase,  the  price  would  only  be  paid  in  exchange 
for  the  transfer  and  share-certificate  on  the  completion  of  the 
transaction,  and  not  before."  ' 

Sometimes,  the  "certification"  of  a  transfer  is  done,  not  by  the 
company,  but  by  the  secretary  of  the  stock  exchange.  For  in- 
stance, if  the  holder  of  a  certificate  for  one  hundred  shares  sells 
fiftv,  he  lodges  the  certificate  with  the  secretarv  of  the  stock  ex- 
change,  who  issues  to  him  two  papers  each  certifying  that  a  cer- 
tificate representing  fifty  shares  has  been  lodged.  One  of  these 
papers  the  transferor  delivers  to  the  transferee  as  evidence  of 
his  ownership  of  the  sliares.  The  purchase  money  is  thereupon 
paid;  and  afterwards  the  share-certificate  is  surrendered  to 
the  company,  the  transferee  is  registered  as  a  shareholder  and 
receives  a  certificate  for  his  fifty  sliares,  and  another  certificate 
is  issued  to  the  transferor  for  the  fifty  shares  retained  by  him. 

'  George  Whitcchurch,  Ltd.  v.  Cavanaugh  (1902),  A.  C.  117,  126. 

703 


§  S70  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

§  S70.  American  Receipts  corresponding  to  English  Certifica- 
tions.—  In  America,  "certification"  of  transfers  of  shares  is 
by  that  name  unknown.  Often,  when  a  certificate  and  transfer 
are  presented  at  the  office  of  an  American  corporation  in  order 
that  the  transfer  may  be  registered,  the  company  gives  no 
receipt  or  acknowledgment  of  any  kind  similar  to  an  EngHsh 
certificate  of  transfer.  Sometimes  a  brief,  informal  acknowl- 
edgment of  the  receipt  of  the  share-certificates  is  given.  Such 
receipts  are  often  marked  "non-transferable,"  and  even  where 
thev  are  not,  they  are  not  often  assigned  or  dealt  in  on  the  stock 
exchange  as  representing  the  shares.  The  English  decisions 
relative  to  "certification"  of  transfers  would  be  pertinent  au- 
thority in  respect  to  the  nature  and  legal  effect  of  such  receipts. 

§  871.  Similar  Receipts  issued  under  Reorganization  Schemes. 
—  Instruments  similar  in  some  respects  to  the  English  certifica- 
tions of  transfers  are  often  issued  under  reorganization  or  amal- 
gamation schemes.  Shareholders  deposit  their  shares  with  the 
trust  company  which  is  financing  the  reorganization  or  con- 
solidation, and  receive  in  exchange  certificates  or  scrip.  The 
law  applicable  to  such  scrip  certificates  is  stated  in  another 
place.'  Such  certificates  diiTer  from  English  certifications  in 
that  they  are  usually  intended  to  be  transferred  from  hand  to 
hand  as  quasi-negotiable  instruments. 

§  872- §  879.     Acceptance  of   Transfer  by   Transferee. 

§  872.  Transfer  complete  without  Acceptance.  —  Transfers 
of  shares,  like  other  unilateral  conveyances,  are,  according  to 
the  prevailing  doctrines  of  law,  complete  upon  registration  with- 
out the  necessity  of  any  acceptance  on  the  part  of  the  trans- 
feree.- For  instance,  the  transfer  though  gratuitous  cannot  be 
revoked  by  the  transferor  after  registration  but  before  the  trans- 
feree has  knowledge  of  it  and  therefore  necessarily  before  he 
has  accepted  it.^    Sometimes  the  same  result  is  reached  by  say- 

>  Infra,  §  994.    Cf.  supra,  §  237.  56  L.  R.  A.  728  (transferor  not  re- 

'  But  the  company  cannot  be  re-  lieved  from  liability  as  shareholder 

quired  to  register  a  transfer  unless  where  transferee   has  not   accepted 

the  transferee  is  ready  to  accept  it.  shares  and  transfer  not  registered). 

Infra,  §  930.  ^  Cf.  Standing  v.  Bowring,  31  Ch. 

Cf!    Vermont,   etc.   Co.   v.   Declez,  D.  282  (a  case  of  a  gift  of  consols  or 

etc.  Co.,  135  Cal.  579,  588-589;    67  pubUc  stocks). 

Pac.   1057;    87  Am.  St.  Rep.   143; 

704 


§832-§l0ll]  ACCEPTANCE  §874 

.  ing  that  acceptance  is  presumed  '  from  tlie  supposedly  bene- 
ficial character  of  the  conveyance;  but  this  is  not  the  true 
ground  historically,   nor  is  it  logical. 

§  873.  Effect  of  Renunciation  of  Shares  by  Transferee.  —  Ac- 
cording to  all  the  authorities,  however,  it'  the  traii.st'eree  promj)tly 
repudiates  the  transfer  upon  receiving  notice  thereof,  the  title 
reverts  to  the  transferor  although  the  transfer  has  JK'en  regis- 
tered;- and  it  has  been  held  that  if  u{X)n  such  repudiation  by 
the  transferee,  his  name  is  stricken  from  the  register,  the  trans- 
feror becomes  subject  once  more  to  the  liabilities  of  a  share- 
holder.^ Indeed,  it  might  well  be  questioned  whether  prompt 
repudiation  of  the  transfer  by  the  transferee  would  not  ipso  facto 
revest  the  title  in  the  transferor  and  make  him  liable  as  share- 
liolder  by  relation  as  if  no  transfer  had  been  executed. 

§  874.  How  Acceptance  of  Transfer  may  be  proved.  —  Ac- 
ceptance or  disaffirmance  by  the  transferee  can  often  l>e  proved 
only  by  parol.  Whilst  the  burden  of  disproving  acceptance 
ordinarily  rests  upon  the  party  who  denies  it,*  and  therefore 
upon  a  transferee  who  is  seeking  to  escape  from  the  liabilities 
attaching  to  ownership  of  shares,  yet  the  burden  may  l>e  shifted 
upon  the  company  or  its  liquidator  or  receiver  by  the  trans- 
feree's sworn  testimony  that  he  knew  nothing  of  the  transfer 
until  immediately  before  his  repudiation  thereof. 

The  acceptance  of  dividends  would  ordinarily  be  conclusive 
evidence  of  acceptance.^  So,  a  transferee  who  retains  the  trans- 
fer in  his  possession  and  does  not  notify  the  transferor  of  his  re- 

'  Cf.    Burke  v.   Smith,    16  Wall,  cannot  be  used  to  validate  a  transfer 

390,  400;   South  Texas  Xat.  Bank  v.  from  a  director  to  the  principal  made 

Texas,  etc.  Lumber  Co.  (Texas),  70  and   registered   without   the   knowl- 

S.  W.  768;   30  Tex.  Civ.  App.  412.  edge  of  the  attorney  and  after  the 

'  Ex    parte    Heritage,    9    Eq.    5;  latter  had  accepted  a  share-certifi- 

Simmons  v.  Hill,  96  Mo.  679;     10  cate  from  the  company  itself,  which 

S.  W.  61 ;   2  L.  R.  X.  476.  had  some  unaUotted  shares). 

Cf.  Mechanics  Banking  Ass'n  v.  ^  Ex  parte  Heritage.  9  Eq.  5. 

Mariposa  Co.,  3  Rob.  (N.  Y.)  395;  *  South  Texas  Xat.  Bank  \.  Texas, 

Welch  v.  Gillelen,  82  Pac.  248;    147  etc.  Lumber  Co.   (Texas),  70  S.  W. 

Cal.  571  (transferee  who  repudiated  768;    30  Tex.  Civ.  App.  412;    Finn 

not    liable   as   shareholder);     Sigua  v.  Brown,  142  U.  S.  56,  67;    12  Sup. 

Iron  Co.   V.   Greene,    104   Fed.   854;  Ct.  136.    Cf.  infra,  §  1128. 
44  C.  C.  -\.  221  (transferee  not  liable         But  see  Sigua  Iron  Co.  v.  Greene, 

as  shareholder  without   acceptance  88  Fed.  207,  213-214. 
—  headnote     misleading) ;      Paten's         ^  Ker's  Case,  4  A.  C.  549. 
Case,  5  Ont.  L.  R.  392  (liolding  that         Cf.  Royal  Bank  of  Iiuiia's  Case, 

»  power  of  attorney  to  accept  shares  4  Ch.  252   259. 
VOL.  I.  —  45                                  705 


§  875  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

pudiation  of  it  may  be  estopped  from  denying  his  acceptance.^ 
jNIoreover,  if  one  of  several  trustees  authorizes  the  investment 
of  certain  of  the  trust  moneys  in  the  shares  of  a  certain  company, 
and  the  moneys  are  so  invested  in  the  names  of  all  the  trustees 
he  is  deemed  to  have  accepted,  especially  if  he  has  signed  a 
letter  written  to  the  company  about  the  payment  of  dividends." 
A  sale  by  the  transferee  of  some  of  the  transferred  shares  is  a 
sufKcient  acceptance  of  the  transfer."  Indeed,  the  execution  of 
a  transfer  on  the  back  of  the  share-certificate,  without  receiving 
any  purchase  money  and  without  in  fact  intending  to  claim  any 
interest  in  the  shares,  is  a  sufficient  acceptance  of  the  shares.* 

The  transferee's  acceptance  may  be  shown  although  he  did 
not  explicitly  authorize  the  registration  of  the  transfer.  Thus, 
after  a  contract  of  sale  of  shares  has  been  made,  the  vendor  is 
justified  in  having  the  transfer  registered  without  the  purchaser's 
knowledge,  and  the  latter,  having  accepted  in  advance^  can- 
not escape  liability  as  shareholder  by  subsequently  repudiat- 
ing the  transfer.^  So,  if  a  person  has  given  his  assent  to  a  course 
of  dealing  which  involves  transferring  shares  to  his  name  from 
time  to  time,  acceptance  of  each  particular  transfer  need  not 
be  proved.*  But  a  voluntary  promise  to  purchase  certain  shares 
when  issued  to  the  promisee  contemplates  a  unilateral  contract, 
and  may  therefore  be  withdrawn  at  any  time  before  the  shares 
have  been  registered  in  the  promisor's  name.^ 

If  the  transferee  is  a  director  and  the  shares  are  necessary  to 
qualify  him,  acceptance  is  easily  inferred.^  Indeed,  if  the  trans- 
feree is  an  officer  having  charge  of  the  transfer  book,  it  seems 
that  in  order  to  avoid  the  burdens  of  ownership  of  the  shares 
he  must  cancel  the  transfer  or  enter  a  transfer  back  to  the 
transferor." 

§  875.  Inconvenience  of  trusting  to  Parol  Proof  of  Acceptance. 
—  The  doctrines  of  law  stated  in  the  foregoing  paragraphs  lead 

>  Shepherd  v.  GUlespie,  3  Ch.  764.         «  Nicol's  Case,  3  De  G.  &  J.  387. 

^  Cunningh ame  v.  City  of  Glasgow  ''  Greene  v.  Sigua  Iron  Co.,  88  Fed. 
Bank,  4  A.  C.  607.  203. 

'  Royal  Bank  of  India's  Case,  4  *  Finn  v.  Brown,  142  U.  S.  56; 
Ch.  252,  259.  12  Sup.  Ct.  136. 

*  Kenyan  v.  Fowler,  155  Fed.  107.         »  Finn  v.  Brown,  142  U.  S.  56,  71  ; 

»  Webster  v.  Upton,  91  U.  S.  65,    12  Sup.  Ct.  136. 
71-72. 

Cf.   Greene  v.  Sigua  Iron  Co.,  88 
Fed.  203. 

706 


§  S32-§  1011]  ACCEPTANCE  §  876 

to  the  un<le.sinil)lo  result  that  important  rights  and  serious  lia- 
bilities depend  ii|)()M  the  fact  of  acceptance  or  repudiation  of 
ii  transfer  -  a  fact  which  can  often  be  proved  only  by  parol. 
This  inconvenience  is  greater  in  the  case  of  shares  in  corj)ora- 
tions  than  in  the  case  of  transfers  of  real  estate;  because  in  the 
case  of  land  accej)tance  can  generally  be  proved  by  notorious 
facts  such  as  taking  possession,  collecting  rents,  paying  taxes, 
and  so  ff)rth.  Moreover,  shares  are  liable  to  great  and  sudden 
fluctuations  of  value,  so  that  the  incentive  may  be  strong  to  in- 
duce a  transferee  to  repudiate  a  transfer  when  the  company 
gets  into  difficulties,  although  his  real  intention  at  the  time  was 
to  accept  it.  Upon  the  whole,  the  desirability  of  requiring 
acceptance  on  the  part  of  the  transferee  to  be  evidenced  in 
writing  before  the  transfer  is  registered  is  apparent. 

§  cS7().  Regulations  requiring  Transfer  to  be  executed  by  Trans- 
feree as  well  as  Transferor.  —  Accordingly,  the  regulations  of  some 
English  corporations  require  a  transfer  of  .shares  to  be  executed 
by  the  transferee  as  well  as  by  the  transferor.^  The  reason- 
ableness of  such  a  regulation  is  abundantly  supported  by  the 
considerations  mentioned  in  the  last  paragraph;-  and  some 
American  corporations  might  perhaps  do  well  by  their  by-laws 
to  adopt  a  similar  requirement.^  Such  regulations  are  satisfied, 
so  that  the  transfer  is  valid  and  entitled  to  registration,  if  the 
transferee  enters  into  direct  contractual  relations  with  the  com- 
pany; and  the  transferee  will  be  deemed  for  all  purposes  a 
shareholder  if  he  act  as  such,  although  he  may  never  have  form- 
ally executed  the  recjuired  paper.^  Even  where  the  regulations 
do  not  expressly  require  a  tran.sfer  to  be  executed  by  the  trans- 
feree, yet  if  the  uniform  practice  of  the  company  has  been  to 
require  execution  by  both  parties,  it  may  refuse  to  register  a 
transfer  which  ex  facie  contemplates  execution  both  by  transferor 
and  transferee  but  which  in  fact  is  executed  by  the  former  alone.^ 

'  See  Ortigosa  v.  Brown,  38  L.  T.  for  execution  of  an  acceptance  of  tlie 

145;   Roots  v.  Williamson,  38  Ch.  D.  tran.sfer  before  the  transfer  could  be 

•185.  registered. 

»  Marino's  Case,  2  Ch.  596,  601.  "  lie  Taurine  Co.,  25  Ch.  D.  118 

'  One  inconvenience  conse(iuent  (semble);    Murray  v.   Bush,   L.   R. 

upon  such   a   reguhition    would   be  6  H.  L.  37;    Royal  Bank  of  India's 

that    the    purchaser's    broker    who  Co.se,  4  Ch.  252, 259. 

usually  sees  to  the  registration  of  the  But   see   Ortigosa   v.    Brown,    38 

1  ransfer   would   have   in   each   case  L.  T.  145. 

to  present  the  certificate  to  his  client  *  Marino's  Case,  2  Ch.  596. 

707 


§  877  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

§  877.  Infancy  or  other  Disability  of  Transferee.  —  Inasmuch 
as  transfers  of  shares,  in  the  absence  of  regulations  or  by-laws 
such  as  those  referred  to  in  the  last  paragraph,  are  valid  with- 
out any  acceptance  on  the  part  of  the  transferee  (subject  of 
course  to  his  right  to  repudiate  the  title),  it  would  seem  logically 
to  follow  that  a  transfer  would  not  be  invalidated  because  of 
some  incapacity  on  the  part  of  the  transferee,  such  as  infancy, 
coverture,^  or  the  like.  Accordingly,  the  opinion  was  expressed 
in  an  Irish  case  that  a  transfer  of  shares  to  an  infant,  if  duly 
registered,  will  relieve  the  transferor,  for  the  future,  from  lia- 
bility  as  shareholder ;  ^  but  the  contrary  has  been  held  m  Eng- 
land,^ and  in  America.*  At  any  rate,  the  infant  is  privileged  to 
repudiate  the  shares  when  he  becomes  of  age  and  thus  escape 
liability  in  respect  thereof;  but  unless  on  obtaining  his  major- 
ity he  promptly  repudiates  the  shares,  he  will  be  deemed  to  have 
elected  to  affirm  the  transaction,  and  therefore  will  be  liable  as 
shareholder.''  ^^^lere  the  infant  transferee  comes  of  age  after 
the  commencement  of  the  winding-up,  it  has  been  held  that  he 
cannot,  by  electing  to  affirm,  compel  the  liquidator  to  accept  him 
as  a  shareholder.®  The  inconveniences  of  having  as  share- 
holder a  person  who  may  at  the  end  of  his  minority  elect  either 
to  retain  or  to  repudiate  the  shares  are,  from  the  company's 
point  of  \iew,  so  great,  where  the  shares  are  not  fully  paid  up, 
that  a  corporation  cannot  be  compelled  to  register  a  transfer  of 
partly  paid  shares  to  an  infant.^  The  question  has  been  left 
open  w^hether  the  rule  would  be  the  same  in  the  case  of  fully 
paid  shares ;  ^    but  it  is  submitted  that  a  company  ought  not 

1  Cf.  Christopher  v.    Norvell,  201  ^  Regina    ex    rel.     Blackborn    v. 

U.  S.  216;    26  Sup.    Ct.  502;    Kerr  Midland  Counties  Ry.,  15  Ir.  Com. 

V.    Urie,  86  Md.    72;    37  Atl.    789;  L.  514,  522  (semble). 

63  Am.  St.  Rep.  493;  38  L.  R.  A.  Cf.  Lumsden's  Case,  4  Ch.  31. 

119;    Tucker    v.    Curtin,    148    Fed.  ^  Capper's     Case,     3     Ch.     458; 

929;  78  C.  C.  A.  557  (holding  that  Mann's    Case,    3    Ch.    459  n.      Cf. 

transfer  of  shares  in  ordinary  way  Brown  v.  Black,  8  Ch.  939. 

from  husband  to  wife  is  a  transfer  *  Aldrich  v.   Bingham,    131   Fed. 

through  a  tliird  person,  namely  the  363. 

corporation,  within  the  meaning  of  a  *  Lumsden's  Case,  4  Ch.  31. 

rule  of  Massachusetts  law  by  which  "  Symon's  Case,  5  Ch.  298. 

a  transfer  of  personal  property  from  ^  Regina  ex  rel.  Blackborn  v.  Mid- 

a  liusband  to  his  wife  without  the  land  Counties  Ry.,  15  Ir.  Com.  L.  514. 

intervention    of   a    third    person    is  *  Regina  ex  rel.  Blackborn  v.  Mid- 

constructively  fraudulent  as  against  land  Counties  Ry.,  15  Ir.  Com.  L.  514. 

his  creditors).  521-522. 

708 


§832-§1011]  INCAPACITY    OF    TRANSFEROR  §880 

to  he  coiiiiK'Ucd  to  execute  u  transfer  to  an  infant  whether  the 
shares  are  fully  paid  or  not.  Where  the  transfer  is  nuule  to  an 
infant  as  trustee  or  nominee  of  an  adult,  the  infant's  name  can- 
not he  treated  as  a  mere  alias  for  that  of  the  cestui  qui'  fru.st,  so 
as  to  justify  the  company  or  the  h(juidator  in  putting  the  name 
of  the  cestui  que  trust  on  the  list  of  shareholders.' 

§  878.  Corporations  as  Transferees.  —  If  the  tran.sferee  be 
a  corporation,  and  if  the  acceptance  of  the  transfer  would 
be  ultra  vires,  the  transferee  cannot  compel  the  company  to 
register  the  transfer.-  The  question  whether  .such  a  tTan.sfer,  if 
registered,  will  subject  the  transferee  to  liability  as  a  share- 
holder or  entitle  him  to  rights  of  a  shareholder  is  considered  be- 
low.^ If  a  transfer  of  shares  to  a  corporation  be  presented  for 
registration,  but  before  the  registration  be  actually  completed 
the  transferee  company  is  thrown  into  liquidation,  the  transfer 
is  nevertheless  valid,  and  the  assets  of  the  transferee  company 
are  subject  to  any  liability  attaching  to  the  ownership  of  the 
shares.* 

§  879.  Fictitious  Transferee.  —  A  transfer  to  a  fictitious  trans- 
feree is  wholly  void  even  though  it  be  entered  on  the  company's 
books.^     There  cannot  be  a  transfer  without  a  transferee. 


§  880.  Incapacity  of  Transferor.  —  Any  legal  incapacity  of 
the  transferor  of  course  invalidates  the  transfer.  For  example, 
a  transfer  by  an  infant  is  voidable,  and  if  he  elect  to  disaffirm, 
no  title  passes;  and  if  the  transfer  has  been  registered,  he  may 
compel  the  company  to  reinstate  him  as  shareholder  or  may 
pursue  any  of  the  other  remedies  open  to  a  shareholder  whose 
name  has  been  stricken  from  the  register  in  pursuance  of  an 
invalid  transfer.    The  same  law  applies  to  a  transfer  by  a  lunatic,® 

'  Massey  &  Giffin's  Case  (1907),  191.  As  to  effect  of  sliare-certificate 
1  Ch.  582.     Cf.  supra,  §  767.  in  the  name  of  a  fictitious  person, 

*  Franklin  Bank   v.    Commercial    see  infra,  §  911. 

Bank,  36  Oh.  St.  350;   38  Am.  Rep.         «  Chew  v.  Bank  of  Baltimore,  14 

594.    Cf.  infra,  §  1049.  Md.    299;      McLaughlin     v.     Daili/ 

'  Infra,  §  1034,  §  1049,  §  1231.  Telegraph,    1    Comm.   L.   R.   (Aust.) 

*  Barned's  Banking  Co.,  3  Ch.  105,  243. 

117-1  IS.  As  to  transfers  by  married  women, 

*  MuskingumValley  Turnpike  Co.  see  Dow  v.  Gould,  etc.  Mining  Co.^ 
V.  Ward,  13  Oh.  120;    42  Am.  Dec.    31  Cal.  629. 

709 


§  SSI  TRANSFER    AND    TR.\NSMISSION  [ChAP.  XV 

at  all  events  unless  it  appear  that  he  has  received  full  value  and 
has  not  been  imposed  upon.  All  these  and  similar  questions 
are  governed  by  the  general  law  of  infancy,  Junacy,  coverture, 
etc.,  and  not  by  any  peculiar  principles  applicable  to  shares  in 
incorporated  companies. 


§  S81-§  889.     Application  of  General  Principles  as  to  Complete- 
ness of  Transfers  to  Special  Cases. 

§  881.  Enumeration  of  Five  Classes  of  Special  Cases.  —  The 
principles  which  have  been  set  forth  above  as  to  the  method  of 
making  valid  and  complete  transfers  may  require  to  be  applied 
in  several  classes  of  special  cases  arising  between  various 
parties:  (1)  between  a  cestui  que  trust  and  a  purchaser  from 
the  trustee,  without  notice  of  the  trust;  (2)  between  donee  and 
donor;  (3)  between  successive  transferees  from  the  same  trans- 
feror ;  (4)  between  the  transferor  and  creditors  of  the  transferor, 
or  the  representative  of  creditors  of  the  transferor;  (5)  wheie 
transfers  have  passed  from  hand  to  hand,  like  negotiable  instru- 
ments.    Of  these  in  their  order: 

§  882.  Between  Cestui  Que  Trust  and  Purchaser  from  Trustee. 
—  As  between  a  cestui  que  trust  and  a  purchaser  from  a  misbe- 
having trustee,  the  question  is  simply,  Has  the  purchaser 
acquired  a  legal  as  distinguished  from  an  equitable  right  before 
receiving  notice  of  the  cestui  que  trust's  claim  ?  So  long  as  the 
purchaser's  right  is  equitable  merely,  the  equity  of  the  cestui  qv£ 
trust,  being  prior  in  time,  is  the  stronger  in  law.'  But  in  order 
that  the  bona  fide  purchaser  should  prevail,  it  is  not  necessary 
that  he  should  be  actually  registered  as  shareholder,  or  should 
acquire  the  technical  and  complete  legal  title  to  the  shares  as 
explained  above :  he  will  be  protected  if,  before  learning  of  the 
cestui  que  trust's  claims,  he  gets  possession  of  the  indicia  of 
ownership,  and  clothes  himself  with  authority  sufficient  to 
enable  him  to  procure  registration  without  calling  upon  the 
transferor  to  do  any  further  act.-    This  he  does,  whenever  he 

»  Roots  v.  Williamson,  38  Ch.  D.         *  Dodds  v.  Hills,  2  Hem.  &  Miller, 
485 ;    Moore  v.  North  Western  Bank    424 ;      Winter    v.    Montgomery    Gas- 
(1891),  2  Ch.  .599;    Ireland  v.  Hart    Light  Co.,  89  Ala.  544:    7  So.' 773. 
(1902),  1  Ch.  522.  Vut  so,-  Roots  v.   Willinmsor.,  C3 

710 


§  832-§   1011]        PURCHASERS    FROM    TRUSTEES  §  883 

gets  possession  of  the  share-certificate  witii  a  transfer  in  regular 
and  ordinary  form.'  Consequently,  a  purcliaser  or  mortgagee 
from  a  trustee,  who  pays  his  money  and  receives  the  share- 
certificate  couj)led  with  a  transfer,  without  notice  of  the  trust, 
will  be  preferred  to  the  ccdui  que  trud,  although  he  is  notified  of 
the  latter's  rights  before  presenting  the  transfer  for  registration 
and  thus  actually  clothing  himself  with  complete  legal  title.'-  If 
the  purchiiser  from  the  trustee  is  actually  registered  as  share- 
holder, his  title  is  superior  to  that  of  the  cestui  que  tru^t,  although 
the  share-certificate  may  not  have  been  delivered  to  him  by  the 
trustee,  having  been  in  the  possession  of  the  cestui  que  trust.^ 
The  only  ground  on  which  a  different  result  could  well  be 
reached  would  l)e  that  a  transferee  who  does  not  get  the  share- 
certificate  should  be  charged  with  notice  of  any  rights  of  the 
holder  of  the  certificate. 

§  883.  Where  the  Company  itself  is  Cestui  que  Trust  or  has 
some  Equity  against  the  Transferor.  —  A  special  class  of  cases 
coming  under  the  general  head  which  we  are  now  considering 
is  where  the  purchaser  of  shares  is  sought  to  be  affected  with 
some  equity  which  existed  in  favor  of  the  company  against  his 
transferor.  The  rule  in  such  cases  is  that  a  purchaser  for  value 
of  the  shares  without  notice  of  the  company's  equity  takes 
discharged  therefrom.  Of  course,  if  the  company  allows  the 
transfer  to  be  registered,  it  would  by  so  doing  waive  its  equity. 
But  even  where  registration  is  refused,  the  company  would  be 
estopped  from  setting  up  its  right  against  a  bona  fide  purchaser 
of  the  share-certificate.  Thus,  a  corporation  cannot  refuse  to 
register  a  transfer  because  of  a  lien  in  its  own  favor  which  was 


Ch.  D.  485;   Moore  v.  North  Western  Dougherty,  62  Oh.  St.  589;  57  N.  E. 

Bank  (1891),  2  Ch.  599;    Ireland  v.  455   (where  the  bona  fide  transferee 

Hart  (1902),  1  Ch.  522.  was  "protected  although  he  acquired 

'  Dodds    V.     Hills,    2     Hem.     &  knowledge  of  the  prior  equity  before 

Miller  424 ;     Winter  v.   Montgomery  delivery  of  the  certificates). 
Gas-Light  Co.,  89  Ala.  544 ;  7  So.  773 ;         ^  y^^drfs  v.  Hills,  2  Hem.  &  Miller, 

Salisbury    Mills    v.    Townsend,    109  424. 

Mass.  115;    Anderson  v.  Waco  State         ^  X.  Y.,  etc.  R.  R.  Co.  v.  Schuyler, 

Bank,  92  Te.x.  506;  49  S.  W.  1030;  34  N.  Y.  30,  78-81. 
71  .\m.  St.  Rep.  867;   Ross  v.  South-         Cf.  First  Xot.  Bank  v.  Gifford,  47 

western    R.    R.    Co.,    53    Ga.    514;  Iowa  575  (where  no  certificate  had 

Gurley  v.  Reed,  190  Mass.  509;    77  ever  been  issued  to  the  trustee). 
N.  E.  642. 

Cf.    Dueber,    etc.    Mfg.    Co.     v. 

711 


f 

I: 


§  SS4  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

created  bv  the  transferor,  but  of  which  the  purchaser  of  the 
certificate  had  no  notice.^  Where  the  company  colorably  issues 
shares  for  the  purpose  of  quaHfying  the  holder  as  a  director,  the 
trust  or  equity  in  favor  of  the  company  is  not  regarded  as  of 
great  merit,  so  that  the  company's  claim  will  be  postponed  to 
that  of  a  person  to  whom  the  director  has  agreed  to  sell  or  pledge 
the  shares :  -  the  equities  are  not  deemed  equal,  and  hence  the 
company's  priority  in  point  of  time  is  of  no  avail. 

§  884.  Between  Donor  and  Donee.  —  As  between  a  donee 
and  donor  of  shares  the  rule  to  be  applied  is  that  while  equity 
will  not  aid  an  incomplete  gift,  yet  its  assistance  will  not  be  lent 
to  the  donor  to  enable  him  to  revoke  his  gift.  Consequently,  if 
the  donee  has  obtained  dominion  over  the  shares  so  that  he  can 
perfect  his  rights  without  calling  upon  the  donor  to  do  any 
further  act,  the  gift  will  be  irrevocable  by  the  donor  even  though 
the  technical  legal  title  to  the  shares  may  not  have  been  vested 
in  the  donee  by  registration.  Accordingly,  where  the  donor  has 
delivered  the  share-certificates  to  the  donee  endorsed  in  the 
usual  way,  the  latter's  title  is  so  far  complete  that  nothing  that 
the  donor  can  do  can  impair  it  or  prevent  the  donee  from 
requiring  the  company  to  register  him  as  shareholder;^  and, 
indeed,  even  a  parol  delivery  of  the  certificate  without  any 
endorsement  or  written  transfer  will  have  the  same  eflect.*  If 
no  share-certificates  have  been  issued,  a  gift  by  execution  and 
delivery  of  a  transfer  under  seal  has  been  held  to  be  complete.^ 

»  Trust  &  Savings  Co.  v.  Home  107  N.  W.  935  (where  the  certificate 

Lumber  Co.,  118  Mo.  447;  24  S.  W.  was   delivered  to  a  trustee   for  the 

129.    Cf.  supra,  §  706,  §  707.  donee,  who  was  accordingly  allowed 

-  Dueber,  etc.   Mfg.  Co.  v.  Dough-  to   maintain    a  bill   to  oompel    the 

erty,  62  Oh.  St.  589;  57  N.  E.  455.  trustee   to   transfer   the    shares    to 

3  Grymes  v.  Hone,  49  N.  Y.   17;  her). 
10  Am.  Rep.  313.  But   see   Matthews  v.   Hoagland, 

*  Reed  v.  Copeland,  50  Conn.  472;  48  N.  J.  Eq.  455;  21  Atl.  1054. 
47  Am.  Rep.  663;    Commonwealth  v.         Cf.    Colton   v.    Williams,    65    111. 

Compton,  137  Pa.  St.  138;    20  Atl.  App.    466    (a   peculiar   case   stated 

417;      Walsh    v.    Sexton,    55    Barb,  supra,   §863);  Nicolls  v.  Reid,   109 

(N.    Y.)    251    (gift    mortis    causa);  Cal.  630;  42  Pac.  298. 
Gilkinson  v.   Third  Ave.  R.  R.  Co.,         As  to  gift  from  husband  to  wife, 

47  N.  Y.  App.  Div.  472;    63  N.  Y.  see  Tucker  v.  Curtin,  148  Fed.  929; 

Supp.  792;  Bond  v.  Bean,  72  N.  H.  78  C.  C.  A.  557;   First  Nat.  Bank  v. 

444;  57  Atl.  340;  First  Nat.  Bank  Holland,  ubi  supra. 
V.   Holland,  99   Va.    495;  39  S.   E.         «  De  Caumont  v.  Bogert,  36  Hun. 

126;  86  Am.  St.  Rep.  898;  55  L.  R.  (N.  Y.)  382. 
A.  155;  Larimer  v.  Beardsley  (Iowa), 

712 


§832-§1011]  StCCESSIVE    TRANSFERS  §885 

These  rules  are  not  accepted  in  Maryland,  where  the  courts 
have  adopted  the  doctrine  that  initil  the  donee  has  perfected 
his  title  l)V  havinfr  tjie  transfer  rei^istered,  tlie  donor  niav  revoke 
it,'  and  of  course  his  death  operates  as  a  revocation.  The  rule 
in  England  seems  to  he  tlie  same  as  in  Maryland. - 

It  has  been  said  ii^  New  York  that  the  mere  entry  of  a  transfer 
of  shares  in  the  company's  books  cannot  be  a  complete  gift  unless 
the  donee  be  invested  in  some  further  way  with  dominion  over 
the  shares;^  but  one  may  doubt  whether  this  dictum  emljodies 
sound  law.^ 

In  all  the  United  States  a  mere  voluntary  executory  promi.se 
to  cause  shares  to  be  transferred  may  be  revoked  by  the 
donor.'*  Moreover,  a  delivery  of  the  share-certificates  with 
transfers  endorsed  thereon  to  the  company's  secretary,  coupled 
with  directions  to  hold  the  certificates  subject  to  the  trans- 
feror's order  and  in  case  of  her  death  to  deliver  them  to  the 
transferees  is  clearly  not  a  completed  gift  /?a>r//.v  cau.sa.^ 

§  885.  Between  Successive  Transferees  from  same  Transferor. 
—  Difficult  questions  sometimes  arise  between  successive  trans- 
ferees from  the  same  transferor.  The  refjistered  owner  first 
executes  a  formal  transfer  to  A  and  subsecjuently  but  before 
the  first  transfer  is  presented  for  registration  executes  another 
transfer  to  B.  Neither  transfer  having  been  registered,  who 
has  the  better  right  to  the  shares,  A  or  B  ?  Other  things  being 
equal,  the  first  transferee  has  the  better  right:'  qui  prior  est 
tempore  potior  est  jure.  Wherever  either  by  law  or  by  custom 
transfers  should  be  registered  only  upon  surrender  of  the  cer- 
tificate issued  to  the  transferor,  the  transferee  who  gets  posses- 
sion of  the   certificate   would  seem   to  have   a  stronger  right 

'  Baltimore    Retort,    etc.    Co.    v.         *  Griffin  v.   Knohlock  (Colo.),  77 

Mali,  65  Md.    93;    3  Atl.    286;    57  Pac.  370. 

Am.   St.   Rep.   304;     Pennington  v.         «  A'oWe  v.  Learnerf  (Cal.),  87  Pac. 

Gittings,  2  Gill  &  J.  (Md.)  208.  402;  Noble  v.  Garden,  146  Cal.  225; 

-  Milroy  v.  Lord,  4  De  G.  F.  &  .J.  79  Pac.  883. 
264;  Bartholomew  v.  Memies  (190li),         '  Societe    Generate    de    Paris    v. 

1  Ch.  680  (where  no  written  transfer  Walker,  11  A.  C.  20;   Peat  v.  Clayton 

was    executed);     Moore    v.    Moore,  (1900),  1  Ch.  659.    As  to  the  circiim- 

18  Eq.  474  (holding  also  that  stock  stances   under  which   a   transfer  to 

cannot    be    the    subject    of    a    gift  the  company  it.self  will  be  postponed 

mortis  causa).  in  law  to  a  subsequent  transfer  to  a 

'  Richardson  v.  Emmett,  61  N.  Y.  third  person,  see  Hill  v.  Atoka  Coal, 

App.  Div.  205;   70  N.  Y.  Supp.  546.  etc.  Co.,  21  S.  W.  Rep.  508  (Mo.). 

*  See  supra,  §  853. 

713 


§  885  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

than  a  person  claiming  under  a  prior  transfer  without  the  cer- 
tificate.^ The  faihire  to  dehver  the  certificate  would  be  deemed 
a  suspicious  circumstance  sufficient  to  subordinate  the  rights  of 
the  prior  transferee  to  those  of  the  holder  of  the  certificate.-  If 
a  transferee  who  has  not  possession  of  the  certificate  is  regis- 
tered bv  the  company  as  shareholder,  he  becomes  clothed  with 
complete  legal  title  and  as  a  bona  pde  purchaser  for  value  would 
take  precedence  over  a  person  having  a  mere  equitable  title 
under  another  transfer  either  prior  or  subsequent  to  his  own,' 
unless  the  non-delivery  of  the  certificate  should  be  deemed  so 
suspicious  a  circumstance  as  to  charge  him  with  notice  of  the 
rights  of  the  possessor  of  the  certificate.  A  fortiori,  a  transferee 
to"  whom  the  certificate  is  delivered  and  who  is  duly  registered 
takes  a  better  title  than  a  person  claiming  under  a  prior  unreg- 
istered transfer,  which  was  disconnected  from  the  certificate, 
and  of  which  he  had  no  notice."  At  any  rate,  the  holder  of  the 
certificate  would  have  a  right  against  the  company  by  estoppel,^ 
or  have  a  cause  of  action  for  registering  a  transfer  without  in- 
sisting on  production  of  the  certificate.^ 

These  questions  between  successive  transferees  arise  much 
more  frequently  in  England  than  in  the  United  States;  for  in 
this  country  the  practice  of  endorsing  the  transfer  upon  the 
certificate  itself  is  so  general  and  inveterate  that  one  rarely 
thinks  of  taking  a  transfer  in  any  other  form.    If  the  certificate 

1  Cf  Third  Nat.  Bank  v.  Buffalo  v.  Brantingham,  77  N.  Y.  App.  Div. 
German  Ins.  Co.,  193  U.  S.  581;  24  280;  79  N.  Y.  Supp.  190;  Price  v. 
Sup.  Ct.  524.  Morning  Star  Mining  Co.,   83   Mo. 

=  But  see  Pea<  V.  CTayton  (1906),  App.  470  (headnote  inadequate  — 
1  Ch.  659  (where  the  prior  transfer  where  an  assignee  of  the  right  to 
was  a  general  assignment  for  the  dividends  was  preferred  to  a  sub- 
benefit  of  creditors).  sequent  transferee  of  the  legal  citle, 

3  A'.  Y.,  etc.  R.  R.  Co.  v.  Schuyler,  in  respect  to  dividends  declared  be- 
34  N.  Y.  30,  78-81;  Cady  v.  Potter,  fore  the  legal  title  vested  in  the 
55  Barb.  (N.  Y.)  463.  second  transferee,  but  postponed  to 

But  see  Bridgeport  Bank  v.  him  with  respect  to  all  dividends 
A^.  Y.,  etc.  R.  R.  Co.,  30  Conn.  231.     declared  thereafter). 

Subsequent  cancellation  of  an  But  see  Peat  v.  Clayton  (1906), 
entry  of  a  transfer  on  tlie  books  is  1  Ch.  659  (where  the  entry  of  the 
of  course  quite  nugatory.  Cady  v.  second  transfer  on  the  registry  was 
Potter,  ubi  supra.  subsequently   stricken    out    by    the 

*  Mahany    v.    Walsh,    16   N.    Y.    company). 
App.   Div.    601;    44   N.    Y.    Supp.         '  Infra,  §  910. 
969  6  Infra,  §  938. 

Cf.  Printing  Telegraph  Xews  Co. 

714 


§  832-§  1011]     RIGHTS  OF  transferor's  creditors       §  886 


were  lost  or  destroyed,  the  owner  would  find  himself  unable  to 
obtain  a  purchaser  for  the  shares  without  first  procuring  a  new 
certificate  to  be  issued  to  him  by  the  company.  But  whenever 
cases  arise  of  successive  transfers,  the  principles  above  stated 
are  those  whicli  should  ix'  a])j)lie(l. 

§  880.  Between  Transferee  and  Creditors  of  Transferor  — 
Rights  of  attaching  Creditors.  —  As  between  a  transferee  and  an 
attaching  creditor  of  the  transferor,  it  would  seem  to  be  irmna- 
terial  whether  the  legal  title  or  only  an  ecjuitable  right  has  passed 
to  the  transferee.  In  either  case,  the  attaching  creditor,  not 
being  a  purchaser  for  value,  should  be  subordinated  to  a  prior 
transferee.  For  this  reason,  after  a  transfer  has  been  made  by 
endorsement  and  delivery  of  the  share-certificate,  the  rights  of 
the  transferee  should  certainly  be  held  superior  to  those  of  a 
creditor  of  the  transferor  levying  upon  the  shares  as  his  debtor's 
property,'  even  though  it  be  provided  that  shares  shall  be  trans- 
ferable only  on  the  books  of  the  company.-     The  contrary  has, 


*  Young  v.  South  Tredegar  Iron 
Co.,  85  Tenn.    189;    2  S.  W.  202; 

4  Am.  St.  Rep.  752;  Newberry  v. 
Detroit,  etc.  Iron  Co.,  17  Mich.  141; 
Pitot  V.  Johnson,  33  La.  Ann.  1286; 
Boston  Mtisic  Hall  v.  Cory,  129 
Mass.  435 ;  Scott  v.  Pequonnock  N^at. 
Bank,  21  Blatchf.  203;  Allen  v. 
Stewart.  7  Del.  Ch.  287;  44  Atl.  786; 
Barse  Live  Stock  Co.  v.  Range  Valley 
Cattle  Co.,  16  Utah  59;  50  Pac.  630; 
U.  S.  V.  Vaughan,  3  Bin.  (Pa.)  394; 

5  Am.  Dec.  375;  Commonwealth  v. 
Watmough,  6  Whart.  117;  Finney's 
Appeal,  59  Pa.  St.  398;  Cornick  v. 
Richards,  3  Lea  (Tenn.)  1  (with 
which  compare  State  Ins.  Co.  v.  Sax, 
2  Tenn.  Ch.  507,  and  State  Ins.  Co.  v. 
Gennctt,  2  Tenn.  Ch.  100);  Lipscomb 
V.  Condon,  56  W.  Va.  416;  49  S.  E. 
392;  107  Am.  St.  Rep.  938;  67 
L.  R.  A.  670  (where  no  share-cer- 
tificate had  been  issued  to  the  trans- 
feree); Loveman  v.  Ilender.Hon,  1 
Tenn.  Ch.  App.  749  (where  there  was 
no  written  transfer) ;  Farmers,  etc. 
Bank  v.  Mosher,  100  N.  W.  133; 
94  N.  W.  1003;  68  Nebr.  713; 
Morton  v.  Cowan,  25  Ont.  529. 

*  Masury  v.  Arkansas  Xat.  Bank, 


93  Fed.  603;  35  C.  C.  A.  476;  Broad- 
way Bank  v.  McKlrath,  13  N.  J.  Eq. 
24  ;  Lutid  v.  Wheaton  Roller  Mill  Co., 
50  Minn.  36;  52  N.  W.  268;  36  Am. 
St.  Rep.  623 ;  Wilson  v.  St.  Louis,  etc. 
Ry.  Co.,  108  Mo.  588;  18  S.  W.  286; 
32  Am.  St.  Rep.  624;  Tombler  v. 
Palestine  Ice  Co.,  17  Tex.  Civ.  App. 
596;  43  S.  W.  896;  Colt  v.  Ives, 
31  Conn.  25;  81  Am.  Dec.  161; 
Comeau  v.  Guild  Farm  Oil  Co.,  3 
Daly  (N.  Y.)  218;  Hubbard  v.  Bank 
of  U.  S.,  12  Fed.  Cas.  777  (headnote 
inadequate) ;  Xew  York  Commercial 
Co.  V.  Francis,  83  Fed.  769;  28 
C.  C.  A.  199;  Continental  Xat.  Bank 
V.  Eliot  Xat.  Bank,  7  Fed.  369  (where 
the  creditor  liad  no  notice  of  the 
transfer);  Smith  v.  Am.  Coal  Co., 
7  Lans.  (N.  Y.)  317;  Clark  v.  Ger- 
man Security  Bank,  61  Miss.  611; 
Port  Townsend  Xat.  Bank  v.  Port 
Townsend  Gas,  etc.  Co.,  6  Wash.  597; 
34  Pac.  155;  Seeligson  v.  Brown,  61 
Tex.  114;  Thurber  v.  Crump,  86 
Ky.  408;  6  S.  W.  145;  Mapleton 
Bank  v.  Standrod  (Idaho),  71  Pac. 
119:  8  Idaho  740:  67  L.  R.  A.  656. 
Cf.  Scripture  v.  Francestoum  Soap- 
stone  Co.,  50  X.  H.  571,  where  the 
715 


886 


TRANSFER   AND   TRANSMISSION  [ChAP.  XV 


however,  been  held  in  some  states.'  If  the  transferee  sleeps  on 
his  rights  for  several  years  after  the  shares  are  levied  upon  and 
sold  as  the  property  of  the  transferor,  he  will  be  barred  by 
laches.-  Of  course,  if  the  prior  unrecorded  transfer  is  executed 
in  fraud  of  creditors,  then  upon  familiar  principles  the  subse- 
quent attachment  will  prevail  over  the  fraudulent  conveyance. 


same  result  was  reached  but  only  on 
the  ground  that  the  creditor  had 
actual  notice  of  the  unrecorded 
transfer.  As  to  which,  see  also 
Black  V.  Zacharie,  3  How.  483; 
Xicollet  Xat.  Bank  v.  City  Bank, 
38  Minn.  85;  35  N.  W.  577;  8  Am. 
St.  Rep.  643;  Cheever  v.  Meyer,  52 
Vt.  66;  Weston  v.  Bear  River,  etc. 
Co.,  6  Cal.  425;  Xaglee  v.  Pacific 
Wharf  Co.,  20  Cal.  529;  People  v. 
Elmore,  35  Cal.  653;  Bridgewater 
Iron  Co.  V.  Lissberger,  116  U.  S.  8; 
6  Sup.  Ct.  241  (a  case  originating  in 
Massachusetts  and  applying  the  law 
of  that  state);  May  v.  Cleland,  117 
Mich.  45;  75  N.  W.  129;  44  L.  R.  A. 
163  (the  purchaser  at  the  sheriff's 
sale  having  notice  of  the  transfer) ; 
Rogers  v.  Stevens,  8  N.  J.  Eq.  167 
(the  purchaser  having  notice  of  the 
transfer). 

'  Fisher  v.  Essex  Bank,  5  Gray 
(Mass.)  373;  Fort  Madison  Lumber 
Co.  V.  Batavian  Bank,  71  Iowa  270; 
32  N.  W.  336;  60  Am.  Rep.  789 
(the  attaching  creditor  having  no 
notice  of  the  assignment) ;  State 
ex  rel.  Koons  v.  First  Nat.  Bank,  89 
Ind.  302;  People's  Bank  v.  Gridley, 
91  III.  457;  Buttrick  v.  Nashua,  etc. 
R.  R.  Co.,  62  N.  H.  413;  13  Am.  St. 
Rep.  578  (where  the  attaching 
creditor  had  no  notice  of  the  trans- 
fer); Re  Murphy,  51  Wise.  519;  8 
N.  W.  419 ;  Weston  v.  Bear  River,  etc. 
Co.,  5  Cal.  186;  63  Am.  Dec.  117 
(limited  by  Weston  v.  Bear  River,  etc. 
Co.,  6  Cal.  425,  to  cases  where  the 
creditor  is  without  notice  of  tlie 
transfer,  and  followed  with  some 
reluctance  in  Naglee  v.  Pac.  Wharf 
Co.,  20  Cal.  529);  Conway  v.  John, 
14  Colo.  30;  23  Pac.  170;   Williams 


v.  Mechanics'  Bank,  5  Blatchf.  59; 
Oxford  Turnpike  Co.  v.  Bunnell,  6 
Conn.  552;  Skowheqan  Bank  v. 
Cutler,  49  Me.  315;  Ottximwa  Screen 
Co.  v.  Stodghill,  103  Iowa  437;  72 
N.  W.  669  (where  the  creditor  had 
notice  of  the  transfer  prior  to  the 
levy);  Perkins  v.  Lyons,  111  Iowa 
192;  82  N.  W.  486  (where  the 
creditor  likewise  had  notice) ;  Sinv- 
mons  v.  Hill,  96  Mo.  679;  10  S.  W. 
61;  2  L.  R.  A.  476  (where  the 
creditor  had  no  notice  of  the 
transfer). 

Cf.  Sargent  v.  Franklin  Ins.  Co., 
8  Pick.  (Mass.)  90,  99;  19  Am.  Dec. 
306;  Andrews  v.  Worcester,  etc, 
R.  R.  Co.,  159  Mass.  64;  33  N.  E. 
1109;  Coleman  v.  Spencer,  5  Blackf. 
(Ind.)  197;  First  Nat.  Bank  v. 
Hastings,  7  Colo.  App.  129 ;  42  Pac. 
691 ;  Isbellv.  Graybill,  19  Colo.  App. 
508;  76  Pac.  550;  Sibley  v.  Quin- 
sigamund  A' at.  Bank,  133  Mass.  515; 
Farmers'  Nat.  Gold  Bank  v.  Wilson, 
58  Cal.  600 ;  West  Coast  Safety,  etc. 
Co.  v.  Wulff,  133  Cal.  315;  65  Pac. 
622;  85Am.  St.  Rep.  171. 

The  same  rule  is  sometimes  pre- 
scribed by  express  statute.  Goyer, 
etc.  Co.  v.  Wildberger,  71   Miss.  438; 

15  So.  235;  Fahrney  v.  Kelly,  102 
Fed.  403  (where  the  attaching  credi- 
tor had  notice  of  the  unrecorded 
assignment);  Hair  v.  Burnell,  106 
Fed.  280  (where  the  attaching  credi- 
tor had  notice);  Scott  v.  Haupt,  83 
S.  W.  (Ark.)  1057;  73  Ark.  78  (same 
point  as  last  case) ;  Gates  v.  Baxter, 
97  Tenn.  443;  37  S.  W.  219  (where 
the  right  under  an  executory  con- 
tract of  subscription  was  attached). 

2  Noble  v.   Turner,  69  Md.  519; 

16  Atl.  124. 


716 


§  832-§  1011]     RIGHTS  OF  transferor's  creditors       §  888 

but  the  mere  failure  to  record  the  transfer  on  the  books  is  not 
conckisive  evidence  of  fraud.'  A  transfer  subscfjuent  to  the 
levying  of  the  attadinient  should  clearly  be  subordinated  to  the 
attachment,  although  the  share-certificates  were  not  seized  by 
the  sheriff;  -  but  in  connection  with  such  cases,  it  should  always 
be  borne  in  mind  that  by  the  law  of  some  states  a  seizure  of 
the  share-certificates  may  be  necessary  in  order  to  constitute  a 
valid  attachment  of  the  shares, 

§  SS7.  Riijiiis  of  Trustee  in  Bankruptcy.  —  An  assignee  in 
bankruptcy  succeeds  to  such  rights  only  as  the  bankrupt  had, 
and  cannot  be  deemed  a  purchaser  for  value.  Hence,  he  can- 
not claim  the  shares  as  against  a  person  claiming  under  a  prior 
unregistered  transfer  from  the  bankrupt.-' 

§  8S8.  Transjers  in  Fraud  of  Creditors.  —  In  cases  where  an 
unrecorded  transfer  is  set  up  against  creditors  or  an  assignee  in 
bankruptcy  as  their  representative,  the  failure  to  enter  the  trans- 
fer on  the  books  may  be  a  suspicious  circumstance  to  be  weighed 
in  connection  with  other  evidence  upon  the  issue  of  fraud ;  but 
standing  alone  it  is  not  proof  of  fraud.*  If  the  certificates  are 
immediately  redelivered  by  the  transferee  to  the  transferor, 
there  arises  a  strong  presumption  that  the  transfer  was  merely 
colorable  and  fraudulent  as  against  the  transferor's  creditors.^ 
Even  if  fraud  be  proved,  if  the  company,  after  notice  of  the 
claims  of  creditors  or  of  their  representative  but  without  notice 
of  the  actual  fraudulent  intent  with  which  the  transfer  was  exe- 
cuted, registers  the  transfer,  it  will  not  be  liable  for  so  doing.' 

'  See  infra,  §  8SS.  *  Scripture  v.  Francestown  Soap- 

»  Harris    v.    Bank    of   MobUe,    5  stone  Co.,  50  N.    H.   571,   589-590; 

La.   Ann.   538;    Shenandoah   Valley  Colt  v.    Ives,   31    Conn.   25,   36-38; 

R.   R.   Co.   V.   Griffith,   76  Va.  913,  81     Am.     Dec.     161;      Xew     York 

922-923.  Commercial     Co.     v.     Francis,     83 

Cf.  McClintock  v.  Central  Bank,  Fed.    769;    28  C.  C.  A.  199;    Culp 

120  Mo.  127;  24  S.  \\.  1052.  v.  Mulvane,  71  Pac.  273;  06  Kans. 

But  see  Clews  v.  Friedman,   182  143. 
Mass.  555;  66  N.  E.  201  (de{)ending         But  see  Pinkerton  v.  Manchester, 

upon     a     peculiar     Massachusetts  etc.  R.  R.,  42  N.  H.  424. 
statute).  *  McFall  v.   Buckeye,  etc.  Ass'n, 

*  Dickenson  v.  Central  Xat.  Bank,  122  Cal.  468;  55  Pac.  253;  68  Am. 

129  Mass.  279;    37  Am.  Rep.  351.  St.  Rep.  47. 

Cf.  Sibley  v.  Quinsigamund  Xat.         ^  Dickenson  v.  Central  Xat.  Bank, 

Bank,  133  Mass.  515.  129  Mass.  279;   37  Am.  Rep.  351, 

But  see  Shipman   v.    ^tna   Ins. 
Co.,  29  Conn.  245. 

717 


§  SS9  TRANSFER    AND    TRANSMISSION  [ChAP.   XV 

Where  the  certificate  is  retained  in  the  possession  of  the  trans- 
feror, the  courts  will  be  very  apt  to  hold  the  transaction  to  be  in 
fraud  of  creditors  of  the  transferor.' 

§  889.  Transfers  which  have  passed  from  Hand  to  Hand  — 
Transfers  in  Blank.  —  Another  class  of  cases  in  which  questions 
as  to  the  validity  of  transfers  of  shares  are  raised  consist  of 
cases  where  written  transfers  of  shares  (in  America  usually 
endorsed  upon  the  certificates)  have  passed  from  hand  to  hand. 
A  transfer  cannot  well  pass  from  hand  to  hand  except  where  the 
transfer  as  signed  by  the  transferor  contains  a  blank  for  the  name 
of  the  transferee.  To  execute  transfers  in  blank  in  this  way  is 
the  ordinary  American  custom,  and  is  by  no  means  uncommon 
in  England.  In  these  cases,  the  rule  is  that,  apart  from  the 
somewhat  elastic  applications  of  the  principle  of  estoppel,  the 
person  claiming  under  the  transfer  must  show  that  it  was  exe- 
cuted by  the  transferor  or  his  duly  authorized  agent  in  the  form 
in  which  the  claimant  relies  upon  it  or  that  blanks  have  been 
filled  up  in  pursuance  of  authority  conferred  by  the  transferor, 
and  that  the  claimant  is  either  the  original  transferee  or  derives 
title  from  him  by  a  regular  chain.^  Inasmuch  as  neither  the 
certificate  nor  the  written  transfer  is  a  negotiable  instrument, 
it  is  not  enough  that  the  claimant  may  have  got  possession  of 
the  certificate,  and  transfer  bona  fide,  and  may  have  given  value 
therefor.^ 

The  validity  of  transfers  in  blank  is  seriously  interfered  with 
by  a  requirement  that  transfers  be  under  seal;*  but  where 
transfers  are  not  required  to  be  under  seal,  the  presence  of  a 
seal  attached  to  a  transfer  in  blank  will  not  vitiate  any  parol 
authority  of  the  transferee  to  fill  up  the  blank,  and  this  is  true 
even  according  to  the  strict  English  rules,  the  seal  being  regarded 
as  mere  surplusage.^    The  extent  of  the  actual  authority  con- 

»  Atkinson  V.  Foster,  134  111.  472;  Compress  Co.,  72  Miss.    323   (head- 

25  N.  E.  528.  note  misleading) ;    16  So.  530.    This 

^  But     the     original     transferor,  can   hardly   be   regarded  as  an  ex- 

who  buys  the  certificate  back  from  ception  to  the  rule  stated  in  the  text, 

the    transferee    or    any    person    to  ^  See  supra,  §  842. 

whom    the    transferee    transfers    it,  *  Supra,  §  847. 

is  entitled  to  rely  on  his  legal  title  so  *  Ortigosa  v.  Brown,  38  L.  T.  145; 

as    to    prevail    over   any    equitable  Ireland  v.   Hart  (1902),   1  Ch.  522, 

rights  created  by  the  transferee  or  525-520. 

any  subsequent    holder  of    the   cer-  Cf.  Bridgeport  Bank  v.  New  York, 

tificate.        Timberlake    v.    Shippers'  etc.  R.  R.  Co.,  30  Conn.  231,273-275. 

718 


§832-§1011]  ESTOPPEL    OF    OWNER  §891 

ferred  by  the  transferor  to  fill  up  materiiil  blanks  rests  entirely 
in  parol,  and  is  not  ap])ar(Mit  from  the  instrument  itself. 

Authority  to  fill  up  blanks,  whatever  its  extent  may  be,  may 
be  exercised  as  well  after  the  death  of  the  transferor  as  in  his 
lifetime." 

Where  the  actual  authority  conferred  i)y  the  transferor  is 
exceeded,  the  transferee  may  often  be  protected  by  the  principle 
of  estoppel.^ 

§  890-§  923.     ESTOPPEL. 

§  890.  Classification  of  Cases  of  Estoppel.  —  A  very  large  pro- 
portion of  the  cases  relating  to  the  law  of  transfers  of  shares 
turn  on  the  question  whether  a  person  who,  according  to  the 
strict  rules  of  law  above  stated,  would  be  without  title  is  pro- 
tected from  loss  by  the  principle  of  estoppel.  This  protection 
may  be  afforded  either  by  an  estoppel  against  the  legal  owner 
of  the  shares  or  by  an  estoppel  against  the  company.  These 
two  kinds  of  estoppel  will  be  considered  separately. 


§  891 -§  907.       ESTOPPEL  OF  OWXER  OF   SHARES  TO  DENY 
TITLE  OF  PERSON  CLAIMING  UNDER  A   VOID    TRANSFER. 

§  891.  General  Principles  which  apply  without  Reference  to  the 
Cause  of  the  InvaUdity  of  the  Transfer.  —  First,  then,  we  should 
inquire  what  circumstances  will  be  sufficient  to  estop  the  true 
and  lecral  owner  of  shares  from  denving  the  validity  of  a  transfer 
which,  according  to  the  principles  above  set  forth,  is  yoid  as 
against  any  one  who  is  free  to  allege  the  truth.  In  general  terms, 
we  may  say  that  the  circumstances  which  will  raise  such  an 
estoppel  against  the  true  owner  of  shares  are  independent  of 
the  cause  of  the  legal  invalidity  of  the  transfer.  In  other  words, 
the  same  circumstances  will  raise  an  estoppel  though  the  transfer 
may  be  invalid  for  entirely  different  reasons.  To  be  sure,  some 
circumstances  sufficient  to  raise  an  estoppel  can  only  arise  in 
case  of  some  particular  kind  of  invalid  transfers  —  blank  trans- 
fers wrongfully  filled  up,  forged  transfers,  or  altered  transfers  — 

>  LeavUt  v.  Fisher,  4  Duer  (N.  Y.)         '  Infra,  §  893  et  seq. 
1.    Cf.    Kern's    Estate,    176   Pa.    St. 
373;  35  Atl.  231. 

719 


§  892  TRANSFER    AND    TRANSMISSION  [CuAP.  XV 

and  these  will  necessarily  be  separately  considered.  At  the  out- 
set, however,  we  should  investigate  the  general  principles  as 
to  what  will  and  what  will  not  be  grounds  for  estoppel  against 
the  true  owner  in  any  case  of  a  void  transfer.  Unfortunately,  the 
decided  cases  which  deal  with  these  general  principles  are  rare. 

A  shareholder  who  as  member  of  the  board  of  directors  ap- 
proves a  transfer  of  shares,  the  denoting  numbers  of  which  stated 
in  the  transfer  are  the  same  as  those  of  shares  which  he  himself 
owns,  is  not  by  that  circumstance  estopped  from  setting  up  his 
own  tide  in  opposition  to  that  of  the  transferee : '  every  director 
could  not  be  expected  to  examine  personally  the  register  of 
shareholders  in  order  to  learn  whether  a  person  who  has  exe- 
cuted a  transfer  and  presented  it  to  the  directors  for  their  ap- 
proval is  the  registered  owner  of  the  shares  which  he  assumes 
to  transfer.  The  fact  that  an  officer  of  the  company  receives 
payment  of  a  call  or  assessment  upon  certain  shares,  to  which 
he  claims  title,  from  a  person  claiming  the  shares  adversely  will 
not  preclude  the  officer  from  proving  that  he  has  a  better  title 
than  the  adverse  claimant." 

§  892.  Estoppel  precluded  by  Negligence  of  Transferee.  — 
Any  circumstance  sufficiently  suspicious  to  deter  a  reasonably 
cautious  man  from  accepting  a  transfer  will  prevent  an  estoppel 
to  dispute  the  validity  of  the  transfer  from  arising  in  favor  of 
one  who  has  acted  upon  it.  Thus,  the  fact  that  a  transfer  was 
executed  many  years  before  is  a  suspicious  circumstance.^  So, 
a  transfer  of  a  share-certificate  for  much  less  than  the  value  of 
the  shares  by  a  lad  sixteen  years  old  should  put  a  purchaser 
on  inquiry.* 

§   893- §   903.      TRANSFERS   IN   BLANK. 

§  893.  statement  of  Problem.  —  Questions  as  to  an  estoppel 
of  the  true  owner  of  shares  to  deny  the  validity  of  a  void  or 
unauthorized  transfer  often  arise  where  the  common  practice 
is  followed  of  signing  a  transfer  of  shares  in  blank. 

*  Dixon  V.  Kennaway  &  Co.  '  Pennsylvania  R.  R.  Co.'s  Ap- 
(1900),  1  Ch.  8.33.  peal,  86  Pa.  St.  80  (but,  note  that  in 

*  Shaw  V.  Spencer,  100  Mass.  382,  this  case  the  estoppel  was  upheld). 
394-395;   97  Am.  Dec.  107;    1  Am.         ■•  Anderson  v.  Nicholas,  28  N.  Y. 
Rep.   115.  600. 

720 


§832-§  lOri]  TRANSFERS    IN    BLANK  §894 

Of  course,  blanks  may  be  of  various  kinds  and  degrees.  For 
instance,  a  l)lank  may  be  left  for  some  immaterial  term ;  or  on 
the  other  hand  a  person  may  sign  an  entirely  blank  sheet  of 
paper,  leaving  the  whole  instrument  to  be  filled  in  above  the 
signature.  Usually  however,  when  we  speak  of  a  transfer  of 
shares  in  blank,  we  mean  a  transfer  in  which  a  blank  is  left  for 
the  name  of  the  transferee  but  which  with  that  exception  is  com- 
plete. The  first  (juestion  is,  what  actual  authority  to  fill  up  the 
blank  did  the  transferor  intend  to  confer  and  upon  whom  did 
he  intend  to  confer  it ;  but  this,  as  we  have  seen  above,  is  a 
question  which  cannot  be  answered  from  the  face  of  the  instru- 
ment. The  principle  of  estoppel  need  be  invoked  only  when 
the  actual  authority  is  exceeded.  Whether  the  transferor  should 
be  estopped  is  a  question  which  depends  very  largely  on  the 
state  of  the  instrument  when  he  signed  it,  and  upon  the  in- 
ferences which  might  fairly  be  drawn  from  the  face  of  the  paper 
as  executed.  If  the  only  blank  is  for  the  name  of  the  transferee, 
the  inference  might  reasonablv  be  drawn  that  the  transferor  in- 
tended  to  authorize  any  person  into  whose  hands  the  instrument 
might  lawfully  come  to  fill  up  the  blank  with  his  own  name :  * 
for  such  is  the  mercantile  custom.  If,  however,  a  blank  is  left 
for  the  number  of  shares  transferred,  or  for  the  name  of  the  com- 
pany, or  for  any  other  matter  of  similar  importance,  any  such 
inference  would  be  unwarrantable,  and  the  only  justifiable  con- 
clusion would  be  that  the  transferor  intended  either  to  fill  up 
the  blanks  himself  or  to  confer  a  special  authority  to  do  so  upon 
some  particular  person. 

If  tlie  blanks  are  filled  up  in  pursuance  of  the  transferor's 
actual  authority  and  directions,  there  can  of  course  be  no  ques- 
tion but  that  the  transfer  is  thenceforward  valid  and  effectual 
(apart  from  any  technical  difficulties  that  might  be  encountered 
if  the  transfer  were  under  seal).  The  question  we  are  now 
to  consider  is  whether  by  emitting  an  instrument  in  an  incom- 
plete state,  the  transferor  can  be  estopped  from  asserting  that 
the  blanks  were  filled  up  without  his  authority. 

§  894.  English  Doctrine.  —  By  a  series  of  decisions  in  Eng- 
land, following  certain  earlier  English  cases  as  to  bills  of  ex- 
change and  promissory  notes,  the  law  in  that  country  seems  to 

•  Leavitt  v.  Fisher,  4  Duer  (N.    283 ;  53  N.  E.  590.    See  also  infra, 
Y.)    1 ;    Coffey   v.    Coffcij,    179    111.     §  896. 
VOL.  I.  — 40  721 


§  895  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

have  become  settled  that  a  person  who  takes  a  transfer  of  shares 
in  which  a  blank  is  left  for  the  consideration,  date,  name  of 
transferee,  or  any  other  material  term,  must  at  his  peril  ascer- 
tain the  authority  of  the  person  from  whom  he  takes  the  trans- 
fer to  fill  up  the  blanks.'  This  is  true,  although  the  jury  find 
that  the  transferor  was  negligent  in  leaving  the  blanks  and  that 
the  purchaser  acted  as  a  reasonable  man  in  advancing  his 
money  upon   the  faith  of  the  transfer,- 

§  895.  Criticism  of  English  Doctrine.  —  It  is  submitted  that 
these  decisions  are  unfortunate  in  failing  to  discriminate  be- 
tween difi'erent  sorts  of  blanks.  For  instance,  if  a  person  signs 
a  transfer  of  shares  leaving  the  name  of  the  company  blank  — 
and  such  a  thing  is  quite  possible  in  England  where  transfers  are 
not,  as  usually  with  us,  endorsed  upon  the  share-certificates  — 
anybody  who  takes  the  transfer  in  that  condition  might  well  be 
chargeable  with  constructive  notice  of  any  limitations  imposed 
by  the  transferor  upon  the  right  to  fill  up  the  blank.  Any  blank 
of  such  sort  is  a  suspicious  circumstance.^  On  the  other  hand^ 
where  the  only  material  blank  is  a  blank  for  the  name  of  the 
transferee  —  and  blanks  for  the  consideration,  date,  etc.,  are 
not  material  blanks  —  the  instrument  is  in  accordance  with  the 
custom  of  stock  brokers  and  does  not  and  should  not  excite  the 
least  suspicion.  Accordingly  it  is  submitted  that  any  rule  of 
law  charging  a  person  who  advances  money  on  the  faith  of 
such  a  transfer  with  constructive  notice  of  any  limitations  im- 
posed by  the  transferor  upon  the  right  to  fill  up  the  blank  is 
without  justification  in  reason. 

§  896.  American  Doctrine.  —  Accordingly,  the  American 
cases  almost  with  unanimity  hold  that  a  person  who  signs  and 
delivers  a  transfer,  endorsed  upon  the  share-certificate,  leaving 
a  blank  for  the  name  of  the  transferee,  is  taken  impliedly  to 
authorize  any  bona  fide  holder  of  the  certificate  and  transfer  to 
fill  up  the  blank  with  his  own  name  or  that  of  any  person  whom 

'  France  v.  Clark,  26  Ch.  D.  257  Clark   was    so  seriously  shaken   by 

(criticising  and  explaining  Ex  parte  the  opinions  of  the  lords  in  Colonial 

Sargent,  17  Ef).  273);  Fox  v.  Martin,  Bank  v.  Cady  as  to  be  no  longer  an 

64  L.  J.  Ch.  473.  authority). 

But  see  Colonial  Bank  v.  Cady,  ^  Hutchinson  v.  Colorado  United 

15   A.    C.    267,    278,    286;    Colonial  Mining  Co.,  3  Times  L.  R.  265. 

Bank   v.    Hepworth,  36  Ch.   D.  36;  ^  Cf.     Treadwell    v.     Clark,     114 

Smith  V.  Rogers,  30  Ont.  256  (where  N.  Y.  App.  Div.  493;  100  N.  Y,  Supp. 

the  judges  thought  that  France  v.  1,  affirmed,  82  N.  E.  505. 

722 


§832-§  ion; 


TRANSFERS    IX    BLANK 


896 


he  may  select;  and  if  any  restrictions  or  conditions  which  the 
transferor  may  have  imposed  upon  the  riglit  to  negotiate  the 
certificate  and  transfer  are  disregarded,  the  transferor  will  be 
esto[)ped  from  denying  the  right  of  any  bona  fide  purchaser  of 
the  instrument  to  lill  out  the  blank,  and  have  the  transfer 
registered.'  If,  however,  the  holder  of  the  blank  transfer  does 
not  claim  to  be  owner  of  the  shares  but  represents  himself  ;us 
agent  of  the  owner  and  authorized  to  negotiate  a  loan  on  the 
owner's  behalf  on  the  security  of  the  shares,  a  lender  taking 
the  shares  as  collateral  uix)n  the  faith  of  those  representations 
will  not,  it  has  been  held  in  New  York,  be  entitled  to  hold  the 
shares  as  against  the  true  owner  unless  the  latter  had  in  fact 
given  authority  to  the  holder  of  the  transfer  to  pledge  the  shares ;  ^ 
but  the  distinction  thus  taken  is  certainly  a  very  fine  one,  and 
is  perhaps  of  questionable  soundness.  If  the  bona  fide  holder 
takes  as  security  for  a  debt,  the  defrauded  owner  of  the  shares 
has  a  right  to  insist  that  any  other  security  which  the  bona  fide 
holder  may  have  should  be  exhausted  before  the  shares  in  ques- 
tion are  resorted  to.^ 


'  National,  etc.  Trust  Co.  v.  Gray, 
12  D.  C.  App.  Cas.  276;  Brittan  v. 
Oakland  Bank  of  Savings,  124  Cal. 
282;  57  Pac.  84;  71  Am.  St.  Rep. 
58;  McNeil  v.  Tenth  Nat.  Bank,  46 
N.  Y.  325;  70  Am.  Rep.  341; 
Mount  HoUy,  etc.  Co.  v.  Ferree,  17 
N.  J.  Eq.  117;  PraU  v.  Tilt.  28  N.  J. 
Eq.  479;  Otis  v.  Gardner,  105  111. 
436;  State  Bank  v.  Cox,  11  Rich.  Eq. 
(S.  Car.)  344;  Wood's  Appeal,  92 
Pa.  St.  379;  37  Am.  Rep.  694; 
Burton's  Appeal,  93  Pa.  St.  214; 
Cherry  v.  Frost,  7  Lea  (Tenn.)  1 ; 
Falman  v.  Lobach,  1  Duer  (N.  Y.) 
354;  Walker  v.  Detroit  Transit  Ry. 
Co.,  47  Mich.  338;  11  N.  W.  187; 
Jarvis  v.  Rogers,  13  Mass.  105; 
Gilbert  v.  Erie  Bldg.  Ass'n,  184  Pa. 
St.  554;  39  Atl.  291;  Westing- 
hou!<e  V.  German  National  Bank, 
196Pa.  St.  249;  46  Atl.  380;  Nelson 
V.  Owen,  113  Ala.  372;  21  So.  75; 
Strange  v.  Houston,  etc.  R.  R.  Co., 
53  Texas  162,  170-171;  O'Mara 
V.  Newcomb  (Colo.),  88  Pac.  167; 
Beckwith  v.  Gallice  Mines  Co.  (Oreg.), 


93  Pac.  453  (where  the  certificate 
and  transfer  were  dehvered  to  a 
bank  to  be  delivered  to  a  purchaser 
on  payment  of  the  purcha.se  money). 

In  Ontario,  the  American  doc- 
trine has  been  followed  upon  the 
ground  that  by  the  usage  of  the 
stock  exchange  the  transfer  in  blank 
is  recognized  as  authorizing  any 
holder  to  fill  in  his  own  name  as 
transferee.  Smith  v.  Rogers,  30 
Ont.  R.  256. 

On  the  other  hand,  in  Maryland 
the  English  doctrine  has  been 
followed.  Taliaferro  v.  First  Nat. 
Bank,  71  Md.  200.  213-214;  First 
Nat.  Bank  v.  Taliaferro,  72  Md.  164; 
German  Sav.  Bank  v.  Ren-shaw,  78 
Md.  475.  Cf.  Kern's  Estate,  176  Pa. 
St.  373  (headnote  inadequate);  35 
Atl.  231. 

-  Merchants'  Bank  v.  Livingston, 
74  N.  Y.  223.  Compare  also  Mary- 
land cases  cited  in  last  note. 

=>  Smith  V.  Savin,  141  N.  Y.  315; 
36  N.  E.  338.  Cf.  Denny  v.  Li/on, 
38  Pa.  St.  98;  80  Am.  Dec.  463. 


723 


§  897  TIL\NSFER    AND    TRANSMISSION  [ChAP,   XV 

§  897.  No  Estoppel  where  Share-Certificate  retained  by  Trans- 
feror. —  If  the  transferor  retains  the  share-certificate  in  his  own 
possession,  the  doctrine  of  estoppel  cannot  be  rehed  upon  to 
eke  out  the  actual  authority  which  he  intended  to  confer  to  fill 
up  blanks  in  the  transfer.'  By  retaining  the  indicia  of  owner- 
ship, he  in  effect  warns  everybody  into  whose  hands  the  trans- 
fer may  come  to  be  on  his  guard  against  accepting  the  transfer 
as  equivalent  to  the  shares.  This  principle  is  supported  by  the 
authority  of  an  English  decision,  and  would  a  fortiori  be  ac- 
cepted as  law  in  the  United  States  where  a  transfer  of  shares 
separated  from  the  certificate  is  more  unusual  and  would  cer- 
tainly never  be  relied  upon  by  any  one  but  a  reckless  speculator. 

§  898.  No  Estoppel  unless  Transfer  regular  on  its  Face.  —  If 
the  transferor  instead  of  signing  his  name  at  the  foot  or  end 
of  the  printed  form  on  the  back  of  the  share-certificate  signs  in 
the  blank  left  at  the  beginning  of  the  printed  form  for  the  name 
of  the  transferor,  the  transfer  is  not  in  order  and  will  not  be 
sufficient  to  raise  an  estoppel  against  the  transferor.^  A  transfer 
in  order  to  raise  an  estoppel  must  be  regular  on  its  face.^ 

§  899.  Alteration  of  Transfer  after  the  Blank  is  filled  up.  — -  If  a 
blank  for  the  name  of  a  transferee  is  once  filled  up,  the  power  is 
exhausted ;  and  any  subsequent  change  in  the  name  is  an  un- 
authorized alteration  and  makes  the  instrument  tantamount  to 
a  forgery.^ 

§  900.  Transfer  in  Blank  by  Executors.  —  If  executors  of  a 
deceased  shareholder  execute  in  their  own  names  upon  the  back 
of  their  testator's  share-certificate  a  transfer  in  blank  in  the  or- 
dinary American  form,  the  House  of  Lords  held,  in  a  case  relat- 
ing to  shares  in  an  American  company,  that  their  action  is  open 
to  two  constructions.  They  may  have  executed  the  transfer 
either  for  the  purpose  of  selling  and  disposing  of  the  shares  or 
merely  for  the  purpose  of  having  the  shares  put  in  their  own 
names  as  executors;  and  on  account  of  this  ambiguity,  it  was 
held  that  if  in  fact  the  transfer  was  signed  by  the  executors  for 
the  purpose  of  having  themselves  registered  as  owners  and  if 

'  Swan  V.  North  British  Austra-  ^  See  also  infra,  §  900.  Cf. 
lasian  Co.,  2  H.  &.  C.  175.  Taliaferro  v.  First  Nat.  Bank,  71  Md. 

2  Treadwell  v.  Clark,   114  N.  Y.    200,211-212. 
App.  Div.  493;  100  N.  Y.  Supp.  1,         *  Denny  v.  Lyon,  38  Pa.  St.  98; 
affirmed,  82  N.  E.  505.  80  Am.  Dec.  463.     See  infra,  §  907. 

724 


§832-§1011]  TRAXSFI-KS    IN    BLANK  §901 

the  broker  wrongfully  disposed  of  the  certificate  and  blank 
transfer  to  a  bona  jide  purchaser,  yet  the  executors  ought  not 
to  be  estopped  from  denying  the  right  of  the  purchaser  U)  (ill 
in  his  own  name  as  transferee  and  to  have  himself  registered 
as  shareholder.'  lliis  conclusion  was  reached,  although  several 
members  of  the  House  expressed  an  emphatic  opinion  which 
is  difficult  to  reconcile  with  the  English  cases  cited  above,-  that 
if  the  share-certificate  had  been  made  out  in  the  names  of  the 
persons  who  signed  the  blank  transfer  endorsed  thereon,  they 
would  have  been  estopped.  The  decision  was  rested  exclusively 
upon  the  circumstance  that  the  persons  who  signed  the  transfer 
were  executors  of  the  registered  shareholder.  Nevertheless,  it 
may  be  doubted  whether  that  circumstance  should  upon  prin- 
ciple affect  the  application  .of  the  doctrine  of  estoppel.  Whilst 
the  action  of  the  executors  was  consistent  either  with  an  inten- 
tion to  transfer  the  shares  or  with  an  intention  to  procure  regis- 
tration of  the  shares  in  their  own  names,  yet  if  the  latter  was 
their  real  intention,  was  it  not  their  duty  (if  they  w^ished  to  pro- 
tect themselves  from  estoppel)  to  fill  in  their  own  names  as 
transferees  instead  of  leaving  a  blank?  The  American  cases 
upon  the  point  are  not  very  full  or  numerous,  but  so  far  as  they 
go,  they  are  not  in  harmony  with  the  decision  of  the  House  of 
Lords  in  Colonial  Bank  v.  Cady.^  Another  circumstance  which 
was  thought  by  some  of  the  lords  to  prevent  an  estoppel  from 
being  raised  was  the  fact  that  a  certificate  of  grant  of  letters 
testamentary  was  not  attached  to  the  share-certificate,  so  that 
according  to  the  rules  of  the  stock  exchange  both  in  London 
and  New  York  the  instrument  would  not  pass  from  hand  to 
hand,  being  regarded  as  incomplete  and  not  "in  order."  * 

§  901 .  Transfer  in  Blank  by  Guardians.  —  A  transfer  in 
blank  by  a  guardian,  the  shares  standing  in  the  name  of  the 
ward,  has  been  thought  to  have  no  effect  by  way  of  estopping 
the  ward  from  denying  his  right  or  power  to  dispose  of  the 

'  Colonial  Bank  v.  Cady,  15  A.  C.         =  Supra,  §  894. 
267.    While  the  House  decitlcd  that         '  Prall  v.  Tilt,  28  N.  J.  Eq.  479 

the  question  of  estoppel  sliould  be  Wood's  Appeal,  92  Pa.  St.  379;    37 

determined    according    to    English  Am.  Rep.  694. 

law,  yet  they  e.xprcssed  the  opinion         ■*  See    particularly    judgment    of 

that  tlie  American  law  did  not  iliffer  Lord  Morris,  15  A.  C.  2S7-2S8.     Cf. 

from  the  law  of  England.     15  A.  C.  supra,  §  898. 
272,  277,  282,  285. 

725 


§  902  TRANSFER    AND    TRANSMISSION  [ChAP.   XV 

shares;*  for,  it  was  said,  the  signature  of  a  fiduciary  should 
put  any  subsequent  holder  on  his  inquiry  as  to  the  fiduciary's 
authority. 


§  902- §  903.     Theft  of  Certificate  ejidorsed  with 
Transfer  in  Blank. 

§  902.  Theft  from  Transferor  before  Delivery  to  Transferee.  — 
If  a  transfer  in  blank  is  endorsed  upon  a  share-certificate  and 
then  before  any  delivery  thereof  the  certificate  with  the  transfer 
is  lost  or  stolen  and  sold  to  a  bona  fide  purchaser,  the  right  of 
the  latter  to  the  shares  depends  upon  whether  or  not  the  owner 
had  by  negligence  of  any  kind  enabled  the  theft  to  be  com- 
mitted. If  he  had  locked  the  certificate  with  the  endorsed  blank 
transfer  in  his  strong-box  which  the  thief  had  broken  open,  it 
would  be  difficult  to  say  that  the  owner  had  been  guilty  of  any 
negligence  upon  which  to  build  an  estoppel.  And,  accordingly, 
in  such  a  case,  where  the  owner  of  the  certificate  has  been  as 
careful  of  it  as  reasonable  convenience  admits  and  reasonable 
prudence  dictates,  he,  the  original  owner,  would  have  a  better 
title  than  the  bona  fide  purchaser.'  If,  however,  the  ouTier  had 
carelessly  left  the  endorsed  certificate  in  some  public  place,  he 
would  (at  least  in  America)  be  held  estopped  by  his  negligence, 
so  that  the  purchaser  would  get  a  good  title.  But  the  mere  fact 
that  he  leaves  the  endorsed  certificate  in  a  safe-deposit  box  to 
which  some  other  person  as  well  as  himself  has  access  will  not 
estop  him  from  asserting  his  ownership  if  that  other  person 
steals  the  certificate  and  assigns  it  to  a  bona  fide  purchaser.^ 
Even  the  fact  that  the  true  owner  had  introduced  the  thief  to 
the  person  who  afterwards  purchased  the  certificate  from  him 
and  had  recommended  him  as  trustworthy  has  been  held  in- 

>  0'//m-onv.Gra7/,  168 Mass.  573;  Oh.  St.  367;  64  N.  E.  518;  90  Am. 

47  N.  E.  429;   60  Am.  St.  Rep.  411 ;  St.  Rep.  586;  58  L.  R.  A.  620  (where 

40  L.  R.  A.  498.  the  certificate  endorsed  in  blank  was 

2  Biddlev.  Bayard,  \2Va,.^t.\bQ;  delivered  to  the   company  itself   as 

Sherwood  v.  Meadow  Valley  Mining  collateral  security  and   was  by  the 

Co.,  50  Cal.  412;  Barstow  v.  Savage  secretary     fraudulently    abstracted 

Min.  Co.,  64  Cal.  388;   1  Pac.  349;  and  reissued). 

49    Am.    Rep.    705;     Anderson    v.  ^  Bangor   EL    Light,   etc.    Co.    v. 

Nicholas,  28  N.    Y.   600;  Farmers'  Robinson,  52  Fed.  520. 
Bank  v.    Diebold  Safe,  etc.   Co.,   66 

726 


§  832-1  1011]  FORGED    TRANSFERS  §  904 

sufficient  to  raise  an  estoppel.'  On  the  other  hand,  where  the 
endorsed  certificates  were  intrusted  for  safekeeping  to  an  agent 
by  whoni  they  were  fraudulently  transferred,  the  owner  has 
been  held  to  be  estopped. - 

§  90o.  Theft  from  Transferee  or  subsequent  Holder.  —  If, 
after  a  blank  transfer  is  endorsed  upon  a  share-certificate  and 
after  the  instrument  .so  endorsed  is  delivered  to  the  tran.sferee, 
the  certificate  is  stolen  from  the  transferee  and  by  the  thief  .sold 
to  a  bona  pde  purcha.ser,  there  might  l)e  difficulty  in  determining 
whether  the  first  transferee  or  the  purchaser  has  the  better  title. 
So  far  as  the  original  transferor  is  concerned,  it  is  a  matter  of 
indifference.  If  the  certificates  were  strictly  negotiable,  like  a 
promissory  note  payable  to  bearer,  there  would  be  no  diffi- 
culty. But  as  the  certificates  lack  this  technical  negotial)ility, 
the  transferee,  if  he  has  not  been  guilty  of  any  negligence,  has 
a  superior  title  to  that  of  the  purchaser.^  For  example,  where 
shares  stand  in  the  name  of  brokers,  as  trustees  for  their  cus- 
tomer, the  latter  in  sending  a  messenger  for  the  share-certificate 
does  not  authorize  the  brokers  to  deliver  it  to  the  messenger  in 
such  a  form  that  he  may  have  the  power  to  convert  it  to  his  own 
use;  and  therefore  if  the  brokers  deliver  the  certificate  to  the 
messenger  with  a  transfer  in  blank  endorsed  thereon  in  the  usual 
form,  and  if  the  certificate  is  sold  by  the  messenger  for  his  own 
account,  the  person  to  whom  he  sells  it  is  liable  to  the  true  owner 
for  a  conversion.* 


§  904-§  906.     Forged  Transfers. 

§  904.  In  general.  —  A  forged  transfer  so  far  as  any  efficacy 
in  passing  title  propria  vigore  is  concerned  is  equivalent  to  no 
transfer  at  a  11.^ 

>  Bm^gor   El.    Light,   etc.    Co.    v.  Smith  v.  Prosser  (1907),  2  K.  B.  735 

Robinson,    52    Fed.    520    (headnote  (as  to  a  promissory  note), 

inadequate).  ^  East  Birmingham  Land  Co.  v. 

^  Pennsylvania  R.R.Co.'s  Appeal,  Dennis,  85  Ala.  565;    5  So.  317;    7 

86  Pa.  St.  80:   Shattuck  v.  American  Am.  St.  Rep.  73;  2  L.R.  A.  836. 

Cement  Co..  205  Pa.  St.  197;  54  Atl.  ••  Hall  v.  Wagner,  111  N.  Y.  App. 

785;  97  Am.  St.  Rep.  735.  Div.  70;  97  N.  Y.  Supp.  570. 

Quare,    whether   these    decisions  *  Bartoyi    v.    North    Staffordshire 

would  be   followed  in  otlier  states.  Ry.  Co.,  38  Ch.  D.  458;    Barton  v. 

Cf.   Hall  V.    Wagner,  111  N.  Y.  App.  London,  etc.  Ry.  Co.,  24  Q.  B.  D.  77; 

Div.  70,  75-76;  97  N.  Y.  Supp.  570;  Telegraph  Co.  v.  Davenport,  97  U.  S. 

727 


§  905  TRANSFER    AND    TRANSMISSION  [ChAP.   XV 

§  905.  Negligence  of  Person  whose  Name  is  forged.  —  If  the 
title  of  any  person  claiming  under  a  forged  transfer  is  to  be  up- 
held, that  result  can  only  be  reached  because  the  circumstances 
are  such  as  to  estop  the  true  owner  from  asserting  that  his  signa- 
ture is  forged.'  Ordinarilv,  considerable  difficulty  is  encoun- 
tered  in  raising  an  estoppel  to  deny  the  validity  of  a  title  derived 
through  a  forgerv.  Certainly,  the  mere  fact  that  the  owner  in- 
trusted  the  certificate  to  the  forger  and  thus  in  a  sense  made 
the  crime  possible  is  not  sufficient  to  estop  him  from  setting  up 
his  title,  even  to  the  prejudice  of  a  bona  fide  purchaser,^  even 
though  the  custodian  was  known  to  the  owner  to  be  insolvent 
and  to  have  previously  used  without  authority  funds  not  be- 
longing to  him.''  So,  the  fact  that  a  corporation  which  owns 
stock  intrusts  its  seal  to  an  officer  who  without  authority  affixes 
the  seal  to  a  power  of  attorney  to  transfer  the  stock  does  not 
estop  the  corporation  from  denying  the  validity  of  a  transfer 
executed  in  pursuance  of  the  power  of  attorney.*  So,  where, 
as  is  often  done  in  England,  the  corporation  upon  receiving  for 
registration  a  transfer  purporting  to  be  signed  by  the  registered 
owner  writes  a  letter  of  inquiry  to  the  latter  in  order  to  ascer- 
tain whether  the  transfer  is  good,  nevertheless  the  owTier  is  not 
estopped  from  asserting  that  the  transfer  was  forged,  although 
he  neglected  to  reply  to  the  letter  of  inquiry,  thus  losing  an 
opportunity  of  deterring  the  company  from  registering  the 
transfer.^  The  negligence  of  a  guardian  in  regard  to  the  pre- 
vention or  detection  of  a  forgery  cannot  estop  the  ward.^ 

§  906.  Adoption  of  forged  Signature  by  Transferor.  —  A 
forged  transfer  may  be  adopted  by  the  person  whose  name  is 
forged,  and  the  signature  then  becomes  by  adoption  the  genuine 
signature  of  the  transferor.^    But  such  a  ratification  will  not  be 

369;     Chicago   Edison   Co.    v.   Fay,  '  Telegraph  Co.  v.  Davenport,  97 

164  111.  323;    45  N.  E.  534;    Hild-  U.  S.  .369  (headnote  inadequate). 

yard  v.  South  Sea  Co.,  2  P.  Wms.  76;  *  Bank  of  Ireland  v.  Trustees  of 

Brown  v.  Howard  Fire  Ins.  Co.,  42  Evans'  Charities,  5  H.  L.  Cas.  389; 

Md.  384 ;  20  Am.  Rep.  90.  Mayor,  etc.  of  Merchants  of  the  Staple 

'  As  to  rights  of  person  claiming  v.  Bank  of  England,  21  Q.  B.  D.160. 

under  a  forged  transfer  through  an  °  Barton  v.  London,  etc.  Ry.  Co., 

estoppel  of  the  corporation  to  deny  24  Q.  B.  D.  77. 

his  title,  see  infra,  §  908  et  seq.  *  Telegraph  Co.  v.  Davenport,  97 

^  Cf.  Bahia  &  San  Francisco  Ry.  U.  S.  369. 

Co.,  L.  R.  3  Q.  B.  584;  Johnston  v.  '  Coles  v.   Bank  of  England,   10 

Renton,  9  Eq.  181.  Ad.  &  E.  437,  explained  and  doubted 

728 


§  832-§  1011]  ESTOPPEL   OF    Co.Ml'ANY  §  W8 

implied  from  doubtful  evidence.'  'riuis,  where  the  forger  de- 
posits tlie  purchase  money  to  the  credit  of  the  triinsferor  in  a 
bank  ujxjn  which  he  is  authorized  to  draw  cheques  in  the 
name  of  the  transferor,  and  does  draw  out  sums  in  excess  of 
the  amount  reahzed  upon  the  forged  transfer,  there  was  held 
to  be  no  sufficient  evidence  of  ratification  of  the  forged 
transfer.- 


§  907.  Altered  Transfers.  —  A  transfer  of  shares  which  is 
altered  in  any  material  particular  without  the  transferor's  au- 
thority is  in  its  altered  form  substantially  a  forged  transfer,=» 
and  subject  to  the  same  rules.  If  the  transfer  is  altered  by  the 
transferor  without  the  transferee's  consent,  it  would  neverthe- 
less have  the  same  effect  as  if  a  second  transfer  had  been  exe- 
cuted by  the  transferor;'  but  if  such  altered  transfer  is  to  a 
person  who  either  from  the  state  of  the  document  or  otherwise 
has  notice  of  the  alteration,  the  rights  of  the  first  transferee  are 
clearly  superior.^ 


§  908-§  923.     ESTOPPEL  OF  COMPANY  TO  DENY  TITLE  OF 
PERSON  CLAIMING  UNDER  A   VOID  TRANSFER. 

§  908.  Existence  of  Estoppel  independent  of  Cause  of  Invalidity 
of  Transfer.  —  Very  valuable  rights  may  be  acquired  through  a 
void  transfer,  where,  although  the  true  owner  is  not  estopped 
from  claiming  his  shares,  yet  the  com.pany  is  for  some  reason 
estopped  from  denying  the  transferee's  title.«  The  grounds  for 
such  an  estoppel  are  generally  if  not  always  quite  independent 

in   Bank  of   Ireland  v.    Trustees  of  after  blanks  have  once  been  filled  up, 

brans'  Charities,  5  H.  L.  Cas.  389,  see  supra,  §  899. 

411,  414,  415.  *  Eaton  v.  New  England  Telegraph 

»'  Chicago  Edison  Co.  v.  Fay,  164  Co.,  68  Me.  63.  68  (semble). 

111.  323;   45  N.  E.  534.  *  Eaton  v.  New  England  Telegraph 

'  Chicago  Edison  Co.  v.  Fay,  164  Co.,  68  Me.  63. 

111.  323;  45  N.  E.  534.  *  As  to  estoppel  of  the  corpora- 

3  Hare  v.  L.  &  N.  W.   Ry.   Co.,  tion  to  treat  shares  in  the    liands 

Johns.  722;   Sewall  v.  Boston  Water  of    a   transferee  as  not  fully    paid 

Power  Co.,  4  Allen  (Mass.)  277;    81  up,  see  supra,  §  800. 
Am.  Dec.  701. 

As  to  alteration  of  blank  transfer 

729 


§  909  TRANSFER    AXD    TRANSMISSION  [ChAP.  XV 

of  the  cause  of  the  invahdity  of  the  transfer  —  lack  of  title  in 
the  transferor,  forgery,  or  any  other  cause.  Hence,  in  deter- 
mining whether  the  company  is  estopped  from  denying  the  title 
of  a  person  claiming  under  a  void  transfer,  there  is  no  occasion 
to  inquire  how  the  transfer  came  to  be  invalid. 

§  909-§  921.      ESTOPPEL   BY   ISSUE   OF   SHARE-CERTIFICATE. 

§  909.  In  general.  —  The  circumstance  usually  seized  upon 
to  raise  such  an  estoppel  against  the  company  is  the  issue  of  a 
share-certificate  to  the  transferor.  A  certificate  is  a  solemn  asser- 
tion under  the  corporate  seal  that  the  person  named  therein  is 
entitled  to  the  specified  number  of  shares.  This  representation 
is  made  for  the  purpose  of  being  acted  upon,  and  if  a  person 
does  act  upon  it,  for  instance,  by  purchasing  the  holder's  sup- 
posed rights,  the  company  is  estopped  from  asserting  that  the 
representation  was  false  and  that  the  certificate  holder  had  in 
fact  no  title,  either  because  he  claimed  under  an  invalid  transfer 
or  for  any  other  reason.^  If  the  company  possesses  unissued 
shares,  it  may  doubtless  be  required  to  make  good  its  repre- 
sentation by  issuing  them  to  the  holder  of  the  certificate  or  his 
transferee.^  If  the  entire  authorized  capital  has  been  already 
issued,  then  the  company  cannot  be  compelled  to  issue  the  shares 
which  the  certificate  represents ;  ^  but  the  estoppel  exists  never- 
theless,* so  that  if  the  company  cancels  the  entry  of  the  certificate 

*  Bahia  &  San  Francisco  Ry.  Co.,  Mass.  547;  24  N.  E.  914;  8  L.  R.  A. 

L.  R.  3  Q.  B.  584 ;   Ottos  Kopje  Dia-  750. 

mond  Mines  (1893),  1  Ch.  618;  Shaw  ^  Bank  of  Kentucky  v.  Schuylkill 

V.  Port  Philip  Mining  Co.,  13  Q.  B.  Bank,   1   Pars.   Eq.  Cas.   (Pa.)   180, 

D.  103 ;   Bank  of  Kentucky  v.  Schuyl-  249     (serable) ;      Westminster    Nat. 

kill  Bank,  1  Pars.  Eq.  Cas.  (Pa.)  180,  Bank     v.     New     England     Electric 

249-250;   Philadelphia  Nat.  Bank  v.  Works,  62  Atl.  971;    73  N.  H.  465; 

Smith,  195  Pa.  St.  38;    45  Atl.  655;  111  Am.  St.  Rep.  637. 

Fifth  Avenue  Bank  v.  Forty-second  ^  Allen  v.  South  Boston  R.  R.  Co., 

Street,  etc.  R.  R.  Co.,  137  N.  Y.  231;  150  Mass.  200,  207;    22  N.  E.  917; 

33  N.  E.  378;  33  Am.  St.  Rep.  712;  15  Am.  St.  Rep.  185;  5  L.  R.  A.  716; 

19  L.  R.  A.  331;    Daily  Telegraph  First  Ave.  Land  Co.  v.  Parker,  111 

Newspaper  Co.  v.  Cohen,  5  N.  So.  Wise.  1 ;   86  N.  W.  604 ;   87  Am.  St. 

Wales  State  Rep.  520;    Westminster  Rep.  841. 

Nat.  Bank  v.  New  England  Electric  But  see  Machinists'  Nat.  Bank  v. 

TT^orfc.s,  62  Atl.  971;    73  N.  H.  465;  Field,     126    Mass.     345     (headnote 

111  Am.  St.  Rep.  637.  misleading). 

In  addition,  the  officers  who  is-  ■•  Balkis  Consolidated  Co.  v.  Tow- 
sued  the  certificate  may  be  liable  for  kinson  (1893),  A.  C.  396,  410. 
deceit.      Windram    v.    French,    151  Cf.  Bridgeport  Bank  v.  New  York, 

730 


§  832-§  1011]  ESTOPPEL   OF    COMPANY  §  910 

holder's  name  among  its  shareholders  (as  it  must  do  at  the  in- 
stance of  the  true  owner  of  the  shares),  then  the  transferee  from 
the  person  to  whom  the  certificate  w^as  issued  is  entitled  to  treat 
such  action  as  a  conversion  and  recover  from  the  company  the 
value  of  the  shares.'  In  such  a  case  the  certificate  holder  is 
entitled  to  retain  any  dividends  which  may  have  been  paid  to 
him  by  the  company.'-'  The  company  is,  however,  entitled  to 
the  same  rights  that  it  would  have  had  if  the  shares  had  been 
valid,  and  therefore  if  it  be  entitled  to  a  lien  on  its  shares  for 
debts  of  the  holders,  it  is  entitled  to  set  off  or  recoup  out  of  the 
sum  payable  as  damages  the  amount  of  any  debt  for  which  it 
would  have  had  a  lien  if  the  shares  purporting  to  be  represented 
by  the  certificate  had  had  a  legal  existence.^ 

§  910.  Whether  Certificate  estops  Company  from  asserting  that 
Holder  has  lost  his  Title  by  Transfer  or  otherwise  after  Issue  of  Cer- 
tificate. —  The  estoppel  created  by  the  issue  of  a  share-certificate 
precludes  the  company  from  denying  that  the  person  named  in 
the  certificate  was  entitled  to  the  shares  at  the  time  of  the  issue 
of  the  certificate:  it  may  not  in  all  cases  prevent  the  company 
from  show^ing  that  the  title,  although  good  at  that  time,  subse- 
quently became  invalid.  Suppose,  for  instance,  the  holder  of 
the  certificate,  having  a  good  title,  transfers  the  shares  by  a  duly 
registered  transfer  to  some  other  person,  but  is  permitted  by  the 

etc.  R.  R.  Co.,  30  Conn.  231;    Bank  Tarboro,  132  X.  Car.  214;    43  S.  E. 

of    Kentucky   v.  Schuylkill    Bank,   1  639;    95  Am.  St.  Rep.  627;    Daily 

Pars.    Eq.    Cas.    180,    245    et   seq. ;  Telegraph  Newspaper  Co.  v.  Cohen, 

Willis  V.  Philadelphia,  etc.  R.  R.  Co.,  5  N.  So.  Wales  State  Rep.  520  (hold- 

6  Wkly.   N.   Cas.    (Pa.)   461;    Am.  ing  that  where  the  shares  have  in- 

Exch.  Xat.  Bank  v.  Woodlaum  Ceme-  creased    in    value,    the    measure   of 

tery,   105  N.  Y.  Supp.  305  (holding  damages  is  the  value  at  the  time  the 

also  that  the  fact  that  the  several  company  first   refused  to  recognize 

certificates  presented  to  a  transferee  plaintiff  as  shareholder), 
were   not    consecutively   numbered,         Cf.  First  Ave.  Land  Co.  y.  Parker, 

was  not  sufficient  to  ciiarge  him  with  111  Wise.  1 ;  86  N.  AV.  604;  87  Am. 

notice  of  an  overissue).  St.  Rep.  841. 

'  Bahia  &  San  Francisco  Ry.  Co.,         But  see  contra:  Mechanics'  Bank 

L.  R.  3  Q.  B.  584;   Ottos  Kopje  Dia-  v.  N.   Y.,  etc.  R.  R.  Co.,  13  N.  Y. 

7«o7uf  A/ine.s(1893),  iCh.  618:  Shaw  599  (distinguished  in  A^  Y.,  etc.  R. 

V.  Port  Philip  Mining  Co.,  13  Q.  B.  R.  Co.  v.  Schuyler,  34  N.  Y.  30). 
D.    103;     Mount  Holly  Paper  Co.'s         '  Daily  Telegraph  Newspaper  Co. 

Appeal,  99  Pa.  St.  513.  521  (head-  v.  Cohen,  5  N.  So.  Wales  State  Rep. 

note   inadequate);     Allen    v.    South  520. 

/ios/on/e.  7?.  Co.,  150  Mass.  200,  207;         ^  3/oi<„;   Holly  Paper  Co.'s  Ap- 

22  N.  E.  917;    15  Am.  St.  Rep.  185;  peal,  99  Pa.  St.  513  (headnote  in- 

5  L.  R.  A.  716;    Havens  v.  Bank  of  adequate). 

731 


§  910  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

company  to  retain  the  certificate.  If  he,  being  still  possessed  of 
the  indicia  of  ownership,  executes  a  transfer  to  some  other  person 
to  whom  the  certificate  is  delivered  and  who  pays  his  money  in 
reliance  upon  the  certificate,  is  the  company  estopped  from  deny- 
ing the  title  of  this  second  transferee?  In  order  that  such  an 
estoppel  should  be  raised,  it  is  necessary  to  show  that  the  com- 
pany was  guilty  of  some  negligence  or  breach  of  duty.  If  the 
shares  are,  as  is  usually  the  case,  at  least  in  America,  expressed 
to  be  transferable  only  upon  surrender  of  the  certificate,  the 
registration  of  the  first  transfer  without  requiring  the  transferor 
to  surrender  the  certificate  would  seem  to  be  sufficient  to  charge 
the  company  with  a  continuing  representation  that  the  trans- 
feror remained  entitled  to  the  shares  represented  by  the  cer- 
tificate, so  that  the  company  should  be  estopped  from  denying 
the  title  of  the  second  transferee,^  or  from  denying  the  title  of 
a  transferee  to  whom  the  certificate  had  been  delivered  before 
the  registration  of  the  other  transfer.-  At  ail  events,  this  result 
should  be  reached  unless  the  company  had  reasonable  ground 
to  suppose  that  the  certificate  had  been  destroyed. 

Nevertheless,  the  opposite  conclusion  was  recently  reached  by 
the  English  Court  of  Appeal,  which  held  that  under  such  cir- 

>  Cushman  v.  Thayer  Mfg.  Jew-  v.  Thom-pson,  103  Va.  58;  48  S.  E. 

elry  Co.,  76  N.  Y.  365;  32  Am.  Rep.  506. 

315;    Bank  v.  Lanier,  11  Wall.  369;         ^  Colonial  Bank  v.   Whinney,  11 

Strange  v.  Houston,  etc.  R.  R.  Co.,  A.     C.     426,     437-438,     per     Lord 

53  Tex.  162;   Greenleaf  v.  Ludington,  Blackburn. 

15  Wise.   558;    82  Am.   Dec.   698;         Cf.  Strange  v.  Houston,  etc.  R.  R. 

Supply  Ditch  Co.  v.  Elliott,  10  Colo.  Co.,  53  Tex.  162,  168;    Greenleaf  v. 

327;    15  Pac.  691;    3  Am.  St.  Rep.  Ludington,   15  Wise.  558;    82  Am. 

586.  Dec.  698 ;  Guilford  v.  Western  Union 

But   see    Bank   of   Commerce   v.  Tel.  Co.,  59  Minn.  332;    61  N.  W. 

Bank  of  Newport,  63  Fed.  898,  902  324;    50  Am.  St.  Rep.  407  (where 

(headnote  misleading);    11  C.  C.  A.  the    certificate    had    been    lost    for 

484.  twelve  years);    Cleveland,  etc.  R.  R. 

2  Cleveland,  etc.  R.  R.  Co.  v.  Rob-  Co.  v.  Rabbins,  35  Oh.  St.  483  (where 

bins,  35  Oh.  St.  483;    Factors,  etc.  the  fact  that  the  transfer  had  been 

Ins.' Co.  V.  Marine  Dry  Dock,  etc.  Co.,  registered  and  a  new  certificate  is- 

31  La.  Ann.  149;    Brisbane  v.  Dela-  sued  in  pursuance  of  a  by-law  to 

ware,  etc.  R.  R.  Co.,  94  N.  Y.  204;  replace  a  certificate  which  was  sup- 

First  Nat.  Bank  v.  Stribling,  16  Okl.  posed    to   be    lost   was   thought   to 

41;  86  Pac.  512.  make  no  difference  in  the  company's 

As  to  the  effect  of  the  issue  of  a  liabiUty) ;  Pottsville  Bank  v.  Miners- 
new  certificate  to  the  transferor  in  ville  Water  Co.,  211  Pa.  566;  61  Atl. 
pursuance  of  judicial  proceedings  119  (where  the  first  transferee  and 
presupposing  that  the  original  cer-  holder  of  the  certificate  was  held  to 
tificate  had  been  lost,  see  Downing  be  barred  by  laches). 

732 


§  832-§  1011]  ESTOPPEL   OF   COMPANY  §  911 

cumstances  no  estoppel  should  be  raised  against  the  company.' 
It  is  submitted  that  this  decision  is  narrow,  and  unsuited  to 
modern  commercial  conditions.  The  preci.se  ground  for  the 
estoppel  which  has  been  suggested  al)ove  does  not  seem  to  have 
been  called  to  the  attention  of  the  court,  the  contention  of  coun- 
sel being  that  the  company  was  estopped  by  a  "certification"  - 
of  the  (irst  transfer  —  a  contention  which  the  judgments  of  the 
learned  judges  answer  very  clearly  and  conclusively. 

As  stated  above,  the  true  doctrine  would  seem  to  be  that  an 
outstanding  certificate  is  a  continuing  representation  on  the 
company's  part  that  the  person  named  therein  is  holder  of  the 
shares  represented  thereby;^  and  that  this  representation  con- 
tinues until  the  certificate  is  cancelled  or  surrendered,  or  until 
its  remaining  in  circulation  can  no  longer  be  attributed  to 
the  company.  Thus,  even  a  decree  against  the  certificate  holder 
declaring  him  to  hold  the  shares  in  trust  will  not  prevent  the 
company  from  being  estopped  to  deny  the  title  of  a  subsequent 
botm  fide  purchaser  taking  the  certificate  from  the  trustee;  *  and 
hence  the  court  will  not  enter  such  a  decree  without  first  secur- 
ing a  surrender  of  the  certificate.^  On  the  other  hand,  it  has 
been  held  that  where  shares  are  sold  under  a  decree  of  a  court 
of  equity  passed  in  a  case  to  which  the  holder  is  party,  the  com- 
pany is  not  bound  to  recognize  the  title  of  a  purchaser  who  sub- 
sequently obtains  the  certificate  from  the  holder,  without  notice 
of  the  judicial  sale.^ 

§  911.      Certificate   issued    to    Fictitious    Person.  —  A    share- 

'  Longman  v.  Bath  Electric  Tram-  (headnote  misleading);    11  C.  C.  A. 

ways  (1905),  1  Ch.  646.     Cf.  Rain-  484;  Guilford  v.  Western  Union  Tel. 

ford  V.  James  Keith  &  Blackman  Co.  Co.,    59    Minn.    332,    345-346;     61 

(1905),   1  Ch.  296  (reversed  on  an-  N.  W.  324;   50  Am.  St.  Rep.  407. 
other  point  in  S.  C.  (1905),  2  Ch.  147.         *  Holbrook    v.    New  Jersey   Zinc 

An  earlier  Ontario  case  is  in  accord  Co.,  57    N.    Y.    616;    Joslyn  v.    St. 

with  the  English  law  as  established  Paul  Distilling  Co.,  44  Minn.   183; 

by  Longman  w  Bath  Electric  Tram-  46  N.  W.  337. 

ways.     Smith  v.    Walkerville   Malle-         Cf.  Bean  v.  Am.  L.  ifc  T.  Co.,  122 

able  Iron  Co.,  23  Ont.  App.  95.  N.  Y.  622;   26  N.  E.  11. 

'^  As   to   what   is   "certification"         *  Joslyn  v.  St.  Paul  Distilling  Co., 

of  a  transfer,  see  supra,  §  869.  44  Minn.  183;   46  N.  W.  337. 

^  Joslyn  V.  St.  Paid  Distilling  Co.,         *  Sprague  v.  Cocheco  Mfg.  Co.,  10 

44  Minn.  183;  46  N.  W.  337;  Strange  Blatchf.  173. 

V.  Houston,  etc.  R.  R.  Co.,  53  Tex.        Cf.   Printing  Telegraph  Xews  Co. 

162.   168.  V.  Brantingham,  77  N.  Y.  App.  Div. 

But    see    Bank   of   Commerce   v.  280;    72  N.  Y.  Supp.  190. 
Bank  of  Newport,  63  Fed.  898,  902 

733 


§  912  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

certificate  impliedly  represents  that  the  person  named  therein 
as  shareholder  is  a  real  person,  and  the  company  is  therefore 
estopped  from  asserting  him  to  be  fictitious.  Hence,  it  has 
been  thought  that  a  certificate  made  out  in  favor  of  a  fictitious 
person  is  in  efiect  the  same  as  if  it  represented  the  bearer  to 
be  the  owner  of  the  shares.'  This  notion  is  based  on  analogy 
to  the  law  of  bills  and  notes,  by  which  an  instrument  payable 
to  a  fictitious  payee  is  deemed  payable  to  bearer;  but  inasmuch 
as  corporations  usually  have  no  power  to  issue  share-certificates 
payable  to  bearef,-  the  analogy  is  far  from  complete. 

§  912-§  916.     In  whose  Favor  Estoppel  will  be  raised. 

§  912.  Only  in  favor  of  Transferee  who  relied  and  acted  reason- 
ably in  reljdng  upon  the  Certificate.  —  A  transferee  of  a  certificate 
cannot  claim  title  by  estoppel  to  the  shares  purporting  to  be  rep- 
resented thereby  unless  he  was  actually  led  by  the  certificate 
to  believe  that  his  transferor's  title  was  good,  nor  unless  he 
acted  reasonably  in  so  believing.  But  a  transferee  is  not  negli- 
gent who  relies  upon  the  company's  representation  as  expressed 
in  the  certificate,  and  therefore  makes  no  inquiries  at  the  com- 
pany's office;  and  hence  such  a  transferee  can  enforce  the 
estoppel  against  the  company  even  though  the  inquiries,  if  he 
had  made  them,  would  have  disclosed  the  defect  in  title.^  More- 
over, the  estoppel  arises  even  in  favor  of  a  transferee  who  had 
knowledge  of  a  doubt  as  to  the  title  of  his  transferor ;  *  for  he 
had  a  right  to  infer  that  the  company  before  issuing  a  certificate 
to  the  transferor  had  considered  all  such  doubts  and  found  them 
baseless.  An  officer  or  director  of  the  company  whose  duty  it 
was  to  know  of  the  invalidity  of  the  share-certificate  will  not  be 
allowed  as  transferee  thereof  to  claim  title  to  the  shares  as  against 
the  company  by  estoppel.^ 

'  Jarvis  v.  Manhattan  Beach  Co.,  Third  Nat.   Bank,    1   Oh.   Circ.   Ct. 

5.3  Hun  (N.  Y.)  .362,  365;    6  N.  Y.  199). 

Supp.  703,  affirmed,  148  N.  Y.  652;         Cf.  Allen  v.  South  Boston  R.  R. 

43  N.  E.  68;    31  L.  R.  A.  776;    51  Co.,  1.50  Mass.  200;    22  N.  E.  917; 

Am.  St.  Rep.  727.  15  Am.  St.  Rep.  185;  5  L.  R.  A.  716. 
^  Supra,  §  852.  *  Mandelhaum  v.  North  American 

*  Cincinnati,  etc.  Ry.  Co.  v.  Citi-  Mining  Co.,  4  Mich.  465. 

zens  Nat.  Bank,  56  Oh.  St.  351;    47         *  Houston,   etc.    Ry.    Co.    v.    Van 

N.  E.  249;    43  L.  R.  A.  777  (over-  Alstyne,  .56  Tex.  439.    But  cf.  im'ra, 

ruling   Cincinnati,    etc.    Ry.   Co.    v.  §  1538,  §  1540. 

734 


§  832-§    Kill]  ESTOPI'EL    OF    COMPANY  §014 

§  913.  Mere  Volunteers. — The  estoppel  will  not  be  raised 
in  favor  of  a  mere  volunteer.  Hence,  inasmuch  as  share- 
certificates  are  not  negotiable  instruments,  a  transferee  who 
takes  the  certificate  as  collateral  security  for  an  antecedent 
debt  cannot  claim  the  rights  of  holder  for  value,  and  there- 
fore cannot  hold  the  company  estopj)ed  from  denying  his  title.' 
Moreover,  he  must  actually  have  given  value;  it  is  not  enough 
that  he  may  have  agreed  to  do  so  by  a  contract  which  he  can 
rescind  for  failure  of  consideration  if  the  title  to  the  shares  is 
not  good.-  On  the  other  hand,  a  volunteer  claiming  through  a 
person  whose  title  the  company  was  estopped  from  denying 
succeeds  to  the  rights  of  his  pre^lecessor  in  title. 

§  914.  Estoppel  in  Favor  of  Person  to  whom  Certificate  was 
issued  —  When  it  will  not  he  raised.  —  The  estoppel  raised 
against  a  corporation  by  its  issue  of  a  share-certificate  to  a 
person  who  is  not  legally  entitled  to  the  shares  which  the  cer- 
tificate purports  to  represent  can  in  general  be  invoked  only  by 
some  transferee  from  the  person  to  whom  the  certificate  is  issued 
and  not  by  that  person  himself.^  Only  in  exceptional  cases  can 
the  person  named  in  the  certificate  be  proved  to  have  altered 
his  position  in  reliance  upon  the  representation  contained  irf  the 
certificate;  and,  therefore,  in  most  cases  a  necessary  prerequisite 
to  an  estoppel  in  pais  is  lacking.  The  certificate  holder's  loss 
is  not  occasioned  by  the  company's  representation.  For  instance, 
if  a  corporation  issues  a  share-certificate  to  a  person  who  pre- 
sents a  forged  transfer  for  registration,  and  the  certificate  holder 
pledges  the  certificate  as  collateral  for  a  loan,  the  company 

'  Kisterbock's  Appeal,  127  Pa.  St.  4  Sup.  Ct.  345.     Cf.  Liicile  Dreijfus 

601;    18  Atl.  381;    14  Am.  St.  Rep.  Mining  Co.  v.  WUlard  (Wash.),  89 

868.     Cf.  supra,  §  843,  and  Miller  v.  Pac.  935. 

Houston  Citi/  liy.  Co.,  69  Fed.  63;         But   see   Allen   v.    South   Boston 

16  C.  C.  A.  128  (where  the  certificate  R.  R.  Co.,  150  Mass.  200;   22  N.  E. 

was  deposited  as  margin  on  a  pur-  917;  15  Am.  St.  Rep.  185;  5  L.  R.  A. 

chase  of  cotton  for  future  deUvery).  716. 

^  Haydcn  v.  Charter  Oak  Driving         As  to  whether  the  company  can 

Park,  63  Conn.  142 ;   27  Atl.  232.  maintain  a  bill  in  equity  to  cancel  a 

*  Houston,   etc.    Ry.    Co.    v.    Van  certificate  on  the  ground  of  tiie  lia- 

Alstyne,   56   Tex.   439;     Trimble   v.  bihty   which   might   be   created   by 

Union  \at.  Bank,  71  Mo.  App.  467;  transferring  the  same  to  a  bona  fide 

Brown  v.  Howard  Fire  Ins.  Co.,  42  purchaser,  see  Reno  Oil  Co.  v.  Cul- 

Md.  384;  20  Am.  Rep.  90;    Wright's  ver,  69  N.  Y.  Supp.  969;    60  N.  Y. 

Appeal,  99  Pa.  St.  425;    Moores  v.  App.  Div.  129. 
Citizens'  Nat.  Bank,  HI  U.  S.  156; 

735 


§  915  TRANSFER   AND    TRANSMISSION  [ChAP.  XV 

would  be  estopped  from  denying  the  title  of  the  pledgee ; '  but 
if  the  loan  is  paid  off  so  that  the  unincumbered  title  revests  in 
the  pledgor,  the  estoppel  is  at  an  end,-  for  he  had  not  been  mis- 
led by  any  representation  of  the  company.  It  would  be  different 
if  the  person  to  whom  the  certificate  was  issued  first  sold  the 
shares  to  a  bona  fide  purchaser  and  then  bought  them  back. 
In  that  case  he  would  succeed  to  the  purchaser's  title  by 
estoppel. 

§  915.  When  it  will  be  raised.  —  In  some  rather  exceptional 
cases,  however,  the  company  may  be  estopped  by  the  issue  of 
a  certificate  even  when  the  certificate  has  never  passed  from 
the  possession  or  control  of  the  person  to  whom  it  was  issued. 
Wherever  it  can  be  shown  that  the  person  to  whom  the  certifi- 
cate was  issued  altered  his  position  in  some  way  to  his  preju- 
dice in  reliance  upon  the  company's  representation  that  he  was 
entitled  to  the  shares  represented,  or  supposed  to  be  represented, 
by  the  certificate  and  that  he  acted  as  a  reasonable  man  in  so 
relying  thereon,  the  company  will  be  estopped  from  denying  the 
truth  of  its  representation  just  as  it  would  be  in  the  case  of  a 
transferee  of  the  certificate.  For  instance,  the  company  will  be 
estopped  if  the  person  to  whom  the  certificate  is  issued  makes 
a  contract  to  sell  the  shares  supposed  to  be  represented  by  the 
certificate  and  so  incurs  liability,*  or  pays  a  call  upon  the  shares.^ 
So,  where  the  person  to  whom  the  certificate  is  issued  is  led  to 
believe  that  everything  in  connection  with  his  title  is  correct  — 
is  lulled  into  security  —  so  that  he  loses  his  remedy  against  the 
person  who  was  responsible  for  the  defect  in  his  title,  the  com- 

»  Metropolitan  Sav.  Bank  v.  N.  E.  109;  15  Am.  St.  Rep.  222; 
Mayor,  etc.  of  Baltimore,  63  Md.  6    5  L.  R.  A.  849. 

(holding  that  the  corporation  is  lia-  '  Cf.  Fifth  Ave.  Bank  v.  Forty- 
ble  to  make  good  to  the  lender  second  St.,  etc.  R.  R.  Co.,  137  N.  Y. 
money  advanced  to  the  forger  after  231,  238;  33  N.  E.  378;  33  Am.  St. 
the  issue  of  a  certificate  in  the  Rep.  712;  19  L.  R.  A.  331. 
forger's  name  but  not  money  ad-  ■*  Bcdkis  Consolidated  Co.  v.  Tom- 
vanced  to  the  forger  prior  to  that  kinson  (1893),  A.  C.  396. 
time  upon  the  faith  of  the  old  cer-  But  the  rule  is  otherwise  where 
tificate  with  forged  transfer  endorsed  the  contract  of  sale  was  made  after 
thereon).  notice  of  the  forgery.     Hambleton  v. 

^  Simm  V.  Anglo-American  Tele-    Central  Ohio  R.  R.  Co.,  44  Md.  551. 
graph  Co.,  5  Q.  B.  D.  188;    Erskine         Cf.    Brown  v.   Howard  Fire   Ins. 
V.    Laewenstein,    82    Mo.    301,    305-    Co.,  42  Md.  384;  20  Am.  Rep.  90. 
306  (headnote  inadequate).  ^  Hart  v.  Frontino  Gold  Mining 

Cf.    Farrington   v.    South   Boston    Co.,  L.  R.  5  Ex.  111. 
R.  R.  Co.,  150  Mass.  406,  408;    23 

736 


§  832-§  1011]  ESTOPPEL    OF    COMPANY  §  91G 

pany  is  estopped  from  denying  his  right  to  the  shares.'  For 
instance  the  company  will  be  estopped  if  the  broker  who  sold 
the  shares  to  the  person  to  whom  the  company  issued  the  cer- 
tificate becomes  in  the  meantime  insolvent  so  that  the  remedy 
against  him  becomes  worthless;  but  in  order  to  raise  an  estoj)j)el 
of  this  sort,  it  must  appear,  first,  that  the  broker  was  originally 
solvent,-  so  that  the  person  to  whom  the  company  issued  the 
certificate  had  originally  a  valuable  remedy,  and  secondly,  that 
the  broker  sultscqucntly  became  insolvent,^  so  that  the  remedy 
became  worthless;  and  thirdly,  that  the  inaction  was  really  in 
reliance  upon  the  company's  representation  and  was  not  due  to 
some  other  cause. ^  The  person  who  invokes  the  estoppel  must 
prove  affirmatively  the  insolvency  of  the  broker  or  other  person 
against  whom  he  claims  that  a  remedy  was  lost ;  but  solvency 
at  the  time  of  the  issue  of  the  certificate  will  be  presumed  unless 
the  contrary  appear.^ 

If  a  person  claiming  under  a  forged  or  otherwise  invalid  trans- 
fer agrees  to  sell  the  shares  and  accordingly  presents  the  transfer 
for  registration  with  a  request  that  a  certificate  be  issued  in  the 
name  of  his  vendee  without  any  active  intervention  on  the  latter's 
part,  the  vendee,  if  he  pay  the  money  on  the  faith  of  the  new 
certificate  so  made  out  in  his  name,  may  hold  the  company 
estopped  from  denying  his  title.' 

Where  an  agent  of  the  corporation  issues  shares  on  its  behalf 
to  a  person  w^ho  understands  that  he  is  acquiring  shares  not  by 
transfer,  but  from  the  company  itself,  the  company  is  liable  if 
the  transaction  w^as  w'ithin  the  real  or  apparent  scope  of  the 
agent's  authority;  but  not  otherwise.^ 

§  916.  Whether  Person  to  whom  Certificate  was  issued  acts 
reasonably  in  relying  thereon.  —  Furthermore,  the  estoppel  will 
not  be  raised  unless  the  person  to  whom  the  certificate  was 
issued  acted  reasonably  in  relying  upon  the  company's  assur- 

*  Dixon  V.  Kennaway  &  Co.  '  Dixon  v.  Kennaway  &  Co. 
(1900),  1  Ch.  833;   Manhattan  Beach    (1900),  1  Ch.  833. 

Co.  V.  Ilarned,  27  Fed.  484.  »  Trimble  v.  Union  Xat.  Bank,  71 

*  Foster  v.  Tyne  Pontoon,  etc.  Co.,    Mo.  App.  467. 

63  L.  J.  Q.  B.  50.  55-56.  Cf.     Machinists    Xat.     Bank     v. 

*  Dixon   V.    Kennaway,    etc.    Co.    Field,  126  Mass.  345. 

(1900),  1  Ch.  833.  ■   Rogers   v.    Southern   Fiber   Co. 

*  Foster  v.  Tyne  Pontoon  Co.,  63  (La.).  44  So.  442.  See  also  supra, 
L.  J.  Q.  B.  50,  53.  ^  5S1.    Cf.  supra,  §  800. 

VuL.  I.  — 17  737 


§  916  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

ance  of  the  soundness  of  his  title.  ^Vllethe^  he  does  act  reason- 
ably in  so  relying  depends  in  part  on  whether  the  defect  in  his 
title  is  due  to  circumstances  of  which  he  has  at  least  as  much 
opportunity  of  knowing  as  the  company,  or  to  facts  which  lie 
peculiarly  within  the  knowledge  of  the  corporation.  If  the 
latter  be  the  case,  he  is  entitled  to  rely  upon  the  company's 
assurance.'  For  instance,  if  the  defect  in  his  tide  be  due  to  the 
fact  that  the  person  from  whom  he  derived  title  was  not  the 
reo-istered  o\sTier  of  the  shares,  he  is  not  guilty  of  negligence 
because  he  relies  upon  the  certificate  issued  to  him  by  the  com- 
pany and  fails  to  inspect  the  register  so  as  to  discover  the  defect 
in  his  title.- 

On  the  other  hand,  where  the  defect  in  the  title  grows  out  of 
facts  which  do  not  lie  peculiarly  within  the  knowledge  of  the 
company,  particularly  where  the  company  has  been  induced  to 
issue  the  certificate  by  some  representation  express  or  implied 
of  the  person  to  whom  it  is  issued,  the  latter  has  no  right  to  go 
to  sleep  in  reliance  upon  the  certificate,  and  if  he  do  so  cannot 
hold  the  company  estopped  by  the  certificate.  This  principle 
finds  application  in  the  case  of  forged  transfers.  If  a  person 
presents  to  a  corporation  a  forged  transfer  of  shares  and  requests 
registration,  he  impliedly  represents  that  the  transfer  is  genuine;  ^ 
and,  however  innocent  he  may  have  been  of  complicity  in  the 
forgery  or  even  of  any  knowledge  or  suspicion  that  the  transfer 
was  spurious,  he  cannot  complain  that  by  registering  the 
transfer  and  issuing  a  certificate  according  to  his  request  the 
company  lulled  him  into  security,  and  if  by  reason  of  his  false 
feeling  of  security  he  loses  his  remedy  against  the  forger  or 
against  any  other  person,  he  cannot  maintain  that  the  company 
is  estopped  from  denying  his  title.* 

1  Balkis  Consolidated  Co.  v.  Tom-         ^  Infra,  §  942. 

kinson  (1893),  A.  C.  396  (headnote  *  Simm  v.  Anglo- American  Tele- 
inadequate),  graph  Co.,  5  Q.  B.  D.  188. 

2  Dixon  V.  Kennaway  &  Co.  Cf.  Balkis  Consolidated  Co.  v. 
(1900),  1  Ch.  833.  See  also  Salis-  Tomkinson  (1893),  A.  C.  396;  Bos- 
bury  Mills  V.  Townsend,  109  Mass.  ton,  etc.  R.  R.  Co.  v.  Richardson,  135 
115;  Cincinnati,  etc.  Ry.  Co.  v.  Mass.  473;  Trimble  v.  Union  Nat. 
Citizens'  Nat.  Bank,  56  Oh.  St.  351;  Bank,  71  Mo.  App.  467;  HUdyard 
47  N.  E.  249;   43  L.  R.  A.  777.  v.  South  Sea  Co.,  2   P.   Wms.   76; 

But  cf.  Houston,  etc.  Ry.  Co.  v.  Brown  v.  Howard  Fire  Ins.  Co.,  42 
Van  Alstyne,  56  Tex,  439.  Md.  384;  20  Am.  Rep.  90;   Hamble- 

738 


§  832-§  1011]  REQUISITES    OF    CERTIFICATE  §  917 


§  91 7- §  921.     Requisites  of  Certificate  in  order 
to  raise  Estoppel. 

§  917.  Certificate  must  be  issued  by  Authority  of  Company.  — 
In  order  that  the  c()in[)any  should  he  estopped  hy  the  issue  of  a 
certificate,  there  must  of  course  he  evidence  that  the  certificate 
was  issued  hy  the  company's  authority  —  that  is  to  sav,  hy 
agents  of  the  corporation  acting  within  the  scope  of  their  real 
or  apparent  authority.^ 

Whether  the  issue  of  the  certificate  can  be  deemed  within 
the  scope  of  authority  of  the  officers  or  agents  by  whom  the 
issue  is  effected  must  be  decided  by  the  principles  of  the  law  of 
agency,  which  are  not  within  the  scope  of  the  present  discussion. 
The  fact  that  the  agent  in  issuing  the  certificate  is  acting 
fraudulently  and  for  his  own  gain  is  by  no  means  conclusive 
to  show  that  the  instrument  is  not  issued  within  the  .scope  of 
the  agent's  authority  so  as  to  estop  the  company.  The  circum- 
stance that  a  share-certificate,  while  not  technically  negotiable, 
is  intended  to  pass  from  hand  to  hand  as  the  evidence  of  owner- 
ship of  the  shares  which  it  purports  to  represent  is  sufficient  to 
exclude  the  application  of  the  doctrine  of  Grant  v.  Norway,^  in 
which  leading  case  the  court  held  that  a  carrier  is  not  bound 
by  a  bill  of  lading  issued  by  an  agent  where  no  goods  at  all 
had  been  delivered  for  carriage.  In  the  case  of  certificates  of 
shares,  issued  by  a  transfer  agent  to  a  supposed  transferee,  the 
company  may,  therefore,  be  bound  although  no  transfer  at  all 
had  been  presented.^     Indeed,  even  the  fact  that  some  at  least 

ton  V.  Central  Ohio  R.  R.  Co.,  44  Md.  porate  seal  and  blank  certificates  of 

551;    Ruben  v.  Great    Fingall    Con-  stock  not  sufficient  evidence  of  au- 

solidated  (1906),  A.  C.  439.  thority  in  president). 

As  to  the  rights  of  the  company  -  Grant  v.  Xorway,  10  C.  B.  665. 

against  a  transferee  under  a  forged  ^  N.  Y.,  etc.  R.  R.  Co.  v.  Schuyler, 

transfer,  see  infra,  §  941.  34  N.   Y.  30;  Fifth  Ave.   Bank   v. 

'  Farmers'  Bank  v.  Diebold  Safe,  Forty-second  St.,  etc.  R.  R.  Co.,  137 

etc.  Co.,  66  Oh.  St.  367;    64  N.  E.  N.  Y.  231;  33N.  E.  378;  33  Am.  St. 

518;     90    Am.    St.    Rep.    586;     58  Rep.  712;    19L.  R.  A.  331;   Havens 

L.   R.   A.   620   (where  a  certificate  v.   Bank  of    Tarboro,    132   N.    Car. 

which  had  been  endorsed  in  blank  214;  43  S.  E.  639;   95  Am.  St.  Rep. 

and   delivered   to   the   company   as  627. 

collateral  security  was  fraudulently  Hut  see  Hall  v.  Rose  Hill,  etc.  Co., 

abstracted  and  reissued  by  the  secre-  70   III.  673.     This  case  would  seem 

tary);    Rogers  v.  Southern  Fiber  Co.  dithcult  to  reconcile  with  the  rule  in 

(La.),  44  So.  442  (custody  of  cor-  Royal  British  Bank  v,  Turquand,  6 

739 


.§  91S  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

of  the  signatures  attached  to  a  certificate  are  forgeries  and  that 
the  seal  of  the  company  is  affixed  without  the  authority  of  the 
directors  will  not  prevent  the  certificate  from  estopping  the  com- 
pany if  it  was  issued  from  the  company's  office  by  a  transfer 
agent  clothed  with  apparent  authority  and  impliedly  representing 
the  instrument  to  be  valid. ^ 

On  the  other  hand,  where  in  1881  a  certificate  was  signed  in 
blank  by  the  president  of  a  company  and  intrusted  to  the  other 
officers  to  be  used  in  case  a  shareholder  should  desire  to  transfer 
his  shares  in  the  president's  absence,  and  where  in  1888  the  then 
president  of  the  company,  who  in  1881  had  been  secretary,  filled 
up  the  blanks,  inserting  his  own  name  as  shareholder,  and  forg- 
ing the  signature  of  the  person  who  had  been  treasurer  in  1881 
(which  was  the  date  borne  by  the  certificate),  and  countersign- 
ino-  with  his  own  name  as  secretary,  the  court  held  that  the 
forger's  authority  to  issue  certificates  dated  in  1881  while  he 
was  secretary  had  absolutely  determined  upon  his  ceasing  to 
hold  the  office  of  secretary,  and  consequently  that  even  a  bona 
fide  purchaser  or  pledgee  from  the  forger  had  no  claim  against 
the  company  by  reason  of  the  certificate.^ 

§  918.  Certificates  issued  for  unlawful  Piirposes.  —  It  has  been 
held  by  high  authority  that  share-certificates  issued  in  aid  of 
rebellion  will  not  create  any  estoppel  prejudicial  to  the  loyal 

E.  &  B.  327  (as  to  which  see  infra,  R.  R.  Co.  v.  Franklin  Bank,  60  Md. 

§  1474),  and  with  estabUshed  princi-  36. 

pies  of  the  law  of  agency.  But  see  Hill  v.  Jewett  Publishing 

Cf.  Mechanics  Bank  v.  New  York,  Co.,  154  Mass.  172;    28  N.  E.  142; 

etc.  R.  R.  Co.,  13  N.  Y.  599.  26  Am.  St.  Rep.  230;    13  L.  R.  A. 

^  Shaivv.  Port  Philip  Mining  Co.,  193;     Ruben   v.   Great  fingall  Con- 

13  Q.  B.  D.  103;  Fifth  Avenue  Bank  solidated  (1906),  A.  C.  439  (a  mere 

V.   Forty-second  St.,  etc.  R.  R.  Co.,  dictum,  since  the  person  in  whose 

137  N.   Y.   231;  33  N.  E.  378;  33  favor  the  estoppel  was  invoked  was 

Am.  St.  Rep.  712;  19  L.  R.  A.  331;  the  person  to  whom  the  certificate 

Hellman  v.   Forty-second  St.,  etc.  R.  was  issued  and,  therefore,  under  the 

R.  Co.,  74  Hun  529;  26  N.  Y.  Supp.  circumstances   was   not   entitled  to 

553,  affirmed  short,  148  N.  Y.  727;  rely  thereon). 

42  N.  E.  723;  Tome  v.  Parkersburg  ^  Manhattan  Life  Ins.  Co.  v. 
Branch  R.  R.  Co.,  39  Md.  36;  17  Forty-second  St.,  etc.  R.  R.  Co.,  139 
Am.  Rep.  540.  N.  Y.  146;  34  N.  E.  776.    Note  that 

Cf     Jarvis   v.    Manhattan    Beach  Mutual  Life  Ins.  Co.  v.  Forty-second 

Co.,  53  Hun  (N.  Y.)  362;    6  N.  Y.  St.,  etc.  R.  R.  Co.,  74  Hun  505;  26  N. 

Supp.  703,  affirmed,  148  N.  Y.  652;  Y.  Supp.  545,  a  later  case  in  a  lower 

43  N.  E.  68;  31  L.  R.  A.  776;  51  New  York  court,  would  seem  to  be 
Am.    St.    Rep.    727 ;     Western   Md.  inconsistent  with  the  principal  case. 

740 


§  832-§  1011]  REISSUED    CERTIFICATES  §  920 

members  of  the  company.'  Perhaps  this  decision  was  (hie  in 
part  to  unconscious  j)<)ntic:il  j)rcju(hce.  At  any  rate,  it  would 
hardly  be  a  safe  generalization  that  certificates  issued  for  any 
illegal  purpose  will  be  insufficient  to  raise  an  estoppel  against 
the  company. 

§  919.  Certificate  issued  to  one  of  the  OflBcers  who  sign  it 
on  behalf  of  the  Company.  —  The  fact  that  one  of  the  officers 
who  sign  a  share-certificate  is  the  person  named  therein  as  the 
owner  of  the  shares  represented  thereby  is  not  deemed  a  sus- 
picious circumstance,  and  will  not  prevent  the  raising  of  an 
estoppel  in  favor  of  a  bona  fide  purchaser  who  relies  upon  the 
certificate.-  The  certificate  is  held  to  be  sufficiently  authenti- 
cated by  the  signature  of  the  other  and  disinterested  officer,  and 
by  the  corporate  seal.  There  is  nothing  to  excite  suspicion  in 
such  a  certificate  as  there  is,  according  to  many  authorities,  in 
a  note  payable  to  one  of  the  officers  who  execute  it  on  behalf 
of  the  company;  for  although  officers  should  not  ordinarily 
enter  into  contracts  with  the  corporation,  yet  officers  are  usually 
shareholders  and  must  have  certificates  as  evidence  of  title. 

§  920.  Certificate  surrendered  to  Company  and  reissued  with- 
out its  Authority.  —  Where  a  share-certificate  which  has  been 
surrendered  to  the  corporation  for  cancellation  is  abstracted 
from  the  company's  safe  and  sold  to  a  bona  fide  purchaser  by 
an  employee  who  had  access  thereto,  the  company  is  not  deemed 
chargeable  with  negligence  even  though  the  failure  to  cancel 
the  certificates  upon  their  surrender  was  a  violation  of  the  by- 
laws: and  hence  the  company  is  not  estopped  from  denying 
the  title  of  the  purchaser  of  the  certificates  to  the  shares  pur- 
porting to  be  represented  thereby.' 

•  Dewing  v.  Perdicaries,  96  U.  S.  ton  R.  R.  Co.,   150  ^lass.  406;    23 

193.  N.  E.  109:    15  Am.  St.  Rep.  222;   5 

Cf.  Central  R.  R.  &  Banking  Co.  L.  R.  A.  849. 
V.  Ward,  37  Ga.  515.  Cf.  Havens  v.  Bank  of  Tarboro, 

2  Titus  V.  Great  Western  Turnpike  132  N.  Car.  214;    43  S.  E.  639;    95 

TJoorf,  61  N.  Y.  237;   Cincinnati,  etc.  Am.   St.   Rep.  627;    Lricile  Dreyfus 

Ry.  Co.  V.  Citizens'  Nat.   Bank.  56  Mining  Co.  v.   WHlard  (Wash.),  89 

oil.    St.    351;    47    N.    E.    249;    43  Pac.    935,    938-940    (headnote    in- 

L.  R.  A.  777  (overruling  Cincinnati,  adequate). 

etc.  Ry.  Co.  v.  Third  Xat.  Bank,  1  Oh.  ^  /^-„^j.  y    ^^^^  Musee  Co.,   148 

Circ.  Ct.  199);  Western  Md.  R.  R.  Co.  N.  Y.  441;    42  N.  E.  988;    51  Am. 

V.Franklin  Bank,  60  Md.  36,  47-48.  St.  Rep.  700;   31  L.  R.  A.  779. 

But  see  Farrington  v.  Souih  Bos-         Cf.  supra,  p.  739,  n.  1. 

741 


§  921  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

§  921.  Informal  Certificates.  —  A  share-certificate  may  estop 
the  company,  though  not  under  the  corporate  seal,  to  the  same 
effect  as  if  the  seal  were  duly  affixed.^  The  seal,  though  usual, 
is  not  necessary  in  order  to  make  the  instrument  a  share-cer- 
tificate.^ Indeed,  although  the  certificate  expressly  state  that  it 
shall  not  be  deemed  evidence  of  the  holder's  title,  the  estoppel 
may  nevertheless  be  raised.^  However,  the  more  informal  the 
instrument  be,  and  the  less  it  resemble  the  ordinary  and  normal 
share-certificate,  the  more  diflBcult  it  will  be  to  raise  an  estoppel." 


§  922-§  923.     Estoppel  raised  othenvise  than  bij  Issue 
of  Share-Certificate. 

§  922.  In  general.  —  Whilst  it  would  be  too  sweeping  an 
assertion  to  say  that  a  corporation  can  be  estopped  from  deny- 
ing the  title  of  a  claimant  to  shares  in  no  other  way  than  by  the 
issue  of  a  share-certificate,  yet  that  is  far  the  most  usual  ground 
of  estoppel.  Other  forms  of  representation  sufficient  to  raise  an 
estoppel,  there  may  undoubtedly  be;  but  they  are  rarely  met 
with.  Unless  the  company  has  issued  a  share-certificate,  there 
is  apt  to  be  very  great  difficulty  in  making  out  a  case  of  estoppel.^ 
For  instance,  the  regular  payment  of  dividends  to  a  claimant 
of  shares  may  have  the  effect  of  lulling  him  into  security  and 
of  leading  him  to  believe  his  title  to  be  unimpeachable,  yet  it 
does  not  amount  to  a  representation  made  by  the  company  with 
a  view  to  being  acted  upon  that  his  title  is  good,  and  conse- 
quently is  no  foundation  for  an  estoppel.^  Likewise,  entering 
a  person's  name  in  the  register  of  shareholders  does  not,  it  is 
submitted,  amount  to  a  representation  upon  which  he  is  en- 
titled to  rely  that  his  title  needs  no  attention.''    If,  however,  a 

'  Hart  V.  Frontino  Gold  Mining  Delaware  Loan  Co.,  9  Houst.  (Del.) 

Co.,    L.    R.    5    Ex.    Ill    (headnote  354;  32  Atl.  980,  although  not  called 

inadequate).  a    share-certificate    would    seem    to 

'^  Cf.  supra,  §  512.  have  been  such  in  legal  effect. 

'  Hart  V.  Frontino  Gold  Mining         *  Foster  v.  Tyne  Pontoon,  etc.  Co., 

Co.,    L.    R.    5    Ex.    Ill    (headnote  63  L.  J.  Q.  B.  50,  54. 
inadequate).  Cf.    Hambleton    v.    Central    Ohio 

*  See   infra,    §   923,   as  to  "cer-  R.  R.  Co.,  44  Md.  551. 
tification."  ^  Foster  v.  Tyne  Pontoon,  etc.  Co., 

*  The  instrument  relied  upon  to  63  L.  J.  Q.  B.  50,  55. 

raise  an  estoppel  in  Richardson  v.         But  see  Hart  v,  Frontino  Gold 

742 


§  832- §  1011]  CERTIFICATION  §  923 

person  who  is  contemplating  dealing  in  certain  shares  in- 
quires of  the  company  whether  a  certain  share-certificate  (whicli 
in  fact  is  forged)  is  valid  and  whether  a  transfer  endorsed 
thereon  is  genuine,  an  affirmative  answer  will  estop  the  com- 
pany from  asserting  as  against  him  that  the  certificate  is 
spurious  and  the  supposed  transferor  and  endorser  a  fictitious 
person.' 

§  923.  No  Estoppel  from  Certification  of  Transfer.  —  The 
"certification"  of  a  transfer  according  to  the  En<flish  custom 
cannot,  at  least  as  a  general  rule,  be  relied  upon  as  foundation 
for  an  estoppel.-  A  certification,  as  explained  alx)ve,  is  an  in- 
formal written  statement  given  out  by  the  company  to  the  effect 
that  a  share-certificate  has  been  lodged  with  the  company  by 
a  certain  person.  But  by  rea.son  of  its  informality  and  also  be- 
cause of  the  fact  that  it  is  not  intended  to  pass  from  hand  to 
hand  or  to  be  used  like  a  share-certificate  as  evidence  of  the 
holder's  title,  the  House  of  TiOrds  has  held  that,  like  a  bill  of 
lading,  it  is  within  the  doctrine  of  Grant  v.  Norway,  so  that  if 
the  company's  secretary  "certificates"  a  transfer  when  in  fact 
no  share-certificate  has  been  lodged  with  the  company,  his  act 
is  deemed  to  be  without  the  scope  of  his  authority  and  will  not 
estop  the  company  from  showing  that  fact.'  This  decision  of 
the  House  of  Lords  is  sometimes  cited  in  the  United  States  as 
though  it  were  applicable  to  ordinary  share-certificates.  This 
is  a  fundamental  error,  and  overlooks  the  whole  point  of  the 
case.  The  very  ground  of  the  decision  was  that  the  informal 
"certification"  could  not,  like  a  formal  share-certificate,  be  re- 
lied upon  to  raise  an  estoppel.  Lord  James  of  Hereford  added 
an  express  caution:    "The  judgment  now  given  must  not  l)e 

Mining  Co.,  L.  R.  5  Ex.  Ill  (head-  53  Hun  (N.  Y)  362;    6  N.  Y.  Supp. 

note  inadequate);    Ashby  v.  Black-  703,  affirmed,   148   N.   Y.    652;    43 

irell,  2  Eden  299,  Ambler  503;   Cen-  N.  E.  68;   31  L.  R.  A.  776;   51  Am. 

iral  R.  R.  ct  Banking  Co.  v.  Ward,  St.  Rep.  727. 

37  Ga.  515;  Bank  of  England  v.  Cf.  Fifth  Ave.  Bank  v.  Forty- 
Cutler  (1907),  1  K.  B.  889  (where  the  second  St.,  etc.  R.  R.  Co.,  137  N.  Y. 
Bank  of  England  by  permitting  231 ;  33  N.  E.  378;  33  Am.  St.  Rep. 
registration  of  a  forged  transfer  of  712;  19  L.  R.  A.  331;  Mutual  Life 
India  Stock  was  held  to  be  estopped  Ins.  Co.  v.  Forty-second  St.,  etc. 
from  denying  the  title  of  the  trans-  R.  R.  Co.,  74  Hun  (N.  Y.)  505, 
feree  to  the  prejudice  of  a  subsc-  514-517;  26  N.  Y.  Supp.  545. 
quent  bona  fide  purchaser  from  -  Supra,  §  869. 
him).  3  Qfarge  Whitechurch,  Ld.  v. 
'  Jarvis  v.  Manhattan  Beach  Co.,  Cavanagh  (1902),  A.  C.  117. 

743 


§  924  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

supposed  to  extend  to  certificates  which  are  made  evidence  of 
title  by  the  Act  of  1862,  and  which  are  passed  under  the  seal 
of  the  company."  ^ 


§   924-§   944.      RIGHTS   AND  LIABILITIES    UPON   PRES- 
ENTATION  OF    TRANSFER  FOR  REGISTRATION. 

§    924-§    939.       LIABILITIES    OF    COMPANY, 

§  924^§  930.     Duties  and  Rights  of  Conipaiiy  upon 
presentation  of  Transfer  for  Registration. 

§  924.  Duty  in  general  to  register  any  valid  Transfer  when 
presented.  — •  When  a  valid  transfer  is  duly  presented  for  regis- 
tration, the  duty  of  the  company  is  to  register  it  and  enter  the 
transferee's  name  in  the  list  of  shareholders."  Unless  expressly 
conferred  by  statute  or  the  company's  regulations,  neither  the 
directors  nor  the  shareholders  in  a  corporation  have  any  dis- 
cretion to  decline  to  register  a  valid  transfer.^  It  makes  no  dif- 
ference that  the  transfer  may  be  very  prejudicial  to  the  interests 
of  the  company.*  For  instance,  the  company  cannot  decline  to 
register  a  transfer  because  the  transferor  is  indebted  for  calls 
or  otherwise,  unless  such  a  power  is  expressly  conferred  by  the 
regulations ;  ^    nor  because  the  transferee  is  engaged  in  a  rival 

>  George     WhitecJntrch,     Ld.     v.  Mullanphy  Sav.   Bank,  8  Mo.  App. 

Cavanagh  (1902),  A.  C.  117,  134.  249;    People  ex  rel.  Bosqui  v.  Crock- 

2  As  to  the  right  to  refuse  to  ett,  9  Cal.  112;  Herdegen  v.  Cotz- 
register  a  transfer  which  is  insuffi-  /lawsen,  70  Wise.  589;  36N.  W.  385; 
ciently  stamped,  see  Maynard  v.  Herrick  v.  Humphrey  Hardware  Co. 
Consolidated  Kent  Collieries  Corp.  (Nebr.),  103  N.  W.  685.  Cf.  infra, 
(1903),  2  K.  B.  121.  §  955. 

3  Weston's  Case,  4  Ch.  20;  Gil-  But  see  Ex  parte  Parker,  2  Ch. 
herVs  Case,  5  Ch.  559,  565  (semble) ;  685  (where  the  court  refused  to  order 
Imperial  Starch  Co.,  10  Ont.  L.  R.  registration  of  a  transfer  made  to 
22  (holding  that  express  authority  escape  payment  of  certain  calls  the 
to  regulate  transfers  does  not  justify  making  of  which  thic  transferor  had 
a  prohibition  of  transfers) ;  Smith  persuaded  the  directors  to  postpone 
V.  Bank  of  Nova  Scotia,  8  Can.  Sup.  for  the  very  purpose  of  getting  an 
Ct.  558.  opportunity  to  effect  the  transfer). 

*  Townsend  v.  Mclver,  2  S.  Car.  A  shareliolder  may,  by  agree- 
25.  ment  —  for   example,  by  accepting 

*  Sargent  v.  Franklin  Ins.  Co.,  a  share-certificate  which  states  that 
8  Pick.  (Mass.)  90,  99-100;  19  Am.  no  transfer  by  a  shareholder  in- 
Dee.  306;  Heart  v.  State  Bank,  2  debted  to  the  company  will  be  per- 
Dev.  Eq.  (N.  Car.)  Ill;    Carroll  v.  mitted  —  voluntarily  give  the  com- 

744 


§  832-§   1011]  TIMES    FOU    REGISTRATION  §  925 

business.'  In  England,  tlie  transfer  must  be  registered,  altliout^h 
it  be  made  to  a  man  of  straw  for  the  very  purpose  of  escaping 
liability  as  a  shareholder,-  provided  only  it  be  not  colorable 
merely  —  that  is,  provided  the  transferor  retain  no  interest  in 
the  shares.  In  America,  the  company  may  always  decline  to 
register  a  transfer  made  to  a  man  of  straw  in  contemplation  of 
insolvency  on  the  part  of  the  company  for  the  purpose  (^f  esca[>- 
ing  liability;^  but  even  with  us  a  company  cannot  lawfullv  re- 
fuse to  register  a  transfer  merely  because  the  transferee  is  in- 
solvent.' Indeed,  the  fact  that  the  transferee  is  an  undischarged 
bankrupt  is  no  excuse  for  refusing  to  register  the  transfer.^  The 
motive  or  purpose  of  a  transfer  is  generally  quite  immaterial 
so  far  as  the  duty  of  the  company  to  register  the  transfer  is  con- 
cerned.°  If,  however,  a  transfer  is  executed  to  a  corporation 
which  has  no  corporate  capacity  to  hold  shares  in  another  com- 
pany, registration  of  the  transfer  may  be  refused.' 

§  92.5.  Right  to  regulate  Times  at  which  Transfers  may  be 
registered.  —  The  company  may,  of  course,  refuse  to  receive 
transfers  for  registration  at  unreasonable  hours.  For  instance, 
they  are  not  bound  to  receive  and  register  a  transfer  presented 
at  midnight.  So,  too,  as  to  the  days  on  which  transfers  can 
be  registered.  They  are  not  bound  to  register  a  transfer  on 
Sunday,  or  on  a  holiday,  or  on  Saturday  or  Wednesday,  or  any 
other  day  that  they  may  deem  inconvenient,  so  long  as  the  right  to 

pany  a  contractual  right  to  refuse  to  ^Sutton    v.    English    &    Colonial 

register    a    transfer.      Reynolds    v.  Produce  Co.  (1902),  2  Ch.  502. 

Bank  of  Mt.  Vernon,  6  N.  Y.  App.  «  Re   Klaus,    67   Wise    401 ;     29 

Div.    62;    39    N.    Y.    Supp.    623,  N.   W.   582;    State  ex  ret.   Page  v. 

affirmed  short,    158  N.  Y.   740;  53  Smith,  48  Vt.  266;    Rice  v.  Rocke- 

N.  E.  1131.  See  also  supra,  §  707,  feller,  134  X.  Y.  174;   31  N.  E.  907; 

§  70S.  30  Am.  St.  Rep.  658;    17  L.  R.  A. 

'  Rice  V.   Rockefeller,   134  N.   Y.  237;    Townsend  v.  M elver,  2  S.  Car. 

174;  31N.  E.  907;  30  Am.  St.  Rep.  25;    Senn  v.   Union,  etc.  Mercantile 

658;    17  L.  R.  A.  237.  Co..  115  Mo.  App.  685;  92  S.  W.  507. 

-  Regina  ex  rel.  Crea  v.  Midland  Cf.  infra,  §  1217,  as  to  transfers 

Counties  Ry.,   15   Ir.   Com.   L.   525;  for  the  purpose  of  increasing  trans- 

Weston's  Case,  4  Ch.  20;    Cawley  &  feror's     voting     rights.       See     also 

Co.,  42  Ch.  D.  209.  Baker's  Appeal,   108  Pa.  St.  510;    1 

3  That  such  a  transfer,   even    if  Atl.  78;   56  Am.  Rep.  231. 

registered,     does     not     release    the  As  to  the  power  of  a  court   of 

transferor  from  liability  as  a  share-  equity  to   refuse   to   aid   a   transfer 

holder,  see.sujira,  §  765.  made  for  the  purpose  of  wrecking 

■•  Chouteau  Spring  Co.  v.  Harris,  the  company,  see  infra,  §  934. 

20  Mo.  382.  '  See  supra,  §  878. 

745 


§  926  TRANSFER    AND    TRANSMISSION  [ChaP.  XV 

transfer  is  not,  under  color  of  such  rules,  substantially  abridged. 
^Moreover,  companies  may,  and  often  do,  close  their  transfer 
books  temporarily  for  some  reasonable  time  prior  to  a  share- 
holder's meeting,'  or  to  the  declaration  of  a  dividend.-  If 
this  were  not  done,  it  might  be  difficult  to  determine  who 
should  have  the  right  to  vote  at  the  meeting  or  to  receive  the 
dividend. 

§  926.  Right  to  refuse  to  register  Transfers  after  Insolvency  of 
Company.  —  Furthermore,  when  the  company  is  insolvent  and 
after  the  directors  have  resolved,  subject  to  the  approval  of  a 
shareholders'  meeting,  to  go  into  liquidation,  they  may  direct 
that  no  transfers  subsequently  received  shall  be  registered.^ 
Such  a  step  is  regarded  as  a  reasonable  preliminary  to  the 
winding-up,  and  is  proper  in  order  to  preserve  the  status  in  quo 
for  the  benefit  of  creditors  and  to  prevent  all  solvent  shareholders 
from  assigning  their  shares  and  escaping  liability.  This  rule, 
which  prevails  in  England  as  well  as  in  the  United  States,  is 
in  some  ways  a  close  approximation  to  the  American  doctrine 
which,  as  stated  above,  precludes  a  shareholder  from  trans- 
ferring his  shares  to  a  man  of  straw  in  contemplation  of  the 
company's  insolvency  for  the  purpose  of  escaping  liability.* 
However,  the  company  cannot  refuse  to  register  a  transfer  which 
was  made  and  presented  for  registration  before  the  company's 
insolvency,  although  after  presentation  of  the  transfer  the  com- 
pany has  become  insolvent.^  Moreover,  where  a  bank  which 
has  suspended  payment  resolves  not  to  go  into  liquidation  but 
to  attempt  to  rehabilitate  itself,  it  cannot  refuse  to  register  trans- 
fers subsequently  made  by  its  shareholders." 

§  927.  Right  to  delay  for  Consideration  of  Vahdity  of  Transfer. 
—  ^Moreover,  a  company  is  never  bound  to  register  a  transfer 

'  Cook    V.    Carpenter    (Pa.),    61         ^  A.  Mitchell's  Case,  4  A.  C.  548; 

Atl.  804:   212  Pa.  177.  N.  Mitchell  v.  City  of  Glascow  Bank, 

Contra:    Panton  and  the  Cramp  4  A.  C.  624. 
Steel  Co.,  9  Ont.  L.  R.  3.  Cf.  Richmond  v.  Irons,  121  U.  S. 

2  Jones  V.  Terre  Haute,  etc.  R.  R.  27,  56-59;    7  Sup.  Ct.  788;    Violet 

Co.,  57  N.  Y.    196,   202  (semble  —  Consolidated   Gold   Mining   Co.,    80 

where  the  company  adopted  the  un-  L.  T.,  n.  s.,  684. 
usual  and,  as  the  court  held,  unrea-         ■*  Supra,  §  765. 
sonable  course  of  opening  the  books         ^  Nation's  Case,  3  Eq.  77. 
again  for  a  day  or  two  immediately         ®  Smith  v.  Bank  of  Nova  Scotia, 

before  the  declaration  of   the  divi-  8  Can.  Sup.  Ct.  558. 
dend). 

746 


§  832-§  1011]  DUTIES    OF    CORPORATION  §  928 

forthwith  upon  its  presentation : '  a  reasonable  delay  for  the 
purpose  of  investigating  the  genuineness  of  the  transfer  is  always 
justifiable.^  Indeed,  in  England,  the  common  practice  seems 
to  be,  upon  presentation  of  a  transfer,  to  pcist  a  letter  of  incjuiry 
to  the  address  of  the  person  named  as  transferor;^  and  not 
until  the  expiration  of  a  reasonable  time  for  reply  to  this  letter 
or  until  an  answer  recognizing  the  transfer  as  genuine  is  actually 
received,  will  the  company  proceed  with  registration.  In  the 
United  States  such  care  and  deliberation  are  not  usually  prac- 
tised, but  are  nevertheless  always  permissible  and  proper.  A 
peremptory  refusal  to  register,  however,  not  placed  uikju  the 
ground  of  a  desire  to  investigate  the  transfer,  is  not  justifiable 
because  the  company  might  properly  have  demanded  time  for 
investigation.*  Moreover,  temporizing  on  the  part  of  the  com- 
pany will  not  be  tolerated;  and  evasive,  dilatory  answers  to  a 
request  to  register  a  transfer  will  be  equivalent  to  an  absolute 
refusal.* 

§  928.  Right  to  demand  Evidence  of  Validity  —  Production  of 
Transferors  Certificate,  etc.  —  The  company  may  also  require 
the  person  who  presents  a  transfer  for  registration  to  adduce 
reasonable  evidence  of  its  genuineness.  Precisely  what  evidence 
shall  be  required  rests  within  the  discretion  of  the  officers  of  the 
company.  To  insist  upon  the  production  of  the  transferor's 
share-certificate  is  certainly  a  reasonable  requirement;^  and 
indeed  in  most  cases,  at  least  in  America,  a  surrender  of  the 
certificate  would  be  necessary  in  order  to  relieve  the  company 

'  Cf.  Tucker  v.  Mulligan,  28  Vict.  «  Colonial  Bank  v.   Whinney,  11 

L.  R.  1  (holding  that  under  the  com-  A.  C.  426;  Societe  Generate  de  Paris 

pany's  articles  of  association  four-  v.  Walker,  11  A.  C.  20;   State  ex  rel. 

teen   days   were  to   be   allowed   for  Martin  v.  Xew  Orleans,   etc.    R.  R. 

registering  a  transfer).  Co.,  30  La.  Ann.  .308;  Supply  Ditch 

^Societe    Generate    de    Paris    v.  Co.  v.  Ei^io^,  10  Colo.  327;    15  Pac. 

Walker,  11  A.  C.  20,  41;    Ireland  v.  691;    3  Am.  St.  Rep.  586;    Isbell  v. 

Hart    (1902),    1    Ch.    522,    528-529  GraybUt,  19  Co\o.  App.  508;   76  Pac. 

(headnote  inadequate).  550. 

'  See  Barton  v.  London  &  N.  W.  Cf.    Shropsfiire    Union   Rys.,    etc. 

Ry.  Co.,  24  Q.  B.  D.  77;    Johnston  Co.  v.  Queen,  L.  R.   7  H.   L.  496; 

V.  Renton,  9  Eq.  181.  National   Bank   v.   Lake  Shore,   etc. 

«  Ottos    Kopje    Diamond    Mines  Ry.    Co.,    21    Oh.    St.    221    (where 

(1893),  1  Cii.  618.  plaintiff   claimetl   under  an  attach- 

Cf.  Ex  parte  Sargent,  17  Eq.  273.  ment  against  an  equitable  owner  of 

*  Goodwin  v.  Ottawa,  etc.  Ry.  Co.,  shares). 
13  Up.  Can.  C,  P.  254. 

747 


§  929  TRANSFER    AND    TRANSMISSION  [ChAP.   XV 

from  liability  in  case  the  certificate  should  subsequently  turn 
up  in  the  hands  of  somebody  else.'  If  the  certificate  is  proved 
to  be  lost  or  destroyed  the  company  may  be  required  to 
register  the  transfer  if  a  suflScient  bond  of  indemnity  be 
given ;  -  but  the  directors  are  not  guilty  of  a  wrong  in  re- 
fusing to  accept  a  bond  which  they  honestly  deem  insuffi- 
cient.^ The  company  may  require  the  transferor's  certificate 
to  be  not  merely  exhibited  for  a  hasty  inspection,  but  may 
also  require  it  to  be  deposited  and  left  at  the  transfer  office 
for  examination  at  leisure,  before  a  transfer  will  be  regis- 
tered ;  *  but  the  failure  to  deposit  the  certificate  cannot  be 
relied  upon  to  excuse  the  refusal  to  register  the  transfer  if 
the  refusal  was  placed  exclusively  on  another  ground.^  That 
the  transfer  fails  to  state  the  address  of  the  transferor  or 
to  specify  the  denoting  numbers  of  the  shares  is  no  ground 
for  refusing  registration,  even  where  the  regulations  of  the 
company  require  all  transfers  to  be  "in  the  usual  common 
form."  «' 

§  929.  Where  Transferor  is  Trustee  or  other  Fiduciary.  —  If 
the  shares  are  held  in  trust,  reasonable  evidence  of  the  authority 
of  the  trustee  to  transfer  them  may  properly  be  required.^ 

§  930.  Right  to  demand  Evidence  of  Acceptance  by  Trans- 
feree. —  A  corporation  before  registering  a  transfer  of  shares 
may  properly  demand  satisfactory  evidence  of  acceptance  on 
the  part  of  the  transferee,  and  cannot  be  compelled  to  register 
a  transfer  to  a  person  who  refuses  to  accept  the  same  even  though 
that  refusal  be  a  breach  of  a  contract  between  him  and  the  trans- 
feror.*    The  necessity  for  acceptance  on  the  transferee's  part 

*  See  supra,  §  910.  *  Letheby   &   Christopher   (1904), 
See  also  Smith  v.   Am.   Coal  Co.,    1  Ch.  815  (headnote  inadequate). 

7  Lans.  (N.  Y.)  .317.  '  Bayard  v.  Farmers',  etc.  Bank, 

2  Colonial  Bank  v.   Whinney,  11  52  Pa.  St.  232. 
A.    C.     42G,    437-438    (semble,    per         Cf.  First  Nat.  Bank  v.  National 

Lord  Blackburn);   Kinnan  v.  Forty-  Broadway  Bank,  156  N.  Y.  459;    51 

second  St.,  etc.  Ry.  Co.,   140  N.  Y.  N.  E.  398;    42  L.  R.  A.  139;   Spel- 

183;     35    N.    E.    498.     Cf.    supra,  Ussy  v.  Cook  &  Bernheimer  Co.,  58 

§  516.  N.  Y.  App.  Div.  283;  68  N.  Y.  Supp. 

'  Societe   Generate    de    Paris    v.  995. 
Walker,  11  A.  C.  20.  As  to  what  is  sufficient  evidence 

*  East  Wheal  Mining  Co.,  33  of  an  executor's  authority  to  trans- 
Beav.  119.  fer  shares,  see  infra,  §  981. 

*  Bond  V.  Mount  Hope  Iron  Co.,  *  Russell  v.  Easterbrook,  71  Conn. 
99  Mass.  505;   97  Am.  Dec.  49.  50;    40  Atl.  905. 

748 


§  832-§   1011]  REMEDIES    OF    TRANSFEROR  §  932 

and  the  effect  of  a  transfer  registered  without  such  acceptance 
have  been  discussed  above.' 


§  931.  To  whom  Transfer  should  be  presented  for  Registration. 
—  The  demand  that  a  transfer  be  registered  should  ordinarily 
be  made  upon  the  officer  or  agent  in  charge  of  the  transfer  books. 
A  demand  on  the  person  in  charge  of  the  company's  principal 
office  is  prima  facie  sufficient.-  A  demand  outside  the  office  may 
have  the  same  effect  as  if  made  within  its  four  walls.^ 

§  932- §  934.     Remedies  against  Company  for  wrongfully 
refusing  to  register  Transfer. 

§  032.  Remedies  of  Trarisferor.  —  If  a  corporation  WTong- 
fuUy  refuses  to  register  a  transfer,  the  transferor  has  several 
remedies.  First,  he  may  perhaps  sue  out  a  writ  of  mandamus 
to  compel  the  company  to  perform  its  duty  by  registering  the 
transfer.*  Or,  secondly,  he  may  have  the  same  relief  upon  bill 
in  equity.^  Or,  thirdly,  he  may  treat  the  company's  action  as 
a  conversion  of  his  shares,  and  sue  for  damages.*'  If  he  pursue 
the  latter  course,  he  is  entitled  to  recover  the  value  of  the  shares 
at  the  time  when  the  company  wrongfully  refused  to  register 
the  transfer.^    If  instead  of  claiming  full  damages  the  transferor 

'  See  supra,  §  872-§  879.  '  Craig  v.  Hesperia,  etc.  Co.,  113 

'  Commercial     Bank     v.      Kort-  Cal.    7;    45    Pac.    10;    54    Am.    St. 

right,  22  Wend.  (N.  Y.)  348,  350-  Rep.  316;  35  L.  R.  A.  306;    Withers 

351;  34  Am.  Dec.  317.  v.   Lafaijette  Countxj   Bank,   67  Mo. 

But  cf.  Bridgeport  Bank  v.  New  App.  115;   Humphreys  v.  Minnesota 

York,  etc.  R.  R.  Co.,  30  Conn.  231,  Clay  Co.,  94  Minn.  469;    103  N.  W. 

272  (semble).  338. 

'  Dooley    v.    Gladiator,    etc.    Co.         But    see    Penfold    v.    Charlevoix 

(Iowa),  109  N.  W.  864.  Sav.  Bank,  103  N.  W.  572  (headnote 

*  Toumseiidv.McIver, 2  S.Car. 25.  inadequate);    140  Mich.  126. 

But  see  Rex  v.  Bank  of  England,         As  to  whether  an  action  ex  con- 

2  Doug.  525;    Terrell  v.  Georgia  R.  tractu  could  be  maintained,  see  Case 

R.,  etc.  Co.,  115  Ga.  104:    41  S.  E.  v.   Bank,   100  U.  S.  446  (headnote 

262;  2  Dos  Passos  on  Stock  Brokers  inadequate). 

and  Stock  Exchanges,  2d  ed.,  848-         ^  Ottos    Kopje    Diamond    Mines 

858.  (1893),  1  Ch.  618. 

*  This  relief  may  be  barred  by  But  see  Penfold  v.  Charlevoix 
laches.  See  Gresham  v.  Island  City  Sav.  Bank,  103  N.  W.  572;  140 
Savings  Bank,  2  Tex.  Civ.  App.  52;  Midi.  126. 

21  S.  W.  550. 

749 


§  933  TRANSFER    AXD    TRANSMISSION  [ChAP.  XV 

elect  to  retain  the  shares,  he  cannot  subsequently  recover  more 
than  his  actual  damages,  as  in  any  other  case  of  conversion  of 
a  chattel  where  the  plaintiff  has  retaken  possession  before  the 
case  is  tried.  In  one  case,  it  was  held  that  the  transferor  who 
has  lost  a  good  sale  by  the  company's  refusal  to  register  the 
transfer,  and  who  afterwards  in  consequence  of  a  decline  in  the 
price  of  the  shares  realized  much  less  for  them,  cannot  charge 
the  company  with  the  difference,  but  that  his  damages  must  be 
nominal  merely.^  The  decision  was  placed  upon  the  ground 
that  the  company  had  no  notice  of  the  special  terms  of  the  first 
contract  of  sale,  and  therefore  under  the  rule  in  Hadley  v.  Baxen- 
dale  could  not  be  charged  with  special  damages  arising  from 
the  frustration  of  that  contract.  Without  venturing  to  question 
the  actual  decision,  one  may  be  permitted  to  doubt  whether 
the  court  in  assigning  its  reason  for  its  conclusion  did  not  over- 
look the  fact  that  the  transferor's  cause  of  action  sounded  in 
tort  for  a  conversion. 

§  933.  Remedies  of  Person  selling  SJmres  under  a  Power.  — 
It  has  been  held  that  a  pledgee  of  shares  with  a  power  of  sale  in 
case  of  default  may  sue  the  company  for  damages  if  the  latter 
refuses  to  register  a  transfer  in  pursuance  of  a  sale  made  under 
the  power.-  But  in  connection  with  this  decision  the  fact  should 
be  borne  in  mind  that  a  pledgee  of  shares  is  not  an  actual  share- 
holder and  that  apart  from  authority  serious  question  might  be 
raised  whether  he  could  maintain  an  action  at  law  in  his  own 
name  against  the  company  for  refusing  to  recognize  his  power 
of  sale. 

§  934.  Remedies  of  Transferee.  —  Upon  principle,  where 
registration  of  a  transfer  is  wrongfully  refused,^  the  transferee 
has  substantially  the  same  remedies  as  the  transferor  against 
the  company,  notwithstanding  the  fact  that  the  very  ques- 
tion at  issue  is  his  right  to  be  deemed  a  member.  Thus,  the 
transferee  may  compel  the  company  by  mandamus  ^  or  bill  in 
'  Skinner  v.  City  of  London  Ma-  *  Green  Mount,  etc.  Co.  v.  Bulla, 
rine  Ins.  Corp.,  14  Q.  B.  D.  882.  4.5  Ind.  1 ;  Hair  v.  Burnell,  106  Fed. 

2  Case  V.  Bank,  100  U.  S.  446.        280   (where    the    writ   was   against 

3  As  to  whether  the  transfer  need  the  officers  of  the  company) ;  Cooper 
actually  be  presented  for  registra-  v.  Dismal  Swamp  Canal  Co.,  6  N. 
tion  before  the  aid  of  the  courts  is  Car.  195;  Townsend  v.  M elver,  2 
invoked,  see  Richardson  v.  Long-  S.  Car.  2'};  Smith  v.  Automatic  Pho- 
mont  Ditch  Co.,  19  Colo.  App.  483;  tographic  Co.,  118  111.  App.  649; 
76  Pac.  546.  State  ex  ret.  Jurgens  v.  Consumers* 


§  832-§   1011]  KEMEDIES    OF    TR.\NSFEREE 


§934 


ecjuity  '  to  register  the  transfer.    That  the  transfer  was  without 
consideration  does  not  diminish  the  transferee's  rights,-  nor  is  the 


Brevnng  Co.,   40  So.    45;    11.5   La. 
782. 

But  see  contra:  Shipley  v.  Me- 
chanics Bank,  10  .JoIin.s.  (N.  Y.)  484; 
Kimball  v.  Union  Water  Co.,  44 
Cal.  173;  13  Am.  Rep.  157;  Ex 
parte  Fireman's  Ins.  Co.,  6  Hill  (N. 
Y.)  243;  Tobey  v.  Hakes,  54  Conn. 
274;  7  Atl.  551;  1  Am.  St.  Rep. 
114  (where  the  proceeding  was 
against  the  company's  .secretary); 
State  ex  rel.  Bornefield  v.  Rombauer, 
46  Mo.  155  (proceeding  against  the 
company's  president);  Wilkinson 
V.  Providence  Bank,  3  R.  I.  22;  Birm- 
ingham Fire  Ins.  Co.  v.  Common- 
wealth, 92  Pa.  St.  72;  Durham  v. 
Monumental  Silver  Mining  Co.,  9 
Oreg.  41;  Stackpole  v.  Seytnour,  127 
Mass.  104  (proceeding  against  com- 
pany's president  and  treasurer) ; 
Murray  v.  Stevens,  110  Mass.  -95 
(against  president  and  secretary); 
Freon  v.  Carriage  Co.,  42  Oh.  St.  30; 
51  Am.  Rep.  794  (where  the  shares 
were  not  salable  on  the  market) ; 
Galbraith  v.  People's  Bldg.  &  Loan 
Ass'n,  43  N.  J.  Law  389. 

Cf.  Regina  v.  Liverpool,  etc.  Ry. 
Co.,  21  L.  J.  Q.  B.  284  (where  the 
writ  was  refused  because  it  was 
thought  that  the  applicant  was  not 
proceeding  bona  fide) ;  Butterfly  Ter- 
rible Gold  Mining  Co.  v.  Brind 
(Colo.),  91  Pac.  1101  (writ  refused 
because  petition  did  not  allege  that 
any  by-laws  there  might  be  as  to 
transfers  had  been  complied  with) ; 
Crawford  v.  Provincial  Ins.  Co.,  8 
Up.  Can.  C.  P.  263  (mandamus  re- 
fused on  the  ground  that  registra- 
tion was  under  the  statutes  appli- 
cable to  this  company  unnecessary 
to  perfect  transferee's  title);  2  Dos 
Passos  on  Stock  Brokers  and  Stock 
Exchanges,  2d  ed.,  848-858  (con- 
taining an  elaborate  discussion  of 
the  question). 

The  mandamus  may  run  against 
the  corporation  without  making  its 


officers  parties  defendant.  Good- 
win V.  Ottawa,  etc.  Ry.  Co.,  13  Up. 
Can.  C.  P.  254. 

'  Rice  V.  RockefeUer,  134  N.  Y. 
174;  31  N.  E.  907;  30  Am.  St.  Rep. 
658;  17  L.  R.  A.  237;  Cushman  v. 
Thayer  Mfg.  Jewelry  Co.,  76  N.  Y. 
365;  32  Am.  Rep.  315;  Feckheimer 
V.  Xat.  E.rchange  Bank,  79  Va.  80; 
Real  Estate  Trust  Co.  v.  Bird,  90 
Md.  229;  44  Atl.  1048;  Buckmaster 
V.  Consumers'  Ice  Co.,  5  Daly  (X. 
Y.)  313;  Hubbard  v.  Bank  of  U.  S., 
12  Fed.  Cas.  777;  Spencer  v.  James, 
10  Tex.  Civ.  App.  327;  31  S.  W. 
540;  43  S.  W.  556;  Mechanics 
Bank  v.  Seton,  1  Pet.  299;  Scherck 
V.  Montgomery,  33  So.  507;  81  Miss. 
426;  Westminster  Xat.  Bank  v.  Xew 
England  Electric  Works,  62  Atl. 
971;  73  N.  H.  465;  111  Am.  St. 
Rep.  637;  Gould  v.  Head,  41  Fed. 
240,  248  (bill  maintained  again.st 
the  company's  officers  without  join- 
ing the  company  itself  as  defendant). 
Cf.  Gresham  v.  Island  City  Sav. 
Bank,  2  Tex.  Civ.  App.  52;  21  S.  W. 
556  (where  tiie  plaintiff  was  held  to 
be  barred  by  the  laches  of  the  trans- 
feror); Archer  v.  American  Water 
Works  Co.,  50  N.  J.  Eq.  33;  24  Atl. 
508. 

But  see  Cooper  v.  Dismal  Swamp 
Canal  Co.,  6  N.  Car.  195. 

Qurere,  whether  the  transferor  is 
a  necessary  party  to  the  bill.  Cf. 
Buffalo  German  Ins.  Co.  v.  Third 
Xat.  Bank,  19  N.  Y.  Misc.  564;  43 
N.  Y.  Supp.  550;  Mechanics  Bank 
V.  Seton,  1  Pet.  299,  306;  Balti- 
nwre  Retort,  etc.  Co.  v.  Mali.  65  Md. 
93;  3  Atl.  286;  57  Am.  St.  Rep. 
304;  Wadlinger  v.  First  Xat.  Bank, 
209  Pa.  197;  58  Atl.  359;  Thornton 
V.  Margin,  116  Ga.  115;  42  S.  E. 
348. 

^  Cushman  v.   Thayer  Mfg.  Jeu^ 

elry  Co.,  76  N.  Y.  365;  32  Am.  Rep. 

315;    GUkinson  v.  Third  Ave.  R.  R. 

Co.,  47  N.  Y.  App.  Div.  472;  63  N. 

51 


§  934  TRANSFER   AND    TRANSMISSION  [CpTAP.  XV 

illegality  of  the  consideration  any  defence  to  the  company.'  But 
if  the  transferee's  object  is  to  acquire  control  of  the  company  for 
the  purpose  of  wrecking  it,  a  court  of  equity  may  refuse  to  lend 
him  its  aid.-  It  is  no  answer  to  a  bill  in  equity  to  compel  exe- 
cution of  a  transfer  that  the  company  has  previously  registered 
another  transfer  of  the  same  shares  without  requiring  a  sur- 
render of  the  certificate,  if  the  company  and  the  transferee  in 
the  last-mentioned  transfer  were  all  the  time  apprised  of  plain- 
tiff's rights.^  If  the  transferee  neglects  for  a  long  period  of 
time  to  present  the  transfer  for  registration,  he  may  be  held  to 
be  estopped,  or  barred  by  laches,  from  obtaining  relief ;  '  but 
there  is  also  authority,  supported  by  weighty  reasons,  for  the 
view  that  no  mere  delay  in  presenting  the  transfer  should  operate 
as  a  bar.^  If  the  transferor  has  executed  an  agreement,  of  which 
the  transferee  had  notice,  to  assent  to  a  plan  for  the  winding-up 
of  the  company  or  its  consolidation  with  another  corporation, 
a  court  of  equity  in  directing  the  transfer  to  be  registered  may 
qualify  its  decree  with  a  proviso  that  the  transferee  should  be 
bound  by  the  agreement  to  the  same^xtent  as  the  transferor.® 

It  would  seem  also  that  the  transferee  should  have  the  right 
to  maintain  an  action  for  damages  on  the  theory  that  the  legal 
title  to  the  shares  vested  in  him  as  soon  as  an  immediate  right  to 
be  registered  as  shareholder  accrued,  and  that  the  company  by 
refusing  to  recognize  his  legal  title  converted  the  shares,  and 
should  be  liable  to  him  as  in  trover.^    The  transferee  has  also 

Y.  Supp.  792;  Senn  v.   U7iion  etc.,  ^  Barker   v.    Montana   Gold,   etc. 

Mercantile  Co.,   115  Mo.  App.  685/  Co.  (Mont.),  89  Pac.  66. 

696  (headnote  inadequate) ;  92  S.  W.  «  Senn  v.   Union,  etc.  Mercantile 

507.    See  supra,  §  884.  Co.,  115  Mo.  App.  685;  92  S.  W.  507. 

*  Crenshaw  v.  Columbian  Mining  ^  Ottos  Kopje  Diamond  Mines 
Co.,  llOMo.  App.  .355;  86  S.  W.  260.  (1893),  1  Ch.  618;    Trust  &  Savings 

2  Gould  V.  Head,  41  Fed.  240;  Co.  v.  Hotne  Lumber  Co.,  118  Mo. 
Senn  v.  Union,  etc.  Mercantile  Co.,  447;  24  S.  W.  129  (where  the  meas- 
115  Mo.  App.  685;  92  S.  W.  507  ure  of  damages  was  considered); 
(semble).  Hussey  v.  Manufacturers',  etc.  Bank, 

3  Cushman  v.  Thayer  Mfg.  Jew--  10  Pick.  (Mass.)  415;  Wain's  As- 
elry  Co.,  76  N.  Y.  365,  370;  32  Am.  signees  v.  Bank  of  North  America,  8 
Rep.  315.  S.  &  R.  (Pa.)  73;    11  Am.  Dec.  575; 

*  Newberry  v.  Detroit,  etc.  Iron  Nicollet  Nat.  Bank  v.  City  Bank,  38 
Co.,  17  Mich.  141.  Minn.  85;  35  N.  W.  577;   8  Am.  St. 

Cf.  Pueblo  Sav.  Bank  v.  Richard-  Rep.  643;  Helm  v.  Swiggett,  12  Ind. 
son  (Colo.),  89  Pac.  799  (where  a  194;  German  Union,  etc.  Ass'n  v. 
statute  required  the  transfer  to  be  Sendmeyer,  50  Pa.  St.  67  (bearing 
presented  within  sixty  days).  also  on  the  measure  of  damages); 

752 


§  832-§   1011]  REMEDIES    OF    TKANSFEHEE  §934 

been  allowed  to  recover  in  assumpsit.'  The  action  may  be  main- 
tained where  the  secretary  of  the  company  refuses  to  register  the 
transfer,  although  the  transferee  is  the  head  officer  of  the  com- 
pany and  might  perhaps  have  registered  the  transfer  himself.' 
The  fact  that  the  transfer  was  executed  in  pursuance  of  an  illegal 
gambling  contract  is  no  defence  to  the  company  when  the  objec- 
tion has  not  been  raised  by  the  transferor.^  The  statute  of  limi- 
tations does  not  begin  to  run  until  the  transferee  is  notified  that 
his  title  is  disputed  by  the  company."  The  transferee  may  in 
the  same  action  recover  any  dividends  that  have  accrued  since 
he  became  entitled  and  which  have  been  wrongfully  withheld 
from  him ;  "^  or,  the  transferee  whose  title  the  company  has 
wrongfullv  refused  to  recognize  may  in  a  separate  action  recover 
any  such  dividends  from  the  company  without  first  compelling 
the  company,  by  bill  in  equity,  to  enter  the  transfer  on  its  books." 


Mount  Holly,  etc.  Co.  v.  Fcrree,  17 
N.  J.  Eq.  117  (semble);  McLean  v. 
Medicine  Co.,  96  Mich.  479;  56  N. 
W.  68  (an  action  on  the  case  in 
which  it  was  held  that  only  nominal 
damagjes  were  recoverable) ;  Mc- 
Murrich  v.  Bond  Head  Harbour 
Co.,  9  Up.  Can.  Q.  B.  333;  Ral- 
ston V.  Bank  of  California,  112  Cal. 
208;  44  Pac.  476;  Rio  Grande 
Catde  Co.  V.  Burns,  82  Tex.  50;  17 
S.  W.  1043;  Protection  Life  Ins.  Co. 
V.  Osgood,  93  111.  69;  Second  Nat. 
Bank  v.  First  .\at.  Bank,  8  N.  Dak. 
50;  76  N.  W.  504  (as  to  measure  of 
damages  where  transferee  holds  as 
collateral  security  merely);  Balti- 
more City  Pass.  Ry.  Co.  v.  Sewell, 
35  Md.  239;  6  Am.  Rep.  402;  Her- 
rick  V.  Humphrey  Hardware  Co. 
(Nebr.),  103  N.  W.  685;  Dooley  v. 
Gladiator,  etc.  Co.  (Iowa),  109  N.  W. 
864  (value  at  time  of  refusal  recov- 
erable notwithstandino;  subsequent 
offer  to  recognize  plaintiff's  rights). 

•  Sargent  v.  Franklin  Ins.  Co., 
8  Pick.  (Mass.)  90;  19  Am.  Dec. 
306;  Commercial  Bank  v.  Kort- 
right,  22  Wend.  (N.  Y.)  348;  34 
Am.  Dec.  317. 

Cf.  Rio  Grande  Cattle  Co.  v.  Burns, 
82Te.\.  50,  57;    17  S.  W.  1043. 


^  McMurrich  v.  Bond  Head  Har- 
bour Co.,  9  Up.  Can.  Q.  B.  333. 

'  Miller  v.  Houston  City,  etc.  Ry. 
Co.,  55  Fed.  366;  5  C.  C.  A. 
134. 

*  Cleveland,  etc.  R.  R.  Co.  v. 
Robbins,  35  Oh.  St.  483. 

^Baltimore  City  Pass.  Ry.  Co.  v. 
Sewell,  35  Md.  239;  6  Am.  Rep. 
402.  The  soundness  of  this  de- 
cision on  this  point  may  perhaps 
be  doubted  because  any  dividends 
that  accrued  prior  to  a  demand 
by  the  transferee  were,  so  far  as 
the  company  was  concerned,  pay- 
able to  the  transferor.  See  Cleve- 
land, etc.  R.  R.  Co.  V.  Robbins,  35 
Oh.  St.  483;  Brisbane  v.  Dela- 
ware, etc.  R.  R.  Co.,  94  N.  Y.  204; 
in  which  cases  the  company  was 
held  not  liable  to  the  transferee  and 
holder  of  the  certificate  for  paying 
dividends  to  the  transferor  and  per- 
sons to  whom  by  a  subsequent 
transfer  the  transferor  assigned  the 
shares.     Cf.  infra,  §  1369. 

«  Hill  V.  Atoka  Coal,  etc.  Co.,  21 
S.  W.  Rep.  508  (Mo.);  Robinson  v. 
Nat.  Bank  of  New  Beirne,  95  N.  Y. 
637. 


VOL.  I.  — 48 


753 


§  935  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 


§  935-§  939.     Liability    of    Company    for    registering    invalid 

Transfer. 

§  935.  Company  in  Dilemma  when  disputed  Transfer  presented 
for  Registration  —  Interpleader.  — -  When  a  transfer  of  shares  is 
presented  for  registration,  the  company  is  in  a  strait  betwixt  two. 
If  the  company  refuses  to  register  the  transfer  and  the  refusal 
turns  out  to  have  been  wrongful,  the  company  may  be  held 
liable,  according  to  the  principles  stated  above.  If  on  the  other 
hand,  it  registers  the  transfer,  and  afterwards  the  fact  transpires 
that  the  transfer  was  forged  or  otherwise  invalid,  the  company 
is  then  liable  to  the  true  owner  of  the  shares.  Accordingly,  if 
the  company  is  in  doubt  whether  a  transfer  ought  to  be  regis- 
tered or  not,  a  bill  in  the  nature  of  a  bill  of  interpleader  may 
be  filed  against  the  various  claimants ; '  but  if  the  company 
decides  the  question  for  itself  and  registers  the  transfer,  it  can- 
not subsequently  file  a  bill  to  require  the  claimants  to  interplead.^ 

§  936.  Right  of  Owner  of  Shares  to  enjoin  Registration  of  In- 
valid Transfer  or  to  compel  Company  to  cancel  same  if  registered.  — 
The  true  owner  of  shares  may  enjoin  the  company  from  regis- 
tering a  void  transfer ;  ^  or  if  his  name  is  improperly  stricken 
from  the  register  in  pursuance  of  a  spurious  or  otherwise  invalid 
transfer,  he  may  compel  the  company  to  restore  his  name,  prob- 
ably by  a  writ  of  mandamus  at  law,  and  certainly  by  bill  in 
equity.*    The  transferee  or  person  whose  name  was  substituted 

>  Cody  V.  Potter,  55  Barb.  (N.  Y.)  57  Am.  Dec.  520;    Telegraph  Co.  v. 

463.  Davenport,  97  U.  S.  .369;    Ashby  v. 

^  Mount  Holly,  etc.  Co.  v.  Ferree,  Blackwell,  2  Eden    299,  Ambler  503 

17  N.  J.  Eq.   117  (headnote  inade-  (headnote    inadequate);      Pratt    v. 

quate);    Chicago  Edison  Co.  v.  Fay,  Taunton  Copper  Co.,  123  Mass.  110; 

164  111.  323,  3.30;  45  N.  E.  534.  25  Am.  Rep.  37;    Blaisdell  v.  Bohr, 

But  see  Cady  v.  Potter,  55  Barb.  68  Ga.   56;    Chicago  Edison  Co.   v. 

(N.  Y.)  463;    Lakewood  Gas  Co.  v.  Fay,   164   111.  323;    45  N.  E.  534; 

Smith,  51  Atl.  152,  153  (headnote  in-  Hildyard  v.  South  Sea  Co.,  2  P.  Wms. 

adequate);  62  N.  J.  Eq.  677  (where  76;    Chew  v.  Bank  of  Baltimore,  14 

one  of  the  officers  by  abuse  of  his  Md.  299;    Herbert  Kraft  Co.  v.  Banb 

autliority  had  procured  the  issuance  of  Orland,  133  Cal.  64;   65  Pac.  143; 

of  a  share-certificate   to  himself).  McLaughlin     v.      Daily      Telegraph 

^  Reynolds  v.  Touzalin  Imp.  Co.,  New.'ipaper,  1  Comm.  L.  R.  (Aust.) 

87  N.  W.  24;   62  Nebr.  236.  243  (where  transferor  was  a  lunatic); 

*  Johnston  v.  Renton,  9  Eq.   181  Ashton    v.    Heggerty,    130    Cal.    516 

(headnote  inadequate);    Pollock  v.  (where  it  was  said  that  the  trans- 

National  Bank,  7  N.  Y.  274,  276;  ferees  were  necessary  parties). 

754 


§  832-§   1011]       REGISTRATION    OF    INVALID    TRANSFER  §937 

for  that  of  the  complaiimiit  may  properly  be  joined  as  a  co- 
defendant  to  such  a  hill;  '  hut  he  is  not  an  indispensable  {)arty.^ 
In  a  New  York  case,  it  was  said  that  if  the  ((Mupany  siunild  be 
unable  to  restore  the  shares,  it  might  be  compelled  to  pay  their 
value;  ^  but  it  would  seem  always  to  be  legally  [X)ssible  to  restore 
the  shares  by  cancelling  the  entry  of  the  transfer,  and  that  if  the 
owner  asks  that  form  of  relief  he  should  hav'e  it.*  The  statute 
of  limitations  does  not  begin  to  run  against  the  right  to  file  such 
a  bill  until  a  tlemand  and  refusal  to  restore  the  complainant's 
name  to  the  register.^ 

In  addition  to  this  relief,  the  true  owner  of  the  shares  may 
require  the  company  to  pay  to  him  any  dividends  which  were 
payable  while  his  name  was  erased  from  the  register,  and  which 
were  paid  to  the  person  whose  name  was  wrongfully  substituted.® 
Simple  interest  calculated  from  the  time  when  the  company 
became  assured  of  the  invalidity  of  the  transfer  is  also 
recoverable.^ 

§  937.  Liability  of  Company  to  Owner  in  Damages  for  regis- 
tering invalid  Transfer.  —  As  an  alternative  to  these  remedies 
the  true  owner  of  the  shares  may  elect  to  treat  the  registration 
of  the  forged  or  otherwise  invalid  transfer  as  a  conversion  of  his 
shares  by  the  company,  and  may  accordingly  sue  the  company 
for  damages.*    So,  if  a  trustee  of  shares  is  knowingly  permitted 

'  Johnston  v.  Renton,  9  Eq.  181;  etc.  R.  R.  Co.  v.  Robbins,  35  Oh.  St. 

Sewall  V.  Boston  Water  Power  Co.,  4  483. 

Allen    (Mass.)    277;     81    Am.    Dec.         *  Johnston  v.  Renton,  9  Eq.  181; 

701  (where  no  objection  on  account  Sewall  v.  Boston  Water  Power  Co.,  4 

of  the  joinder  was  raised).  Allen   (Mass.)  277,  282-283   (head- 

Cf.   Chicago  Edison  Co.   v.   Fay,  note  inedaquate) ;   81  Am.  Dec.  701; 

164    111.   323,   330;     45   N.    E.   534;  Pollock  v.    Xational    Bank,  7  X.  Y. 

Blaisdell  v.  Bohr,  68  Ga.  56.  274,  279  (headnote  inadequate) ;    57 

-  Barton  v.  London  cfr  .V.  W.  Ry.  Am.    Dec.    520;     Telegraph    Co.    v. 

Co.,  38  Ch.  D.  144.     But  see  ^s/j/on  Davenport,  97  U.   S.   369;     Telford, 

v.  Heggerty,  130  Cal.  516.  etc.  Co.  v.  Gerhab  (Pa.),   13   Atl.  90 

'  Pollock  V.  Xationai  Bank,  7  N.  (headnote    inadequate);     Ashby    v. 

Y.  274;    57  Am.  Dec.  520.  Blackwell,  2  Eden  299;  Ambler  503 

*  But  see  Sewall  v.  Boston  Water  (headnote  inade(|uate). 
Power  Co.,  4  Allen  (Mass.)  277;    81  Cf.  Brisbane  v.  Delaware,  etc.  R. 

Am.  Dec.  701  (where  an  alternative  R.  Co.,  94  N.  Y.  204. 
decree  for  a  restoration  of  the  shares  '  Chew  v.  Bank  of  Baltimore,  14 

or  for  their  value  was  passed).  Md.  299,  320. 

Cf.    Telegraph  Co.   v.   Davenport,         *  Sewall  y.   Boston  Water  Power 

97  U.  S.  369.  Co.,  4  Allen  (Mass.)  277;    81   Am. 

'  Barton    v.    Xorth    Staffordshire  Dec.  701;  Bank  of  Attica  v.  Manu- 

Jiy.  Co.,  38  Ch.  D.  458;    Cleveland,  facturers',  etc.  Bank,  20  N.  Y.  501; 

755 


§  938  TRANSFER    AND    TRANSMISSION  [ChaP.  XV 

bv  the  company  to  transfer  the  shares  in  violation  of  his  trust 
to  a  purchaser  or  pledgee  for  value,  the  corporation  is  liable  to 
the  cestui  que  irust.^  The  liability  of  the  company  in  damages 
for  registering  a  transfer  cannot  be  determined  upon  a  bill  of 
interpleader  filed  by  the  corporation  for  the  purpose  of  ascer- 
taininir  to  which  of  two  claimants  dividends  on  the  shares  should 
be  paid.-  The  wrongful  registration  of  a  transfer  being  a  tort 
in  the  nature  of  a  conversion  of  the  true  owner's  interest,  it 
follows  that  all  persons  who  aid  or  incite  the  wrong  are  liable 
as  well  as  the  company  itself.^ 

§  938.  Liability  of  Company  for  failing  to  require  Surrender  of 
Transferor's  Certificate.  —  If  the  company  registers  a  transfer 
without  exacting  a  surrender  of  the  share-certificate,  so  that  the 
legal  title  to  the  shares  is  vested  in  the  transferee,  a  cestui  que 
trust  whose  equitable  interest  in  the  shares  has  thus  been  cut 
off  by  purchase  for  value  may  have  an  action  against  the  com- 
pany for  damages.^  Indeed,  the  broad  principle  is  accepted  in 
America  if  not  in  England  that  if  a  company  registers  a  transfer 
without  insisting  upon  a  surrender  of  the  share-certificate,  it 
will  be  liable  to  any  bona  fide  holder  of  the  certificate.^ 

§  939.  Estoppel  of  Owner  to  proceed  against  Company  for  reg- 
istering invalid  Transfer.  —  Any  circumstances  which  would  estop 
the  true  owner  of  shares  from  disputing  the  title  of  a  bo)ia  fide 
purchaser  claiming  under  an  invalid  transfer  will  also  estop  such 
owner  from  holding  the  company  liable  for  registering  the  trans- 
fer in  good  faith  in  the  ordinary  course  of  business.  This  estop- 
pel would  prevent  an  action  for  damages  against  the  company. 
It  would  also  prevent  a  bill  in  equity  to  require  the  issue  of 

Telegraph  Co.  v.  Davenport,  97  U.  S.  As  to  liability  for  registering  wrong- 

369;     Mayor,    etc.    of   Baltimore   v.  ful  transfers  by  executors,  see  infra, 

Norman,   4  Md.   352    (demand  and  §  981. 

refusal  to  restore  plaintiff's  name  to  ^  Salisbury    Mills    v.    Townsend, 

register  not  condition  precedent  to  109  Mass.  115. 

action  for  conversion) ;    Mayor,  etc.  ^  Greenleaf  v.  Ludington,  15  Wise. 

of  Baltimore  v.  Ketchum,  57  Md.  23  558;   82  Am.  Dec.  698. 

(holding  that  action  may  be  main-  *  N.  Y.,  etc.  R.  R.  Co.  v.  Schuy- 

tained  without  showing  that  claim-  ler,  34  N.   Y.   30,   81-86   (headnote 

ant  under  invalid  transfer  is  a  bona  inadequate).     Cf.  infra,  §  989. 

fide  purchaser).  Cf.  Brisbane  v.  Delaware,  etc.  R. 

But  see  Telford,  etc.  Co.  v.  Ger-  R.  Co.,  94  N.  Y.  204;   Smith  v.  Am. 

hab  (Pa.),  13  Atl.  90.  Coal  Co.,  7  Lans.  (N.  Y.)  317. 

'  Lowry  v.  Commercial,  etc.  Bank,  *  See  supra,  §  910. 
Taney  310.    See  infra,  §  989,  et  seq. 

756 


§  832-  §   1011],      HEGISTRATIOX    OF    INVALID    TRANSFER  §041 

new  share-certificates  to  the  owner  if  certificates  have  l^een  pre- 
viously issued  honestly  to  a  person  claiming  under  the  invalid 
transfer  and  have  come,  or  may  have  come,  into  the  possession 
of  a  holder  for  value  whose  title  the  company  would  be  estopped 
from  denying.' 

§  940-§  941.     Liahilitij   of   Claimant    under   invalid    Transfer 
which  is  wrongfidiy  registered. 

§  940.  Liability  to  true  Owner  of  the  Shares.  —  Besides  his 
various  remedies  against  the  company,  the  owner  of  shares 
whose  name  is  stricken  from  the  register  of  shareholders  in  pur- 
suance of  a  forged  or  otherwise  invalid  transfer  has  valuable 
rif'hts  affainst  the  transferee  whose  name  is  substituted  for  his 
own.-  Presumably,  he  may  sue  him  in  an  action  in  the  nature 
of  trover  for  conversion  of  the  shares.^  Certainly  he  may  recover 
from  him  any  dividends  paid  to  him  by  the  company.*  These 
riffhts  of  course  exist  onlv  in  cases  in  which  the  true  owner  is 
not  estopped  from  denying  the  validity  of  the  transfer  m  ques- 
tion. It  has  been  held  that  in  an  action  of  trover  by  an  alleged 
owner  of  shares  against  a  person  whose  name  has  i)een  regis- 
tered in  his  stead,  a  judgment  in  an  action  by  the  plaintiff 
against  the  corporation  whereby  the  corporation  was  exonerated 
from  liability  to  the  plaintiff'  for  registering  the  transfer  is  admis- 
sible in  evidence  to  prove  that  the  plaintiff  is  without  title  to  the 
shares  claimed  by  him.^ 

§  941.  Liability  to  the  Company.  —  Where  the  company  has 
treated  a  transferee  as  shareholder  under  a  mistaken  belief  that 
the  transfer  is  genuine,  any  dividends  paid  to  him  as  shareholder 
may  be  recovered  back  by  the  company  as  money  paid  under 
mistake  of  fact.^  Of  course,  the  transferee  cannot  be  required 
to  repay  the  dividends  to  the  corporation  and  also  to  pay  the 

'  Pennsylvania  R.   R.   Co.'s  Ap-  charged  with  notice  of  the  invalidity 

peal,  86  Pa.  St.  80.  of  his  title). 

=  Cf.  Blaisdell  v.  Bohr.GSGa.  56;  But  .see  O'Dwyer  v.  Verdon.  115 

Harrison    v.    Pryse,    Barnard.    Ch.  N.  Y.  App.  Div.  37. 

324.  ■•  Johnston  v.  Renton,  9  Eq.  181; 

But  see  Pratt  v.  Taunton  Copper  Hildyardv.SouthSeaCo. ,2F.V>'ms.76. 

Co.,    123   Mass.    110;  25  Am.   Rep.  *  O'Dwyer  v.   Verdon,  115  N.  Y- 

37.  App.  Div.  37. 

3  Anderson  v.  Nicholas,  28  X.  Y.  *  Foster  v.  Tyne  Pontoon,  etc.  Co., 

600     (where     the     tran.sferee     was  63  L.  J.  Q.  B.  50. 

757 


§  942  TRANSFER    AND    TRANSMISSION  [ClIAP.   XV 

amount  of  them  to  the  true  owner  of  the  shares.  Recovery 
by  the  company  would  be  a  bar  to  a  claim  by  the  true  owner 
against  the  transferee.  And  the  amount  recovered  by  the  com- 
pany from  the  transferee  would  be  held  in  trust  for  the  true 
owner  of  the  shares.  Of  course,  if  the  company  be  estopped 
from  denying  the  validity  of  the  transfer,  as  we  have  seen  above 
may  be  the  case,  the  transferee  would  be  under  no  liability  to 
the  company.  As  the  transferee  or  his  agent  usually  presents 
the  transfer  for  registration,  the  transferee  often  incurs  the  lia- 
bility attaching  to  any  person  who  presents  an  invalid  transfer 
for  registration  —  a  matter  which  is  considered  below.' 


§  042.  Liability  of  Person  who  presents  invalid  Transfer  for 
Registration.  —  A  person  who  presents  a  transfer  for  registra- 
tion impliedly  asserts  its  genuineness.  If  the  transfer  is  in  fact 
forged,  he  is  liable  to  the  company  for  any  damages  it  may 
suffer  in  acting  thereon  although  he  was  quite  ignorant  of  the 
forgery;  ^  and  if  the  transfer  is  executed  by  an  agent  or  attorney, 
he  is  liable  unless  the  agent  or  attorney  had  in  fact  authority 
to  execute  the  same.^  The  same  rules  apply  where  the  transfer 
is  invalid  because  of  the  lunacy  or  other  incapacity  of  the 
transferor.* 

If  after  the  registration  of  a  forged  transfer  the  shares  are 
assigned  to  a  bona  fide  purchaser,  and  the  person  whose  name 
was  forged  calls  upon  the  company  to  cancel  the  transfer  and 
issue  another  certificate  to  him,  the  company  may  give  notice  of 
this  claim  to  the  person  who  presented  the  forged  transfer,  and 

'  Infra,  §  942.  land  v.  Cutler  (1907),  1  K.  B.    889 

^  Sheffield  Corporation  v.  Barclay  (where  a  person  who  introduced  the 

(1905),   A.    C.    392    (overruling   the  transferor  for  the  purpose  of  identi- 

judgment  of  Lindley,  J.,  in  Anglo-  fying  him  was  held  to  warrant  his 

American  Tel.  Co.  v.  Spuriing,  5  Q.  identity  with  the  registered  owner). 
B.  D.  188) ;   Starkey  v.  Bank  of  Eng-         ^  Clarkson  Home  v.  Missouri,  etc. 

land   (1903),   A.   C.    114;     Clarkson  Ry.  Co.,  182  N.  Y.  47;  74  N.  E.  571 

Home  V.  Missouri,  etc.  Ry.  Co.,  182  (depending  partly  on  a  rule  of  the 

N.  Y.  47;   74  N.  E.  571;   Boston,  etc.  stock  exchange). 
R.  R.  Co.  V.  Richardson,   135  Mass.  ''  McLaughlin     v.     Daily     Tele- 

473;  Hildyard  v.   South  Sea  Co.,  2  graph  Newspaper,    1   Comm.   L.   R. 

P.  Wms.    76  (disapproved    in,   and  (Aust.)   243,   280   (headnote  inade- 

perhaps  overruled  by  Ashhy  v.  Black-  quate). 
well,   Ambler  503);     Bank  of  Eng- 

758 


§832-§1011]       REGISTRATION    OF    INVALID    TRANSFER  §043 

may  recjuire  him  to  pay  its  costs  in  resisting  the  claim  as  well  as 
the  amount  which  the  company  may  have  expended  in  pur- 
chasing shares  in  the  market  in  order  to  respond  to  the  claim.' 
So,  if  the  company  pays  dividends  to  the  transferee  who  presented 
the  forged  transfer,  and  is  afterwards  compelled  to  cancel  the 
transfer,  reinstate  the  true  owner,  and  pay  the  dividends  to 
him,  the  amount  of  the  dividends  may  be  recovered  back  from 
the  person  who  presented  th.e  forged  transfer.-  A  jortiori,  the 
company  may  on  bill  in  ecpiity  re{juire  the  person  who  presented 
the  transfer  to  surrender  the  share-certificate  which  the  com- 
pany issued  to  him  and  the  validity  of  which  in  the  hands  of  a 
bona  fide  purchaser  the  company  would  be  estopped  from 
denying.^ 

The  lial>ility  of  the  person  who  presents  an  invalid  transfer 
for  registration  is  founded  not  merely  on  an  implied  warranty 
of  the  validity  of  the  transfer,  in  which  case  the  statute  of  limi- 
tations would  begin  to  run  forthwith,  but  rather  upon  an  implied 
contract  of  indemnity,  so  that  the  statute  of  limitations  does  not 
begin  to  run  until  the  company  suffers  a  loss  by  being  compelled 
to  respond  to  the  true  owner  of  the  shares  in  damages  or  other- 
wise.* On  the  other  hand,  where  the  company  registers  a  forged 
transfer  of  stock  and  the  stock  is  afterwards  transferred  by  the 
forger  to  a  bona  fide  purchaser,  the  company  upon  discovering 
the  forsrerv  is  not  bound  to  strike  out  the  forged  transfer,  and 
remove  the  name  of  the  bona  fide  purchaser  from  the  register, 
but  mav  purchase  stock  in  the  market  for  the  original  o\^'ner 
without  waiting  for  the  bona  fide  purchaser  to  set  up  a  claim 
by  estoppel,  and  may  thereupon  sue  the  person  who  presented 
the  forged  transfer  for  indemnity  against  the  loss  sustained  on 
the  purchase  of  the  stock  in  the  market.-^ 

§  943.  Liability  of  Transferor  in  and  about  Registration  of 
Transfer.  —  As  will  be  more  fully  explained  below,  to  procure 
the  reiristration  of  a  transfer  is  the  part  of  the  transferee  rather 

'  Boston,  etc.  R.  /?.  Co.  v.  Rich-  ^  Brown  v.  Howard  Fire  /?!,s.  Co., 

ardson,  13.5  Mass.  473.  42  Md.  384;  20  Am.  Rep.  90. 

"  Hildijard  v.  South  Sea  Co.,  2  P.  ■*  Shejjield  Corporation  v.  Barclay 

Wms.  76  (disapproved  in  and  per-  (190.")),  .\.  C.  392,  404-405  (headnote 

haps  overruleil  by  Ashbi/  v.   Black-  inadequate). 

well.    Ambler    503);     Hambleton    v.  *  Bank    of     England     v.    Cutler 

Central    Ohio    R.    R.    Co.,    44    Md.  (1907),   1  K.  B.  889. 
551. 

759 


§  944  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

than  of  the  transferor.'  It  follows  that  the  transferor  is  under 
no  active  duties  in  the  matter.  He  is,  however,  bound  to  do 
nothing  to  interfere  with  the  transferee  in  hrs  endeavor  to  have 
the  transfer  registered.  If  at  his  instance  the  company  refuses 
or  postpones  the  registration  of  the  transfer,  he  is  liable  to  the 
transferee  for  all  damages  sustained  in  consequence  of  such 
refusal  or  postponement.-  This  liability  is  not  strictly  con- 
tractual but  is  imposed  by  the  law.  Indeed,  it  sounds  rather  in 
tort  dian  in  contract.  Consequently,  it  may  be  enforced  by  a 
person  with  whom  the  transferor,  the  defendant,  has  entered 
into  no  direct  contractual  relations  —  for  example,  by  the  ulti- 
mate purchaser  of  a  blank  transfer  which  has  passed  from  hand 
to  hand  and  which  the  purchaser  has  filled  up  with  his  own 
name,  or  by  a  person  claiming  under  a  transfer  which  is  for 
some  reason  defective  but  the  validity  of  which  the  transferor 
is  estopped  from  denying.^ 

§  944.  LiabiUty  of  Transfer  Agent  or  Clerk.  —  The  agent  who 
negligently  or  fraudulently  registers  an  invalid  transfer,  or  issues 
a  share-certificate  to  a  person  who  is  not  entitled  to  it,  is  obviously 
liable  to  the  corporation  for  so  doing.  In  most  cases,  the  culp- 
able agent  is  financially  irresponsible,  so  that  this  remedy  is  • 
rarely  resorted  to.  Sometimes,  however,  the  corporation  ap- 
points some  bank  *  or  trust  company  its  transfer  agent,  and 
delegates  to  it  the  duty  of  registering  transfers  and  issuing  cer- 
tificates. In  such  cases,  the  bank  or  trust  company  is  liable 
for  the  negligent  or  fraudulent  registration  of  an  invalid  trans- 
fer or  for  the  issuing  of  a  certificate  to  a  person  not  entided 
thereto;^  even  though  due  care  may  have  been  used  in  the 
selection  of  the  sub-agent  or  clerk.^  Where  the  transfer  agent's 
sub-agent  has  engaged  in  a  systematic  fraudulent  issue  of  cer- 
tificates to  persons  who  were  not  entitled  to  them,  the  entire 
liability  of  the  transfer  agent  may  be  enforced  in  one  equity 
suit  without  resorting  to  separate  actions  at  law.^     Such  a  bill 

'  Infra,  §  971.  ^  Bank  of  Kentucky  v.  Schuylkill 

2  Hooper  V.  Herts  (190G),   1  Ch.  Bunk,  1  Pars.  Eq.  Cas.  (Pa.J  180. 
549.  »  Bank  of  Kentucky  v.  Schuylkill 

^  Hooper  V.Herts  {l90Ci),  I  Ch.5i9.  Bank,   1  Pars.  Eq.  Cas.   (Pa.)   180, 

*  As  to  the  corporate  power  of  a  239-244. 
bank  to  act  as  such  agent,  see  Bank         '  Bank,  of  Kentucky  v.  Schuylkill 

of  Kentucky  v.  Schuylkill   Bank,    1  Bank,  1  Pars.  Eq.  Cas.  (Pa.)  180. 
Pars.  Eq.  Cas.  (Pa.)  180,  236-239. 

760 


§S32-§1011]  BY-LAWS  §046 

may  be  filed  even  before  the  corporation  has  been  compelled 
to  discharge  any  liability  to  the  holders  of  the  wrongfully  issued 
certificates.'  On  the  other  hand,  the  duty  of  the  transfer  agent 
or  clerk  to  register  a  valid  transfer  when  presented  is  owing  to 
his  principal  alone;  and  for  mere  nonfeasance  in  refusing  or 
neglecting  to  register  a  valid  transfer  when  presented,  the  trans- 
fer agent  is  not  liable  in  damages  either  to  the  transferor  or 
transferee.^ 


§  945-§  962.     BY-LAWS  and  express  regulations  respecting 

TRANSFERS. 

§  945.  Validity  of  By-laws  relating  to  Transfers.  —  The  by-laws 
and  conventional  regulationsof  incorporated  companies  generally 
contain  provisions  relating  to  transfers  of  shares.  The  validity 
of  these  provisions  is  sometimes  open  to  dispute;  but  with  such 
questions,  which  are  discussed  in  another  place,^  we  are  not  now 
concerned.  For  present  purposes,  the  validity  of  the  regula- 
tions may  be  assumed;  and  we  shall  accordingly  confine  our- 
selves to  questions  as  to  their  construction,  operation,  and  effect, 
assuming  them  to  be  valid. 


§  946-§  948.     Regulations  as  to  Form  or  Manner  of  Transfers. 

§  946.  Mandatory  Regulations.  —  Regulations  respecting  the 
form  or  manner  of  transfers  may  of  course  i)e  either  mandatory 
or  directory.  General  rules  for  determining  whether  any  par- 
ticular provision  should  be  construed  to  be  the  one  or  the  other 
are  apt  to  be  misleading  rather  than  helpful.  A  provision  that 
transfers  must  be  by  deed  has  been  held  to  be  mandatory,  so 
as  to  invalidate  an  unsealed  transfer.^  So  a  provision  that  trans- 
fers shall  be  executed  by  both  transferor  and  transferee  will  pre- 
vent a  transfer  executed  bv  the  transferor  onlv  from  passinjr  a 

'  Bank  of  Kentucky  v.  Schuylkill    shares  by  refusing  to  register  trans- 
Bank,    1   Pars.   Eq.  Cas.   (Pa.)   ISO,    fer  not  sustainable). 
244-245.  Cf.  Cooky  v.  Curran.  104  N.  Y. 

^  Dunham  v.  City  Trust  Co.,  101    Supp.  751. 
N.  Y.  Supp.  87;    Cooley  v.  Curran,         ^  See  supra,  §  706-§  711. 
104  X.  Y.  Supp.  424  (action  against  *  Poirell  v.  London  it-  Prm-incial 

company's  president  for  converting    Bank  (1893),  2  Ch.  5n5;    Bishop  v. 

Globe  Co.,  135  Mass.  132. 
761 


§  947  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

complete  title.^  Similarly,  a  provision  that  transfers  shall  be 
signed  in  the  presence  of  an  officer  of  the  company  or  of  two 
witnesses  has  been  held  to  invalidate  a  transfer  not  so  attested." 

§  947.  Directory  Regulations.  —  On  the  other  hand,  a  pro- 
vision that  a  transfer  should  contain  a  true  statement  of  the  con- 
sideration upon  which  it  was  executed  has  been  thought  to  be 
directory  merely.-' 

§  948.  Regulations  that  Shares  shall  be  transferable  only  on 
Company's  Books.  —  A  very  common  provision  in  American 
bv-laws  is  that  shares  shall  be  transferable  only  on  the  books 
of  the  company.  This  provision  is  not  treated  separately  in  this 
v.ork,  because  the  transfer  books  of  a  corporation  play  so  im- 
portant a  role  in  the  matter  of  transfers  of  shares  that  it  seemed 
inadvisable  to  relegate  the  consideration  of  their  function  to  a 
sub-heading  under  the  subject  of  by-laws  and  regulations  affect- 
ing transfers  of  shares.  3*Ioreover,  it  has  seemed  to  the  writer 
that  the  actual  effect  of  a  regulation  that  shares  shall  be  trans- 
ferable only  on  the  company's  books  is  comparatively  slight; 
that  is  to  say,  by  statute  or  custom  every  incorporated  company 
is  required  to  keep  a  list  or  roll  of  its  shareholders,  and  even 
where  the  regulations  of  the  company  do  not  expressly  provide 
that  transfers  of  shares  shall  be  made  only  by  entry  on  the 
company's  books,  the  importance  to  a  transferee  of  seeing 
that  his  name  is  properly  entered  on  the  company's  books  is 
only  slightly  less. 

§  949- §  950.     Waiver   by   Compaiiy  of   Regulations    intended 
for  its  Benefit. 

§  949.  In  general.  —  Even  where  a  provision  regulating 
transfers  is  mandatory  rather  than  directory,  nevertheless  if 
it  be  intended  solely  for  the  company's  benefit  or  protection, 
non-compliance  may  be  waived,  and  will  be  deemed  to  have 
been  waived  if  the.  company  with  knowledge  of  the  irregularity 
proceeds  to  register  the  transfer.  Thus,  although  a  provision 
that  transfers  shall  be  executed  by  both  parties  be  mandatory 
and  not  merely  directory,  yet  if  the  company  accept  as  valid 
a  transfer  executed  by  the  transferor  only,  and  recognize  the 

>  Ortigosa  v.  Brown,  38  L.  T.  145.  '  Powell  v.  London  &  Provincial 

2  Dane  v.  Young,  61  Me.  160.  Bank  (1893),  2  Ch.  555,  560  (semble). 

762 


§S32-§1011]  WAIVER    OF    RESTRICTIONS  §951 

traiistcree  as  shareholder,  the  irreguhirity  will  Ik"  deemed  waived 
and  cured.'  So  a  provision  that  every  transferee  of  shares  must 
sign  the  by-laws  of  the  company  may  be  waived  by  issuing  a 
share-certificate  to  the  transferee  and  paying  him  dividends. - 

§  OoO.  Waiver  of  Restrictions  on  Shareholder's  Right  of 
Alienation.  —  This  same  principle  applies  to  restrictions  u|X)n 
the  right  of  a  shareholder  to  transfer  his  shares:  they  may  l>e 
waived  by  registering  the  transfer  and  treating  the  tran.sferee 
as  a  shareholder.^  For  instance,  a  provision  that  an  officer  of 
the  company  shall  not  alienate  his  qualification  shares  does  not 
invalidate  a  transfer  made  with  company  s  consent.*  So,  a 
statutory  provision  that  no  shareholder  who  is  indebted  for 
calls  upon  his  shares  shall  be  entitled  to  transfer  any  of  his 
shares,  does  not  invalidate  such  a  transfer  if  the  company  waives 
the  irregularity  by  registering  the  transferee  as  a  shareholder,^ 
unless  the  registration  of  the  transfer  was  done  by  mistake,  in 
which  case  it  may  be  stricken  out  and  the  transferor's  name 
restored.®  And  a  fortiori  if  the  registration  of  the  transfer  be 
procured  by  fraudulent  mis-representation  of  the  transferor, 
the  company  may  strike  out  the  name  of  the  transferee  and 
restore  that  of  the  transferor.^  INIoreover,  a  provision  that  no 
officer  of  a  bank  shall  hold  shares  in  the  bank  without  the  con- 
sent of  the  directors  is  waived  by  paying  dividends  annually 
to  an  officer  who  has  purchased  shares,  even  though  the  transfer 
when  presented  for  registration  was  never  actually  registered.* 

§  951-§  952.     Regulations  authorizing  Company  to  reject 
Transfers  deemed  inimical  to  its  Interests. 

§  951.  Whether  By-laws  prescribing  such  Regulations  are 
Valid.  —  A  common  provision  in  England  vests  in  the  company 

»  Taurine    Co.,    25    Ch.    D.    118  Ass'n  v.  Grifflths,  1  Cabab6  &  Ellis, 

(semble).  15. 

Cf.  BuTTies  V.  Pennell,  2  Ho.  Lds.         *  Ex  parte  Littledale,  9  Ch.  257, 
Cas.  497.  Cf.     Chambersburg     his.    Co.     v. 

2  People's    Home    ySavings    Bank  Smith,   11  Pa.  St.    120;    Watson  v. 

V.  Rickard,   139   Cal.  285 :    73   Pac.  Eales,  23  Beav.  294.     See  also  infra, 

858.  §  957. 

^  People's  Home  Savings  Bank  v.         *  Arulerson's  Case,  8  Eq.  509. 
Rickard,  139  Cal.  285;    73  Pac.  858.  '  Williams'   Case,  9   Eq.  225  n.; 

Cf.  Royal  British  Bank,  26  L.  J.  Payne's  Case,  9  Eq.  223. 
Ch.  545.  »  Earle  v.  Coyle,  97  Eed.  410;  38 

*  LoTidon  &  Westminster  Supply  C.  C.  A.  226. 

763 


§  952  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

or  its  directors  a  power  of  rejecting  a  transfer  that  they  may 
deem  prejudicial  to  the  interests  of  the  corporation.  Great 
doubt  exists  whether  such  a  provision  can  in  America  be  enacted 
bv  mere  by-law/  Certainly,  however,  the  law  ought  to  provide 
some  method  by  which  a  corporation  could  be  formed  subjec^t 
to  such  a  regulation.  The  business  of  many  corporations  is 
such  that  unless  entire  harmony  prevails  in  the  management 
the  interests  of  all  the  members  may  suffer.  If  the  organizers 
of  a  corporation  desire  to  form  the  company  upon  a  plan  which 
will  prevent  any  member  from  alienating  his  shares  to  a  person 
whom  the  other  shareholders  may  not  deem  a  desirable  asso- 
ciate, the  law  should  furnish  the  means  by  which  they  can  do 
so.  It  is  a  reproach  to  the  jurisprudence  of  the  United  States 
if  such  a  plan  is  not  feasible  without  the  aid  of  special  legislation. 

§  952.  Operation  and  EfiEect  of  such  Regulations  where  Valid.  — 
The  effect  of  a  valid  regulation  requiring  transfers  to  be  ap- 
proved by  the  directors  of  the  company  is  that  no  transfer  is 
valid  at  law  —  the  rule  in  equity  will  be  considered  presently  — 
until  it  has  received  such  approval."  The  approval  may,  how- 
over,  be  implied  from  the  fact  of  registration.^  A  court  of  law 
may  by  mandamus  compel  the  directors  to  consider  a  transfer,* 
but  cannot  control  the  exercise  of  their  discretion  even  though 
they  act  arbitrarily,  unfairly,  and  oppressively.^  A  court  of 
equity,  however,  if  the  rejection  of  the  transfer  be  shown  to  be 
arbitrary  and  not  bona  fide,  has  power  to  override  the  determina- 
tion and  to  direct  that  the  transfer  be  registered  as  if  it  had  been 
approved  instead  of  being  rejected.* 

Even  in  equity,  the  company's' rejection  of  the  transfer  is  con- 
clusive, however  erroneous  it  may  be,  unless  bad  faith  be  proved.'' 
INIoreover,  the  decision  reached  by  the  company  in  rejecting 
the  transfer  is  presumed  to  have  been  reached  bona  fide.^    This 

'  Supra,  §  706-§  711.  Bell  Bros.  65  L.  T.  245;    Robinson 

'  Nicov's  Case,  3  De  G.  &  J.  387,  v.  Chartered  Bunk,  1  Eq.  32. 

433  (semble);  Ex  parte  Penny,  8  Ch.  '  Yuruari  Co.,  6  Times  L.  R.  119; 

446.  Hannan's     King    Mining    Co.,     14 

2  Ex  parte  Bentinck,  1  Megone  23.  Times  L.  R.  314;    Ex  parte  Penny, 

But  see  Battie's  Case,  39  L.  J.  Ch.  8  Ch.  446. 

391_  But   cf.    Hubbard   v.    Manhattan 

*  Ex  parte  Penny,  8  Ch.  446  Trust  Co.,  87  Fed.  51,  57-58;  30 
(semble).  C.  C.  A.  520. 

*  Ex  parte  Penny,  8  Ch.  446.  *  Hannan's  King  Mining  Co.,  14 

*  Ex   parte   Penny,    8    Ch.    446;  Times  I..  R.  314. 

764 


§  832-§  1011]  REQUIREMENT    OF    APPROVAL  §  952 

is  true  even  where  no  reasons  are  assi^ed  by  the  company  for 
the  rejection  '  although  the  right  to  reject  a  transfer  is  confined 
to  certain  named  grounds."  If,  however,  reasons  for  rejecting 
the  transfer  are  assigned,  the  reasons  so  specified  must  be  ade- 
quate and  furnisii  some  just  ground  for  the  rejection;  for  other- 
wise a  court  of  ecjuity  will  deem  the  rejection  unjustifiable, 
treating  the  rejection  of  the  transfer  for  certain  specified  rea- 
sons as  etjuivalent  to  an  approval  in  all  other  respects  —  an 
approval  subject  to  an  inadmissible  objection.^  It  makes  no 
difi'erence,  therefore,  that  another  ground  for  rejecting  the 
transfer  can  be  suggested  upon  which  if  the  directors  had 
acted,  the  court  would  not  have  felt  justified  in  overruling  their 
determination.'  A  refusal  to  approve  any  transfer  at  all,  thus 
virtually  making  the  shares  inalienable,  is  of  course  deemed 
arbitrary.^  So,  an  objection  to  a  person  for  whom  the  transferee 
is  acting  as  trustee  has  been  held  to  be  insufficient  cause  for 
rejecting  the  transfer;  ^  but  this  decision,  if  it  be  law,  certainly 
greatly  reduces  the  advantages  to  the  company  from  a  require- 
ment that  transfers  shall  be  subject  to  the  approval  or  rejection 
of  the  corporation.  In  Australia,  a  refusal  to  approve  the  trans- 
fer because  of  a  belief  that  the  transferee  would  vote  for  a  cer- 
tain person  as  director  has  been  held  unjustifiable  ^  —  a  decision 
which  likewise  greatly  reduces  the  value  of  the  company's  dis- 
cretionary power.  A  refusal  to  register  a  transfer  because  of 
a  desire  to  keep  the  control  of  the  company  in  a  particular  family 
is  unjustifiable.^  And  a  refusal  because  the  transferor  is  in- 
debted to  the  company  is  also  improper  under  a  general  power 
to  reject  any  transfer;"    for  the  effect  would  be,  virtually,  to 

'  Ex    parte    Penny,    8    Ch.    446;  ^  Robinson  v.  Chartered  Bank,  1 

YuTuari  Co.,  6  Times  L.  R.  119.  Eq.  32;   New  Lambton  Land  A  Coal 

But  see  Xew  Lambton  Land   &  Co.  v.  London  Bank,  1  Comm.  L.  R. 

Coal  Co.  V.  London  Bank,  1  Comm.  (Aust.)  524. 

L.  R.  (Aust.)  524;    Alfred  Shaw  &  «  Bell  Bros.,  65  L.  T.  245,  248; 

Co.,  21  Vict.  L.  R.  599  (where  the  New  Lambton  Land  &  Coal  Co.  v. 

court    drew    unfavorable   inferences  London  Bank,  1  Comm.  L.  R.  (Aust.) 

from  tlie  refusal  of  the  directors  on  524,  545. 

cross  examination  to  disclose  their  Cf.  Robinson  v.  Chartered  Batik,  1 

reasons).  Eq.    32;     Moffat    v.    Farquahar,    7 

■  Coal  port    China    Co.    (1895),    2  Ch.  D.  591. 

Ch.  404.  '  Alfred  Shaw   d-   Co.,   21    Vict. 

^  Bell  Bros.,  65  L.  T.  245,  249.  L.  R.  599  (headnote  inadequate). 

*  Bell  Bros.,  65  L.  T.  245,  248-  «  Bell  Bros.,  65  L.  T.  245. 

249.  9  Pinkett  v.  Wright,  2  Hare  120; 

765 


§  953  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

give  the  company  a  lien  on  the  shares  for  the  indebtedness  of 
the  holder  —  a  result  which  requires  an  express  regulation.^ 
The  justifiableness  vel  non  of  a  rejection  of  a  transfer  must  be 
judged  according  to  facts  existing  at  the  time  the  transfer  is 
presented  to  the  company,  and  cannot  be  affected  by  any  sub- 
sequent occurrences.^ 

The  company  may  rescind  an  approval  of  a  transfer  which 
was  procured  by  fraudulent  misrepresentations  of  the  trans- 
feror ^  or  by  bribing  the  directors  of  the  company;  *  but  it  seems 
that  the  mere  fact  that  the  transferor  is  a  member  of  the  board 
of  directors  and  participates  in  the  approval  of  the  transfer  will 
not  invalidate  the  approval.^ 

An  approval  of  a  transfer  in  consideration  of  the  transferor's 
guarantee  of  any  calls  that  might  be  payable  by  the  transferee 
is  valid  so  that  the  transferor  is  no  longer  liable  as  a  shareholder, 
although  he  may  be  liable  upon  his  contract.^ 

Sometimes  the  right  to  reject  a  transfer  is  conditional  upon 
a  substitute  being  found  who  will  take  the  shares  at  the  same 
price  as  the  proposed  transferee;  and  in  such  a  case  the  com- 
pany has  no  right  to  reject  a  transfer  without  first  finding  a 
substitute.^  Sometimes,  if  a  transfer  is  rejected  the  directors 
are  bound  to  purchase  the  shares  on  behalf  of  the  company; 
but  even  under  such  a  regulation  they  cannot  be  required  to 
purchase  the  shares  if  the  company  has  no  funds  available  for 
the  purpose.^ 


§  953.  Regulations  authorizing  Directors  to  prescribe  Form  of 
Transfers.  —  Sometimes,  the  board  of  directors  without  being 
invested  with  any  discretion  absolutely  to  reject  a  transfer,  are 
empowered  to  prescribe  the  form  of  transfer.     Under  such  a 

New  Larnbton  Land  &  Coal  Co.  v.  *  Bennett's  Case,  5  De  G.  M.  &  G. 

London  Bank,  1  Coram.  L.  R.  (Aust.)  284. 

524   544.  Cf.  Eyre's  Case,  31  Beav.  177. 

•'  See  infra,  §  954,  §  955.  ^  Ex  parte  Littledale,  9  Ch.  257. 

*  Cawley  &  Co.,  42  Ch.  D.  209;  See  infra,  $  1602. 

Ex  -parte  Rudolph,  11  W.  R.  806.  «  Harrison's  Case,  6  Ch.  286. 

Cf.  Nation's  Case,  3  Eq.  77.  '  Chappell's  Case,  6  Ch.  902. 

»  Waimms'    Case,    9    Eq.    225n;  «  Ta/^  v. //amson,  10  Hare  489. 
Payne's  Case,  9  Eq.  223. 

Cf.  BaUie's  Case,  39  L.  J.  Ch.  391. 

766 


§832-§1011]        ThANSFEKOIi's    INDEBTEDNESS  §  0.:4 

power,  the  directors  cannot  arbitrarily  reject  a  form  of  transfer 
which  they  liave  approved  in  otlier  cases.' 

§  954.  Regulations  authorizing  Directors  to  decline  to  register 
Transfer  by  Shareholder  who  is  indebted  to  the  Corporation.  — 
Sonietiines,  provisions  are  found  entithng  the  conipanv  to  de- 
cline to  allow  a  transfer  in  any  case  where  the  transferor  is  in- 
debted to  the  corporation.  Such  a  provision  does  not  render 
a  transfer  by  a  shareliolder  who  is  indebted  to  the  company 
absolutely  void;  for  the  transferor  may  pay  off  the  indebted- 
ness, and  then  the  transfer  should  be  registered.-  Hence  a  trans- 
fer by  a  shareholder  who  was  indebted  to  the  company  passed 
all  his  interest,  and  removed  his  common  law  incompetency 
to  testify  in  an  action  to  which  the  corporation  was  party.^ 
Even  where  the  regulations  provide  that  a  transfer  disapproved 
by  the  directors  shall  be  void,  a  refusal  to  register  a  transfer  on 
the  ground  that  the  transferor  is  indebted  to  the  company  is 
not  such  a  disapproval  as  will  render  the  transfer  utterly  void.* 
A  provision  authorizing  the  company  to  decline  to  register  a 
transfer  by  a  shareholder  who  is  indebted  to  it,  applies  to  an 
indebtedness  of  any  kind  and  not  merely  to  a  debt  for  calls  or 
some  other  debt  due  by  the  transferor  qua  shareholder;^  but 
does  not  apply  to  the  potential  liability  for  future  calls  which 
have  not  been  actually  made  at  the  time  of  the  transfer.^  The 
point  of  time  at  which  the  indebtedness  must  exist  is  the  time 
of  presentation  of  the  transfer  for  record  and  not  the  time  of 
execution  of  the  transfer.''    If  the  shareholder  is  indebted  to  the 

»  Poole  V.  Middleton,  29  Beav.  etc.  Co.,  4  Ala.  652  (debt  due  by 
646.  firm     of     which     shareholder     was 

*  Ex  parte  Harrison,  28  Ch.   D.    member). 

363.  Cf.  Mobile  Mut.    Ins.  Co.  v.  Cul- 

^  Bank    of    Utica    v.    Smaller/,    2  Zom,  49  Ala.  558;   Sprout  v.  Standard 

Cow.    (N.    Y.)    770,    778;     14    Am.  G/os.s  Co.,  201  Pa.  103:   50  Atl.  1003 

Dec.  526.  (a  claim  against  an  officer  for  mis- 

*  Ex  parte  Harrison,  28  Ch.   D.  feasance).      See  also  infra,  §  960. 
363.    See  supra,  §  952.  «  Caivley  ct  Co.,  42  Cli.D.  209; 

»  Ex  parte  Stringer,  9  Q.   B.   D.  Ex  parte  Rudolph,    11   W.    R.   806; 

436;    Nat.  Bank  v.  Rochester  Turn-  Hall  v.  U.  S.  Ins.  Co.,  5  Gill  (Md.) 

bier  Co.,  172  Pa.  St.  614 ;  33  Atl.  748;  484. 

Kahn  v.  Bank  of  St.  Joseph,  70  Mo.         Contra:  Pittsburgh,  etc.  R.  R.  Co. 

262;     Mechanics    Bank    v.    Earp,    4  v.  Clarke.  29  Pa.  St.  146. 
Rawle  (Pa.)  384  (where  the  debt  in         See  also  cases  cited  infra,  §  960. 

question    was   owing   by   a   firm   of  Cf.  Re  Bachman,  2  Fed.  Cas.  310. 
which  the  sharehoKler  was  a  mem-         ^  Michigan    Trust    Co.    v.    State 

ber);  Cunningham  v.  Ala.  Life  Ins.,  Bank,  111  Mich.  306;   09  N.  W.  645. 

767 


§  955  TRANSFER    AND    TRANSMISSION  [ChaP.  XV 

company,  and  the  company  is  indebted  to  the  shareholder  on 
another  and  entirely  separate  account,  the  company  may  de- 
cline to  register  a  transfer  even  though  upon  a  full  settlement 
of  accounts  a  balance  would  have  been  due  to  the  shareholder.' 


§  955-§  961.     Liejis  on  Shares  for  Debts  of  Holders 
to  the  Company. 

§  955.  When  Lien  exists.  —  Sometimes,  the  company  has  a 
lien  upon  its  several  shares  for  debts  due  to  it  by  the  holders 
thereof.  Such  a  lien  does  not  exist  apart  from  some  express 
provision  either  in  some  statute  or  in  the  company's  regula- 
tions.- It  has  been  said  that  a  statute  giving  the  company  a 
lien  upon  its  shares  for  debts  of  the  holders  should  be  strictly 
construed.^  It  may  be  argued  that  a  lien  is  something  more 
than  a  mere  power  to  decline  to  register  a  transfer  by  a  share- 
holder who  is  indebted  to  the  company;  and  consequently  it 
is  held  in  England  and  in  Ireland  that  a  provision  vesting  such 
a  power  in  the  company  does  not  create  a  lien  upon  the  shares.* 
But  the  American  cases  in  which  the  point  has  arisen  generally 
hold  that  such  a  provision  does  give  the  company  a  lien.^  It 
has  been  held  that  no  lien  is  created  by  a  provision  for  for- 
feiture of  the  shares  in  case  the  shareholder  fails  to  pay  a  debt 
owing  to  the  company.^     On  the  other  hand,  a  provision  that, 

^Mechanics    Bank    v.    Earp,    4  *  Kingstown  Yacht  Club  (IS88),  21 

Rawle  (Pa.)  384,  392.  L.  R.  Ir.  199;   Dunlop  v.  Dunlop,  21 

2  Merchants'  Bank  v.  Shouse,  102  Ch.  D.  583. 

Pa.  St.  488;    Heart  v.  State  Bank,  2  ®  Kenton  Ins.  Co.  v.  Bowman,  84 

Dev.  Eq.  (N.  Car.)  Ill;  Mass.  Iron  Ky.  430;     1   S.  W.   717;    Farmers' 

Co.  V.  Hooper,  7  Cush.  (Mass.)  183;  Bank  of  Maryland's  Case,  2  Bland 

Lankershin  Ranch  Land,  etc.  Co.  v.  (Md.)  394;   Wetherell  v.   Thirty-first 

Herberger,  82  Csil  600;   23  Pac.  134;  Street,  etc.   Ass'n,    153   111.   361;  39 

Gemmell  v.  Davis,  75  Md.  546;    23  N.  E.  143. 

Atl.    1032;    32  Am.   St.   Rep.   412;  Ci.  Brent  v.  Bank  of  Washington, 

Steamship    Dock    Co.     v.     Heron's  10  Pet.  596  (headnote  inadequate); 

Admx.,  52  Pa.   St.  280;  Herrick  v.  Tete  v.  Farmers',  etc.  Bank,  4  Brewst. 

Humphrey   Hardware    Co.    (Nebr.),  (Pa.)  308;   Sproul  v.  Standard  Glass 

103  X.  W.  685.  Co.,  201  Pa.  103,  109-110;    50  Atl. 

Cf.  Re  Rowe  (1904),  2  K.  B.  489.  1003. 

As    to    the    validity    of    by-laws  But  see  Brent  v.  Bank  of  Wash- 
creating  such  liens,  see  supra,  §  706-  ington,  2  Cranch  C.  C.  517. 
§  711.  »  Dunlop  V.   Dunlop,  21   Ch.   D. 

«  Boyd  V.  Redd,  120  N.  Car.  335;  583;    Dearborn  v.   Washington  Sav. 

27  S.  E.  35;  58  Am.  St.  Rep.  792.  Bank,   18  Wash.  8;    50  Pac.   575; 

768 


§832-§  1011]  LIENS    ON    SHARES  §956 

in  case  of  non-payment  of  the  debt,  the  company  may  sell  the 
debtor's  shares  and  retain  the  amount  of  the  debt  out  of  the 
proceeds  does  create  a  lien.' 

§  9."30.  Nature  and  Effect  of  Lien  in  general.  —  A  lien  upon 
shares  for  a  debt  due  by  tlie  liolder  to  the  company  is  an  equi- 
table charge,  and  as  such  subject,  in  general,  to  all  the  rules, 
whether  prescribed  by  statute  or  existing  apart  from  statute, 
applicable  to  charges  of  that  description.  Hence,  where  the 
company  has  a  lien  upon  its  shares  for  the  debts  of  the  holder 
a  loan  to  a  shareholder  is  deemed  a  loan  upon  security.'  So, 
the  lien  gives  priority  in  respect  to  the  shares  covered  thereby 
even  over  a  debt  owing  to  the  sovereign. ■*  Moreover,  a  surety 
of  the  shareholder,  on  paying  the  debt,  is  entitled  to  be  sul>- 
rogated  to  the  company's  lien.^  The  existence  of  the  lien  may 
be  offered  in  evidence  in  reduction  of  damages  in  a  suit  against 
the  company  by  the  shareholder  in  the  nature  of  an  action  for 
conversion  of  the  shares.**  If  the  company  at  the  time  of  making 
the  loan  has  notice  of  another  existing  equitable  charge  upon 
the  shares,  the  company's  lien  will  be  postponed  to  the  prior 
charge.^    If  the  lien  be  created  by  statute,  even  a  bona  fide  pur- 

Small  w  Herkimer  Mfg.  Co.,  2 '!<^.Y.  ropolitan  Nat.    Bank,   2   Biss.    527; 

330.  First  A'at.  Bank  v.  Hartford,  etc.  his. 

But  see  Re  Jennings  (1851),  1  Ir.  Co.,  45  Conn.  22. 

Ch.  236:    Great  Northern  Ry.  Co.  v.  ■*  Brent  v.   Bank  of  Washington, 

Kennedy,  4  Exch.  417,  425.  10  Pet.  596. 

•  Dcering  v.   Hibernian   Banking  *  KIopp    v.    Lebanon    Batik,    46 

Co.,  16  W.  R.  578;    Arnold  v.  Suf-  Pa.  St.  88;    Petersburg,  etc.  In.s.  Co. 

folk  Bank.  27  Barb.  (N.  Y.)  424.  v.  Lumsden,  75  Va.    327;   Re    Mor- 

But  see  Dearborn  v.  Washington  rison,    10   N.   B.    R.    105   (semble); 

Savings  Bank, l8Wash.8:50Fac.575.  Young    v.    Vough,    23     N.    J.     Eq. 

2  Evcritt  V.   Automatic   Weighing  325. 

Machine  Co.  (1892),  3  Ch.  506.  But  cf.  Cross  v.  Phoenix  Bank,  1 

Cf.  Farmers'  Bank  of  Maryland's  R.  I.  39.    See  also  West  Branch  Bank 

Case,  2  Bland  (Md.)  394.  v.  Armstrong,  40  Pa.  St.  278. 

But  see  German  Security  Bank  v.  ^  Arnold    v.     Suffolk    Bank,    27 

Jefferson,  10  Bush  (Ky.)  326,  hold-  Barb.  (N.  Y.)  424. 

ing  that  the  company  after  exhaust-  '  Bradford  Banking  Co.  v.  Briggs, 

ing  the  shares  cannot  prove  in  com-  12  .\.  C.  29;   Xesmith  v.  Washingto7i 

petition   with   the   debtor's   general  6fln^^  6  Pick.  (Mass.)  324;   Birmirig- 

creditors  until  the  latter  have  been  ham  Trust,  etc.  Co.  v.  La.  Xat.  Bank, 

made  equal  out  of  the  general  estate.  99  Ala.  379;   13  So.  112;  20  L.  R.  .\. 

Sed  qucere.  600;     Curtice    v.    Crawford    County 

3  National  Bank  of  Wales  (1899),  Bank,  118  Fed.  390. 

2  Ch.  629  (affirmed  sub  nom.  Dovey         See  also  infra,  §  960. 
V.  Cory  (1901),  A.  C.  477). 

Cf.  Evansville  Nat.  Bank  v   Met- 
VOL.  I.  — 49  769 


§  956  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

chaser  of  the  shares  claiming  under  a  transfer  endorsed  on  the 
share-certificate  would  take  subject  to  the  lien ;  '■  for  he  has 
constructive  notice.  But  where  a  mere  by-law  of  an  American 
corporation  attempts  to  create  a  lien,  it  will  not,  according  to 
the  prevalent  view,  be  valid  as  against  a  bona  fide  purchaser 
of  the  certificate,  even  if  the  by-law  have  any  effect  at  all  —  a 
point  on  which  the  authorities  are  not  unanimous."  A  pur- 
chaser of  the  shares  at  a  sale  under  an  execution  against  the 
shareholder  takes  subject  to  the  lien.^  A  lien  created  by  statute 
for  a  particular  class  of  debts  will  have  priority  over  a  lien  for 
all  debts  without  distinction  created  by  the  by-laws.*  The 
company's  lien  is  a  general  one;  and  hence  if  the  company 
takes  other  security,  it  must  exhaust  the  same  before  resorting 
to  the  shares.^  The  lien  protects  all  debts  owing  to  the  com- 
pany equally,  without  regard  to  the  date  when  they  were  con- 
tracted. Hence  a  surety  for  the  debt  first  contracted  has  no 
equity,  it  has  been  held,  to  have  the  shares  applied  to  the  dis- 
charge of  that  debt  rather  than  of  other  debts  subsequently 
contracted  by  the  shareholder ;  *'  but  it  is  submitted  that  a  differ- 
ent decision  would  have  been  more  just  to  the  surety  without 
in  any  way  diminishing  the  right  of  the  corporation  and  with- 
out doing  violence  to  any  rule  of  law.  If  some  of  the  shares  are 
assigned  to  a  botia  fide  purchaser,  although  he  takes  subject  to 

■  Farmers'  Bank  of  Md.  v.  Igle-  ville,  68  Ark.  234;    57  S.  W.  257; 

hart,  6  Gill  (Md.)  50;    Dorr  v.  Life  Mechanics  Bank  v.  Merchants  Bank 

Ins.  Clearing  Co.,  71  Minn.  38;    73  45   Mo.    513;     100   Am.    Dec.    388; 

N.  W.  635;    70  Am.  St.  Rep.  309;  Tuttle  v.  Walton,  1  Ga.  43;  Farjwers', 

First  Nat.  Bank  V.  Hartford,  etc.  liis.  etc.   Bank  v.  Haney,  87  Iowa  101; 

Co.,  45  Conn.  22,  35-36;    Bohmer  v.  54  N.  W.  61. 

City  Bank,  77  Va.  445;    Union  Bank         Aliter  where  the  company's  debt 

V.  Laird,  2  Wheat.  390  (where  the  had  not  been  contracted  at  tne  time 

lien  was  created  by  a  special  act  of  of  the  levy:  Pilot  v.  Johnson,  33  La. 

incorporation);    Hammond  v.  Hast-  Ann.  1286;  Geyery.  Western  Ins.  Co., 

ings,  134  U.  S.  401;    10  Sup.  Ct.  727  3  Pittsb.  (Pa.)  41. 
(where  the  lien  was  created  by  a         Cf.  Bryon  v.  Carter,  22  La.  Ann. 

general    statute);      Wright    Lumber  98;   Owens  v.  Atlanta  Trust,  etc.  Co., 

Co.   V.   Hixon,    105  Wise.    153;    80  122  Ga.  521;  50  S.  E.  379  (where  the 

N.  W.  1110,  1135;   Reese  v.  Batik  of  purchaser  at  the  execution  sale  had 

Commerce,  14  Md.  271;  74  Am.  Dec.  notice  of  the  company's  claim). 
536;     Curtice    v.    Crawford    County         *  Petersburg,  etc.  Ins.  Co.  v.  Lums- 

Bank,  110  Fed.  830.  den,  75  Va.  327. 

2  See  supra,  §  706.  *  Dunlop  v.   Dunlop,   21   Ch.   D. 

^  Oliphint  V.  Bank  of  Commerce,  583. 
60  Ark.  198;   29  S.  W.  460;  Spring-         »  Cross  v.  Phoenix  Bank,  1  R.  I. 

field   Wagon  Co.   v.  Bank  of  Bates-  39. 

770 


§  832-§   Kill]  LIENS    ON    SHARES  §957 

the  company's  lien  (unless  the  company  waive  the  lien  by  regis- 
tering the  transfer  or  otherwise),  still  the  effect  of  the  assign- 
ment, according  to  the  doctrine  of  marshalling,  is  to  charge  the 
lien  in  the  first  instance  upon  the  shares  retained  by  the  trans- 
feror, to  the  exoneration  of  the  transferred  shares;'  and  this 
rule  applies  even  as  against  judgment  creditors  of  the  transferor 
who  have  levied  upon  the  shares  remaining  in  his  name.^  Where 
the  lien  is  for  the  full  value  of  the  shares,  the  company  may,  it 
has  been  held,  upon  getting  the  share-certificate  in  its  posses- 
sion, lawfully  refuse  to  redeliver  it  until  the  indebtedness  be 
adjusted.^ 

§  957.  Waiver  of  Lien.  —  According  to  some  authorities  and 
the  reason  of  the  thing,  the  company  by  registering  a  transfer 
of  shares  waives  any  lien  thereon  for  a  debt  of  the  transferor.^ 
It  would  follow,  therefore,  that  the  company  may  always  refuse 
to  register  a  transfer  of  shares  upon  which  it  has  a  lien  for 
moneys  owing  by  the  transferor,^  even  though  the  transferee 
may  have  acquired  the  certificate  in  the  open  market  without 
knowledge  of  the  debt  for  which  the  lien  is  claimed."  On  the 
other  hand,  in  one  or  two  states,  the  courts  have  held  that  while 
even  a  bona  fide  purchaser  of  the  certificate  takes  in  subordina- 
tion to  the  lien,  yet  the  company  may  be  required  to  register  the 
transfer  subject  to  the  lien.^    Transmission  of  shares  by  death 

*  Gray  v.  Stone,  69  L.  T.  282.  ist ration  of  shares  in  name  of  exec- 
'  Gray  v.  Stone,  69  L.  T.  282.  utor  of  deceased  shareholder  not  a 
^  Bishop  V.  Globe  Co.,  135  Mass.    waiver    of    lien).      See    also    supra, 

132,  138  (headnote  inadeqiuite).  §  950. 

Cf.   Arnold  v.  Suffolk   Bank,  27         But  see  Re  Bachman,  2  Fed.  Cas. 

Barb.  (N.  Y.)  424,  429-430.  310;  Dobbins  v.  Walton,  37  Ga.  614; 

*  Hodges    v.    Planters'    Bank,    7  95  Am.  Dec.  371. 

G.  &  J.  (j\Id.)  306;    Downers  Adni'r         *  Jennings  v.  Bank  of  California, 

V.    ZanesvUle    Bank,    Wright    (Oh.)  79  Cal.  323;    21  Pac.  852;    12  Am. 

477;  Hill  v.  Pine  River  Bank.  45  N.  St.  Rep.  145;    5  L.  R.  A.  233;    Tete 

H.  300;  National   Bank  v.   Watson-  v.   Farrners',   etc.    Bank,    4    Brewst. 

tovm  Bank,  105  U.  S.  217  (headnote  (Pa.)  308. 
inadequate).  Cf.  W.  Key  A  Son  (1902),  1  Ch. 

Cf.  Hall  V.  U.  S.  Ins.  Co.,  5  Gill  467. 
(Md.)  484;    Moore  v.  Bank  of  Com-         »  See  supra,  §  956. 
merce,  52  Mo.  377;    Petersburg,  etc.         '  Craig  v.  Hesperia,  etc.  Co.,  113 

Ins.  Co.   V.   Lumsden,   lo  Va.  327;  Cal.  7;  45  Pac.  10;  54  Am.  St.  Rep. 

Just  V.  State  Bank,  94  N.  AV.  200;  316;    35  L.  R.  A.  306:    Herdegen  v. 

132   Mich.    600;    London,   Paris   &  Cotzhausen,  70  Wise.  oS9;   36  N.  W. 

American    Bank    v.    Aronstein,    117  385. 
Fed.  601,  606;  54  C.  C.  A.  663  (reg- 

771 


§  957  TRANSFER    ANT)    TRANSMISSION  [ChAP.  XV 

or  bankruptcy  does  not  affect  the  lien;  and  consequently  the 
lien  is  not  waived  by  registering  as  shareholder  the  executor  or 
the  trustee.' 

The  fact  that  the  person  in  charge  of  the  transfer  books  when 
a  transfer  is  presented  for  registration  promises  to  make  the 
transfer  and  issue  a  new  certificate  will  not  amount  to  a  waiver 
of  the  lien  or  estop  tlie  company  from  relying  thereon,  where 
the  agent  in  charge  ol  the  books  was  not  shown  to  have  author- 
ity to  do  more  than  receive  requests  and  communicate  with  the 
proper  officers.'  Even  a  letter  from  the  company  explicitly  stat- 
ing that  the  shares  are  unencumbered  will  not,  it  has  been  held, 
estop  the  corporation  from  asserting  a  lien  some  twelve  months 
afterwards.^  On  the  other  hand,  if  the  company  leads  the 
transferee  to  believe  that  the  lien  does  not  exist  or  will  not  be 
insisted  upon,  thereby  lulling  him  into  security  and  causing  him 
to  alter  his  position,  the  lien  cannot  subsequently  be  set  up 
against  him.* 

An  express  mortgage  or  pledge  of  shares  to  the  company 
would  seem  to  supersede  the  general  lien.^  But  the  fact  that 
the  company  has  taken  other  security  for  the  debt,  such  as 
a  mortgage  of  land,  does  not  amount  to  a  waiver  of  the 
lien.^ 

A  by-law  providing  that  a  shareholder  desiring  to  sell  his  shares 
shall  give  the  company  ten  days  to  find  a  purchaser,  and  after 
the  expiration  of  that  time  may  sell  at  pleasure,  does  not  amount 
to  a  waiver  of  a  lien  secured  to  the  company  by  statute.^ 

The  failure  of  the  company,  when  the  shareholder's  debt  is 

'  See  infra,  §  977,  §  983  and  supra,  the  lien   and  yet  an   estoppel  was 

p.  771,  n.  4.  raised    by    representations    of    the 

^  Bishop  V.  Globe  Co.,  135  Mass.  cashier);     St.    Paul   Nat.    Bank    v. 

132.     Cf.  Kenton  Ins.   Co.   v.   Bow-  Life  Ins.  Clearing  Co.,  71  Minn.  123; 

man,  84  Ky.  430;    1  S.  W.  717.  73  N.  W.  713. 

^  Planters',  etc.  Ins.  Co.  v.  Selma  *  McLean   v.   Lafayette   Bank,   3 

Savings  Bank,  63  Ala.  585,  594-595.  McLean  587,  617-619. 

*  National   Bank   v.    W atsoniown  '  Kenton  Ins.  Co.  v.  Boivman,  84 

Bank,  105  U.  S.  217;  Moore  v.  Bank  Ky.  4.30;    1  S.  W.  717;    Union  Bank 

of    Commerce,    52    Mo.    377 ;     Des  v.  Laird,  2  Wheat.  390 ;  German  Nat. 

Moines,  etc.  Trust  Co.  v.  Des  Moines  Bank  v.  Kij.  Trust  Co.,  40  S.  W.  458; 

Bank,  97  Iowa  668;    66  N.  W.  914;  19  Ky.  Law  Rep.  361. 

Oakland,  etc.  Bank  v.  State  Bank,  113  Cf.  Dunlop  v.  Dunlop,  21  Ch.  D. 

Mich.  284;    71  N.  W.  453;    67  Am.  583;   Re  Morrison,  10  N.  B.  R.  105. 

St.  Rep.  463  (where  by  statute  the  ^  Citizens  Bank  v.  Kalamazoo  Co. 

directors  alone  had  power  to  waive  Bank,  111  Mich.  313;  69  N.  W.  663. 

772 


§  832-§  1011]  LIENS  ON  SHARES  §  959 

contracted,  to  insist  upon  a  surrender  of  the  sliare-oertificate 
does  not  amount  to  a  waiver  of  the  lien;  '  and,  indeed,  one  may 
well  doubt  whether  it  could  lawfully  have  demanded  a  surrender 
of  the  certificate.  A  statement  in  a  share-certificate  that  the 
shares  may  be  transferred  on  the  company's  lx>oks  on  surrender- 
ing the  certificate  does  not  amount  to  a  waiver  of  the  lien  or  estop 
the  company  from  asserting  it  against  a  bona  fide  purchaser  of 
the  certificate.-  On  the  other  hand,  if  the  regulations  which 
create  the  lien  provide  that  a  eopy  of  the  by-law  shall  Ije  endorsed 
on  the  certificate,  an  omission  of  the  endorsement  from  the  cer- 
tificate has  been  held  a  waiver  of  the  lien.^ 

§  958.  Loss  of  Lien  otherwise  than  by  Waiver.  —  "^I'he  repeal 
of  the  statute  which  gave  the  lien  will  not  divest  the  lien  as  to 
debts  contracted  prior  to  the  repeal.''  The  lien  is  not  lost  because 
the  debt  secured  is  barred  by  limitations.^ 

§  959.  What  is  subject  to  the  Lien.  —  The  lien  covers  any 
moneys  distributable  or  payable  to  the  shareholder  on  account 
of  his  shares  in  liquidation  or  amalgamation  or  consolidation 
proceedings.®  The  lien  extends  to  dividends  payable  on  the 
shares;  but  the  right  to  deduct  a  debt  due  from  a  shareholder 
from  the  amount  of  dividends  payable  to  him  may  often  be 
supported  on  ordinary  principles  of  set-oflf  even  though  the 
company  have  no  lien.^  All  shares  owTied  by  the  debtor  are 
subject  to  the  lien,  and  the  company  cannot  be  required  to 

•  Bohmer  v.  City  Bank,  77  Va.  447;  24  S.  W.  129;  Bank  of  Holly 
445;  Bank  of  Commerce  v.  Bank  of  Springs  v.  Pinson,  58  Miss.  421;  38 
Newport,  63  Fed.  898,  902  (headnote    Am.  Rep.  330. 

misleading);    11  C.  C.  A.  484;    Piatt  *  Wright  Lumber  Co.   v.   Hixon, 

V.  Birmingham  Axle  Co.,  41  Conn.  105  Wise.  153;  80  N.  W.  1110,  1135. 

255.  '  Gcyer   v.    Western    Ins.    Co.,   3 

*  Union  Bank  v.  Laird,  2  Wlieat.  Pittsb.  (Pa.)  41 ;  Farmers',  etc.  Bank 
390   (headnote  inadequate);    Ham-  v.  Iglehart,  6  Gill  (Md.)  50. 

mond   V.    Hastings,    134    U.    S.    401  »  General  Exchange   Bank,   6  Ch. 

(iieadnote  inadequate);    10  Sup.  Ct.  818. 

727;    Bank  of  Commerce  v.  Bank  of  '  Gemmell  v.  Davis,  75  Md.  546; 

Newport,  63  Fed.  898,  902  (headnote  23  Atl.  1032;   32  Am.  St.  Rep.  412. 

misleading);    11  C.  C.  A.  484;    Nat.  Cf.  Hagar  v.  Union  Nat.  Bank,  63 

Bank   of  the   Republic   v.    Rochester  Me.  509;    Bates  v.  N.  Y.  Ins.  Co.,  3 

Tumbler  Co.,   172  Pa.  St.  614;    33  Johns.  Cas.  (N.  Y.)  238;   and  infra, 

Atl.  748;    Bohmer  v.  City  Bank,  77  §  1361. 

Va.  445;  Reese  v.  Bank  of  Commerce,  As  to  dividends   in   liquidation, 

14  Md.  271;    74  Am.  Dec.  536.  see  Merchants'  Bank  v.  Shouse,  102 

'  Br inkerhoff-F arris     Trust,     etc.  Pa.  St.  488;    Bridges  v.  Nat.  Bank 

Co.  V.  Home  Lumber  Co.,   118  Mo.  of  Troy,  185  N.  Y.  146. 

773 


§  960  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

release  any  of  them  from  the  Hen,  aUhough  the  remainder  might 
be  more  than  sufficient  to  secure  the  debt.' 

§  960.  What  Debts  are  covered  by  the  Lien.  —  When  the  hen 
is  expressed  to  be  for  "moneys  due,"  it  extends  to  a  debt  for 
which  time  bills  of  exchange  not  yet  mature  have  been  taken ;  - 
for  the  taking  of  the  bills  merely  suspends  the  remedy  without 
making  the  original  indebtedness  any  the  less  "due."  A  lien 
for  any  indebicduess  of  a  shareholder  of  course  includes  a  debt 
which  is  not  yet  payable.^  Where  one  of  the  articles  of  associa- 
tion provides  that  the  company  shall  have  a  lien  upon  its  shares 
for  debts  "due"  from  the  holders  and  another  provides  that  the 
company  may  decline  to  register  a  transfer  by  any  member  who 
is  "indebted"  to  it,  the  two  articles  being  in  pari  materia  must 
be  construed  together,  and  hence  the  company  may  not  refuse 
to  register  a  transfer  unless  the  transferor's  indebtedness  is  " due" 
and  payable.*  Ordinarily,  only  legal  as  distinguished  from  equi- 
table claims  against  a  shareholder  are  within  the  lien.^  The 
lien  extends  to  an  indebtedness  of  a  trustee  though  not  con- 
tracted on  behalf  of  the  trust  estate,"  unless  of  course  the  com- 
pany has  notice  of  the  trust  before  contracting  the  debt ;  ^  but 

'  Sewall   V.   Lancaster   Bank,    17         ®  Child  v.  Hudson's  Bay  Co.,  2 

S.  &  R.  (Pa.)  285  (semble).  P.  Wms.  207,  209  (headnote  inade- 

Cf.  Cross  V.  Phcenix  Bank,  1  R.  I.  quate).      Qucere    as    to    claims    for 

39  (criticised,  supra,  §  956).  torts:    Hotchkiss,  etc.  Co.  v.   Union 

'  London,  Birmingham,  etc.  Bank-  Nat.  Bank,  68  Fed.  76;  15  C.  C.  A. 

ing  Co.,  34  Beav.  332.  264. 

*  Grant  v.  Mechanics  Bank,  15  *  New  London  Bank  v.  Brockle- 
S.  &  R.  (Pa.)  140;  St.  Louis,  etc.  Ins.  bank,  21  Ch.  D.  302. 

Co.  V.  Goodfellow,  9  Mo.  149.  Cf.  Young  v.  Vough,  23  N.  J.  Eq. 

Cf.  Sewall  V.  Lancaster  Bank,  17  325. 

S.  &  R.  285 ;  Pittsburgh,  etc.  R.  R.  Co.  '   Conant,  Ellis   &   Co.  v.  Seneca 

V.  Clarke,  29  Pa.  St.  146.  County  Bank,  1  Oh.  St.  298;    Brad- 

*  Stockton  Iron  Co.,  2  Ch.  D.  101.  ford  Banking  Co.  v.  Briggs,  12  A.  C. 
Cf.   Michigan  Trust  Co.  v.  State  29;    Bank  of  America  v.  McNeil,  10 

Barjfc,  111  Mich.  .306;  69N.  W.  645;  Bush.  (Ky.)  54;    Prince  Investment 

Reese  v.  Bank  of  Commerce,  14  Md.  Co.  v.  St.  Paul,  etc.  Land  Co.,  68 

271;   74  Am.  Dec.  536.  Minn.  121;  70  N.  W.  1079;  Nesmith 

But  see  Downer's  Adm'r  v.  Zanes-  v.  Washington  Bank,  6  Pick.  (Mass.) 

vUle  Bank,  Wright  (Oh.)  477;    Leg-  324;    Birmingham  Trust,  etc.  Co.  v. 

gett  V.  Bank  of  Sing  Sing,  24  N.  Y.  Louisiana  Nat.  Banic,  99  Ala.  379; 

283  (where    a    hen  for  debts    "due  13  So.  112;    20  L.  R.  A.  600;    Me- 

and  payable"  was  held  to  cover  a  chanics  Bank  v.  Seton,  1  Pet.  299; 

debt  evidenced  by  a  promissory  note  McLaughlin  v.  Bank  of  Victoria,  20 

•which  had  not  reached  maturity).  Vict.  L.  R.  433. 

Cf.  Brent  v.  Bank  of  Washington, 
10  Pet.  596  (headnote  inadequate). 

774 


§  832-§  1011] 


LIENS    ON    SHARES 


9G0 


it  does  not  extend  to  debts  owint^  to  the  company  l)v  a  cestui 
que  trmi  of  shares.'  Moreover,  the  hen  a|)i)hes  to  debts  con- 
tracted by  the  registered  owner  of  the  shares  even  after  a  transfer 
by  endorsement  and  deUvery  of  the  share-certificate,-  unless  the 
company  lias  notice  of  the  assignment;^  and  bv  parity  of  rea- 
soning debts  contracted  by  a  purchaser  of  shares  who  has  not 
been  registered  {is  shareholder  are  not  within  the  lien.^  But 
debts  contracted  by  a  shareholder  in  favor  of  a  third  jx'rson, 
and  afterwards  acquired  by  the  company  by  assignment,  are 
not  covered.^     It  has  been  held  that  debts  contracted  bv  the 


>  Re  Perkins,  24  Q.  B.  D.  613. 
Cf.  Helm  V.  Swiggett,  12  Ind.  194 
(headnote  inadequate). 

But  see  contra:  Planters',  etc. 
Ins.  Co.  V.  Selma  Savings  Bank,  03 
Ala.  585;  Sabin  v.  Bank  of  Wood- 
stock, 21  Vt.  353. 

Cf.  Lanier  Lumber  Co.  v.  Rees, 
103  Ala.  622;  16  So.  637;  49  Am. 
St.  Rep.  57  (where  the  cestui  que 
trust  was  a  corporation  wliich  had 
no  power  to  hold  shares  in  another 
company,  and  for  this  reason  its 
debt  was  held  not  to  be  secured  by 
the  lien). 

^  Jennings  v.  Bank  of  California, 
79  Cal.  323;  21  Pac.  852;  12  Am. 
St.  Rep.  145;  5  L.  R.  A.  233  (where 
the  indebtedness  secured  was  stated 
by  the  terms  of  tlie  certificate  to  be 
"that  of  the  person  in  wliose  name 
the  stock  stands  on  the  books  of  the 
bank  ");  Gibbs  v.  Long  L4and  Bank, 
83  Hun  (N.  Y.)  92,  96  (headnote 
inadequate);  31  N.  Y.  Supp.  406; 
Stafford  v.  Produce  Exch.  Banking 
Co.,  61  Oh.  St.  160;  55  N.  E.  162; 
76  Am.  St.  Rep.  371;  Mount  Holly 
Paper  Co.'s  Appeal,  99  Pa.  St.  513; 
Leggett  v.  Bank  of  Sing  Siyig,  24  N.  Y. 
283,  287-288  (headnote  inadequate) ; 
Piatt  V.  Birmingham  Axle  Co.,  41 
Conn.  255;  Reese  v.  Bank  of  Com- 
vierce.  14  Md.  271 ;  74  Am.  Dec.  536; 
People's  Bank  of  Talbotton  v.  Ex- 
change Bank,  116  Ga.  820;  43  S.  E. 
269;   94  Am.  St.  Rep.  144. 

Cf.  Michigan  Trust  Co.  v.  State 
Bank,  111  Mich.  300;   69  N.  W.  645. 


^  Bank  of  America  v.  McNeU,  10 
Bush.  (Ky.)  54;  White  River,  etc. 
Bank  v.  Capital,  etc.  Trust  Co.,  59 
Atl.  (Vt.)  197;  77  Vt.  123;  107  Am. 
St.  Rep.  754  (where  it  was  said  that 
the  hen  of  the  company  wouKl  attach 
to  the  interest  of  a  pledgor  who 
had  pledged  the  shares  and  given 
notice  to  the  company  before  the 
company's  claim  was  contracted); 
People's  Bank  of  Talbotton  v.  Ex- 
change Bank,  116  Ga.  820;  43  S.  E. 
269;  94  Am.  St.  Rep.  144;  Curtice 
V.  Crawford  County  Bank,  110  Fed. 
830  (burden  of  proving  that  com- 
pany liad  notice  of  the  assignment 
held  to  rest  on  the  transferee  of  the 
shares). 

Cf.  Prince  Investment  Co.  v.  St. 
Paul,  etc.  Land  Co.,  68  Minn.  121; 
70  N.  W.  1079;  Birmingham  Trust, 
etc.  Co.  V.  Louisiana  Xat.  Ba7ik,  99 
Ala.  379;  13  So.  112;  20  L.  R.  A. 
600;  Hotchkiss,  etc.  Co.  v.  Union 
Nat.  Bank,  68  Fed.  70;  15  C.  C.  A. 
264. 

*  But  see  Wetherell  v.  Thirty-first 
Street,  etc.  Ass'n,  153  111.  361;  39 
N.  E.  143  (where  the  purcliaser  was 
secretary  of  the  company  and  as 
such  charged  \\ith  the  duty  of  reg- 
istering transfers). 

*  Boyd  V.  Redd,  120  X.  Car.  335; 
27  S.  E.  35;  58  Am.  St.  Rep.  792. 

Cf.  Bank  of  Kentucky  v.  Bonnie 
Bros.,  102  Ky.  343;  438.  W.  407; 
White's  Bank  v.  Toledo  Ins.  Co.,  12 
Oh.  St.  601. 

But  see  Grant  v.  Mechanics  Bank, 


§  961  TRANSFER    AND    TR.ANSMISSION  [ChAP.  XV 

shareholder  before  he  acquiiTd  his  shares  are  within  the  hen.' 
Of  course,  the  hen  cannot  be  restricted  by  imphcation  to  debts 
due  by  the  shareholder  qua  shareholder.-  A  debt  owing  by  a 
partnership  of  which  the  shareholder  is  a  member  is  within  the 
lien,^  and  so  is  a  claim  against  the  shareholder  as  surety.'* 
A  statute  creating  a  lien  in  favor  of  the  company  has  been  held 
to  apply  to  debts  contracted  prior  to  the  enactment.* 

§961.  Enforcement  of  Lien.  —  The  company's  lien,  like 
any  other  equitable  charge,  may  be  enforced  by  a  foreclosure 
suit.®  Where  the  debtor  has  assigned  the  shares  subject  to  the 
lien  by  endorsement  of  the  certificate,  a  decree  of  foreclosure 
may  be  entered  in  a  suit  between  the  company  and  the  assignee 
although  the  assignor,  w^ho  remains  the  registered  holder,  is  not 
a  party.'  But  it  has  been  held  in  Pennsylvania  that  the  com- 
pany cannot  take  the  law  into  its  own  hands  and  sell  the  shares 
covered  by  the  lien.* 


§  962.  Regulations  giving  Company  a  Right  of  Pre-emption.  — 
Provisions  are  sometimes  found  requiring  a  shareholder  before 
selling  his  shares  to  offer  them  to  the  company  at  the  price 
which  he  is  able  to  obtain  from  an  outsider.     Such  regulations 

15  S.  &  R.  (Pa.)  140;    Union  Bank         *  St.  Louis,  etc.  Ins.  Co.  v.  Good- 

V.  Laird,  2  Wheat.  390  (where  this  fellow,  9  Mo.  149. 
point  was  not  raised  by  counsel  or  *  Birmingham  Trust,  etc.  Co.  v. 

noticed   specifically  by  the   court);  East  Lake  Land  Co.,  101  Ala.  304; 

Rogers  v.  Huntingdon  Bank,  12  Serg.  13  So.  72;   First  Nat.  Bank  v.  Hart- 

&R.  (Pa.)  77.  ford,  etc.  Ins.  Co.,  45  Conn.  22. 

•  Schmidt    v.    Hennepin    County         *^  Mechanics  Bldg.,  etc.   Asr'n  v. 

Barrel  Co.,  35  Minn.  511;   29  N.  W.  King,  83  Cal.  440  (headnote  inade- 

200.  quate) ;  23  Pac.  376. 

^  Mobile  Mutual  Ins.  Co.  v.  Cut-  But  see  Aldine  Mfg.  Co.  v.  Phil- 

lom,  49  .4la.  558;  Rogers  v.  Hunting-  lips,  118  Mich.  162;    76  N.  W.  371; 

don  Bank,  12  Serg.  &  R.   (Pa.)  77.  74  Am.  St.  Rep.  380;    42  L.  R.  A. 

See  also  Ex  parte  Stringer,  9  Q.  B.  D.  531. 
436.    Cf.  supra,  §  954.  Cf.  Reese  v.  Bank  of  Commerce,  14 

^  Arnold  V.Suffolk  Bank,  27  Barb.  Md.   271,   284;    74   Am.    Dec.    536; 

(N.  Y.)  424,  430;    Citizens'  Bank  v.  Farmers'  Bank  of  Maryland's  Case, 

Kalamazoo  Co.  Bank,  111  Mich.  313;  2  Bland  (Md.)  394. 
69  N.  W.  663;    Cunningham  v.  Ala.         '  Citizens'  Bank  v.  Kalamazoo  Co. 

Life  Ins.  Co.,  4  Ala.  652  (headnote  Bank,  111  Mich.  313;  69  N.  W.  663. 
inadequate) ;     Mechanics    Bank    v.         *  Tete  v.  Farmers',  etc.  Bank,  4 

Earp,  4  Rawle  (Pa.)  384.  Brewst.  (Pa.)  308. 

776 


§  S32-§  1011]  CONTRACTS    FOR    SALE  §904 

should  l)e  held  void  as  couteniplatinf^  a  reduction  of  fiij)ital, 
unless  clearly  authorized  by  statute.  A  provision  of  that  sort  has 
been  held  to  have  no  application  to  a  sheriff's  sale  under  an 
execution  against  the  shareholder;'  but  on  the  other  hand,  it 
has  been  held  to  apply  to  a  transfer  to  a  principal  from  an  agent 
in  whose  name  shares  i)elonging  to  the  principal  have  \)een  reg- 
istered.- A  provision  of  this  kind  is  not  satisfied  by  offering  to 
the  company  a  larger  number  of  shares  than  the  outside  pur- 
chaser offers  to  take.^  If  the  company  registers  a  transfer,  non- 
compliance with  any  such  provision  giving  to  the  corporation 
a  right  of  pre-emption  is  waived.* 


§  963.  Rescission  of  Transfer  of  Shares  for  Fraud  of  Transferor. 
—  A  transfer  of  shares,  like  any  other  conveyance  of  property, 
may  be  set  aside  at  the  instance  of  the  transferee  if  he  was 
induced  to  accept  the  shares  by  the  fraud  of  the  transferor. 
Where  the  transfer  has  been  completed  a  bill  in  ecjuity  to  cancel 
it  may  be  maintained  by  the  transferee  against  the  transferor 
and  the  company.^  But  if  the  company  was  not  party  to  the 
fraud,  it  would  seem  clear  on  principle  that  the  defrauded  trans- 
feree should  be  subject  to  a  shareholder's  liabilities  to  the  com- 
pany, and  its  creditors,  during  such  time  as  the  shares  stand  in 
his  name,  and  that  his  only  relief  against  such  liabilities  would 
be  by  holding  the  transferor  responsible  by  way  of  indemnity.^ 

§  964-§  975.     Contracts  far  Sale  or  Transfer  of  Shares. 

§  964.  In  general.  —  Contracts  for  the  sale  or  transfer  of 
shares  differ  in  some  respects  from  ordinary  contracts  for  sale 
of  personal  property.  As  showTi  above,  the  complete  legal  title 
does  not  pass  immediately  upon  the  making  of  the  contract,  as 
is  usually  the  case  in  contracts  of  sale  of  chattels. 

»  Barrows  v.  Nat.  Rubber  Co.,  12  *  Fanvell  v.   Colonial   Trust  Co., 

R.  I.  17.3.  147  Fed.  480:   78  C.  C.  A.  22. 

2  Barrett  v.  King,  63  N.  E.  934 ;  But   see   Behloio  v.   Fischer,    102 

181  Mass.  476.  Cal.  208,  214;    36  Pac.  509  (deolar- 

»  Sweetland  v.   Quidnick  Co.,   11  ing   that   the   corporation   is   not   a 

R.  I.  328.  proper  party  to  such  a  bill). 

*  Am.  Nat.  Bank  \.  Oriental  Mills,         »  But  see  Stufflebeam  v.  DeLash- 

17  R.  I.  551;  23  Atl.  795.  mutt,  101  Fed.  367. 

777 


§  965  TRANSFER   AND    TRANSMISSION  [ChAP.  XV 

§  965.  Whether  Contract  is  Joint  or  Several  on  Part  of  Vendors. 
—  Where  a  contract  is  made  for  the  sale  of  all  the  shares  of  a 
corporation,  as  is  often  done  in  pursuance  of  schemes  of  con- 
solidation, amalgamation,  and  reorganization,  there  is  sometimes 
a  question  whether  the  contract  should  be  construed  as  a  several 
sale  by  each  shareholder  of  the  shares  held  by  him  or  whether 
it  should  be  construed  as  a  sale  by  the  corporation  of  its  entire 
property  and  assets.  AMiere  in  such  a  case  the  purchaser  buys 
at  so  much  a  share,  and  there  is  no  provision  that  the  proceeds 
shall  become  a  joint  fund,  the  contract  is  several  on  the  part  of 
each  shareholder,  and  each  may  therefore  maintain  a  separate 
action  against  the  purchaser.* 

§  966.  Whether  Non-disclosure  of  Contracts  for  Sale  of  Shares  is 
a  Fraud  upon  other  Persons  interested  in  the  Company.  —  Inasmuch 
as  shares  are  freely  transferable,  an  agreement  made  between  a 
promoter  and  a  subscriber  to  shares,  whereby  the  former  agrees 
to  purchase  from  the  latter  the  shares  subscribed  by  him,  if  the 
undertaking  should  prove  unsuccessful,  is  quite  valid  even  though 
the  existence  of  the  agreement  be  kept  secret  so  that  the  public 
may  be  induced  to  believe  that  the  subscriber  in  question  — 
perhaps  a  capitalist  of  repute  —  had  shown  faith  in  the  com- 
pany by  actually  risking  his  money  in  its  shares.^  Ijiasmuch  as 
shares  are  freely  transferable,  no  one  is  justified  in  concluding 
that  a  shareholder  has  made  no  contract  whereby  he  is  guaran- 
teed against  loss  from  depreciation  of  his  shares. 

§  967.  Description  of  the  Shares  to  be  Transferred.  —  The 
number  and  character  of  the  shares  contracted  to  be  trans- 
ferred ought  to  be  and  usually  are  specified  in  the  contract.^ 
A  contract  which  calls  for  "£1000  worth  of  fully  paid-up 
shares,"  has  been  held  to  mean  shares  of  that  actual  value  in 

'  Dowling   v.    Wheeler,    117  Mo.  to  be  transferred  all  the  stock  of  a 

App.  169;    93  S.  W.  924.  corporation  is  subject    to   a  condi- 

2  Morgan  v.  Struthers,  131  U.  S.  tion  precedent  tliat  he   be   able  to 

246;  9  Sup.  Ct.  726;  Meyer  v.  Blair,  deliver  the  entire  amount  of  stock, 

109  N.  Y.  600;   17  N.  E.  228;   4  Am.  see  Alden  Speare's  Sons  Co.  v.  Casein 

St.  Rep.  500.  Co.,  106  N.  Y.   Supp.  980  (where  a 

^  As    to  an    English  statute   re-  provision    that    the    vendor   should 

quiring  contracts    for  sale    of   bank  cause  the  transfer  of  shares  owned 

shares  to  specify  the  denoting  num-  by  a  third  person  was  held  a  mere 

bers  of  the  shares,  see  infra,  §  969.  collateral    stipulation    and    not     a 

As  to  whether  the  right  of  a  vendor  condition), 
under  a  contract  to  transfer  or  cause 

778 


§  832-§   IjOll]  CONTRACTS    FOR    SALE  §969 

the  market  and  not  shares  of  that  nominal  or  par  vahie.'  Inas- 
much as  all  shares  in  a  corjX)ration  prima  facie  stand  on  an 
equality,  a  contract  calling  for  the  transfer  of  shares  in  a  com- 
pany to  be  subsequently  incorjwjrated  means  shares  which  shall 
stand  on  an  ecjuality  with  all  other  shares  in  the  same  company, 
and  therefore  is  not  satisfied  by  a  transfer  of  ordinary  or  deferred 
shares  in  a  company  which  has  issued  preferred  shares.- 

§  908.  Statute  of  Frauds.  —  In  England,  contracts  for  sale 
of  shares  are  held  not  to  be  contracts  for  sale  of  goods,  wares, 
and  merchandise  within  the  seventeenth  section  of  the  Statute 
of  Frauds.^  In  the  United  States,  a  conflict  of  authority  exists 
on  this  point.*  Where  contracts  for  sale  of  shares  are  held  to 
be  within  the  statute,  a  transfer  of  the  shares  or  some  of  them 
to  the  vendee  and  the  issue  of  a  certificate  for  them  to  him  con- 
stitute such  delivery  and  acceptance  as  will  take  the  contract 
out  of  the  statute.'^ 

§  9(39.  Sales  on  the  Stock  Exchange  —  Usages  of  Brokers.  — 
Contracts  for  sale  of  shares  in  large  corporations  whose  securi- 
ties are  listed  are  usually  made  through  brokers  upon  the  stock 
exchange.^  Such  contracts  in  their  interpretation  and  operation 
are  governed  by  the  rules  and  customs  of  the  stock  exchange 
upon  which  they  are  made.^  By  these  rules  and  customs  even 
public  statutes  are  sometimes  brushed  aside  or  evaded. 

For  example,  a  British  statute  known  as  Leeman's  act,*  pro- 
vides that  every  contract  for  sale  of  bank  shares  shall  be  void 
unless  it  designates  in  writing  the  distinguishing  numbers  of  the 
shares  in  the  register  of  the  company,  if  there  are  such  distin- 
guishing numbers.     Nevertheless,  the  London  stock  exchange 

•  Mcllquham  v.  Taylor  (1895),  entered  into  on  the  London  Stock 
1  Ch.  53.  Exchange,    see    Levitt    v.    Hamblet 

*  Mcllquham  v.  Tmjlor  (1895),  (1901),  2  K.  B.  5.3;  Beckhanson  d- 
1  Ch.  53  (per  StirUng,  J.).  Gibbs  v.  Hamblet  (1901),  2  K.  B,  73; 

»  Supra,  §  505.  Scott   &    Norton  v.    Godfrey  (1901), 

*  Ibid.  2  K.  B.  726. 

»  Dinkier  v.  Baer,  92  Ga.  432;  17         '  Stray  v.  Russell,  1  E.  &  E.  888; 

S.  E.  953.     As  to  what  is  sufficient  London   Founders'  Ass'n  v.   Clarke, 

to    take    the    contract    out    of    the  20  Q.   B.   D.  576.     Dos  Passos  on 

statute,  see  further  2  Dos  Passos  on  Stock  Brokers  and  Stock  Exchanges, 

Stock  Brokers  and  Stock  Exchanges,  2d  ed..  Chap.  IV,  pp.  410-474  (where 

2d  ed.,  892  et  seq.  a  full  citation  and  discussion  of  the 

•  Cf.  Nickalls  v.  Merry,  L.  R.   7  authorities  will  be  found). 
H.  L.  530.     As  to  privity  between         »  30  Vict.,  c.  29. 
principals    in    respect    of    contracts 

779 


§  970  TRANSFER    AND    TRANSMISSION  [ChAP.   XV 

frequently  disregards  the  provisions  of  this  act.  Indeed,  one 
can  readily  perceive  the  inconvenience  that  would  result  from  a 
uniform  compliance  with  the  statute.  Consequently,  the  courts 
have  held  that  a  person  who  with  knowledge  of  this  usage  of 
the  stock  exchange  employs  a  broker  to  buy  or  sell  shares  for 
him  impliedly  consents  that  the  contract  of  sale  shall  be  made 
in  accordance  with  the  custom  of  the  stock  exchange  instead  of 
in  accordance  with  the  provisions  of  the  statute;  and  hence, 
if  the  contract  is  made  accordingly,  and  if  the  broker,  being  by 
the  rules  of  the  stock  exchange  bound  to  perform  the  agreement 
under  penalty  of  expulsion  from  the  exchange,  does  perform  it, 
he  may  sue  his  customer  and  recover  indemnification  for  any 
losses  sustained  in  performing  the  agreement.'  To  that  extent, 
the  custom  of  the  stock  exchange  is  permitted  to  override  the 
policy  of  the  statute;  but  the  courts  could  not  well  be  expected 
to  go  any  further  in  sustaining  the  brokers'  usage  in  opposition 
to  the  statute.  For  instance,  unless  the  customer  had  actual 
knowledge  of  the  usage,  the  broker  would  not  be  permitted,  as 
in  the  case  just  stated,  to  perform  the  legally  invalid  agreement 
at  the  customer's  expense.^  So,  where  a  person  commissions  a 
broker  to  sell  shares  without  cognizance  of  or  reference  to  the 
custom,  the  broker  impliedly  agrees  to  make  a  legally  binding 
contract;  and  if  the  contract  which  he  makes  does  not  comply 
with  the  act  of  parliament  and  is  repudiated  on  that  ground,  he 
must  make  good  the  loss  which  results  to  his  principal.^  If  a 
transfer  made  in  pursuance  of  a  contract  which  does  not  comply 
with  the  act  of  parliament  is  accepted  by  the  transferee  or  by 
his  broker  on  his  behalf,  the  transferor  may  require  the  trans- 
feree to  indemnify  him  against  any  further  liability  as  share- 
holder;* but  this  result  is  reached  not  because  of  the  custom 
of  the  brokers  to  disregard  the  act,  but  because  the  acceptance 
of  the  transfer  makes  the  transferor  trustee  for  the  transferee 
and  vests  in  the  latter  an  equitable  title  to  the  shares,  so  that 
the  void  executory  contract  is  performed  and  the  act  of  parlia- 
ment no  longer  applies. 

§  970.     When  Purchase  Money  is  payable.  —  Where  a  contract 
for  sale  of  shares  is  made  without  any  extraordinary  or  unusual 

'  Seymour  v.  Bridge,  14  Q.  B.  D.         ^  Neilson  v.  James,  9  Q.  B.  D.  546. 
460.  ••  Lorlng  v.  Davis,  32  Ch.  D.  625. 

^  Perry  v.  Barnet,  15  Q.  B.  D.  388. 

780 


§  832-§   1011]  (ONTKACTS    FOH    SALE  §971 

terms,  whether  on  tlie  stock  exchange  or  otherwise,  the  purcliase 
money  is  payable  on  deHvery  or  tender  oF  the  share-certilicate 
coupled  with  a  transfer  in  regular  form;'  although  a  valid 
transfer  on  the  books  of  the  company  without  the  delivery  of 
any  certificate  would  amount  to  performance  of  the  contract.' 
If  no  certificate  has  been  issued  to  the  transferor,  a  tender  of 
a  deed  of  assignment  is  sufhcient.-'  A  tender  of  certificates  made 
out  in  the  name  of  a  third  person  without  any  endorsement  by 
or  transfer  from  him,  is  of  course  not  a  sufficient  tender  of  per- 
formance by  a  vendor  of  shares.^  The  purchase  money  may  be 
payable,  although  the  vendor  retains  the  certificate  in  his  pos- 
session by  way  of  security  for  payment  of  the  price :  thus,  where 
the  selling  broker  deposited  the  certificates  duly  endorsed  with 
a  trust  company  by  whom  they  were  to  be  dehvered  out  only 
on  the  joint  order  of  the  buying  and  selling  brokers,  the  court 
held  that  the  transaction  amounted  to  a  transfer  of  the  title 
subject  to  the  vendor's  right  to  require  the  trust  company  to 
obtain  the  purchase  money  before  surrendering  the  certificate, 
and  that  accordingly  an  action  for  the  purchase  price  might  be 
maintained  by  the  vendor.^ 

§  971.  Burden  of  procuring  Registration  of  Transfer  on  Trans- 
feree. —  The  burden  of  procuring  registration  of  the  transfer 
does  not  rest  upon  the  transferor."  Hence,  where  the  company 
has  the  right  to  reject  any  transferee,  the  purchase  money  can- 
not be  recovered  back  by  a  transferee  who  is  rejected :  ^  he  un- 
dertook the  burden  of  procuring  registration,  and  the  transferor 
consequently  cannot  be  deemed  impliedly  to  have  contracted 

'  London     Founders'     Ass'n     v.  influenced  by  the  peculiar  terms  of 

Clarke,  20  Q.  B.  D.  576;    Xo7jes  v.  an  Oklahoma  statute). 
Spaulding,  27  Vt.  420.  '  McGue    v.   Rommell    (gal.),  83 

Cf.    Brown  v.   Stnith,    122   Mass.  Pac.  1000. 
589;     Briice   v.    Smith,    44    Ind.    1         *  Xicolls  v.    Reid,  109  Cal.   630; 

(where  the  deliverj'  of  the  endorsed  42  Pac.  298. 

certificate    was    admitted    by    de-         *  Frazier  v.  Simmons,  139  Mass. 

murrer  to   have   been   accepted   as  531;  2N.  E.  112. 
full  jierformancc).  ^  Skinner     v.     City     of    London 

-  White  y.  Solisbunj,  33  Mo.  150.  Marine  Ins.  Corp.,  14  Q.  B.  D.  882. 
See  supra,  §  853.  Cf.  Xewberry  v.  Detroit,  etc.  Iron 

Cf.  Boatmen's   Ins.   ct-   Trust  Co.  Co.,  17  Mich.  141 ;   Webster  v.  Upton, 

V.  Able,  48  Mo.  130:  Dinkier  v.  Baer,  91  U.  S.  65,  71-72. 
92  Ga.  432;   17  S.  E.  953.  '  Stray  v.  Russell,  1  E.  &  E.  888; 

But  see  Haynes  v.  Brown  (Okl.),  London  Fouriders'  Ass'n  v.  Clarke, 

89  Pac.  1124  (where  the  decision  was  20  Q.  B.  D.  57G. 

781 


§  972  TRANSFER   AND   TRANSMISSION  [ChAP.  XV 

that  the  transferee  should  be  accepted  as  a  shareholder.  Nor 
can  the  money  be  recovered  back  on  the  ground  of  total  failure 
of  consideration,  for  the  transferee  still  has  the  certificates,  which 
are  of  some  value  even  though  the  company  refuses  to  recog- 
nize him  as  a  shareholder,  so  that  the  failure  of  consideration  is 
at  most  partial  merely.  It  is  sometimes  said  that  "it  is  the  duty 
of  the  transferor  to  see  that  his  transfer  is  registered  " ; '  but 
this  dictum  means  merely  that  if  he  wishes  to  escape  further 
liability  as  shareholder  he  must  see  to  the  registration  of  the 
transfer,  and  should  not  be  construed  as  conflicting  with  the  rule 
that  as  between  transferor  and  transferee  the  duty  of  procuring 
registration  rests  on  the  latter. 

§  972.  Obligation  of  Purchaser  to  indemnify  Vendor  against 
Liability  as  Shareholder.  —  The  procurement  of  registration  of 
the  transfer  being  within  the  province  of  the  transferee,  the 
transferor  is  entitled  to  be  indemnified  by  the  transferee  for  any 
liability  he  may  sustain  as  shareholder  in  consequence  of  a 
delay  in  registering  the  transfer.^  The  statute  of  limitations 
does  not  begin  to  run  against  such  a  claim  for  indemnity  until 
the  transferor  is  actually  compelled  to  pay,  even  though  a  rea- 
sonable time  for  registration  of  the  transfer  has  elapsed  after 
the  delivery  of  the  certificate.^    An  action  by  a  transferor  against 

'  Tucker   v.    Mulligan,   28   Vict,  retaining  the  transfer  in  his  posse: - 

L.  R.   1,  6;  Heights  of  Maribyrnong  sion);    Alan  v.  Boykin  (S.  Car.),  00 

Estate  Co.,  22  Vict.  L.  R.  438,  445.  S.  E.  17. 

^  Paine  v.  Hutchinson,  3  Ch.  388;         But  see  Sayles  v.  Blane,  14  Q.  B. 

Loring   v.    Davis,    32    Ch.    D.    625;  205;    Treadway  v.  Johnson,  33  Mo. 

Nic.kalls   v.  Merry,  L.  R.    7  H.  L.  App.  122  (decision  based  on  peculiar 

530 ;   Bowring  v.  Shepherd,  L.  R.   6  terms     of     contract) ;      Humble     v. 

Q.   B.  .309;    Hawkins  v.  Maltby,  4  Langston,  7  M.  &.W.  517. 
Ch.  200;   Hutzler  v.    Lord,   64    Md.  Cf.  Ex  parte  Head,  15  L.  T.  262; 

534;  3  Atl.  891  ;  Brinkley  v.  H amble-  Davis  v.  Haycock,  L.  R.  4  Ex.  373. 

ton,  67  Md.  169,  178  (semble);  8  Atl.  In  Walker  v.  Bartlett,  18  C.  B.  845, 


904;  Kellogg  v.  Stockwell,  75  111.  68 
Wynne  v.  Price,  3  De  G.  &  S.  310 
Johnson  v.  Underhill,  52  N.  Y.  203 


it  was  said  that  the  purchaser  was 
under  no  obligation  to  have  him- 
self  registered   as   shareholder,    but 


Gordon  v.  Parker,  10  La.  56  (head-  was   bound   only  to  indemnify  the 

note   inadequate) ;     Gustard's   Case,  vendor  in  case  he  exercised  his  right 

8  Eq.  438  (semble) ;    People's  Home  not    to    present    the    transfer    for 

Sav.     Bank    v.     Stadtmuller    (Cal.),  registration.    Cf.  McClure  v.  Central 

88    Pac.     280,    281-282     (semble);  Trust  Co.,  28  N.  Y.  App.  Div.  433, 

Shepherd    v.    Gillesfne,    3    Ch.    764  441 ;  53  N.  Y.  Supp.  188.    Sed  qva-re. 
(where  a   transferee   who   had    not         ^  Hutzler  v.   Lord,  64  Md.   534; 

authorized  the  transfer  was  estopped  3  Atl.  891. 
from    denying    liis    acceptance    by 

782 


§832-§1011]  CONTUACT.S    F(JR    SALE  §073 

a  transferee  for  indemnity  may  clearly  Ije  maintained  notwith- 
standing the  fact  that  the  company  is  in  liquidation : '  tlie  ques- 
tion is  entirely  collateral  to  the  liabilities  to  be  adjusted  in  the 
windiii<r-ui)  j)roceedin<j;s.  If  the  nominal  transferee  is  an  infant, 
so  that  the  registration  of  tlie  transfer  does  not  relieve  the  trans- 
feror from  liability  as  a  shareholder,  the  transferor  may  demand 
indemnity  from  a  person  for  whom  the  infant  was  actin^'  as 
trustee.-  The  transferee  is  also  bound  to  indemnify  the  trans- 
feror against  any  statutory  liability  as  a  past  member  which  the 
latter  may  have  been  compelled  to  discharge.^ 

If  the  nominal  transferee  is  a  mere  nominee  or  bare  trustee 
of  another,  the  transferor  may  require  indemnity  from  the  cestui 
que  trust  as  well  as  the  trustee/  But  an  arrangement  between 
the  transferor  and  the  nominal  transferee  whereby  the  purchase 
money  is  returned  and  the  transfer  cancelled  will  bar  any  such 
claim  against  the  cestui  que  trusts 

If  the  transferee  has  in  turn  assigned  the  shares  before  the 
original  transferor  is  called  upon  to  pay,  the  latter  may  proceed 
against  the  ultimate  purchaser.  According  to  an  English  case, 
he  may  also,  if  he  choose,  proceed  against  his  own  immediate 
transferee ; "  but  a  jMaryland  decision  is  diametrically  opposite 
on  this  point. ^  If  the  only  basis  for  the  claim  of  indemnity  is 
a  quasi-contractual  obligation  springing  out  of  the  principle  qui 
sentit  commodum  sentire  debet  et  onus,  then  the  reasoning  of  the 
Maryland  court  is  irresistible.  If,  on  the  other  hand,  it  is  an  im- 
plied term  of  every  contract  for  sale  of  shares  that  the  purchaser 
shall  reimburse  the  vendor  against  any  further  liability  as  share- 
holder, then  it  would  seem  that  the  purchaser  should  not  be 
able  to  avoid  this  obligation  by  assigning  the  shares. 

§  973.  Implied  Warranties  by  Vendor.  —  The  vendor  im- 
pliedly warrants  the  genuineness  of  the  certificate  ^  and  of  the 

'  Joseph   V.   Holroyd,   22   W.   R.  *  Castellan  v.  Hohson,  10  Eq.  47. 

61-1.  «  Maynard  v.   Eaton,  9  Ch.   414 

^  Broum  v.  Black,  8  Ch.  939.  (where  the  nominal  transferee  being 

*  Kellock   V.    Enthoven,   L.    R.   9  an  infant  had  sued  the  transferor  for 

Q.  B.  241;    Roberts  v.  Crowe,  L.  R.  damages  for  fraud). 

7  C.  P.  629  (holding  that  a  compro-  «  Kellock    v.   Enthoven,   L.   R.   9 

mise  of  the  Hquidator's  claim  against  Q.  B.  241. 

the  transferee  does  not  jirotect  the  ^  Brinkley  v.  HanMeton,  67  Md. 

latter    from    his    obligation    to    re-  169;  8  .\tl.  904. 

imburse  the  transferor  from  hability  *  Fifth     Ave.     Bank     v.     Forty- 

as  a  past  member).  second  St.,  etc.  R.  R.  Co.,  137  N.  Y. 

783 


§  973  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

transfer.'  If  the  transferor  endorses  the  certificate  in  blank,  he 
warrants  the  genuineness  of  the  certificate  not  merely  in  favor 
of  the  immediate  transferee  but  also  in  favor  of  any  one  who 
in  due  course  acquires  the  certificate  and  who  according  to  ac- 
cepted principles  of  law  would,  if  the  certificate  were  genuine, 
have  the  right  to  insert  his  own  name  in  the  blank  and  become 
registered  as  shareholder,  even  though  the  immediate  trans- 
feree was  aware  of  the  spuriousness  of  the  certificate  and  there- 
fore could  not  have  claimed  any  benefit  from  the  warranty.^ 
On  the  other  hand,  it  has  been  held  that  the  vendor  does  not 
warrant  the  corporate  existence  —  at  any  rate,  not  the  de  jure 
corporate  existence  —  of  the  company  which  issued  the  shares ;  ^ 
but  in  England,  where  the  doctrine  of  de  facto  corporations  is 
not  recognized,*  it  seems  that  the  vendor  is  held  impliedly  to 
warrant  the  legal  existence  of  the  company.^  In  New  York,  it 
has  been  held  that  the  vendor  impliedly  warrants  the  shares  to 
be  free  of  liens  or  encumbrances  in  favor  of  the  company ;  ^  but 
this  decision  would  probably  not  be  universally  followed.  For 
instance,  where  a  share-certificate  with  a  transfer  duly  endorsed 
thereon  is  delivered  and  accepted  in  performance  of  a  contract 
of  sale,  there  is,  at  least  according  to  a  Pennsylvania  case,  no 
implied  warranty  that  the  shares  represented  by  the  certificate 
are  legally  issued,  so  that  if  it  subsequently  transpires  that  the 
shares  in  question  were  part  of  an  illegal  overissue,  the  pur- 
chaser cannot  rescind  the  contract  and  recover  back  the  pur- 
chase money.^ 

231,238;   33  N.  E.  378;   33  Am.  St.  703,   affirmed,  148  N.    Y.    652;    43 

Rep.  712;    19  L.  R.  A.  331  (semble).  N.  E.  68;   31  L.  R.  A.  776;   51  Am. 

Cf.    Wood  V.   Sheldon,   42   N.   J.  St.  Rep.  727  (based  upon  a  rule  of 

Law  421;   36  Am.  Rep.  523;   Jarvis  the  stock  exchange). 

V.    Manhattan    Beach   Co.,    53    Hun  ^  Matthews  v.  Massachusetts  Nat. 

(N.   Y.)  362;    6  N.  Y.  Supp.   703,  Bank,  16  F^ed.  Cas.  1113. 

affirmed,  148  N.Y.  652;  43  N.E.  68;  ^Marshall    v.    Reach    (111.),    81 

31  L.  R.  A.  776;  51  Am.  St.  Rep.  727  N.  E.  29;  Barter  v.  Eltzroth,  111  Ind. 

(based    upon   a    rule   of   the   stock  159;     12   N.    E.    129;     Burwash   v. 

exchange).  Ballou  (111.),  82  N.  E.  355. 

As  to  whether  the  vendor  war-  *  See  supra,  §  284. 

rants  the  shares  to  be  full-paid  as  '  Kempson  v.  Saunders,  4  Bing.  5. 

stated  in  the  certificate,  see  Biggins  *  McClure  v.   Central   Trust  Co., 

V. Illinois Trust,etc. Bank,  193111394;  165  N.  Y.  108;    58  N.  E.  777;    53 

61  N.  E.  1024;  Foote  v.  Illi7iois  Trust,  L.  R.  A.  153. 

etc.  Bank,  194  111.  600;  62  N.  E.  834.  '  People's  Bank  v.  Kurtz,  99  Pa. 

*  Jarvis  v.  Manhattan  Beach  Co.,  St.  344;   44  Am.  Rep.  112. 

53  Hun  (N.  Y.)  362;   6  N.  Y.  Supp.  Contra:    Lincoln  v.  New  Orleans 

784 


§  832-§   1011]  SPECIFIC    rEHFOKMAN'CE  §  975 

§  974.  Purchase  on  Marg-in.  —  Purchases  of  shares  on  margin, 
a  familiar  feature  of  deahiif^  in  stocks  at  the  present  day,  liave 
few  or  no  legal  peculiarities  pertinent  to  the  present  subject. 
According  to  the  weight  of  authority,  such  a  j)urcliase  amounts 
in  legal  effect  to  a  purchase  coupled  with  an  hyjKjthecation  of 
the  purchased  shares  with  the  purchaser's  broker  to  secure  pay- 
ment of  the  portion  of  the  purchase  money  advanced  by  the 
broker.'  The  purchaser's  broker  is  not  bound  to  keej)  the  pur- 
chased shares  separate  from  other  shares  standing  in  his  name, 
but  does  his  full  duty  if  he  is  always  ready  to  transfer  an  equal 
number  of  shares  of  the  same  issue." 

§  975.  Specific  Performance  of  Contracts  for  Sale  or  Transfer  of 
Shares.  —  Although  courts  of  equity  will  not  ordinarily  grant 
specific  performance  of  contracts  for  sale  of  personal  property, 
and  although  in  an  early  case  specific  performance  was  refused 
of  a  contract  for  sale  of  South  Sea  stock,^  yet  in  modern  times 
in  England  the  rule  has  been  established  that  equity  will  grant 
specific  performance  of  contracts  to  sell  or  transfer  shares  in 
railway  and  other  companies.*  The  reason  assigned  by  the 
courts  for  this  conclusion  was  that  shares  in  railway  companies, 
for  example,  were  limited  in  number  and  could  not  always  be 
procured  in  the  market,  like  consols  or  public  stocks.'  This 
reason  is  hardly  applicable  to  shares  in  the  large  railway  and 
industrial  companies  of  the  present  time  which  can  always  be 
purchased  on  the  stock  exchange.  Perhaps  sounder  reasons 
for  granting  specific  performance  are  the  rapid  fluctuation  of 
value  to  which  shares  in  many  corporations  are  liable  and  which 
renders  pecuniary  damages  an  uncertain  and  therefore  inade- 

Express  Co.,  45  La.  Ann.  729;    12  taken  up  with  a  discussion  of  tlie 

So.  937  (where  the  plaintiff  ac<]uired  various   questions   involved,   wiiich, 

the  shares  from  the  company  itself),  however,  hardly  relate    to  corpora- 

Cf.  supra,  §  579-§  582.  tion  law,  properly  so  called. 

Cf.  Wood  V.  Sheldon,  42  N.  J.  Law  -  Worthington  y.  Tormey,  34  Md. 

421;  37  Am.  Rep.  523.  182.    See  also  supra,  §  500,  and  cases 

*  1  Dos  Passos  on  Stock  Brokers  there  cited, 

and  Stock  Exchanges,  2d  ed.,  179-  ^  Cud  v.  Riitter,  1  P.  Wms.  570. 

200.      But   as   to   a    pecuharity   of  *  Z)Mnc(/// v.  .4/6rec/i/,  12  Sim.189; 

Massachusetts  law,  see /i?e  .Sit'i!/^,  105  Poole  v.  Middlcton,  29  Beav.  646; 

Fed.    493,   affirmed    112    Fed.    319.  Cheole  v.  Kemvnrd,  3  Dc  G.  &  J.  27; 

A  large  portion  of  tlie  law  of  stock  Paine    v.    Hutchinson,    3    Ch.    388; 

brokers  and  their  dealings  relates  to  Wynne  v.  Price,  3  De  G.   &  S.  310. 

these    transactions,    and    Mr.    Dos  *  Duncuftv,  Albrecht,  12  Sim.  1S9. 
Passos'    valuable    book    is     largely 
VOL.  I.  —  50                                 785 


§  975  TR.\NSFER   AND   TRANSMISSION  [Ch.\.P.  XV 

qiiate  form  of  relief,  and' also  the  fact  that  shares  are  often  pur- 
chased for  the  purpose  of  obtaining  control  of  the  corporation, 
in  which  case  the  damages  would  be  difhcult  to  estimate  fairly. 
Accordingly,  in  the  United  States,  specific  performance  of  a 
contract  for  sale  of  shares  will  be  granted  when  the  uncertain 
value  of  the  shares  renders  it  difficult  to  do  justice  by  an  award 
of  damages,'  or  where  the  shares  agreed  to  be  sold  constitute 
a  controlling  interest  in  the  company ;  -  but  unless  some  such 
special  ground  for  equitable  interference  exists  the  parties  will 
according  to  many  authorities  be  left  to  the  remedy  at  law.^ 
It  should  be  observed,  however,  that  the  American  authorities 
supporting  this  latter  proposition  rest  upon  the  early  English 

»  White  V.  Schuyler,  1  Abb.  Pr.,  contract  was  regarded  as  one  to 
N.  s.  (N.  Y.),  300;  Treasurer  v.  which  a  court  of  conscience  ought 
Commercial  Mining  Co.,  23  Cal.  not  to  lend  its  aid);  Clements  v. 
390  (mining  stock) ;  Manton  v.  Ray,  Sherwood-Dunn,  95  N.  Y.  Supp. 
18  R.  I.  672;  29  Atl.  998;  49  Am.  766;  108  N.  Y.  App.  Div.  327. 
St.  Rep.  811  (where  the  bill  alleged  ^  Treasurer  v.  Commercial  Min- 
and  a  demurrer  admitted  that  ing  Co.,  23  Cal.  390  (semble); 
plaintiff  could  not  obtain  the  stock  Goodwin  Gas  Stove,  etc.  Co.'s  Appeal, 
elsewhere);  Newton  v.  Wooley,  105  117  Pa.  St.  514;  12  Atl.  736;  2  Am. 
Fed.  541;  Dennison  v.  Keasbey  St.  Rep.  696;  Avery  v.  Ryan,  74 
(Mo.),  98  S.  W.  546  (where  none  of  Wise.  591;  43  N.  W.  317;  Rigg  v. 
the  stock  was  procurable  in  the  Reading,  etc.  Ry.  Co.,  191  Pa.  St. 
market);  Rau  v.  Seidenberg,  104  298;  43  Atl.  212;  Kennedy  v. 
N.  Y.  Supp.  798;  53  N.  Y.  Misc.  386;  Thompson,  97  N.  Y.  App;  Div.  296; 
Baumhoff  v.  St.  Louis,  etc.  R.  R.  Co.  89  N.  Y.  Supp.  963;  Bateman  v. 
(Mo.),  104  S.  W.  5.  Straus,  86  N.  Y.  App.  Div.  540;   83 

But    see    Clements   v.    Sherwood-    N.  Y.  Supp.  785. 
Dunn,   95   N.    Y.   Supp.    766;     108         Cf.   Noyes  v.   Marsh,    123  Mass. 
N.  Y.  App.  Div.  327.  286;    Todd  v.  Taft,  7  Allen  (Mass.) 

Cf.  Fleishman  v.  Woods,  135  371;  Leach  v.  Forbes,  11  Gray 
Cal.  256;  67  Pac.  276;  Currie  v.  (Mass.)  506;  71  Am.  Dec.  732 
Jones,  138  N.  Car.  189;  50  S.  E.  (specific  performance  decreed  of  a 
560;  Eichbaum  v.  Sample  (Pa.),  62  contract  to  transfer  both  land  and 
Atl.  837;   213  Pa.  216.  shares  of  capital  stock) ;   Johnson  v. 

2  O'Xeill  v.  Webb,  78  Mo.  App.  1;  Stratton,  109  111.  App.  481;  Watkins 
Northern  Central  Ry.  Co.  v.  Wal-  v.  Robertson  (Va.),  54  S.  E.  33  (where 
worth,  193  Pa.  St.  207;  44  Atl.  253;  specific  performance  was  allowed 
74  Am.  St.  Rep.  683.  Cf.  Hower  v.  without  noticing  this  objection); 
Weiss,  etc.  Co.,  55  Fed.  356;  5  Boggs  v.  Boggs  &  Buhl  (Pa.),  66 
C.  C.  A.  129;  Butler  v.  Murphy,  80  Atl.  105.  The  most  elaborate  dis- 
S.  W.  337  (Mo.);  Scruggs  v.  Cot-  cussion  of  the  question  on  principle 
terill,  67  N.  Y.  App.  Div.  583;  73  and  in  the  light  of  the  conflicting 
N.  Y.  Supp.  882.  authorities  to  be  found  in  the  books 

But  see  Ryan  v.  McLane,  91  Md.  is  contained  in  2  Dos  Passos  on 
175;  46  Atl.  340;  80  Am.  St.  Rep.  Stock  Brokers  and  Stock  Exclianges, 
438;    50  L.  R.  A.  501   (where  the   2d  ed.,  810-848. 

786 


§  832-§   1011]  SPECIFIC    PERFORMANCE  §  07: 

cases  which  refused  specific  performance  of  contracts  for  sale 
of  "  pubHc  stocks, "  whereas  the  "  puhhc  stocks"  in  (pu'stion  were 
not  capital  stocks  at  all  hut  were  government  obligations.  The 
English  cases,  as  stated  al)Ove,  grant  specific  performance  of 
contracts  for  sale  of  shares  in  cor[K>rations  —  in  other  words, 
shares  of  capital  stock  —  even  in  the  case  of  railway  corf>ora- 
tions  and  other  companies  whose  securities  are  dealt  in  on  the 
stock  exchange. 

A  suit  for  specific  performance  of  a  contract  for  sale  of  shares 
must  be  distinguished  from  a  suit  by  a  transferee  of  shares  to 
compel  the  company  to  register  a  transfer  already  executed  by 
the  vendor.'  Moreover,  an  executory  contract  to  sell  shares 
should  be  distinguished  from  an  executed  sale,  the  legal  title 
being  retained  by  the  vendor  as  security  for  the  purchase  money.- 
Such  a  transaction  is  equivalent  to  a  formal  transfer  followed 
by  a  mortgage  back  to  secure  the  purchase  money,  and  in  all 
such  cases  the  vendee  has  a  remedy  by  a  bill  to  redeem. 

Wherever  specific  performance  of  a  contract  to  sell  shares  is 
allowed,  the  remedy  as  in  other  cases  of  specific  performance  is 
mutual,^  and  will  be  granted  either  at  the  suit  of  the  transferor  * 
or  the  transferee.^  The  assumption  of  the  liabilities  of  a  share- 
holder by  the  transferee  is  sufficient  consideration  for  the  trans- 
feror's promise." 

The  court  will  not  refuse  to  decree  specific  performance  where 
the  directors  of  the  company  have  a  right  to  prescribe  the  mode 
of  transfer,  but  will  compel  the  vendor  to  do  all  he  can  to 
perfect  the  transfer.^  The  decree  may  pass  even  though  the 
company  has  gone  into  liquidation;  and  the  transferee  may 
be  required  to  indemnify  the  transferor  against  any  liability 
as  shareholder  in  the  liquidation  proceedings.^ 

'  See    supra,    §  934.      Mechanics         ^  But   see   Eckstein   v.   Downing, 

Bank    v.    Seton,    1    Pet.    299,    305;  64N.  H.  248;  9Atl.  626;   10.\m.  St. 

Lucas   V.    Milliken,    139    Fed.    816,  Rep.  404. 

822-826  (hokling  that  the  company         *  Paine  v.  Hutchinson,  3  Ch.  388; 

is  not  a  necessary  party  to  a  bill  Cheale  v.  Kenward,  3  De  G.  &  J.  27. 
for  specific   performance  of  a  con-         Cf.  £'j:  por/e //ear/,  1.5  L.  T.  262. 
tract    for   tlie   sale   of   some   of   its         *  Duncuft  v.  Alhrccht,  12  Sim.  189, 

shares);      Schcrck     w     Mnntgomery,  Poole  v.  Middleton,  29  Bcav.  646. 
33  So.  507;   81  Miss.  426;    Thornton        »  Cheale  v.  Kenward,  3  De  G.  &  J. 

V.   Martin,    116  Ga.    115,    118;    42  27. 
S.  E.  348.  ■'  Poole   v.    Middleton,  29    Beav. 

"  Bcardsley     v.     Bcardsley,     138  646. 
U.  S.  262 ;   11  Sup.  Ct.  318.  »  Paine  v.  Hutchinson,  3  Ch.  388. 

787 


§  976  TRANSFER    AND    TRANSMISSION  [Cm^P.  XV 

§   976- §   984.      TRANSMISSION   OF   SHARES. 

§  976-§  981.     Death  of  Shareholder. 

§  976.  In  general  —  Rights  and  Liabilities  of  Executor  or  Ad- 
ministrator before  Entry  of  Decedent's  Death  in  the  Company's  Reg- 
ister —  Mutual  Rights  of  specific  and  residuary  Legatees.  —  The 
subject  of  transm'ssion  or  change  in  the  ownership  of  shares 
otlierwise  than  bv  transfer  next  demands  attention;  and  we 
shall  first  consider  the  transmission  or  devolution  of  shares  upon 
the  death  of  the  owner.'  For  certain  purposes,  the  shares  vest 
in  the  executor  or  administrator  immediately  upon  the  death  of 
the  decedent,  or  grant  of  letters,  without  the  necessity  for  any 
entry  upon  the  company's  register  and  while  the  shares  still 
stand  in  the  name  of  the  deceased.-  Thus,  the  executors  are 
entitled,  while  the  shares  remain  in  their  testator's  name,  to 
receive  any  dividends  payable  thereon,  and  probably,  in  the 
absence  of  any  by-law  or  regulation  to  the  contrary,  to  vote  in 
respect  of  the  shares.^  So,  also,  the  executors  may  participate 
pari  passu  with  the  registered  shareholders  in  any  increase  of 
capital  offered  for  subscription  to  the  existing  members  of  the 
company.*  The  executors,  moreover,  may  execute  a  transfer 
of  the  shares  which  will  pass  a  good  title  to  the  transferee  and 
entitle  him  to  be  registered  as  shareholder.' 

Furthermore  the  executors  are  liable  in  their  representative 
capacity  for  calls  upon  the  shares  made  after  the  testator's 
death  and  before  any  sale  or  distribution  of  the  shares;"  but 
unless  the  executors  are  registered  as  shareholders,  they  are  not 
hable  personally.'  The  estate  of  a  deceased  shareholder  in 
whose  name  the  shares  continue  to  stand  on  the  company's 

*  The     fullest     consideration     of    original  shares;  Jacques  v.  Chambers, 
'tbis  subject  in  any  text-book  is  found    4  Enp;.  Ry.  &  Canal  Cas.  205. 

in  1  Lindley  on  Companies  (6th  ed.,         *  Colonial  Bank  v.  Cody,  15  A.  C. 

p.  731  et  seq.)  Bk.  IIT,  Chap.  7.  267.     See  infra,  §  980,  §  981. 

'  As  to  tiie  right  to  inspect  books         *  James      v.       Buena       Ventura 

of  the  corporation,  see  infra,  §  1107.  Nitrate  Co.  (1896),  1  Ch.  456  (sem- 

*  See  infra,  §  1227.  Cf.  Dana  v.  ble).  See  also  supra,  §  768.  Cf. 
American  Tobacco  Co.  (N.  J.),  65  Matteson  v.  Dent,  176  U.  S.  521;  20 
Atl.  730,  afTirmed,  69  Atl.  223.  Sup.  Ct.  419;  Lanigan  v.  North,  69 

*  Supra,  §  605.    Shares  acquired  Ark.  62;  63  S.  W.  62. 

by  the  executors  in  exercise  of  this         '  Buchan's  Case,  4  A.  C.  549. 
right  go  to  a  specific  legatee  of  the 

788 


§  832-§   1011]  DEATH    OF    SriAREIIOLDER  §  977 

books  is  liahle  for  calls  made  after  the  decedent's  death,  even 
though  the  c()iiij)aiiy's  regulations  provide  that  an  executor  or 
administrator  shall  not  he  a  shareholder  nor  entitled  to  the  rights 
of  a  shareholder.'  In  the  absence  of  a  direction  to  the  contrary, 
calls  made  after  a  testator's  death  upon  shares  becjueathed 
specifically  should  as  between  the  specific  legatee  and  the  resid- 
uary legatee  be  paid  by  the  former;  ^  but  if  payment  of  the  calls 
be  necessary  to  constitute  the  testator  a  complete  shareholder 
the  rule  is  dilVerent.'^  If  the  will  contain  a  direction  that  debts 
shall  be  paid  out  of  the  real  estate,  calls  made  after  the  testator's 
death  must  be  borne  by  the  realty  to  the  exoneration  of  the  per- 
sonal estate."*  Any  liability  of  the  decedent's  estate  is  terminated 
when  the  shares  are  transferred  to  or  devolve  upon  the  legatee 
or  distributee.^  Of  course,  executors  are  liable  for  any  calls 
made  in  the  lifetime  of  the  testator  to  the  same  extent  as  for  any 
other  debt  of  the  deceased.^ 

Sometimes,  the  rights  of  executors  or  administrators  of  a  de- 
ceased shareholder  who  have  not  been  registered  in  his  place, 
to  receive  dividends  on  the  shares,  to  vote  in  respect  thereof, 
and  to  transfer  the  same,  are  taken  away  or  abridged  by  statute.^ 

§  977.  Registration  of  Executor  or  Administrator  as  Share- 
holder. —  In  order  that  the  registration  of  an  executor  as  share- 
holder should  have  any  effect,  it  must  be  accomplished  by  his 
authority.  The  mere  production  of  papers  to  prove  the  exec- 
utor's title  will  not  authorize  the  company  to  substitute  his 
name  for  that  of  the  testator  in  the  register  of  shareholders.* 

»  Houldsworth  v.  Evans,  L.  R.  3  As  to  the  case  where  the  shares  are 
H.  L.  263;    Baird's  Case,  5  Ch.  725.    bequeathed  to  one  for  hfe  with  re- 

*  Day  V.  Day,  1  Dr.  &  Sm.  261      mainder  over,  see  infra,  §  1110. 
Armstrong  v.  Burnet,  20  Beav.  424;         »  Day  v.  Day,  1  Dr.  &  Sm.  261 
Addams    v.    Ferick,    26    Beav.    384    (scmble) ;    Armstrong  v.  Burnet,  20 
(where  the  call  although  determined    Beav.  424  (semble). 
upon    before    the    testator's    death         *  Blount    v.   Hipkins,   7  Sim.   51 
was  not  deemed  to  be  made  until    (where   tlie   testator  had  expressly 
afterwards);     Re    Box,    1    Hem.    «fc    covenanted  to  pay  the  calls). 
Mill.  552,   -)br>  (semble).  ^  See  infra,  S  979. 

See  1  Linilley  on  Companies,  6th  "  Houldsworth  v.  Erans,  L.  R.  3 
ed.,  739-740.     As  to  laying  by  a  re-    II.  L.  263. 

serve  fund  to  meet  future  calls  which         '  Barton  v.  London  &  X.  W.  Ry. 
ought  to  be  borne  by  the  general    Co.,  24  Q.  B.  D.  77  (applying  the 
estate,  see  Jacques   v.   Chambers,  4    Companies  Clauses  Act). 
Eng.  Ry.  &  Can.  Cas.  499;   Went-        «  Buchan's   Case,    4    A.    C.    549. 
worth  V.  Chevill,  3  Jur.,  n.  s.,  805.    Cf.  Dana  v.  American  Tobacco  Co. 

789 


§  978  TRANSFER    AND    TRANSMISSION  [ClIAP.   XV 

The  ordinarv  and  regular  method  of  putting  the  shares  into  the 
name  of  the  executor  is  as  follows :  the  executor  signs  a  transfer 
in  the  crdinarv  form  to  himself  as  executor;  this  transfer  to- 
gether with  the  testator's  share-certificate  and  a  certificate  from 
the  proper  court  of  the  grant  of  letters  is  presented  to  the  com- 
pany, and  the  appropriate  entries  are  thereupon  made.^  The 
registration  of  an  executor  as  shareholder  in  the  room  of  his 
testator  is  not  the  registration  of  a  transfer  within  the  meaning 
of  regulations  authorizing  the  company  to  decline  to  register 
a  transfer  by  a  shareholder  who  is  indebted  to  it  or  requiring 
all  transfers  to  be  executed  by  the  transferor  and  the  transferee.^ 
The  registration  of  an  executor  in  his  capacity  of  executor  in 
respect  of  shares  owned  by  the  testator  —  an  entirely  proper 
proceeding  —  should  be  distinguished  from  a  registration  of 
the  shares  in  the  name  of  the  executor  individually,  which  may 
amount  to  a  devastavit  or  tortious  conversion  of  the  shares  on 
his  part.^ 

§  078.  Rights  and  Liabilities  of  Executor  or  Administrator  after 
Registration  as  Shareholder.  —  If  the  executors  of  a  deceased 
shareholder  have  the  shares  registered  in  their  own  name,  though 
as  executors,  they  become  virtually  trustees.  For  instance,  they 
become  liable  personally  for  any  calls  made  while  the  shares 
stand  in  their  names.*  So,  one  of  two  co-executors  whose  names 
are  entered  upon  the  register  of  shareholders  as  such  has  no  more 
power  to  transfer  the  shares  without  the  concurrence  of  his 
fellow  than  one  of  two  co-owners  not  executors  would  have,  not-  ^ 
withstanding  the  common  law  rule  that  one  of  two  co-executors 
may  transfer  any  part  of  the  estate  without  the  concurrence  of 
his  colleague.^ 

§  979.     Devolution   of    Title  from    Executor   to  Legatee.  —  It 
would  seem  that  a  transfer  from  an  executor  to  a  legatee  should 

(N.    J.),    05   Ail.    730    (letter   from  Banfc  v.  .4ronstem,  117  Fed.  601,  606; 

administrator  to  company  respecting  54  C.  C.  A.  663. 

payment  of  dividends  not  sufficient         ^  Holland    v.    Ball    (Mass.),    78 

to  charge  the  corporation  with  the  N.  E.  772. 

duty   of   registering   him   as   share-        ;*  Buchan's   Case,   4   A.    C.    549; 

holder  or  of   taking  notice    of    his  Leeds  Banking  Co.,  1  Ch.  231. 

address),  affirmed,  69  Atl.  223.  ^  Barton  v.  London  &  N.  W.  Ry. 

'  Cf.  Colonial  Bank  v.  Cady,  15  Co.,  24  Q.  B.  D.  77.    Quaere:   Is  this 

A.   C.  267.     See  supra,   §   900,  for  decision  applicable  in   America,   or 

statement  and  criticism  of  this  case,  does   it   depend   entirely   upon    the 

*  London,     Paris     &     American  peculiar  terms  of  English   statutes? 

790 


§832-§lUll]  SALES    BY    EXECUTORS  §981 

be  fjoveriied  l)V  the  same  rules  as  anv  otlier  transfer.  Thus, 
where  under  the  statutes  or  internal  regulations  hy  whieh  the 
company  is  governed,  the  directors  have  power  to  decline  to 
register  a  transfer  to  a  person  whom  they  disaj)prove,  it  has 
been  held  that  tiiey  may  refuse  to  register  a  transfer  from  the 
executor  of  a  deceased  shareholder  to  the  residuary  legatee.'  To 
be  sure,  in  an  early  Maryland  case,  it  was  held  that  the  assent 
of  an  executor  to  a  becjuest  of  shares  ipso  facto  vests  the  legal 
title  in  the  legatee  without  the  necessity  of  an  entry  on  the  books, 
just  as  in  the  case  of  an  ordinary  chattel ;  -  but  on  principle  and 
accortling  to  the  authority  of  the  Feileral  Supreme  Court  a  legatee 
or  distributee  must  be  registered  as  shareholder  before  he  can 
be  deemed  to  be  clothed  with  complete  legal  title.''  If  a  transfer 
is  made  to  a  distril)utee  in  pursuance  of  a  decree  of  distribution 
which  is  reversed  on  appeal  the  title  of  the  executor  revives.* 

§  980.  Requisites  of  formal  Transfer  by  Executors.  —  A 
written  transfer  signed  by  an  executor  with  his  individual  name 
merely  will  pass  shares  which  he  holds  as  executor.^  A  transfer 
by  one  of  several  co-executors  without  the  joinder  of  his  col- 
league will  pass  shares  owned  by  the  decedent's  estate,  and  the 
corporation  is  therefore  under  no  liability  for  registering  such 
a  transfer." 

The  effect  of  a  transfer  in  blank  by  executors  in  raising  an 
estoppel  in  favor  of  a  transferee  has  been  already  considered.^ 

§  981.  Sales  of  Shares  by  Executors.  —  Inasmuch  as  execu- 
tors and  administrators  have  at  common  law  full  jx>wer  to  sell 
any  assets  of  the  decedent,  the  company  will  incur  no  liability 
for  registering  a  transfer  by  an  executor  which  is,  or  is  reason- 

'  South  Yorkshire  Wine  Co.,  8  840;  Baker  v.  Beach.  8.5  Fed.  836; 
Times  L.  R.  413.  Burr  v.  Sherwood,  3  Bradf.   (N.  Y.) 

'  Farmers',  etc.  Bank  v.  Iglehart,    85. 
6  Gill  (Md.)  50.  "  Ashton  v.  Zeila  Mining  Co.,  134 

a.  Cooper  \.  Illinois  Central  R.R.    Cal.  408;    66  Pac.  494;    Ashton  v. 
Co.,  38  N.  Y.  App.   Div.  22.  25-26;    Heggerty,  130  Cal.  516. 
57    N.    Y.    Supp.    925;     Jones    v.         «  Mahaney  v.    Walsh,    16  N.   Y. 
Atchison,  etc.  R.  R.  Co.,  150  Mass.    App.  Div.  601;   44  N.  Y.  Supp.  969. 
304;  23  N.  E.  43;  5  L.  R.  A.  538.  »  Loury  v.  Commercial,  etc.  Bank, 

3  Matteson  V.Dent,  176  U.  S.  521,   Taney  310,  330  (semble).     But   of. 
530-532  (headnote  inadequate) ;  20    Barton  v.  London  ct  X.  W.  Ry.  Co., 
Sup.  Ct.  419;    People's  Home  Sav.   24  Q.  B.  D.  77  (stated supra,  §978). 
Bank  v.  Stadtmuller  (Cal.),  SS  Pac.         '  Supra,  §  900. 
280. 

Cf.    Tourtelot  v.   Finke,   87   Fed. 

791 


§  982  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

ably  supposed  to  be,  a  bona  fide  sale  for  purposes  of  administra- 
tion, even  thougli  the  purchase  money  be  afterwards  misapphed 
or  indeed  even  though  the  supposed  sale  be  in  fact  fraudulent 
or  colorable  merely.^  For  this  reason,  when  a  transfer  by  an  ex- 
ecutor or  administrator  to  a  purchaser  is  presented  for  registra- 
tion, the  company  cannot  properly  insist  upon  any  evidence  of 
the  transferor's  authority  to  make  the  transfer.-  Moreover, 
although  a  statute  prohibit  an  administrator  from  selling  at 
private  sale,  the  company  incurs  no  liability  for  registering  in 
good  faith  a  transfer  in  pursuance  of  a  private  sale.^  An  exec- 
utor has  of  course  no  right  to  pledge  the  assets  of  the  estate; 
and  if  he  undertake  to  pledge  shares  belonging  to  the  estate,  the 
company  may  and  should  refuse  to  register  a  transfer  to  the 
pledgee  or  by  the  pledgee  to  any  person  cognizant  of  the  facts.^ 


§  982.  Marriage  of  Female  Shareholder.  —  The  law  of  trans- 
mission of  shares  by  the  marriage  of  a  female  shareholder  has 
been  so  generally  altered  by  statute  that  it  may  now  fairly  be 
regarded  as  obsolete  and  interesting  rather  to  antiquarians  than 
to  practising  lawyers.  Shares  being  personal  property  of  the 
kind  known  as  choses  in  action,  the  husband  had  the  right  to 
reduce  them  to  possession,  and  thus  make  himself  absolute 
owner.^ 

§  983.     Bankruptcy  of  Shareholder,  —  Upon  the  bankruptcy  of 

'  Wooten  V.  Wilmington,  etc.  R.  the  text  that  the  next  of  kin  may 

Co.,  38  S.  E.  Rep.  298  (semble);  128  file  a  bill  to  compel  the  company  to 

N.  C.  119;   56  L.  R.  A.  615;   Hutch-  discover  the  name  of  the  transferee, 

ins  V.  State  Bank,  12  Met.  (Mass.)  and  may  join  the  company  as  de- 

421;    Cox  v.  First  Nat.   Bank,   119  fendant  to  a  bill  to  compel  the  trans- 

N.  Car.  302;   26  S.  E.  22;   Lowry  v.  feree  to  restore  the  shares  to  the 

Commercial,  etc.  Bank,  Taney  310.  estate). 

Cf.    Marbury  v.    Efden,    72    Md.  "  Davis    v.  Nat.  Eagle  Bank  (R. 

206;    19  Atl.  648;    20  Am.  St.  Rep.  I.),  50  Atl.  530. 

467    (distinguishing   Albert    v.    Sav-  ^  Wells  v.   Tyler,  25  N.  H.  340; 

ings  Bank,  2  Md.   159);    Stewart  v.  Graham  v.  First  Nat.  Bank,  84  N.  Y. 

Firemen's  Ins.  Co.,  53  Md.  565.  393;    38  Am.   Rep.   528   (as  to  the 

^  Bayard  v.  Farmers',  etc.  Bank,  right  of  the  husband  to  collect  divi- 

52  Pa.  St.  232  (semble).  dends  due  his  wife);    Burr  v.  Sher- 

3  South-Western    R.    R.    Co.    v.  wood,  3  Bradf.  (N.  Y.)  85.    See  also 

Thomason,   40  Ga.   408   (holding  in  supra,  §  834, 
addition  to  the  proposition  stated  in 

792 


§  832-§   1011]       BANKRUPTCY    OF    SIIAKEIIOLDERS  §983 

a  shareliolder,  the  title  tlevolves  upon  the  assignee  or  trustee, ' 
who,  iiowever,  may  refuse  to  aecept  the  shares  if  he  (U-ein  the 
ownership  onerous  rather  tlian  advantageous.-  Ihe  devolution 
of  ownership  upon  the  assignee  or  trustee  in  bankruptcy  is 
"transmission"  as  distinguLshed  from  "transfer,"  and  hence 
the  company  cannot  decline  to  register  the  trustee  in  bank- 
ruptcy under  a  i)o\ver  to  decline  to  register  a  transfer  by  any 
member  who  is  indebted  to  it.^  The  bankrupt  remains  the 
owner  of  the  shares,  so  far  as  the  company  is  concerned,  luitil 
the  name  of  the  assignee  or  some  note  of  the  bankruj)tcy  is 
entered  on  the  company's  register;  and  hence,  until  that  time, 
notices  of  calls,  forfeitures,  and  the  like  may  be  validly  served 
on  the  bankrupt  even  though  the  company  have  notice  of  the 
bankruptcy.'  The  company  may  accordingly  be  required  to 
rco-ister  an  undischarged  bankrupt  as  shareholder  unless  the 
assignee  or  trustee  object.^  Moreover,  a  bona  fde  purchaser 
from  the  bankrupt  will,  when  duly  registered  as  shareholder, 
have  a  better  title  than  the  trustee  in  bankruptcy.®  But  the 
shares  cannot  be  attached  on  a  proceeding  against  the  bank- 
rupt even  though  they  still  stand  in  the  bankrupt's  name.' 
The  company  may  be  required  by  the  assignee  in  bankruptcy 
to  issue  to  him  a  share-certificate,  and  if  a  sufficient  bond  of 
indemnity  be  given,  this  may  be  done  even  though  the  bank- 
rupt's certificate  has  been  abstracted  by  the  bankrupt  and  has 
never  been  cancelled  or  slirrendered  to  the  company.^  ^^he^e 
the  assignee  or  trustee  disclaims  ownership  of  the  shares  they 
are,  it  seems,  forfeited  to  the  company.^ 

'  The    fullest    consideration     of  *  Graham  v.  Van  Diemen's  Land 

this  subject,  confined  of  course  to  Co.,  1  H.  &  N.  541. 

the  English  law,  is  contained  in   1  But  see  Sutton  v.  English  &  Col- 

Lindley  on  Companies  (Gth  ed.,  p.  onial  Produce  Co.  (1902),  2  Ch.  502. 

746  et  scq.),  Bk.  Ill,  Chap.  8.  *  Sutton   v.    English    &    Colonial 

"  Supra,  §  771.    As  to  the  rights  Produce  Co.  (1902),  2  Ch.  502. 

of  a  trustee  in  bankruptcy  to  divi-  "  London  &  Provincial  Tel.  Co., 

dends,    see    Bryan   v.    Sturgis   Nat.  9  Eq.  653. 

Bank  (Tex.),  90  S.  W.  704.  '  French  v.  White  (Vt.),  62  Atl.  35. 

»  Bentham  Mills  Co.,  11  Ch.  D.  «  Wilson  v.  Atlantic,  etc.  R.  R. 
900;  W.  Key  S:  Son  (1902),  1  Ch.  Co.,  2  Fed.  459. 
467  (tnistee  in  bankniptcy  entitled  *  E.t  parte  Hallett,  1  Manson  3S0. 
to  be  registered  ^^^thout  addition  of  But  cf.  Glenn  v.  Hoivard,  65  Md. 
note  indicating  the  company's  claim  40  (wiiere  the  title  was  held  to  re- 
ef a  hen  for  a  disputed  debt).  Cf.  main  in  the  bankrupt,  who  was  ac- 
Ex  parte  Harrison,  28  Ch.  D.  303.  cordingly  liable  for  subsequent  calls). 

793 


§  984  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

§  984.  Transmission  or  Devolution  under  Special  Statute.  — 
Shares  may  be  transmitted  or  devolved  in  consequence  of  some 
special  statute.  As  respects  shares  owned  by  private  persons, 
anv  such  statute  would  ordinarily  be  obnoxious  in  America  to 
constitutional  objections,  and  would  be  so  foreign  to  Anglo- 
Saxon  conceptions  of  justice  that  it  could  never  be  passed  by  a 
British  parliament.  But  where  shares  are  owned  by  some  public 
corporation,  the  case  is  different.  For  instance,  a  statute  enact- 
ing that  upon  a  certain  day  a  school-board  or  other  quasi-public 
body  shall  be  "abolished"  and  its  property  "transferred"  to  a 
municipal  corporation,  has  the  effect  of  investing  the  latter  cor- 
poration with  complete  legal  title  to  stocks  owned  by  the  school- 
board  and  registered  with  the  Bank  of  England,  without  the 
execution  of  any  written  transfer  and  without  any  registered 
transfer  on  the  books  of  the  Bank  of  England.* 


§  985- §  994.    TRUSTS  of  shares  and  equitable  interests 

IN   SHARES. 

§  985.  Relevancy  of  Subject  —  Scope  of  Treatment.  —  The 
subject  of  trusts  of  shares,  or  of  equitable  interests  in  shares,  is 
closely  connected  with  the  subject  of  transfers  of  shares.  Indeed, 
in  almost  every  case  of  transfer  of  shares,  the  equitable  title  vests 
in  the  transferee  some  time  before  the  legal  title  passes.  Trusts 
of  shares  are  governed  by  no  peculiar  principles  not  applicable 
to  trusts  in  general,"  and  of  course  an  attempt  to  state  even  in 
outline  the  general  law  of  trusts  would  be  wholly  out  of  place 
here.  The  only  attempt  will  be  to  set  forth  briefly  the  applica- 
tion of  the  general  principles  of  the  law  of  trusts  to  the  peculiar 
circumstances  of  trusts  of  shares. 

1  Oldham  Corporation  v.  Bank  of  shares  in  such  a  company  specifically 
England  (1904),  2  Ch.  716.  bequeathed    to    two    or    more    co- 

2  As  to  the  power  of  trustees  to  trustees  may  lawfully  be  allowed  to 
invest  in  stocks  or  shares,  see  1  stand  in  the  name  of  one  of  them. 
Perry  on  Trusts,  2d  ed.,  §  455,  §  456.  Consterdine  v.  Consterdine,  31  Beav. 
Even  where  two  or  more  co-trustees  330.  As  to  whether  trustees  of 
are  empowered  to  invest  in  sliares,  shares  may  hold  shares  in  subsidiary 
they  are  not  authorized  to  invest  in  companies  distributed  to  them  upon 
shares  of  a  company  which  cannot  a  reduction  of  the  capital  of  the 
be  registered  in  the  names  of  two  principal  company,  see  supra,  §  665 
or  more  persons  as  co-owners,  but  note. 

794 


§  832-§   1011]  TRUSTS    OF    SHAKES  §  988 

§  98G.  Theory  of  a  Trust  applied  to  Shares.  —  Accordin|:r  to  the 
theory  of  a  trust,  ii  trustee  is  a  pers<jM  who  with  respect  to 
certain  partieuhir  property  is  bound  as  between  liirnself  and 
another  person,  called  the  cestui  que  trust,  to  exercise  his  rights 
of  ownership  for  the  benefit  of  that  other  person.  In  other 
words,  a  trustee  is  a  person  who,  owning  certain  property, 
holds  for  the  benefit  of  another  person.'  Hence,  the  tru.st  is 
something  with  which  the  company  and  other  third  persons 
have  nothing  whatever  to  do,  beyond  refraining  from  any  action 
which  could  be  construed  as  participation  or  connivance  in  a 
breach  of  trust.  The  trustee  and  not  the  cestui  que  trust  is  the 
person  whom  the  company  recognizes  as  the  owner  of  the  shares.^ 
Thus,  the  trustee  and  not  the  cestui  que  trust  is  entitled  to  vote 
in  respect  of  the  shares.^  For  this  reason,  a  trustee  is  liable 
personally  as  a  shareholder  although  the  shares  stand  on  the 
register  in  his  name  as  trustee.^  The  cestui  que  trust  is  not  a 
person  "entitled  to  shares  as  against  the  company  ";  ^  his  right 
is  against  the  trustee  alone.  Hence,  it  is  deemed  a  matter  of 
entire  indifTerence  to  the  company  who  may  be  cestui  que  trust 
of  its  shares : "  the  trustee  is  the  person  with  whom  alone  the 
company  has  to  deal. 

§  987.  Tendency  of  American  Courts  to  depart  from  this  Prin- 
ciple. —  Undoubtedly,  many  American  courts  would  not  follow 
out  logically  this  theory  of  a  trust,  but  would  treat  the  trustee 
as,  so  to  speak,  a  personification  of  the  trust  estate,  the  estate 
being  regarded  as  constituting,  as  it  were,  a  legal  entity. 

§  988.  The  Principle  emphasized  in  England  —  Companies  Act, 
1862,  §  30.  —  In  England,  however,  the  principle  is  not  merely 
accepted  and  applied  but  is  even  extended  and  emphasized  by 
custom  and  reinforced  by  statute.  Section  30  of  the  Companies 
Act,  1SG2,  provides  that,  in  the  case  of  English  or  Irish  as  dis- 
tinguished from  Scotch  companies,  no  notice  of  any  trust,  ex- 
pressed, implied,  or  constructive,  shall  be  entered  on  the  register 
of  members  or  be  receivable  by  the  registrar.    By  a  narrow  con- 

'  Conversely,  a  person  who  holds         ^  See  infra,  §  1223. 
shares   or  other  property   "for  the         *  Muir  v.  City  of  Glasgoio  Bank, 
belioof    of"    another   is    a    trustee.    4  A.  C.  337.     See  supra.  §  767. 
GUlespie  v.  City  of  Glasgotv  Bank,  4         *  Re  Perkins.  24  Q.  B.  D.  013. 
A.  C.  632.  »  BcU  Bros.,  Go  L.  T.  245,  248. 

*  Cf.  Sylvania,  etc.  R.  Co.  v.  Hoge 
(Ga.),  5<J  "S.  E.  806. 

795 


§  988  TRANSFER    AND  TRANS^HSSION  [ChAP.  XV 

struction  of  this  statute,  it  might  have  been  held  that  while  the 
company  was  exempted  from  any  obligation  to  enter  the  trust 
on  the  register,  so  as  to  afford  notice  thereof  to  all  persons 
inspecting  the  register,  still  it  should  not  be  relieved  from  tlic 
duty  of  itself  recognizing  any  trusts  or  equities  of  which  it 
might  have  notice  from  any  source.  Such,  however,  has  not 
been  the  construction  adopted  by  the  courts.  The  act  exon- 
erates the  company  from  registering  an  absolute  transfer  from 
a  trustee  to  the  tenant  for  life  to  the  prejudice  of  the  remain- 
dermen, although  the  company  had  notice  of  the  terms  of  the 
trust.*  On  the  other  hand,  the  statute  does  not  authorize  the 
company  wantonly  to  disregard  the  equities  of  the  cestui  que 
trust.  For  instance,  if  the  company  has  under  its  regulations 
a  lien  upon  its  shares  for  the  debts  of  the  holders,  it  may  not 
set  up  its  lien  to  the  prejudice  of  the  cestui  que  trust  in  respect 
of  advances  made  after  it  had  actual  notice  of  the  trust.^  On 
the  other  hand,  perhaps,  even  this  latter  almost  unreasonable 
power  may  be  conferred  upon  the  company  by  an  explicit 
provision  in  the  articles  of  association.^ 

The  section  of  the  Companies  Act  which  we  are  now  consider- 
ing had  its  origin  and  prototype  in  a  custom  or  by-law  of  the 
Bank  of  England,  which  refused  (and  still  refuses)  to  enter  upon 
its  books  any  trusts  of  stock.*  The  principle  which  lies  at  the 
root  of  the  statute  is  very  far-reaching;  and  oftentimes  it  is 
difficult  to  determine  whether  a  decision  of  an  English  court  as 
to  equitable  interests  in  shares  rests  upon  this  statutory  pro- 
vision or  upon  general  principles  of  company  law.^ 

Lord  Coleridge,  in  terms  which  are  not  inapplicable  in  Amer- 
ica, has  forcibly  expressed  the  importance  of  recognizing  that 
the  trustee  is  the  only  person  with  whom  the  company  has  any- 
thing to  do  and  that  whether  he  holds  the  shares  beneficially 

'  Simpson     v.      Molson's     Bank  *  Cf.  Law  Guarantee  Soc.  v.  Bank 

(1895),  A.  C.  270,  279  (construing  a  of  England,  24  Q.  B.  D.  406. 

similar    provision    in    a    Canadian  ^  For  cases  in  which  the  decision 

statute).  has  been  more  or  less  affected  by 

^  Bradford  Banking  Co.  v.  Briggs,  the  statutory  provision,  see  Re  Per- 
12  A.  C.  29;  McLaughlin  v.  Bank  of  kins,  24  Q.  B.  D.  613;  Societe  Gen- 
Victoria,  20  Vict.  L.  R.  433.  erale  de  Paris  v.   Tramways  Union, 

^  Cf.  Neio  London  Bank  v.  Brock-  14  Q.  B.  D.  424;    Barton  v.  London 

lehank,     21     Ch.      D.     302.       See  &  N.  W.  Ry.  Co.,  24  Q.  B.  D.  77. 
Palmer's    Company    Law,    3d    ed., 
pp.   113-117. 

796 


§  832-§  1011]  TRUSTS    OF    SHARES  §  989 

or  upon  trust  is  no  concern  of  the  com[)any.  "It  seems  to  me," 
said  that  learned  judge,  "extremely  important  not  to  throw  any 
doubt  on  the  principle  that  companies  have  nothing  whatever 
to  do  with  the  relations  between  trustees  and  their  cc.stuis  que 
trust  in  respect  of  the  shares  of  the  company.  If  a  trustee  is  on 
the  company's  register  as  a  holder  of  shares,  the  relations  which 
he  may  have  with  some  other  person  in  respect  of  the  shares 
are  matters  with  which  the  company  have  nothing  whatever  to 
do.  They  can  only  look  to  the  person  whose  name  is  on  the 
register."  ' 

§  989.  Obligation  of  Company  to  protect  Cestui  Que  Trust  of 
Shares.  —  Apart  from  provisions  such  as  that  found  in  the 
British  Companies  Act  of  18G2,  based  upon  the  rule  of  the  Bank 
of  England  and  referred  to  above,  a  corporation  is  undoubtedly 
bound  like  any  other  person  to  respect  equitable  rights  of  which 
it  has  notice.^  It  is  liable  to  the  cestui  que  trust  if  after  notice 
of  the  trust  it  permits  the  trustee  to  deal  with  the  shares  in  a 
way  inconsistent  v^rith  the  just  rights  of  the  cestui  que  trust ; ' 
and  may  therefore  refuse  to  register  any  transfer  which  it  knows 
to  have  been  executed  by  the  trustee  in  disregard  of  his  trust.* 
A  local  custom  to  the  contrary  will  not  have  effect,  at  any  rate 
not  unless  shown  to  have  been  known  to  the  cestui  que  trust."* 
For  instance,  if  the  company  issues  to  the  trustee  a  share-cer- 
tificate which  does  not  indicate  on  its  face  the  existence  of  the 
trust,  whereby  the  trustee  is  enabled  to  convey  the  shares  to  a 
purchaser  for  value,  the  company  must  make  good  the  cestui 
qv£  trust's  loss.^  So,  if  the  company,  being  charged  with  notice 
of  a  trust  for  A  for  life  with  remainder  over,  registers  the  shares 
in  the  name  of  the  trustee  as  "trustee  for  A,"  thus  enabling  the 

1  Re  Perkins,  24  Q.  B.  D.  613,         '  Geyser-Marion  Co.  v.  Stark,  106 

616.  Fed.  558;    45  C.  C.  A.  4G7;    Mar- 

'  Lowryx.  Commercial,  etc.  Bank,  bury  v.  Ehlen,  72  Md.  206;    19  .\tl. 

Taney  310,  335;    Guarantee  Co.  v.  648;   20  Am.  St.  Rep.  467;   Stewart 

East  Rome  Town  Co.,  96  Ga.  511 ;  23  v.  Firemen's  Ins.  Co.,  53  Md.  565. 
S.   E.   503;    51   Am.   St.   Rep.    150;  CL  Bank  of  Kentucky  v.  Winn,  61 

Bayard  v.  Farmers',  etc.  Bank,  52  Pa.  S.  W.  32 ;    1 10  Ky.  140. 
St.  232.  ^   Young  v.   Xew  Standard  Con- 

But  see  Sylvania,  etc.  R.  Co.  v.  centrator  Co.  (Cal.),  83  Pac.  28. 
Hoge  (Ga.),   59  S.   E.   806   (holding         *  Geyser-Marion,  etc.  Co.  v.  Stark, 

that  the  company  cannot  refuse  to  106  Fed.  558;  45  C.  C.  A.  467. 
roco<i;nize  a  transfer  in  violation  of  a         "  Loring  v.  Salisbury  Mills,   125 

poohng    agreement   between   share-  Mass.  138. 
holders). 

797 


§  990  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

trustee  to  transfer  the  shares  to  A,  and  enabling  A  to  transfer 
to  bona  fide  purchasers,  the  company  must  make  good  the  loss 
to  the  remamderman.' 

§  990.  What  amounts  to  Notice  of  Existence  and  Terms  of  Trust. 
—What  will  amount  to  notice  of  a  trust  or  of  the  terms  of  a 
trust  of  shares,  is  a  question  upon  which  the  authorities  are  not 
agreed.-  The  question  would  seem  to  be  governed  by  no  pecu- 
har  principles  applicable  to  shares  and  not  to  other  species  of 
property.  Where  the  trust  is  created  by  the  will  of  a  deceased 
shareholder,  the  company's  knowledge  of  the  existence  of  a  will 
has  been  held  to  be  constructive  notice  of  the  contents  of  the 
will,  and  consequently  of  the  terms  of  the  trust,^  so  that  a  reg- 
istration of  a  transfer  from  the  executors  to  a  legatee  without 
protecting  all  the  ceshns  que  trust  will  be  wrongful.^  The 
fact  that  a  share-certificate  states  that  the  shares  represented 
thereby  are  held  "in  trust"  is  sufficient  to  charge  the  company 
and  any  transferee  with  notice  of  the  trust  so  as  to  prevent  the 
transferee  from  claiming  the  rights  of  a  purchaser  for  value  in 
opposition  to  the  cestui  que  trust,^  and  to  render  the  company 
liable  if  it  registers  the  transfer  without  ascertaining  the  power 
of  the  trustee  to  make  the  transfer,"  and  a  fortiori  where  the 
person  described  as  trustee  pledges  the  shares  to  secure  his  indi- 
vidual debt  the  pledgee  is  not  deemed  a  bona  fide  purchaser.' 

1  Wooten  V.  Wilmington,  etc.  R.  suppose  that  the  transfer  by  execu- 
Co.,  38  S.  E.  298  (N.  Car.) ;  128  N.  C.  tors  is  a  sale  for  purpose  of  admin- 
119;   56  L.  R.  A.  615.  istration,    this    hability    would    not 

2  Cf.  Simpson  v.  Molson's  Bank  attach.    See  supra,  §  981. 

(1895),  A.  C.  270;    Spelissy  v.  Cook  *  Bank  of  Montreal  v.  Sweeny,  12 

&   Bernheimer  Co.,  58  N.   Y.  App.  A.  C.  617. 

Div.  28.3 ;   68  N.  Y.  Supp.  995.  Cf.  Prall  v.  Tilt,  28  N.  J.  Eq.  479; 

3  Caidkins  v.  Gas-Light  Co.,  85  First  Nat.  Bank  v.  National  Broad- 
Tenn.  683;  4  S.  W.  287;  4  Am.  St.  way  Bank,  156  N.  Y.  459;  51  N.  E. 
Rep.  786;  Marbury  v.  Ehlen,  72  398;  42  L.  R.  A.  139;  Johnson  v. 
Md.  206;  19  Atl.  648;  20  Am.  St.  Amber  son,  37  So.  273;  140  Ala.  342. 
Rep.  467 ;  Stewart  v.  Firemen's  Ins.  "  Geyser-Marion,  etc.  Co.  v. 
Co.,  53  Md.  565,  57.5-576;  Lowry  \.  Stark,  106  Fed.  558;  45  C.  C.  A. 
Commercial,  etc.  Bank,  Taney  310.  467;  Marbury  v.  Ehlen,  72  Md.  206; 

*  Wooten  V.  Wilmington,  etc.   R.  19  Atl.  648;    20  Am.  St.  Rep.  467 

Co.,  .38  S.  E.  Rep.  298  (N.  Car.);   128  (distinguishing     Albert    v.     Savings 

N.  C.  119;    56  L.  R.  A.  615.  Bank,  2  Md.  1.59,  which  latter  case 

Cf.  Caidkins  v.  Gas-Light  Co.,  85  is  reaffirmed  in  Grafflin  v.  Robb,  84 

Tenn.  683;   4  S.  W.  287;   4  Am.  St.  Md.  451;    35  Atl.  971). 

Rep.  786.  '  Shaw    v.    Spencer,    100    Mass. 

If   the   company   has   reason   to  382;   97  Am.  Dec.  107;    1  Am.  Rep. 

798 


§  832-§  1011]  TRUSTS    OF    SHAKES  §  902 

But  other  cases  hold  that  the  word  "trustee"  alone  is  not  suffi- 
cient to  put  a  purchaser  on  incjuiry,'  and  some  few  apply  the 
same  rule  even  in  cases  of  hypothecation  by  the  person  named 
as  trustee  to  secure  his  own  dei)t.-  According  to  all  the  authori- 
ties where  the  name  of  the  cestui  que  truat  is  communicated  to 
the  corporation,  it  is  bound  to  protect  his  rights.^  But  if  the 
share-certificate  does  not  disclose  the  existence  of  the  trust,  the 
purchaser  is  not  bound  to  examine  the  books  of  the  company 
in  order  to  see  whether  the  shares  be  held  in  trust.^  The  mere 
fact  that  shares  are  held  by  two  or  more  persons  jointly  is  no 
indication  of  the  existence  of  a  trust." 

§  991.  LiabiUty  of  Trustee's  Bond.  —  If  the  trustee  has  given 
bond  for  the  faithful  performance  of  his  trust,  the  bond  is  of 
course  answerable  for  any  wrongful  transfer  by  the  trustee. 
Prima  facie,  the  measure  of  damages  would  be  the  value  of  the 
shares  transferred ;  but  if  the  company  was  party  to  the  breach 
of  trust  and  has  been  compelled  to  pay  the  value  of  the  shares, 
the  bondsmen  are  liable  for  no  more  than  nominal  damages.' 
They  cannot,  it  was  held,  be  made  liable  under  the  bond  for 
the  benefit  of  the  company,  which  is  regarded  as  a  joint  tort- 
feasor in  confederation  with  the  misconducting  trustee.  This 
was  held  in  a  case  where  the  transfer  by  the  fiduciary  was  invalid 
under  a  statute  which  avoided  any  transfer  by  a  guardian  made 
without  a  prior  order  of  court  sanctioning  it.  The  decision  was 
a  harsh  one,  inasmuch  as  the  corporation  did  not  appear  to  have 
been  guilty  of  any  intentional  wrongdoing,  and  a  fortiori  the 
same  rule  would  apply  where  the  company  knowingly  connives 
at  a  wrongful  transfer  by  a  trustee. 

§  992.  Change  of  Trustees.  —  A  resignation  of  a  trusteeship 
and  the  substitution  of  another  trustee  partakes  of  the  nature 
of  a  transfer  of  the  trust  shares.    The  mere  resignation  of  the 

115;    Budd  v.  Munroe,  18  Hun  (N.         '  Brewster  v.  Sime,  42  Cal.  139; 

Y.)  316;    Clemens  v.  Heckscher,  185  Thompson  v.  Toland,  48  Cal.  99. 
Pa.  St.  476;    40  Atl.  80.  '  Bayard  v.  Farmers',  etc.  Bank, 

But  of.  Ashton  v.  Atlantic  Bank,  52  Pa.  St.  232. 
3  Allen  (Mass.)  217.  *  Salisbury    Mills    v.    Toivnsend, 

'  arajjiin  v.   Robb,  84   Md.   451;  109  Mass.    115;    Loury  v.  Commer- 

35  Atl.  971  (distinguishins  Marbury  cial,  etc.  Bank,  Taney  310. 
V.  Ehlen,  72  Md.  206;   19  Atl.  648;  '  See  infra.  §  1008. 

20  Am.  St.  Rep.  467;  and  reaffirm-         «  State    use   Murray   v.   Murray, 

ins  Albert  v.  Savings  Bank,  2  Md.  24  Md.  310;   87  Am.  Dec.  608. 
159). 

799 


§  993  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

trust  does  not  cause  the  trustee  to  cease  to  be  a  shareholder  or 
reheve  him  from  a  shareliolder's  habilities.^  It  is  not  even 
enough  that  his  resignation  is  communicated  to  the  directors; 
there  must  be  a  transfer  by  the  resigning  trustee  or  something 
in  the  nature  of  a  transfer,  in  order  that  the  trustee's  Habilities 
as  shareholder  may  terminate.'  An  execution,  by  two  Scotch 
trustees  of  shares,  of  a  deed  "assuming"  new  trustees,  followed 
by  a  note  on  the  stock  ledger  giving  the  names  of  the  "assumed" 
trustees  and  entered  with  their  consent,  is  equivalent  to  a  trans- 
fer into  the  names  of  the  new  trustees  and  renders  them  share- 
holders in  the  company.^ 

§  993-§  994,     Assignments  of  Equitable  Interests  in  Shares. 

§  993.  In  general.  —  A  cestui  que  trust  or  equitable  owner  of 
shares  may  of  course  assign  his  interest;  but  since  the  shares 
stand  in  the  name  of  the  trustee,  to  whom  also  the  certificate  is 
issued,  the  cestui  que  trust  cannot  deliver  or  endorse  the  certifi- 
cate to  his  transferee,  and  cannot  clothe  his  transferee  with  the 
right  to  demand  that  the  company  register  him  as  shareholder. 
The  utmost  right  that  a  cestui  que  trust  can  confer  upon  the 
transferee  is  the  right  to  require  the  trustee  to  execute  a  transfer 
and  deliver  to  him  the  certificate,  to  the  end  that  he  may  be  reg- 
istered as  legal  owner  of  the  shares ;  and  even  this  can  be  done 
by  the  cestui  qu£  tru^t  only  in  the  case  of  a  bare  trust.  The 
transfer  of  a  cestui  que  trust's  interest  is  naturally  accomplished 
by  very  different  means  from  those  employed  where  the  legal 
title  is  to  be  transferred.  An  assignment  of  the  cestui  que  trust's 
interest,  like  "all  grants  and  assignments  of  any  trust  or  confi- 
dence," is  required,  by  the  ninth  section  of  the  Statute  of  Frauds, 
to  "be  in  writing  signed  by  the  party  granting  or  assigning  the 
same  or  else  shall  ...  be  utterly  void  and  of  none  effect." 
With  this  exception,  no  form  or  ceremony  is  requisite.  Even  if 
the  assignment  be  gratuitous,  it  is  irrevocable  from  the  execu- 
tion and  delivery  of  the  written  transfer,  without  any  further 
act  or  ceremony;*    for  a  voluntary  transfer  of  an  equitable 

'  A.  Mitchell's  Case,  4  A.  C.  548;         '  Bell's  Case,  4  A.  C.  547. 
Rutherford's  Case,  4  A.  C.  548;   Ker's         *  Nanney  v.  Morgan,  37  Ch.  D. 
Case,  4  A.  C.  549.  346. 

2  A.  Mitchell's  Case,  4  A.  C.  548; 
Rutherford's  Case,  4  A.  C.  548. 

800 


§  832-§   1011]       ASSIGNMENTS  OF  EQUITABLE  INTERESTS       §  994 

rif^ht  is  complete  as  soon  as  the  assigmjr  has  done  everything 
that  the  nature  of  the  case  admits  of  to  put  the  subject  of  the 
gift  out  of  his  control  and  within  the  dominion  of  the  assignee. 

In  order  to  perfect  the  assignment,  it  may  be  necessary  for 
the  assignee  to  notify  the  trustee,  but  it  is  not  necessary  to  give 
notice  to  the  company.'  As  the  assignment  does  not  confer  any 
legal  as  distinguished  from  equitable  rights,  the  transferee  is  not 
entitled  to  stand  as  a  purchaser  of  the  shares  without  notice  of 
an  outstanding  prior  equity  superior  to  the  title  of  the  trustee 
or  person  in  whose  name  the  shares  stand.- 

§  994.  Assignments  by  Shareholders  who  have  assented  to  Vot- 
ing Trusts,  Reorganization  Schemes,  etc.  —  The  law  of  assign- 
ments of  equitable  interests  in  shares  has  been  applied  in  cases 
of  voting  trusts,  reconstruction  and  amalgamation  schemes,  and 
similar  arrangements.  The  sliareholders  who  put  their  shares 
into  the  trust  or  pool  receive  from  the  trustees  certain  certifi- 
cates or  scrip  which  really  represent  equitable  interests  in  the 
shares  and  which  are  intended  to  be  and  are  assignable  in  much 
the  same  way  as  the  shares  themselves  would  be.^  The  trust- 
certificates  or  scrip  are  to  be  treated,  as  far  as  possible,  like 
share-certificates.  Like  them,  they  are  assigned  by  endorsement. 
The  assignment  is  consummated  by  an  entry  on  the  transfer 
books  of  the  trust  or  pool.  The  duty  of  the  trustees  to  enter 
the  transfer  on  the  books  is  the  same  as  that  of  a  corporation  to 
enter  on  its  books  a  transfer  of  its  shares ;  and  the  duty  is  en- 
forceable in  the  same  way."  If  the  trust  is  illegal,  it  may  be 
revoked  at  any  time  by  the  holders  of  the  trust  certificates ;  and 
a  transferee  has  the  same  right  in  this  respect  as  an  original 
holder.^  If  the  trustee  or  depositary  under  a  reorganization 
scheme  issues  a  certificate  to  one  who  falsely  represents  himself 
to  be  owner  of  certain  of  the  deposited  shares,  nevertheless  the 
true  owner  of  the  shares  in  question  (who  had  not  assented  to 

•  Houser  v.   Richardson,  90  Mo.  '  Cf.  Hubbard  v.  Manhattan  Trust 

App.  134.  Co.,  87  Fed.  51,  57-58;  30  C.  C.  A. 

Cf.  Elty  V.  Bridges,  2  Y.  &  Colly.  520,  and  also  supra,  §  237. 
Oh.  48G  (relating  to  an  equitable  in-         *  Rice  v.  Rockefeller,   134  N.  Y. 

terest    in    bank  annuities  or   stock,  174;  3lN.  E.  907;  30  Am.  St.  Rep. 

not   capital  stock  of    the  company,  658;    17  L.  R.  A.  237. 
where    there    was     no    trustee    in         *  Shepaug  Voting  Trust  Case*,  60 

existence).  Conn.  553;   24  Atl.  32. 

'  Barker  v.  Montana  Gold,  etc.  Co. 
(Mont.),  89  Pac.  66. 

VOL.  I.  —  51  801 


§  995  TRANSFER    AND    TRANSIVOSSION  [ChAP.  XV 

the  reorganization  plan)  cannot  compel  the  trustee  or  deposi- 
tary to  issue  to  him  the  securities  in  the  new  company  repre- 
sented by  the  certificate,  unless  the  certificate  be  first  actually 
delivered  up;  and  this  is  true  even  though  the  holder  of  the 
certificate  be  a  party  to  the  suit  and  be  ordered  by  decree  to 
surrender  the  certificate;  for  if  he  should  disobey  the  decree, 
the  trustee  would  be  liable  to  a  bona  fide  transferee  of  the 
certificate.^ 


§  995-§  1005.      PLEDGES   AND    MORTGAGES   OR   HYPOTHECATION 

OF   SHARES. 

§  995.  Confusion  in  Law  of  Mortgages  in  general.  —  The  law  of 
mortfases  and  similar  charges  in  the  United  States  is  involved 
in  great  confusion,  irrespective  of  the  nature  of  the  mortgaged 
property  —  whether  real  estate,  personal  chattels,  or  choses  in 
action.  In  some  states  a  mortgage  is  deemed  a  conveyance  of 
the  legal  title  to  the  mortgagee;  in  others  it  is  regarded,  even  at 
law,  as  a  mere  lien.  In  some  states  the  distinction  between  law 
and  equity  has  been  obliterated,  while  in  others  it  is  preserved 
in  all  its  sharpness.  Although  substantial  justice  is  accomplished 
almost  everywhere,  the  uncertainty  as  to  the  theory  upon  which 
the  results  are  reached  is  far  from  creditable  to  American  juris- 
prudence. That  this  confusion  which  envelops  the  whole 
law  of  mortgages  should  be  intensified  when  the  law  is  applied 
to  property  of  so  peculiar  a  kind  as  shares  in  incorporate! 
companies  is  not  surprising. 

§  996.  Difficulty  in  applying  general  Principles  of  Law  to  Mort- 
gages and  Pledges  of  Shares  —  Distinction  between  "Pledge"  and 
"  Mortgage  "  of  Shares.  —  As  applied  to  shares,  even  the  logi- 
cal simplicity  of  the  English  common  law  of  mortgages  and 
pledges  becomes  uncertain  and  intricate.  For  one  thing,  there 
is,  as  we  have  seen  above,  considerable  uncertainty  and  conflict 
of  authority  in  respect  to  what  formalities  if  any  are  necessary 
in  order  to  effect  a  transfer  of  the  legal  title  to  shares.  More- 
over, transfer  of  possession  is  a  sine  qua  non  of  a  valid  pledge 
of  personal  property;  and,  in  the  existing  state  of  the  authori- 
ties, who  can  say  what  are  the  elements  of  possession  of  the 

»  Bean  v.  Am.  L.  &  T.  Co.,  122  N.  Y.  622;   26  N.  E.  11. 
802 


§  832-§   1011]  PLEDGES    OF    SUAHES  §  997 

iiK'orporeiil  persoruil  property  known  as  shares  or  stock?  '  In- 
dcvd,  some  authorities  have  gone  so  far  as  to  maintain  tiiat 
shares  in  corporations,  not  being  capable  of  possession,  cannot 
be  the  sul)jeet  of  a  pledge.  Certain  it  is  that  the  use  of  the 
terms  "mortgage,"  "pledge,"  etc.,  as  apphed  to  siiares  is  more 
likely  to  mislead  than  instruct.  From  tlie  fact  that  shares  held 
as  collateral  security  are  said  bv  one  court  to  be  "pledixed," 
and  by  another  to  be  "mortgaged,"  no  inference  can  safely  be 
drawn  that  the  rights  of  the  parties  woukl  l)e  held  to  be  differ- 
ent by  the  two  tribunals.  Terms  which  are  useful  as  aj)j)lieil  to 
charges  upon  land  or  per.sonal  chattels  are  worse  than  useless 
as  applied  to  shares.  Hence,  to  discuss  which  charges  or  liens 
upon  shares  in  a  corporation  are  properly  denominated  "mort- 
gages" and  which  "pledges"  would  be  largely  a  waste  of  time 
and  battle  about  words.-  The  term  "pledge"  is  frequently  u.sed 
in  this  work,  for  want  of  a  better  word,  to  designate  a  charge  or 
lien  upon  shares;  but  the  word  is  used  as  a  generic  term  and  not 
in  any  technical  sense,  as  distinguished  from  a  mortgage,  (([ui- 
table  charge,  or  security  of  a  different  nature.  All  such  classi- 
fications will  be  disregarded  as  unfortunate  and  misleading; 
and  in  lieu  thereof  a  classification  suited  to  the  peculiarities  of 
shares  in  incorj)orated  companies  will  be  adopted. 

§  997.  Classification  of  Charges  or  Liens  upon  Shares.  — 
Charges  or  liens  upon  shares  may,  then,  be  divided  into  five 
classes:  (1)  where  there  is  an  agreement,  oral  or  written,  that 
the  shares  shall  be  held  as  security  for  a  debt,  no  formal  transfer 
being  executed  and  the  indicia  of  ownership,  notably  the  share- 

'  Supra,  §  834.  v.  GUbert,   173  111.  34S;    50  N.  E. 

*  Cf.  Barse  Live  Stock  Co.  v.  1087;  Manns  v.  Brookville  Xat. 
Range  Valley  Cattle  Co.,  IGUtnh  59;  Bank,  73  Ind.  243;  Campbell  v. 
50  Pac.  G30  (hypothecation  of  shares  Wood.'^tock  Iron  Co.,  83  Ala.  351;  3 
in  ordinary  way  held  not  to  be  within  So.  369;  Greene  w  Dispcan,  14  R.  I. 
a  chattel  mortgage  act);  Ilasbrouck  575,  576;  Bryson  v.  Raymr,  25  Md. 
V.  V a ndevoor t,  i  Sa.ndf.  (X.  Y.)  74  424;  90  Am.  Dec.  69 ;  Richardson  v. 
(where  the  court  said  that  the  trans-  Longmont  Supply  Ditch  Co..  19  Colo, 
action  was  a  pledge  but  that  the  App.  483;  76  Pac.  546;  (liypotlieca- 
logal  title  passed  to  the  pknlgce) ;  tion  not  a  mortgage  within  meaning 
Wilson  V.  Little,  2  N.  Y.  443;  51  Am.  of  statute  limiting  time  for  foreclos- 
Dec.  307;  Doak  v.  Bank  of  the  State,  ing  chattel  mortgages);  Irving  Park 
(1  Ired.  Law  (N.  Car.)  309;  Me-  Ass'n  v.  Watson,  67  Pac.  945;  41 
chanics  Bldg.,  etc.  Ass'n  v.  Conovcr,  Oreg.  95  (hypothecation  of  sliares 
14  N.  J.  Eq.  219  (as  to  a  pledge  or  not  witliin  statute  relating  to  fore- 
mortgage  to  the  corporation) ;    Rice  closure  of  chattel  mortgages). 

803 


§  993  TRANSFER    AND    TRANSMISSION  [ChAP,  XV 

certificate,  being  retained  in  the  possession  of  the  debtor; 
(2)  where  the  share-certificate  is  dehvered  to  the  creditor  but 
without  any  transfer  or  endorsement  sufficient  to  enable  the 
creditor  to  have  himself  registered  as  the  owner  or  to  sell  the 
shares  in  the  market,  without  some  further  act  on  the  part  of 
the  debtor;  (3)  w^here  the  certificate  is  delivered  to  the  debtor 
coupled  with  a  transfer  or  blank  endorsement;  (4)  where  the 
shares  are  transferred  to  the  creditor  on  the  books  of  the  com- 
pany but  coupled  with  an  entry  indicating  that  they  are  held 
as  collateral  security  merely,  and  (5)  where  the  shares  are 
transferred  to  the  creditor  on  the  company's  books,  no 
entrv  being  made  to  indicate  that  they  are  held  as  collateral 
security  and  no  communication  of  that  fact  being  made  to 
the  company.  We  shall  now  consider  the  rights  of  the  parties 
in  these  several  cases,  without  pausing  to  inquire  whether 
the  transactions  are  more  properly  denominated  pledges  or 
mortgages. 

(1)  §  99S.  Mere  Agreement  that  Shares  shall  be  held  as 
Collateral  Security.  —  The  transaction  in  this  case  evidently 
amounts  to  no  more  than  an  executory  contract  to  hypothecate 
the  shares  for  payment  of  the  debt.  Such  a  contract,  however, 
should,  it  is  submitted,  be  enforced  specifically  in  equity,  so 
that  it  may  amount,  virtually,  to  an  equitable  charge.^  The 
creditor  obviously  has  no  means  of  enforcing  his  rights,  or  of 
obtaining  any  control  over  the  shares  without  the  aid  of  a  court 
of  equity.  Hence,  if  the  debtor  be  a  sovereign  state  and  as  such 
exempt  from  suit,  the  creditor  is  without  remedy  to  enforce  the 
charge  or  contract.- 

'  Schioind  v.  Boyce,  94  Md.  510;  Pa.  St.  579;    27  Atl.  662;    Lallande 

51  Atl.  45.     Cf.  Harris's  Appeal,  12  v.  Ingram,  19  La.  Ann.  364;  Succes- 

Atl.    Rep.    743    (Pa.);     First    Nat.  sion  of  Lanaux,  46  La.  Ann.  1036; 

Bank  v.  Bacon,  113  N.  Y.  App.  Div.  15  So.  708;   25  L.  R.  A.  577;    Third 

612;    98  N.  Y.  Supp.  717;    Dexter  Nat.   Bank  v.   Buffalo  German  Ins. 

Horton  &  Co.  v.  McCafferty  (Wash.),  Co.,  193  U.  S.  581;   24  Sup.  Ct.  524 

84  Pac.  733.  (agreement  held,  in  accordance  with 

But  see  Atkinson  v.  Foster,   134  settled  principles  of  law,  inoperative 

111.  472;    25  N.   E.  528  (where  the  against     a     subsequent     bona     fide 

lien  was  held  invalid  even  in  equity  pledgee  of  the  share-certificate), 

as   against    the   general    creditors);  -  Christian  v.   Atlantic  &  North 

Nishit  V.  Macon  Bank,   etc.  Co.,   12  Carolina  R.  R.  Co.,   133  U.   S.  233 

Fed.   686.     Cf.   Cam.phell  v.    Wood-  (where   the    creditor   attempted   to 

stock  Iron  Co.,  83  Ala.  351 ;    3  So.  proceed  against  the  corporation). 
369;  Girard  Trust  Co.  v.  Mellor,  156 

804 


§  832-§    1011]  PLEDGES    OF    SHARES  §   ]  ()00 

(2)  §  900.  Agreement  coupled  with  Delivery  of  Share-Certifi- 
cate without  Transfer  or  Endorsement.  ~  In  this  case  a.s  in  the 
preceding,  the  creditor  must  resort  to  equity  to  obtain  specific 
performance  of  the  contract  of  hyp^)thecation.  The  mere  j)os- 
session  of  the  share-certificate  does  not  enable  him  to  transfer 
the  shares  or  to  have  himself  registered  as  the  owner.  It  does, 
however,  enable  him  to  embarra.ss  the  debtor  if  the  latter  should 
attempt  to  dispose  of  the  shares  in  violation  of  his  agreement 
with  the  former,  and  by  refusing  to  surrender  the  certificate  the 
creditor  may  often  extort  from  the  debtor  either  payment  of  the 
debt  or  some  more  effective  pledge  of  the  shares.  In  such  a 
case  as  this,  the  creditor  might  be  deemed  a  pledgee  of  the  cer- 
tificate considered  merely  as  a  chattel,  and  as  such  entitled  to 
hold  the  certificate  precisely  as  the  pledgee  of  a  coat  or  a  hat 
would  be  entitled  to  do.'  However,  it  has  been  held  that  the 
creditor  may  have  a  strict  foreclosure,  and  is  not  limited  to  his 
remedy  by  sale  of  the  shares  as  an  ordinary  pledgee  of  a  chattel 
would  be.^ 


(3)  §  1000-§  1002.     Delivery  of  Share-Certificate  coupled  with 
Transfer  or  Endorsement  in  Blank. 

§  1000.  Rights  of  Creditor  with  respect  to  Third  Persons.  — 
This  case  illustrates  the  ordinary  method  of  hypothecating  shares. 
In  many  respects  the  creditor's  rights  are  the  same  as  those  of 
a  transferee  under  an  absolute  transfer,  to  whom  the  share- 
certificate  has  been  delivered  coupled  with  a  transfer  signed  by 
the  Iransicror  but  who  has  not  yet  been  registered  as  a  share- 
holder. This  is  certainly  the  case  in  so  far  as  the  rights  and 
liabilities  of  the  pledgee  with  reference  to  the  corporation  or  any 
third  person  are  concerned.  For  example,  if  the  pledgor  was  a 
trustee  who  was  disposing  of  the  shares  in  violation  of  liis  trust, 
the  question  whether  a  person  to  whom  the  certificate  has  been 
delivered  coupled  with  a  transfer  in  blank  is  to  be  deemed  a 
bona  fide  holder  for  value  without  notice  and  therefore  entitled 
to  hold  the  shares  as  against  the  cestui  qu£  trust  is  precisely  the 

'  Cf.  Wagner  v.  Mnrple,  10  Tex.  Lovemon  v.  Henderson,  1  Tenn.  Ch. 
Civ.  App.  505;  31S.  W.  691;  Xishit    App.   749. 

V.  Macon  Bank,  etc.  Co.,  12  Fed.  686;         ''  Harrold  v.  Plenty  (1901),  2  CL 

314. 
805 


§   1001  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

same  whether  the  transfer  be  intended  as  absolute  or  as  col- 
lateral security  merely.  So,  too,  the  question  whether  the  holder 
of  the  certificate  with  the  endorsed  transfer  is  to  be  preferred 
to  a  person  claiming  under  another  transfer  from  the  same 
transferor  is  precisely  the  same  whether  the  first-mentioned 
transfer  was  absolute  or  by  way  of  collateral  security. 

The  debtor,  beingr  the  registered  owner,  is  entitled  to  collect 
any  dividends  payable  upon  the  shares.^  If,  however,  the  cred- 
itor notify  the  company  of  the  hypothecation,  he  has  been  held 
to  be  entitled  to  recover  from  the  company  any  such  dividends." 
The  creditor  under  such  circumstances  has  been  allowed  to 
maintain  the  action  even  though  the  debt  had  been  paid,  the 
theory  of  the  court  being  that  the  amount  collected  would  be 
held  for  the  use  of  the  debtor ;  ^  but  it  would  seem  that  the  action 
should  have  been  brought  in  the  debtor's  name.  If  the  debtor 
collects  dividends  declared  on  the  shares  after  the  contract  of 
hypothecation,  the  creditor  is  entitled  to  require  him  to  account 
for  the  same,  for  such  dividends  are  part  of  the  creditor's 
security.* 

§  1001.  Rights  of  Creditor  and  Debtor  Inter  Sese.  —  The  rights 
of  the  debtor  and  the  creditor  inter  scse  in  the  case  we  are  now 
considering  are  as  follows :  The  transfer  in  blank  as  collateral 
security  authorizes  the  creditor  to  fill  up  the  blank  with  his 

*  Hill   V.   N ewichaxcanick   Co.,   8  cation  liable  over  again  to  the  cred- 

Hun  459,  affirmed  on  opinion  below,  itor) ;    Central  Nehr.   Nat.    Bank    v. 

71  N.  Y.  593;   Gemmell  v.  Davis,  75  Wilder,  32  Nebr.  454;  49  N.  W.  3(jv) 

Md.  546;  23  Atl.  1032;  32  Am.  St.  (same  point  as  last  case). 
Rep.  412.  Cf.  Gemmell  v.  Davis,  75  Md.  546; 

Cf.  Hermann  v.  Maxwell,  47  N.  Y.  23  Atl.  1032 ;   32  Am.  St.  Rep.  412. 
Super.  Ct.  347  (holding  the  debtor         ^  Guarantee    Co.    v.    East    Rome 

a  trustee  of  the  dividends  for  the  Town  Co.,  96  Ga.  511;  23  S.  E.  503; 

creditor);    Meredith  Village  Savings  51  Am.  St.  Rep.  150. 
Bank  v.  Marshall,  68  N.  H.  417;   44  *  Fairbank    v.    Merchants'    Nat. 

Atl.   526  (same  point  as  preceding  Bank,   132   111.    120,   134   (headnote 

case);    Fairbank  v.  Merchants'  Nat.  inadequate);   22  N.  E.  524;   Gaty  v. 

Bank,  132  111.   120;    22  N.    E.  524  i7o?Z(V/«7/,  8  Mo.  .\pp.  118  (overruling 

(holding   that   the   creditor   has   no  the  objection  that  the  creditor's  only 

claim  to  dividends  declared  prior  to  remedy  was  against  the  corporation 

the  pledge).  winch  had  paid  the  dividends  to  the 

^^  Gaty    V.   Holliday,  8  Mo.  App.  debtor  after  notice  of  the  creditor's 

118,  119  (semble);  Guarantee  Co.  v.  claim). 

East   Rome  Town  Co.,  96  Ga.  511;  Cf.    Page    Belting   Co.    v.    Prince 

23  S.  E.  503;  51  Am.  St.  Rep.   150  (N.    J.),    67    Atl.    401;     Highett   v. 

(company     paying     dividends     to  Highett.  22  Vict.  L.  R.  352. 
debtor  with  notice  of  the  hypothe- 

806 


§832-§  1011] 


PLEDGES    OF    SHAKES 


§   1001 


own  name  as  transferee  and  to  have  the  transfer  refjistered ;  ' 
and  if  the  company  refuses  to  recognize  him  as  shareholcK-r  he 
may  avail  of  any  appropriate  remedy  that  would  have  heen' 
avaihd)le  if  tlie  transfer  ha<l  been  ahsohite  instead  f)f  as  coU 
lateral  security  merely."  Instead  of  putting  the  shares  in  his 
own  name,  he  may  put  them  in  the  name  of  an  agent  or  nominee.' 
Whether  the  creditor  nnist  keep  the  hypothecated  shares  sepa- 
rate and  distinct  or  whether  he  may  mingle  them  indiscrimi- 
nately with  other  shares  of  the  same  kind  standing  in  his  name 
will  depend  on  the  terms  of  the  contract  as  interpreted  in  the 
liHit  of  the  surroundint;  circumstances  and  of  the  customs  or 
usages  of  the  trade.*  Moreover,  in  England  the  creditor  is 
entitled  to  repledge  the  shares  as  security  for  his  own  indebt- 
edness, conferring  upon  the  second  pledgee  the  right  to  hold 
the  shares  as  security  until  the  first  debt  is  paid  off.^    If  a  mort- 


»  Davies'  Case,  33  L.  T.  834; 
Ex  parte  Sargent,  17  Kq.  273  (criti- 
cised in  France  v.  Clarke,  26  Ch.  D. 
257);  Skiff  v.  Stoddard,  63  Conn. 
198,217-218;  26  Atl.  874;  28  Atl. 
104;  21  L.  R.  A.  102;  Union,  etc. 
Bank  v.  Farrington,  13  Lea  (Tenn.) 
333;  Day  v.  Holmes,  103  Mass.  306 
(holding  further  that  the  creditor 
may  put  the  shares  in  the  name  of 
an  agent);  Hubbell  v.  Drexel,  11 
Fed.  115;  Feige  v.  Burt,  118  Mich. 
243;  77N.  W.  928;  74  Am.  St.  Rep. 
390  (semble) ;  Rich  v.  Boijce,  39  Md. 
314  (custom  to  the  contrary  held 
unreasonable  and  void) ;  Davis  v. 
Hardimck  (Tex.),  94  S.  W.  359.  ' 

Cf.  Commercial  Bank  v.  Kort- 
right,  22  Wend.  348;  34  Am.  Dec. 
317;  Norton  v.  Morgan,  19  N.  Y. 
170;   75  Am.  Dec.  311. 

But  see  contra :  where  no  default 
has  been  made  in  payment  of  the 
debt.  Spreckels  v.  Nevada  Bank,  113 
Cal.  272;  45  Pac.  329;  33  L.  R.  A. 
459;  54  Am.  St.  Rep.  348.  Ci.  State 
ex  rel.  Canal  Bank  v.  North  Ameri- 
can Laml,  etc.  Co.,  112  La.  441;  36 
So.  488. 

^  Herbert  Kraft  Co.  v.  Bank  of 
Orland,  65  Pac.  143;  133  Cal.  64; 
Miller  v.  Houston  City  liy.  Co.,  55 


Fed.  366;   5  C.  C.  A.  134  (where  the 
debt  was  barred  by  limitations). 

Cf.  Wadlinger  v.  First  Nat.  Bank, 
209  Pa.  197;  58  Atl.  359  (as  to  mak- 
ing the  pledgor  a  party). 

3  Day  V.  Holmes,  103  Mass.  306; 
Hiatt  V.  Griswold,  5  Fed.  573,  576- 
577  (where  the  creditor  transferred 
the  shares  from  his  own  name  in 
order  to  avoid  liabihty  as  a  share- 
holder) ;  Ra7ikin  v.  Fidelity  Trust 
Co.,  189  U.  S.  242,  252,  254;  23  Sup. 
Ct.  553;  Higgin^  v.  Fidelity  Ins., 
etc.  Co.,  108  Fed.  475,  477;  46  C.  C. 
A.  509. 

Cf.  Terry  v.  Birmingham  Nat. 
Bank.  93  Ala.  599;  9  So.  299;  30 
Am.  St.  Rep.  87;  Sttiith  v.  Becker 
(Wise),  109  N.  W.  131. 

*  See  supra,  §  500. 

'  France  v.  Clark,  26  Ch.  D.  257. 

Contra:  We.'^tinghouse  v.  German 
Nat.  Bank,  188  Pa.  St.  630;  41  Atl. 
734  (rehypothecation  forbidden  by 
statute). 

Cf.  Fay  v.  Gray,  124  Mass.  500; 
Skiff  V.  Stoddard,  63  Conn.  198,  218- 
220.  231;  26  Atl.  874;  28  Atl.  104; 
21  L.  R.  A.  102;  Price  v.  Gover,  40 
Md.  102,  115-116;  Lauretice  v. 
Maxwell,  53  N.  Y.  19;  Neiv  York, 
etc.  R.  R.  Co.  V.  Davies,  38  Hun  (N. 


807 


§  1001 


TRANSFER   AND   TRANSMISSION  [ChAP.  XV 


pagee  assumes  to  do  more  than  this,  he  is  exceeding  his  actual 
authority,  and  his  deahngs  with  the  shares  can  be  sustained, 
if  at  all,  only  on  the  principle  of  estoppel.  That  such  an  estoppel 
will  be  raised  in  favor  of  a  bona  fide  transferee  of  the  certificate 
is  the  general  American  rule.* 

Tn  general,  we  may  say  that  the  rights  and  remedies  of  the 
parties  are  the  same  as  in  case  of  a  pledge  of  tangible  personal 
property,  leaving  a  detailed  statement  of  such  rights  and  reme- 
dies to  books  which  deal  specifically  with  pledges  of  personal 
property.  For  example,  if  default  be  made  in  payment  of  the 
debt,  the  creditor  may,  as  in  case  of  pledge  of  tangible  personal 
property,  if  he  be  willing  to  assume  the  risk,  sell  the  shares  by 
public  sale  ^  although  not  by  private  sale ;  ^  but  must  first 
demand  payment  of  the  debt  *  and  also  must  give  the  debtor 
reasonable  notice  of  the  time  and  place  of  sale,^  any  custom 


Y.)  477;  German  Sav.  Bank  v.  Ren- 
shaw,  78  Md.  475;  Oregon  &  Trans- 
continental Co.  V.  Hilmers,  20  Fed. 
717. 

1  McNeil  V.  Tenth  Nat.  Bank,  46 
N.  Y.  325;  7Am.  Rep.  341;  Brittan 
V.  Oakland  Bank  of  Savings,  124 
Cal.  282;  57  Pac.  84;  71  Am.  St. 
Rep.  58;  Westinghouse  v.  German 
Nat.  Bank,  188  Pa.  St.  630,  632;  41 
Atl.  734;  Gilbert  v.  Erie  Bldg.  Ass'n 
(Pa.),  39  Atl.  291  (semble);  Com- 
mercial Bank  v.  Kortright,  22  Wend. 
(N.  Y.)  348;  34  Am.  Dec.  317; 
O'Mara  v.  Newcomb  (Colo.),  88 
Pac.    167.    See  also  supra,  §  896. 

But  see  German  Sav.  Bank  v. 
Renshaw,  78  Md.  475;  Kern's  Es- 
tate, 176  Pa.  St.  373  (headnote  inade- 
quate);   35  Atl.  231. 

2  Brown  v.  Ward,  3  Duer  (N.  Y.) 
660. 

'  Diller  v.  Brubaker,  52  Pa.  St. 
498;  91  Am.  Dec.  177;  Baltimore 
Marine  Ins.  Co.  v.  Dalrymple,  25 
Md.  269. 

As  to  whether  a  sale  on  the  stock 
exchange  is  a  private  sale,  see  Brass 
V.  Worth,  40  Barb.  (N.  Y.)  648,  653- 
654;  WiXloughby  v.  Comstock,  3 
Hill  (N.  Y.)  389;  ChUd  v.  Hugg,  41 
Cal.  519;   Maryland  Fire  Ins.  Co.  v. 


Dalrymple,  25  Md.  242;  Rankin  v. 
McCullough,  12  Barb.  (N.  Y.)  103; 
Tucker  v.  Wilson,  1  P.  Wms.  261;  5 
Bro.  P.  C.  193. 

*  Wilson  V.  Little,  2  N.  Y.  443; 
51  Am.  Dec.  307;  Nabring  v.  Bank 
of  Mobile,  58  Ala.  204. 

But  see  Franklin  Nat.  Bank  v. 
Newcombe,  1  N.  Y.  App.  Div.  294; 
37  N.  Y.  Supp.  271  (where  a  definite 
time  for  payment  was  fixed  by  the 
contract). 

^  Stenton  v.  Jerome,  54  N.  Y.  480; 
Markham  v.  Jandon,  41  N.  Y.  235; 
Gillett  V.  Whiting,  120  N.  Y.  402 ;  24 
N.  E.  790  (with  which  cf.  s.  c,  141 
N.  Y.  71;  35  N.  E.  939;  38  Am.  St. 
Rep.  762,  where  the  objection  was 
held  to  have  been  waived);  Stevens 
V.  Hurlbut  Bank,  31  Conn.  146  (no- 
tice of  less  than  one  day  held  in- 
sufficient); Hempfling  v.  Burr,  59 
Mich.  294;  26  N.  W.  496;  Feige  v. 
Burt,  118  Mich.  243;  77  N.  W.  928; 
74  Am.  St.  Rep.  390;  Conyngham's 
Appeal,  57  Pa.  St.  474;  McCutcheon 
V.  Dittman,  23  N.  Y.  App.  Div.  285; 
48  N.  Y.  Supp.  360  (forwarding 
newspaper  advertisement  of  sale  to 
debtor  held  insufficient  notice) ;  Fur- 
ber  v.  National  Metal  Co.,  103  N.  Y. 
Supp.  490  (as  to  the  necessity  of 


808 


§  832-§  ion; 


PLEDGES    OF    SHARES 


§    KXJl 


of  brokers  to  the  contrary  notwithstaiidincr,'  unless  the  con- 
tract of  hypothecation  is  expressly  made  subject  to  such  usage.' 
The  place  of  sale  must  be  a  reasonable  one.^  The  sale  may 
b<^  complete  so  as  to  cut  off  the  debtor's  rio;ht  of  redemption 
altliougii  the  transfer  is  never  entered  on  the  bcmks  of  the  com- 
pany, the  shares  standing  all  the  time  in  the  name  of  a  clerk  of 
the  creditor's  liroker,  and  although  the  same  certificate  ultimiitely 
gets  back  into  the  hands  of  the  creditor/  It  has  been  held  in 
California  that  an  irregular  sale  is  not  a  forfeiture  of  all  title  to 
the  shares,  but  passes  to  the  purchaser  the  right  of  the  creditor 
to  hoKl  them  until  the  debt  is  paid.^  If  the  creditor  desire  to 
have  the  protection  of  a  court  of  equity,  he  may  file  a  bill  for  the 
purpose  of  realizing  on  his  security ,°  and,  at  least,  according  to 
the  English  law,  may,  if  he  so  elect,  have  a  strict  foreclosure 
instead  of  a  sale.' 

In  order  to  confer  these  various  rights  upon  the  creditor  as 
between  himself  and  his  debtor,  the  certificate  must  have  l:>een 
delivered  to  him  with  intent  to  secure  the  particular  indebted- 
ness in  question.  For  instance,  if  a  certificate  endorsed  in 
blank  is  delivered  to  a  creditor  to  secure  a  debt  which  is  after- 


giving  a  new  notice  when  sale  is 
postponed  at  debtor's  rdtjuest  from 
date  first  fixed  therefor). 

But  see  Wallace  v.  Burdell,  24 
Hun  (N.  Y.)  379;  McDowell  v. 
Chicago  Steel  Works,  124  111.  491; 
16  N.  E.  854;  7  Am.  St.  Rep.  381 
(where  the  contract  authorized  the 
pledgee  to  sell  at  eitlier  pubhc  or 
private  sale);  Worthington  v.  Tor- 
mey,  34  Md.  182  (dispensing  with 
notice  of  the  place  of  sale);  De- 
verges  V.  Sandenian,  Clark  &  Co. 
(1902),  1  Ch.  579. 

Cf.  Alexandria,  etc.  R.  R.  Co.  v. 
Burke,  22  Gratt.  (Va.)  254;  Bryan 
V.  Baldwin,  52  N.  Y.  232;  Neiler  v. 
Kelley,  69  Pa.  St.  403. 

*  Markham  v.  Jandon,  41  N.  Y. 
235. 

'  Baker  v.  Drake,  66  N.  Y.  518; 
23  Am.  Rep.  80. 

*  Cf.  Gnimherg  v.  //.  W.  Downs 
Co.,  165  Mass.  467;  43  N.  E.  195;  52 
Am.  St.  Rep.  525  (where  the  debtor 
had  waived  the  objection). 


«  Smith  V.  Becker  (Wise),  109 
N.  W.  131. 

As  to  a  sale  accompanied  or  fol- 
lowed by  a  repurchase  by  the  cred- 
itor, see  Macoun  v.  Erskine,  Oxenard 
&  Co.  (1901),  2  K.  B.  493;  Erskine, 
Oxenard  &  Co.  v.  Sachs  (1901),  2 
K.  B.  504;  Walter  v.  King,  13  Times 
L.  R.  270. 

*  Brittan  v.  Oakland  Bank  of 
Savings,  124  Cal.  282;  57  Pac.  84; 
71  Am.  St.  Rep.  58. 

"  Vaupell  V.  Woodward,  2  Sandf. 
Ch.  (N.  Y.)  143;  Plankinton  v. 
Hildebrand,  89  Wise.  209;  01  N.  W. 
839;  Conyngham's  Appeal,  57  Pa. 
St.  474. 

Cf.  Zellerbach  v.  Allenherg,  99 
Cal.  57;  33  Pac.  786  (where  the 
creditor  was  defendant  in  equity 
and  obtained  the  relief  without  fihng 
a  cross-bill.) 

'  Harrold  v.  PlerUy  (1901),  2  Ch. 
314. 


809 


§  1002  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

wards  paid  off,  he  cannot  hold  it  as  security  for  another  debt.* 
But  the  creditor's  hen  covers  his  claim  for  reimbursement  for 
any  assessments  on  the  shares  which  he  is  legally  compellable 
to  pay  or  which  he  is  requested  by  the  debtor  to  pay.^ 

The  debtor  is  of  course  entitled  to  redeem ;  and  this  right  he 
may  assign,  and  after  notice  of  the  assignment  the  creditor  is 
bound  to  treat  such  assignee  as  the  owner  of  the  shares  subject 
to  tlic  lien  and  to  accord  him  all  the  rights  of  such  owner.^  At 
least,  under  some  circumstances,  the  debtor  may  file  a  bill  to 
redeem.^ 

§  1002.  Redelivery  of  Certificate  to  Debtor.  —  The  lien  will 
be  deemed  to  have  been  waived  if  the  creditor  redeliver  the 
certificate  to  the  debtor,  who  will  thereupon  be  able  to  transfer 
an  unincumbered  title  to  the  shares.^ 


(4)  §  1003.  Transfer  to  Creditor  on  Company's  Books  coupled 
with  Qualification  that  the  Shares  are  held  as  Security  merely.  — 
There  is  little  authority  as  to  the  rights  of  the  parties  where 
shares  are  transferred  by  a  debtor  on  the  books  of  the  company 
to  his  creditor  with  an  entry  indicating  that  they  are  held  as 
collateral  security  merely.''  The  creditor  is  entitled  to  collect 
dividends  payable  in  respect  of  the  shares.^    The  rights  of  the 

'  NUes  V.  Edwards,  90  Cal.   10;  =  Hershey  v.   Welch,   104  N.  W. 

27   Pac.    159;     Harris   v.   Franklin  821;  96  Minn.  145. 

Bank,  77  Md.  423;   26  Atl.  523.  «  Cf.  Spreckels  v.  Nevada  Bank, 

Cf.  Riley  v.  Hampshire,  etc.  Bank,  113  Cal.  272;  45  Pac.  329;  33  L.  R. 

164  Mass.  482;   41  N.  E.  679;   Day-  A.  459;  54  Am.  St.  Rep.  348;  Noyes 

ton  Xat.   Bank  v.   Merchants'  Nat.  Bros.,  136  Fed.  977  (as  to  what  is 

Bank,    37    Oh.    St.    208;     Leahy   v.  sufficient   indication   on   the   books 

Lobdell,  80  Fed.  665;  26  C.  C.  A.  75;  that  the  shares  are  held  in  pledge); 

Fairbank  v.  Merchants'  Nat.  Bank,  Pauly  v.   State  Loan,   etc.   Co.,    165 

132  111.  120;  22  N.  E.  524  (as  to  the  U.  S.  606;    17  Sup.  Ct.  465  (creditor 

effect    of    renewal    of    notes,    etc.);  not    liable    as    shareholder    where 

Boyd  V.  Conshohocken  Worsted  Mills,  shares    registered    in    his    name    as 

149  Pa.  St.  363 ;   24  Atl.  287.  pledgee) ;    Frater  v.  Old  Nat.  Bank, 

^  Iowa    Nat.     Bank    v.     Cooper  101  Fed.  391;  42  C.  C.  A.  133  (where 

(Iowa),  107  N.  W.  625.  shares  held   by  bank   as   collateral 

'  LcMarc/ianfv.  Moore,  150  N.  Y.  security  were  registered  in  name  of 

209;   44  xN.  E.  770.  "C,     casliier   O.   N.    Bank,"    held, 

Cf.  First  Nat.  Bank  v.  Root,  107  bank  not  liable). 

Ind.  224;    8  N.  E.  105.  '  Hunt  v.  Laconia,  etc.  Ry.  Co., 

*    Treadwell  v.  Clark  (N.  Y.),  82  68  N.  H.  561 ;  39  Atl.  437;  Page  Belt- 

N.  E,  505.  ing  Co.  v.  Prince  (N.  J.),  67  Atl.  401. 

810 


§  832-§   1011]  PLEDGES    OF    SHARES  §   1004 

parties  inter  sese  would  seem  to  be  the  same  as  in  the  case  where 
the  transfer  or  mortgage  is  not  recorded  in  the  company's 
books. 

(5)  §  1004.  Transfer  on  the  Company's  Books  absolute  in 
Form.  —  In  this  case,  as  in  the  proccdiiig,  the  rights  of  the 
parties  inter  sese  do  not  in  general  differ  greatly  from  the  case 
where  the  certificate  and  transfer  in  blank  are  delivered  to  the 
creditor  but  where  the  debtor  remains  registered  as  the  abso- 
lute owner.'  Indeed,  we  have  seen  above  that  according  to  the 
better  view  the  creditor  to  whom  a  blank  transfer  has  been  de- 
livered has  the  right  to  fill  up  the  blank  with  his  own  name  and 
have  himself  registered  as  shareholder.  Accordingly,  the  creditor 
has  an  implied  power  of  sale  after  the  lapse  of  a  reasonable  time 
after  default.^  The  creditor  who  is  registered  as  though  abso- 
lute owner  is  entitled  as  between  himself  and  his  debtor  as  well 
as  between  himself  and  the  company  to  any  dividends  declared 
on  the  hypothecated  shares,^  until  the  debt  be  paid;  but  upon 
payment,  the  debtor  as  between  himself  and  the  creditor  be- 
comes entitled  to  the  dividends.''  Inasmuch  as  the  legal  title 
is  in  the  creditor,  the  debtor  may  file  a  bill  in  equity  to  redeem 
upon  payment  of  the  debt.^    With  respect  to  third  persons,  in- 

'  Cf.  Xahring  v.  Bank  of  Mobile,  19o    (transferee    from    pledgee    not 

58  Ala.  204;    Markham  v.  Jandon,  liable  to  account  for  dividends  col- 

41  N.  Y.   235;  Green-e  v.  Dispeau,  lected  by  pledgee). 

14  R.  I.  575.     As  to  parol  evidence  *  Hasbrouck     v.     Vandevoort,     4 

to  qualify  the  apparently  absolute  Sandf.  (N.  Y.)  74;    Newton  v.  Fay, 

transfer,  see  §  1005.  10   Allen    (Mass.)    505;     Bryson   v. 

^  Deverges  v.  Sandeman,  Clark  &  Rayner,  25  Md.  424;    90  Am.  Dec. 

Co.  (1902),  1  Ch.  579.  69. 

»  Boyd    V.    Conshohocken    Mills,  Cf.  Gilmer  v.  Morris,  80  Ala.  78; 

149  Pa.  St.  363;  24  Atl.  287.  60  Am.  Rep.  85  (where  the  debtor 

Cf.  Guarantee  Co.  v.  East  Rome  was  barred  by  laches);    Greene  v. 

ToM)n  Co.,  96  Ga.  511;  23S.  E.  503;  Dispeau,  14  R.  I.  575  (same  point 

51   Am.   St.   Rep.    150;    Roland  v.  as   preceding   case);     Wateriimn   v. 

Lancaster,  etc.  Bank,  135  Va.  St.  59S;  Brown,  31  Pa.  St.  161  (same  point 

19  Atl.  951;    Nelson  v.  Cwen,   113  as  preceding);    Roberts  v.  Sijkes,  30 

Ala.   372;    21   So.   75;    CMurn  v.  Barb.  (N.  Y.)  173  (claim  barred  by 

Riley,  11  Colo.  App.   184;    52  Pac.  hmitations);    Lauman's  Appeal,  08 

684;   Gemmell  v.  Davis,  75  Md.  546;  Pa.  St.  88  (where  tlie  transfer  was 

23  Atl.  1032;  32  Am.  St.  Rep.   412.  held  to  be  a  conditional  sale  and  not 

*  Cro.'is  V.  Eureka  Lake,  etc.  Co.,  collateral  security);    Crimp  v.  Mc- 

73  Cal.  302;   14  Pac.  885;  2  .\m.  St.  Cormick  Co.,  71  Fed.  356;  18  C.  C.  A. 

Rep.  808.  70  (same  point  as  last  case) ;   Hower 

Cf.    Ma.rwell    v.    Nat.    Bank    of  v.   Weiss,  etc.  Co.,  55  Fed.  356;    5 

Greenville,  70  S.  Car.  532;    50  S.  E.  C.  C.  A.  129;    Gilmer  v.  Morris,  43 

811 


§   1005  TRANSFER    AND    TRANSMISSION  [ChAP.  XV 

eluding  the  corporation,  the  creditor  is  clothed  with  an  apparent 
ownership  of  the  most  complete  character.^  If  by  reason  of 
such  apparent  ownership,  the  creditor  is  compelled  to  pay  to 
the  company  calls  or  assessments  on  the  shares,  the  debtor  can- 
not redeem  without  refunding  to  the  creditor  the  sums  so  ex- 
pended.- But,  on  the  other  hand,  the  creditor  owes  no  duty  to 
the  debtor  to  pay  such  calls  or  assessments;  and  therefore  the 
debtor  cannot  complain  if  the  creditor  suffers  the  shares  to  be 
forfeited  for  non-payment.^ 

§  1005.  Parol  Evidence  of  Terms  of  Agreement  between 
Debtor  and  Creditor.  —  It  has  been  said  that  where  an  absolute 
transfer  of  shares  is  made  on  the  books  of  a  corporation,  parol 
evidence  is  not  admissible  to  show  that  the  transfer  was  intended 
as  collateral  security  merely;^  but  this  dictum,  if  supportable 
at  all,  —  an  hypothesis  which  to  say  the  least  is  doubtful,^  — 
must  be  confined  to  cases  where  the  rights  of  third  persons  are 
involved,  for  between  the  parties  the  transfer  takes  effect,  at 
least  in  equity,  according  to  their  actual  intent.^  Parol  evidence, 
however,  is  not  admissible  to  vary  the  terms  of  an  express  written 
contract  of  hypothecation.' 

§  100G-§  1008.     Co-ownership  of  Shares. 

§  1006.  Rights  and  Liabilities  of  Co-owners.  —  Where  shares 
are  held  by  tenants  in  common  or  joint  tenants,  —  e.g.,  by 
several  co-trustees,  —  each  co-owner  is  liable  as  though  he  were 
the  sole  owner  of  all  the  shares  in  severalty,  and  not  merely  for 
his  proportionate  part  of  the  total  liability  attaching  to  the 
shares.^    A  fortiori,  where  shares  are  held  by  joint  tenants,  upon 

Fed.     456     (reconsidered     and     re-  question  was  not  shares  or  stock, 

affirmed,  46  Fed.  333,  335-336).  Baugher  v.  Merryman,  32  Md.  185. 

1  Thompson  v.  Toland,  48  Cal.  =  McMahon  v.  Macy,  51  N.  Y. 
99 ;  National  Bank  v.  Case,  99  U.  S.  155 ;  May  v.  Genesee  County  Sav. 
628.  Bank,  120  Mich.  330;   79  N.  W.  630. 

2  McCalla  v.  Clark,  55  Ga.  53.  «  Brick  v.   Brick,  98  U.  S.  514; 
'  Marine  Bank  v.  Biays,  4  H.  &    Travers  v.  Leopold,  124  111.  431;    16 

J.  (Md.)  338.  N.  E.  902;   Newton  v.  Fay,  10  Allen 

*  Bend    v.    Susquehanna   Bridge,  (Mass.)    505;     Ginz   v.   Stumph,   73 

etc.  Co.,  6  H.  &  J.  (Md.)  128,  133-  Ind.  209. 

134;    14  Am.  Dec.  261.     This  case         '  Fay  v.  Gray,  124  Mass.  500. 
would  seem  to  be  on  this  point  over-         Cf.  Fairhank  v.  Merchants'  Nat. 

ruled  by  later  Maryland  cases,  in  Bank,  132  111.  120;   22  N.  E.  524. 
which,    however,    the    property    in         *  Cunninghame  v.  City  of  Glasgow 

812 


§  832-§  1011]        co-o\raER8HiP  of  shares  §  1()07 

the  death  of  one  of  them  the  whole  lial)iHty  devolves  ujKjn 
the  survivor.'  One  of  two  or  more  co-tenants  of  shares  has  no 
power  to  transfer  the  shares  so  held,  or  any  of  them,  without 
the  concurrence  of  all  his  co-tenants;-  but  where  shares  are 
owned  by  a  partnership  any  partner  may  execute  a  valid  trans- 
fer just  as  he  may  assign  other  firm  property,  without  the  assent 
of  his  co-partners.^  Where  three  out  of  four  co-owners  of  shares 
are  permitted  by  the  company  to  transfer  on  the  books  their 
proportion  of  the  shares,  the  result  is  that  the  remaining  joint 
owner,  especially  if  he  be  a  minor,  becomes  entitled  in  severalty 
as  against  the  company  to  the  remaining  shares,  so  that  the 
company  cannot  claim  a  lien  upon  them  for  debts  of  the  other 
co-holders.*  Where  two  co-trustees  in  breach  of  trust  invest 
trust  funds  in  partly  paid  shares,  the  executor  of  one  of  them 
is  not  liable  to  the  company  for  a  call  made  after  the  testator's 
death,  but  is  nevertheless  liable  to  the  surviving  trustee  for 
contribution.' 

§  1007.  Transfer  to  Tenants  in  Common,  whether  Company 
compellable  to  register.  —  In  England,  it  has  been  held  that  a 
corporation  is  not  compellable  to  register  shares  or  stock  in  the 
names  of  two  or  more  persons  as  tenants  in  common. *  The 
process  of  reasoning  seems  to  have  been  that  the  corporation 
ought  not  to  be  obliged  to  inquire  into  the  proportionate  share 
of  each  co-owner,  as  would  be  necessary  upon  the  death  of  one 
tenant  in  common;  but  this  argument  does  not  furnish  a  very 
satisfactory  basis  for  the  conclusion,  to  the  mind  of  an  American 
lawyer.  The  English  court  further  held  that  a  corporation  and 
an  individual  cannot  hold  either  land  or  personal  property  as 
joint  tenants;  since  the  jiis  acrcsccudi  would  not  be  mutual, 
the   corporation   being  inevitably   the   survivor.^      Hence,   the 

Bank,  4  A.  C.  607;    Gillespie  v.  City         *  Presbyterian     Congregation     v. 

of  Glasgow  Bank,  4  A.  C.  632.  Carlisle  Bank,  5  Pa.  St.  345. 

'  Hill's  Case,  20  Eq.   597;    Na-         *  Jackson    v.    Dickinson    (1903). 

tional    Trustees,    etc.    Co.,    21    Vict.  1  Ch.  947. 

L.     R.     75     (liolding     that     estate         •  Law  Guarantee  Soc.  v.  Bank  of 

of    deceased    joint     tenant    is    not  England,  24  Q.  B.  D.  406.     .\s  to  a 

liable  for  calls  made  during  his  life-  provision  in  an  incorporation  paper 

time).  that  no  two  or  more  persons  should 

■  Barton  v.  London  &  X.  W.  Ry.  be  registereil  as  joint  owners  of  uny 

Co.,  24  Q.  B.  D.  77.  share  or  shares,  see  Con.<<tcrdine  v. 

3  Sargerit  v.  Franklin  Ins.  Co.,  8  Consterdine,    31    Beav.    330  (stated 

Pick.  (Mass.)  90,  97;    19  Am.  Dec.  supra.  §  985  note). 
306.  '  Cf.  supra,  §  76. 

813 


§  1008  TRANSFER   AND   TRANSmSSION  [ChAP.  XV 

court  held,  the  Bank  of  England  cannot  be  compelled  to  register 
a  transfer  of  consols  to  a  corporation  and  a  natural  person ;  * 
for  they  would  necessarily  hold  as  tenants  in  common  and,  as 
above  stated,  a  company  is  not  in  England  compellable  to  register 
shares  or  stock  in  the  names  of  two  persons  as  tenants  in  com- 
mon. The  entire  decision,  premises  and  conclusion,  is  un- 
suited  to  American  business  methods,  and  would  therefore 
hardly  be  followed  anywhere  in  the  United  States. 

§  1008.  Joint  Ownership  not  Evidence  of  Trusteeship.  — 
Although  joint  owmership  of  shares  is  most  common  in  the  case 
of  co-trustees,  yet  the  mere  fact  that  shares  stand  in  the  joint 
names  of  two  or  more  individuals  is  no  evidence  of  a  trust  suffi- 
cient to  put  a  purchaser  upon  inquiry.^ 

§  1009-§  1011.     Executory  Limitations  of  Shares. 

§  1009.  In  general  —  Duty  of  Company  to  protect  Remainder- 
man. —  Shares  in  corporations,  being  permanent  and  valuable 
property,  are  often  settled  upon  one  person  for  life  with  limita- 
tions in  remainder  after  his  death.  Such  limitations  may  in 
America  be  either  legal  or  equitable.^  In  either  case,  the  com- 
pany, if  it  have  notice  of  the  Hmitations,  is  bound  to  protect  the 
interest  of  the  remainderman. 

If  the  company  registers  an  absolute  transfer  by  or  to  the 
owner  of  the  particular  estate,  thus  imperilling  the  rights  of  the 
remainderman,  the  latter  may  compel  the  company  to  respond 
in  damages.*  The  statute  of  limitations  does  not  begin  to  run 
against  any  such  right  of  action  until  the  determination  of  the 
particular  estate.^  Moreover,  the  measure  of  damages  is  the 
value  of  the  shares  at  the  time  of  the  termination  of  the  par- 
ticular estate  and  not  at  the  time  of  the  transfer  or,  so  to  speak, 
of  the  conversion."     This  right  of  action  is  vested  in  the  re- 

»  Law  Guarantee  Soc.  v.  Bank  of  man,  5  Gill  (Md.)  336;    Steioart  v. 

England,  24  Q.  B.  D.  406.  Firemen's  Ins.  Co.,  53  Md.  665. 

2  Dodds  V.  Hills,  2  Hem.  &  Miller         *  Wooten  v.   Wilmington,  etc.  R. 

424.  Co.,  38  S.  E.  Rep.  298,  302;     128 

»  See  Gray   on  Perpetuities,   2d  N.  Car.  119;    56  L.  R.  A.  615.     Cf. 

ed.,  §  88-§98.  Farmers',  etc.   Bank   v.   Wayman,  5 

*  Cox   V.   First  Nat.    Bank,    119  Gill  (Md.)  336,  358. 
N.  Car.  302;  26  S.  E.  22;   Wooten  v.         But  see  contra:    Yeager  v.  Bank 

Railroad,     128    N.    Car.     119;     56  of     Kentucky    (Ky.),     106     S.    W. 

L.  R.  A.  615;   38  S.  E.  298.  806. 

Cf.  Farmers',  etc.  Bank  v.  Way-         "  Caulkins  v.   Gas-Light  Co.,  85 

814 


§  832-§   1011]  CO-OWXEHSIIIP    OF    SHARES  §   1010 

maindcrinun  and  not  in  tlic  administrator  de  bonis  von  of  tlie 
testator  by  whose  will  the  estate  for  life  was  created.'  But  if 
the  testator  directs  that  the  shares  shall  be  transferred  into  the 
tenant  for  life's  own  name,  he  in  efVect  directs  that,  so  far  at 
least  as  the  company  is  concerned,  the  tenant  for  life  shall  have 
full  power  of  disposition,  so  that  the  company  is  not  liable  for 
reffislerinir  a  transfer  to  the  tenant  for  life  absolutely  and  bv  him 
to  a  purchaser,  although  the  tenant  for  life  is  acting  fraudu- 
lently and  converts  the  proceeds  of  sale  to  his  own  use.'- 

If  the  sliares  are  registered  in  the  name  of  the  tenant  for  life, 
they  may  upon  his  death  be  transferred  into  the  name  of  the 
remainderman  without  the  payment  of  duty.^ 

§  1010.  Liability  for  Galls  as  between  Tenant  for  Life  and  Re- 
mainderman. —  As  i)etween  the  tenant  for  life  and  remainder- 
man, any  liability  for  calls  made  during  the  running  of  the  life 
estate  should  be  borne  by  the  corpus  of  the  estate  and  not  by 
the  tenant  for  life  personally  or  out  of  his  income.''  Indeed,  so 
closely  is  this  rule  adhered  to  that  even  a  testator's  express 
directions  that  any  calls  which  may  at  any  time  "become  due 
in  respect  of  any  shares  for  the  time  being  constituting  part  of 
my  residuary  personal  estate"  shall  be  paid  out  of  income,  will 
be  confined  to  calls  upon  shares  owned  by  the  testator  at  the 
time  of  his  death,  and  will  not  be  deemed  to  apply  to  calls  upon 
additional  shares  in  the  same  companies  allotted  to  the  execu- 
tors in  respect  of  their  ownership  of  shares  held  by  the  testator.* 
If  the  tenant  for  life  advances  money  to  pay  the  calls,  he  is  en- 
titled to  a  lien  on  the  shares  for  the  amount  advanced.^  As  be- 
tween the  legatees  of  the  shares  (including  both  the  tenant  for 
life  and  the  remaindermen),  and  the  residuary  estate  of  the 
testator,  the  liability  for  calls  is  governed  by  the  rules  above 
stated  as  to  specific  and  residuary  legatees.^  If  the  shares 
settled  for  life  are  during  the  running  of  the  life  estate  part  of 
the  residue  but  are  specifically  bequeathed  in  remainder,  calls 

Tenn.  683;   4  S.  W.  287;   4  Am.  St.         *  Clive  v.  Clive,  Kay  600. 

Rep.  786.  5  Bevan  v.  Waterhouse,  3  Ch.  D. 

'   Yager's  Admr.  v.  Bank  of  Ken-  752. 
tucky  (Ky.),  100  S.  W.  848.  «  Rotvley  v.  Unmn,  2  K.  &  J.  138; 

*  Hughes  v.  Drovers',  etc.   Bunk,  Todd  v.  Moorehouse,  19  Eq.  69. 
86  Md.  418;   38  Atl.  936.  '  Supra,  §  976. 

»  Hennell  v.  Strong,  25  L.  J.  Ch. 
407. 

815 


§   1011  TRANSFER    AND    TRANSINUSSION  [ChAP.  XV 

made  during  the  life  estate  are  not  to  be  borne  by  the  shares 
themselves  but  may  be  paid  out  of  other  parts  of  the  residuary 
estate  which  do  not  yield  so  good  an  income  and  which  are  not 
specifically  bequeathed  in  remainder/ 

§  1011.  Mutual  Rights  of  Tenant  for  Life  and  Remainderman 
with  respect  to  Dividends,  Bonuses,  etc.  —  The  difficult  questions 
which  arise  as  to  the  respective  rights  of  tenant  for  life  ^nd 
remainderman  as  to  dividends,  especially  extriiordinary  divi- 
dends, and  as  to  proceeds  of  sale  augmented  by  prospect  of 
a  dividend,  are  elsewhere  discussed.-  So,  too,  the  question 
whether  upon  an  increase  of  capital  the  right  of  the  old  share- 
holders to  subscribe  to  the  new  shares  before  any  allotment  to 
the  public  is  to  be  treated  as  income  or  capital,  as  between  a 
tenant  for  life  and  a  remainderman,  is  the  subject  of  con- 
sideration in  another  chapter.^  It  would  seem  that  the  tenant 
for  life  may  exercise  the  right  to  vote.* 

'  Re  Box,  1  Hem.  &  MiU.  552.  Court  (Minn.),  113  N.  W.  888  (where 

2  See  infra,  §  1377-§  1396.  the  deed  creating  the  estate  for  Ufe 

3  See  supra,  §  607.  expressly  so  provided). 
*  Cf.  State  ex  rel.  Tozer  v.  Probate 


END    OF   VOL.    I 


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